Corporate Governance Compliance and its Impact on Profitability of the Commercial Banks of Bangladesh

Abstract

This report is an investigative analysis of the rules and practices of corporate governance in the banking sector of Bangladesh. The SEC's Guidelines on Corporate Governance have been used to measure the compliance of corporate governance against international standards and current business practices by the commercial banks in Bangladesh. The report points out key areas where institutions, regulations, or other economic factors in the banking sector could be strengthened to improve their corporate governance (CG) practice, which is closely associated with the profitability and solvency of the banks. The focus of this report is on whether private commercial banks in Bangladesh are meeting SEC disclosure requirements regarding corporate governance practice and how most banks are involved in Corporate Governance activities to enhance their operational efficiency and financial strength. This study looked at the banks' annual reports to find out if the commercial banks of Bangladesh are following SEC’s disclosure requirements regarding corporate governance and how such compliance is affecting bank’s profitability and solvency. This study demonstrates that and good corporate governance is closely related with higher compliance of SEC’s disclosure requirements and the banks with higher compliance with SEC’s disclosure requirements regarding CG, has experienced improved financial ratios & financial, profits. The study further reveals that such compliance is also positively associated with improved stock price indices of the commercial banks as well. This scenario also improved bank’s profit, wealth, solvency, and market value of all the commercial banks under study. This analysis provides a profound insight for further research. This report suggests that the same study could be conducted in multiple nations and different industry contexts by incorporating the constructs used in this research.