Problem Identification

The main problem of the organization is corporate governance and impact on

bank performance.

Theoretical Frameworks

Independent variables Dependent Variable

BDSZ

AUDC

CAR ROE, ROA

CAR

CAR2

OWPT

Variables
Dependent variable: Return on Assets and Return on Equity

Independent variable: Board size representing the number of directors sitting in the board
(BDSZ), existence of audit committee in the board (AUDC), (CAR) capital adequacy ratio,
loan loss provision (LLP), (CAR2) is the square of capital adequacy ratio and ownership type
(OWTP).
Research objectives

General: The major objectives of the study are to analyse the corporate governance and
impact on bank performance.

The specific objectives are:

 To analyse difference between the private and state-owned banks in terms of type and
quality of service both provide.
 To analyze relationship between internal and external corporate governance
mechanisms and bank performance as measured by return on equity (ROE) and return
on asset (ROA)
 To examine the corporate governance mechanisms and their impact on performance
of commercial banks in the absence of organized stock exchange.

Research questions
The study is intended towards following research questions:
1. What is the relationship between working condition of the company and
different stakeholders such as employees, management, shareholders and
depositors of commercial banks?
2. What is the difference between the private and state-owned banks in terms of type
and quality of service both provide?

Research Hypothesis

Based on the literature of the study the following hypothesis has been formulated and tested:

H1: There is positive relationship between Board size and bank performance.

H2: There is positive relationship between existence of audit committee in the board and bank performance.

H3: There is positive relationship between external corporate governance mechanisms as measured by CAR and
bank performance.

H4: There is negative relationship between loan loss provision and bank performance

.H5: There is positive relationship between capital ratio and bank performance.

H6: There is negative relationship between loan to de posit ratio and bank performance.
Research model

The researcher uses the multiple regression analysis for the study. The models are the theoretical statement
framed above may be states as:

Model 1 ROE = a0 + a1BDSZ + a2AUDC + a3CAR + a4CR + a5LLP + a6LDR + a7BKSZ + a8OWTP +
a9CAR2 + E.

Model 2 ROA = a0 + a1BDSZ + a2AUDC + a3CAR + a4CR + a5LLP + a6LDR + a7BKSZ + a8OWTP +
a9CAR2 + E.