Board meetings and bank performance in Africa

Figures & data

Table 1. Number of banks selected from each country

No.	Country	No. of Banks	No.	Country	No. of Banks
1	Algeria	17	25	Madagascar	5
2	Angola	17	26	Malawi	12
3	Benin	5	27	Mali	8
4	Botswana	16	28	Mauritania	7
5	Burkina Faso	7	29	Mauritius	16
6	Burundi	5	30	Morocco	18
7	Cameroon	9	31	Mozambique	16
8	Cape Verde	6	32	Namibia	10
9	Central African Republic	2	33	Niger	4
10	Chad	3	34	Nigeria	28
11	Cote D’Ivoire	12	35	Rwanda	9
12	Djibouti	5	36	Senegal	11
13	DR. Congo	12	37	Seychelles	6
14	Egypt	26	38	Sierra Leone	7
15	Ethiopia	15	39	South Africa	57
16	Gabon	7	40	South Sudan	2
17	Gambia	2	41	Sudan	19
18	Ghana	29	42	Swaziland	7
19	Guinea	3	43	Tanzania	29
20	Guinea Bissau	1	44	Togo	10
21	Kenya	43	45	Tunisia	31
22	Lesotho	4	46	Uganda	24
23	Liberia	2	47	Zambia	22
24	Libya	9	48	Zimbabwe	20
	Total number of Banks				635

Table 2. Specialisation of the banks selected for the study

No.	Bank specialisation	No. of banks	Percentage
1	Bank holdings company	33	5.2%
2	Central bank	26	4.1%
3	Clearing and custody institution	1	0.2%
4	Commercial bank	399	62.8%
5	Corporative bank	2	0.3%
6	Credit institution	27	4.3%
7	Finance company	27	4.3%
8	Investment and trust corporation	2	0.3%
9	Investment bank	51	8.0%
10	Islamic bank	24	3.8%
11	Micro-finance institution	18	2.8%
12	Multi-lateral governmental bank	6	0.9%
13	Other non-banking credit institution	1	0.2%
14	Private banking/Asset mgt. comp	1	0.2%
15	Real estate and mortgage bank	8	1.3%
16	Savings bank	6	0.9%
17	Securities firm	3	0.5%

Table 3. Summaries of measures and variables

Variable	Measurement	Expected sign
Panel A: Performance Variables
ROA	Net income/total assets (%)
ROE	Net income/shareholder’s equity (%)
Panel B: Corporate governance variables
MEETINGS	The number of times that the board meets per year	+
Panel C: Control Variables
LNTA	Natural log of total assets	+
COST	Overheads/net interest revenue plus other operating income (%)	-
EQTA	Equity divided by total assets (%)	+
NLTA	Net loans divided by total assets (%)	-
LNGDP	Annual GDP growth rate	+
COR	Rank of corruption perception from World bank (corruption perception index)	-
CRISIS	Dummy variable for 2007/2008 financial crisis	-

Table 4. Summary descriptive statistics of all variables

Variables	Mean	Median	Std. Dev.	Min.	Max.	Skewness	Kurtosis	Observations
Panel A: Performance (dependent) variables
ROA	1.78	1.71	2.74	−6.91	9.30	−0.35	5.71	7434
ROE	13.96	14.04	19.54	−49.36	60.33	−0.65	5.33	7434
Panel B: Corp. governance variables
MEETINGS	6.26	5.0	4.20	0.00	38.00	3.59	20.94	1447
Panel C: Control Variables
LNTA	3.55	3.17	1.71	−1.70	9.65	0.28	2.92	7510
COST	62.70	59.00	28.37	14.46	159.21	1.23	5.41	6810
EQTA	16.34	11.77	14.51	2.70	72.91	2.45	9.10	7493
NLTA	47.59	48.84	21.39	2.77	90.01	−0.16	2.50	7238
LNGDP	6.74	7.32	2.46	−0.81	11.15	−0.24	2.16	10768
COR	35.40	32.70	22.23	0.48	85.85	0.25	1.87	10137
δ	0.12	0.00	0.32	0.00	1.00	2.37	6.63	10790

Note: This table presents the following variables: performance measured by return on assets (ROA), performance measured by return on equity (ROE), bank size (SIZE), equity to assets (EQTA), net loans to assets (NLTA), cost-to-income-ratio (COST), corruption (COR), gross domestic product (GDP), number of board meetings (MEETINGS), δ is dummy for the crisis period.

