The impact of corporate governance and financial leverage on the performance of local Thai banks using corporate social responsibility as a mediator

Aamir Sarwar, Mamdouh Abdulaziz Saleh Al-Faryan, Sara Saeed

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Abstract

The study looks at the impact of Corporate Governance on the financial performance of seven Thai banks for the period from 2009 to 2018, and also focused on the relationship between corporate governance, leverage, financial performance and Corporate Social Responsibility (CSR) as a mediating variable. Corporate governance was observed through seven variables. Financial performance was measured through three ratios. Relationship between Independent Variables and Dependent Variables was verified through CSR as a mediator. Ordinary Least Square and Two Stage Least Square were used to determine the relationship between the variables. Using Hausman test it was found that Random Effect model was the suitable model. Few of our independent variables were having endogeneity so in order to have stable results we used Two Stage Least Square Method instead of ordinary least square. The study also shows the hidden significance of many relationships. Different statistical tools used for data analysis include MS-Excel, SPSS-23.0, STATA-16, Eviews-10 and Smart-PLS 3.0. This study will help the management of Thai banks to work on the different aspects of Corporate Governance and strategize CSR which can result in improvement of the financial performance. The result will also be helpful for the bank management and policy makers. The data of banks was collected from the Annual reports available online. We could not find any similar study on Thai local banks. This may be the first study on local banks and may contribute towards the literature related to the Corporate Governance.
Original languageEnglish
Pages (from-to)19-51
Number of pages33
JournalTheoretical Economics Letters
Volume12
Issue number1
DOIs
Publication statusPublished - 1 Feb 2022

Keywords

  • corporate governance
  • corporate social responsibility
  • leverage
  • financial performance
  • endogeneity
  • financial institutions
  • Ordinary Least Square
  • Two Stage Least Square

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