Bank ownership and governance quality in India: Evolution and detection of convergence clubs |
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| Affiliation: | 2. University of Rome Tor Vergata, Dipartimento di Economia e Finanza, Via Columbia 2, 00133 Roma, Italy;4. Università Politecnica delle Marche, School of Business Giorgio Fuà, Money and Finance Research Group (MoFiR), Piazza Martelli 8, Ancona, Italy;1. School of Materials Science and Engineering, Northeastern University, Shenyang, Liaoning 110819, China;2. School of Applied Finance and Behavioral Science, Dongbei University of Finance and Economics, No.217, Jian Shan Street, Sha Hekou District, Dalian, Liaoning 116025, China;3. School of Business Administration, Northeastern University, No.195, Innovation Road, Hunnan New District, Shenyang, Liaoning 110169, China;4. School of Business Administration, Northeastern University, No.195, Innovation Road, Hunnan New District, Shenyang, Liaoning 110169, China;1. Department of Industrial and System Engineering, Hosei University, Japan;2. School of Business, Aoyama Gakuin University, Japan;1. Department of Business Administration in Catholic University of Saint Anthony, Campus Los Jerónimos, 30107, Murcia, Spain;2. Department of Quantitative Methods in University of Murcia, Campus Espinardo, 30100, Murcia, Spain;3. Department of Applied Economics, University of Murcia, Murcia, Spain |
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| Abstract: | Utilizing a novel panel dataset for the period from 2009 to 2018, this paper investigates how the corporate governance of Indian banks has evolved since the post-global crisis and identifies convergence clubs among banks in distinct ownership groups. It also presents optimal policy priorities for specific aspects of corporate governance. To assess the quality of bank corporate governance, we used a non-parametric “Benefit-of-the-Doubt” (BoD) approach to create a bank-wise composite index of corporate governance based on 48 governance norms. Empirical results have shown that while Indian banks have made remarkable progress in adhering to the mostly mandatory corporate governance norms in the past few years, but their current level of governance isn’t adequate to characterize it as a “socially-efficient” structure. A typical public bank generally prioritized maintaining adequate disclosure and transparency, by and large, while a private bank focuses more spotlight on audit function, followed by risk management and board quality. The results based on Phillips and Sul’s (2007, 2009) clustering and merging algorithms reveal two convergent clubs in the private banking segment and a sole club in the public sector banking segment. |
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| Keywords: | Corporate governance Data envelopment analysis Benefit-of-the-doubt Club convergence Indian banks |
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