Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia
This paper aims to examine the impact of Good Corporate Governance (GCG) practice on bank stability and performance. Governance is measured using the GCG rating that covers eleven aspects. The authors apply instrumental regression to link governance to performance and stability. The study covers a s...
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doaj-a00d9ef0908942f99f86769d27fdccd92020-11-25T00:19:33ZengLLC "CPC "Business Perspectives"Problems and Perspectives in Management1727-70511810-54672018-04-0116211110.21511/ppm.16(2).2018.0110236Positive contribution of the good corporate governance rating to stability and performance: evidence from IndonesiaRR. Iramani0Muazaroh Muazaroh1Abdul Mongid2Associate Professor, DR, MSi, STIE Perbanas SurabayaAssistant Professor, Dr., MMT, STIE Perbanas SurabayaAssociate Professor, Doctor of Economics, MA, Ph.D, STIE Perbanas SurabayaThis paper aims to examine the impact of Good Corporate Governance (GCG) practice on bank stability and performance. Governance is measured using the GCG rating that covers eleven aspects. The authors apply instrumental regression to link governance to performance and stability. The study covers a sample of 150 banks. The result shows that bank stability can mediate bank governance and bank performance. On the determinant of bank performance, it can be concluded that the GCG rating is positive and directly influences bank performance. Bank stability is also positive for bank performance indicating the indirect contribution of the GCG rating to bank performance. NPL, LDR, CAR and bank’s size (LASSET) are all negative and significant. The aim of this paper is to provide strong empirical evidence on the importance of governance and stability for performance. The limitations of this paper are the size of the sample and that it only covers public banks which are theoretically required to apply better governance in all aspects of their business by the Capital Market Authority.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/10236/PPM_2018_02_Iramani.pdfgood governanceIndonesiaROAROEstabilitytwo-stage regression |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
RR. Iramani Muazaroh Muazaroh Abdul Mongid |
spellingShingle |
RR. Iramani Muazaroh Muazaroh Abdul Mongid Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia Problems and Perspectives in Management good governance Indonesia ROA ROE stability two-stage regression |
author_facet |
RR. Iramani Muazaroh Muazaroh Abdul Mongid |
author_sort |
RR. Iramani |
title |
Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia |
title_short |
Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia |
title_full |
Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia |
title_fullStr |
Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia |
title_full_unstemmed |
Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia |
title_sort |
positive contribution of the good corporate governance rating to stability and performance: evidence from indonesia |
publisher |
LLC "CPC "Business Perspectives" |
series |
Problems and Perspectives in Management |
issn |
1727-7051 1810-5467 |
publishDate |
2018-04-01 |
description |
This paper aims to examine the impact of Good Corporate Governance (GCG) practice on bank stability and performance. Governance is measured using the GCG rating that covers eleven aspects. The authors apply instrumental regression to link governance to performance and stability. The study covers a sample of 150 banks. The result shows that bank stability can mediate bank governance and bank performance. On the determinant of bank performance, it can be concluded that the GCG rating is positive and directly influences bank performance. Bank stability is also positive for bank performance indicating the indirect contribution of the GCG rating to bank performance. NPL, LDR, CAR and bank’s size (LASSET) are all negative and significant. The aim of this paper is to provide strong empirical evidence on the importance of governance and stability for performance. The limitations of this paper are the size of the sample and that it only covers public banks which are theoretically required to apply better governance in all aspects of their business by the Capital Market Authority. |
topic |
good governance Indonesia ROA ROE stability two-stage regression |
url |
https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/10236/PPM_2018_02_Iramani.pdf |
work_keys_str_mv |
AT rriramani positivecontributionofthegoodcorporategovernanceratingtostabilityandperformanceevidencefromindonesia AT muazarohmuazaroh positivecontributionofthegoodcorporategovernanceratingtostabilityandperformanceevidencefromindonesia AT abdulmongid positivecontributionofthegoodcorporategovernanceratingtostabilityandperformanceevidencefromindonesia |
_version_ |
1725371351312629760 |