Table 5. Pearson (left) and Spearman (right) correlation matrices of the variables

Variables	1	2	3	4	5	6	7	8	9	10
ROA	1	.765**	−.071**	.319**	−.024*	−.005	.017	−.551**	.059**	−.058*
ROE	.732**	1	.075**	−.182**	−.079**	.018	.000	−.493**	.072**	−.057*
3. LNTA	−.055**	.033**	1	−.250**	.047**	.266**	−.036**	.004	−.050**	.082**
4. EQTA	.206**	−.135**	−.184**	1	.070**	−.027*	−.004	−.090**	−.024*	−.011
5. NLTA	−.007	−.051**	.035**	−.017	1	−.019	.236**	−.054**	−.012	−.052
6. LNGDP	−.012	−.009	.224**	−.053**	−.017	1	−.298**	.115**	.002	.127**
7. COR	.067**	.025*	−.051**	.117**	.232**	−.304**	1	−.105**	.018	.028
8. COST	−.581**	−.560**	.012	−.027*	−.093**	.090**	−.101**	1	−.025*	−.004
9. δ	.039**	.053**	−.054**	.003	−.012	.000	.014	−.019	1	.029
10.MEETINGS	−.068*	.034	.041	−.031	−.096**	.029	−.084**	.037	.011	1

Note: ***, **, * indicate significance at 1, 5 and 10% respectively. Robust standard errors in parenthesis. This table presents the following variables: performance measured by return on assets (ROA), performance measured by return on equity (ROE), bank size (SIZE), equity to assets (EQTA), net loans to assets (NLTA), cost-to-income-ratio (COST), corruption (COR), gross domestic product (GDP), number of board meetings (MEETINGS).

Table 6. GMM regressions results of board meetings and bank performance

Model	(1)	(2)
VARIABLES	Overall	Overall
L.ROA	0.0884*
	(0.0475)
L.ROE		0.134***
		(0.0493)
MEETINGS	−0.0724	−0.760**
	(0.0452)	(0.311)
Size	−0.137*	−0.552
	(0.0764)	(0.445)
EQTA	−0.00645	0.0712
	(0.0245)	(0.243)
NLTA	−0.0357***	−0.0217
	(0.0116)	(0.0922)
COST	−0.0469***	−0.235***
	(0.00843)	(0.0624)
COR	−0.00892	0.0930
	(0.0105)	(0.0999)
LNGDP	−0.0157	−0.771
	(0.111)	(0.865)
δ	0.411***	4.027***
	(0.107)	(0.653)
Constant	7.961***	34.49**
	(1.561)	(13.70)
Observations	1,050	1,050

Notes: This table is based on generalised method of moments (GMM) panel data estimator. ***, **, * indicate significance at 1, 5 and 10% respectively. Robust standard errors in parenthesis. This table presents the following variables: performance measured by return on assets (ROA) and return on equity (ROE) in models 1 and 2, respectively, lag of ROA (L.ROA), bank size (SIZE), equity to assets (EQTA), net loans to assets (NLTA), cost-to-income-ratio (COST), corruption (COR), natural logarithm of gross domestic product (LNGDP), number of board meetings (MEETINGS), δ is dummy for the financial crisis period.

Table 7. GMM regressions results of board meetings and bank performance

Model	(1)	(2)	(1)	(2)	(1)	(2)	(1)	(2)	(1)	(2)
VARIABLES	Sub-Sahara	Sub-Sahara	North	North	South	South	East	East	West	West
L.ROA	0.0801**		0.301***		0.171***		0.0405**		−0.251***
	(0.0393)		(0.0137)		(0.0155)		(0.0168)		(0.0573)
L.ROE		0.229***		0.323***		0.0382**		0.0670**		0.257***
		(0.0453)		(0.0279)		(0.0173)		(0.0311)		(0.0560)
MEETINGS	−0.0949**	−0.484**	0.0567***	0.846***	−0.115***	−0.658**	−0.127***	−0.958***	−0.0247	−1.112***
	(0.0446)	(0.226)	(0.00360)	(0.0189)	(0.0330)	(0.251)	(0.0260)	(0.174)	(0.0184)	(0.355)
Size	−0.178**	−0.838	−0.0726***	−0.314***	−0.123**	0.217	0.0302	0.614	−0.640***	−3.112***
	(0.0885)	(0.508)	(0.0136)	(0.0838)	(0.0501)	(0.295)	(0.0713)	(0.373)	(0.112)	(0.663)
EQTA	−0.0277	−0.0849	0.0326***	−0.204***	0.0291***	−0.242***	−0.0637***	−0.511***	0.0524**	−0.156
	(0.0230)	(0.209)	(0.00325)	(0.0301)	(0.00640)	(0.0648)	(0.0124)	(0.107)	(0.0211)	(0.182)
NLTA	−0.0274**	0.0360	−0.0108***	−0.139***	−0.00271	−0.230***	−0.0829***	−0.110**	−0.0386***	0.0364
	(0.0107)	(0.0776)	(0.00173)	(0.0176)	(0.00333)	(0.0330)	(0.00373)	(0.0491)	(0.00742)	(0.161)
COST	−0.0518***	−0.182***	−0.0568***	−0.469***	−0.0445***	−0.389***	−0.0602***	−0.306***	−0.0700***	−0.564***
	(0.00785)	(0.0567)	(0.00160)	(0.0181)	(0.00163)	(0.0200)	(0.00530)	(0.0279)	(0.00877)	(0.0481)
COR	−0.00957	0.0579	0.00481**	0.0590***	0.0106**	−0.0752**	−0.0497***	−0.0382	−0.0220	−0.975***
	(0.00960)	(0.0820)	(0.00213)	(0.0212)	(0.00457)	(0.0305)	(0.00656)	(0.0735)	(0.0227)	(0.137)
LNGDP	−0.0506	−0.311	−0.163***	−1.571***	−0.0428	1.796***	−0.0284	−0.300	−0.439***	−6.370***
	(0.100)	(0.695)	(0.0221)	(0.151)	(0.0348)	(0.587)	(0.0654)	(0.450)	(0.129)	(0.932)
δ	0.374**	4.481***	0.673***	5.032***	0.803***	3.413***	0.691***	5.978***	0.152	7.436***
	(0.148)	(0.814)	(0.0477)	(0.280)	(0.0457)	(0.608)	(0.0433)	(0.418)	(0.113)	(0.879)
Constant	8.989***	27.78**	4.770***	45.46***	4.919***	52.12***	13.25***	52.67***	13.81***	138.8***
	(1.553)	(12.52)	(0.172)	(1.867)	(0.483)	(3.408)	(0.666)	(5.871)	(1.472)	(18.08)
Observations	893	893	157	157	372	372	484	484	143	143

