Title: The interaction effect of corporate governance and CAMEL framework on bank performance in Malaysia

Authors: Siti Nurain Muhmad; Hafiza Aishah Hashim

Addresses: School of Maritime Business and Management, Universiti Malaysia Terengganu, Terengganu, Malaysia ' School of Maritime Business and Management, Universiti Malaysia Terengganu, Terengganu, Malaysia

Abstract: This study conducts an analysis of interaction effect between corporate governance and CAMEL framework (capital adequacy, asset quality, management competency, earning quality, liquidity) toward bank performance in Malaysia. The study highlights the corporate governance as a moderator to CAMEL framework in enhancing the bank performance. Additionally, to closely examine the interaction effect, the simple slope test is employed in this study to investigate the impact of high and low corporate governance toward CAMEL framework and bank performance. The result indicates that capital adequacy, management competency, earning quality and liquidity have a significant relationship with bank performance when interacting with corporate governance. However, the result of simple slope test shows that management competency and liquidity have a better interaction with high corporate governance. The outcome of the study should be to provide vision to the corporate governance bodies in Malaysia, depositors, investors, stakeholders and also researchers to adopt and increase knowledge especially on how corporate governance and CAMEL framework could improve bank performance.

Keywords: interaction; corporate governance; CAMEL framework; bank performance; Malaysia.

DOI: 10.1504/AAJFA.2017.087503

Afro-Asian Journal of Finance and Accounting, 2017 Vol.7 No.4, pp.317 - 336

Received: 04 Jun 2016
Accepted: 08 Mar 2017
Published online: 16 Oct 2017 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article