Evaluation of corporate governance in the Indian banking sector

Abstract

This paper has been written by Sandeep Das and Saurabh Bhansali, students at IIM Bangalore under the guidance of Prof. Padmini Srinivasan of the Finance and Control Area at IIM Bangalore. The objective of this paper is to evaluate the Corporate Governance in the Banking Sector in India. This paper develops a Corporate Governance Index and identifies the changes that have taken place in the Corporate Governance Compliance in the Banking Sector over the past 3 years. Specifically, this paper examines the interrelationship between Corporate Governance Index (CGI) and various firm performance parameters like Return on Equity, Non-Performing Assets, Market Capitalization, Beta and Tobin s Q which are expected to get influenced by CGI. Besides, this paper also seeks to identify the movement in Corporate Governance Index for Public and Private Sector banks to identify variations, if any in the extent of the efficacy of the Corporate Governance checks and practices implemented by them.