Notes: This table is based on generalised method of moments (GMM) panel data estimator. ***, **, * indicate significance at 1, 5 and 10% respectively. Robust standard errors in parenthesis. This table presents the following variables: performance measured by return on assets (ROA) and return on equity (ROE) in models 1 and 2, respectively, lag of ROA (L.ROA), bank size (SIZE), equity to assets (EQTA), net loans to assets (NLTA), cost-to-income-ratio (COST), corruption (COR), natural logarithm of gross domestic product (LNGDP), number of board meetings (MEETINGS), δ is dummy for the financial crisis period.

Table 8. Relationship between board meetings and bank performance using ROA for the overall sample

MODEL	(1)	(2)	(1)	(2)	(1)	(2)	(1)	(2)
VARIABLES	OLS	OLS	Fixed effect	Fixed effect	2SLS	2SLS	GMM	GMM
L.ROA							0.0884*
							(0.0475)
L.ROE								0.134***
								(0.0493)
MEETINGS	−0.0219	0.0495	−0.0236	−0.0355	−0.0251	−0.0248	−0.0724	−0.760**
	(0.0176)	(0.123)	(0.0246)	(0.173)	(0.0194)	(0.135)	(0.0452)	(0.311)
SIZE	−0.154***	−0.515**	−0.121***	−0.609**	−0.154***	−0.811***	−0.137*	−0.552
	(0.0361)	(0.246)	(0.0389)	(0.274)	(0.0326)	(0.229)	(0.0764)	(0.445)
EQTA	0.0343***	−0.227***	0.0437***	0.00193	0.0351***	−0.126***	−0.00645	0.0712
	(0.00642)	(0.0266)	(0.00829)	(0.0585)	(0.00566)	(0.0390)	(0.0245)	(0.243)
NLTA	−0.00653*	−0.0465**	−0.00297	0.0214	−0.00769*	−0.0465*	−0.0357***	−0.0217
	(0.00369)	(0.0227)	(0.00556)	(0.0392)	(0.00393)	(0.0271)	(0.0116)	(0.0922)
COST	−0.0524***	−0.370***	−0.0628***	−0.452***	−0.0586***	−0.414***	−0.0469***	−0.235***
	(0.00380)	(0.0247)	(0.00270)	(0.0191)	(0.00234)	(0.0163)	(0.00843)	(0.0624)
COR	0.00181	0.0348*	0.00286	0.156**	0.00386	0.0505*	−0.00892	0.0930
	(0.00287)	(0.0196)	(0.0110)	(0.0779)	(0.00430)	(0.0291)	(0.0105)	(0.0999)
LNGDP	0.0227	−0.0538	−0.934**	−10.47***	0.0473	0.0738	−0.0157	−0.771
	(0.0246)	(0.177)	(0.389)	(2.745)	(0.0391)	(0.263)	(0.111)	(0.865)
δ	0.241	4.737***	0.217	3.030**	0.331**	4.796***	0.411***	4.027***
	(0.220)	(1.554)	(0.172)	(1.212)	(0.162)	(1.150)	(0.107)	(0.653)
Constant	5.474***	43.53***	12.21***	109.7***	5.641***	44.75***	7.961***	34.49**
	(0.410)	(2.601)	(2.713)	(19.13)	(0.453)	(3.086)	(1.561)	(13.70)
Observations	1,114	1,114	1,114	1,114	1,114	1,114	1,050	1,050
R-squared	0.406	0.381	0.417	0.424

Notes: This table is based on generalised method of moments (GMM) panel data estimator. ***, **, * indicate significance at 1, 5 and 10% respectively. Robust standard errors in parenthesis. This table presents the following variables: performance measured by return on assets (ROA) and return on equity (ROE) in models 1 and 2, respectively, lag of ROA (L.ROA), bank size (SIZE), equity to assets (EQTA), net loans to assets (NLTA), cost-to-income-ratio (COST), corruption (COR), natural logarithm of gross domestic product (LNGDP), number of board meetings (MEETINGS), δ is dummy for the financial crisis period.