Title: Nexus between corporate governance and bank stability: an empirical study on the banking sector in India

Authors: Nidhi Garg; Shubham Garg; Sangeeta Mittal; Sanjeev Kumar

Addresses: Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar, India ' Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar, India ' Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar, India ' Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar, India

Abstract: This study endeavours to explore the effect of corporate governance on the stability (measured by capital adequacy ratio) of public and private sector banks in India by covering the dataset from 2012-2013 to 2021-2022 by employing panel regression modelling. The result explicates that out of corporate governance variables, the board composition is inversely related to bank stability (CRAR). In contrast, CEO duality is positively related with bank stability. Moreover, board size, gender diversity and board meeting are insignificantly related to bank stability. Similarly, the result posits a significant association of leverage, bank's activity level and bank size with the stability of banks. The findings of the study entails that banks should adequately assess the loan risk to maintain enough capital to have more stability and should adequately plan for capital allocation. This may be the first study to explore the capital adequacy ratio as a measure of bank stability in the Indian banking context.

Keywords: board attribute; bank stability; capital adequacy ratio; corporate governance; Indian banks; India.

DOI: 10.1504/GBER.2025.147992

Global Business and Economics Review, 2025 Vol.33 No.2, pp.154 - 175

Received: 17 Dec 2023
Accepted: 07 Mar 2024
Published online: 13 Aug 2025 *

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