Table 7 Board effects on ROE Source: author’s calculation (2023)
Related Figures (7)
Guided by the purpose of the study and preliminary literature, the study presents a simple conceptual framework made up of dependent, independent variables and control variables. The dependent variable is financial performance measured in terms of return on asset and return on equity. The independent variables have to do with board composition, board committees, and CEO duality. The control variables chosen are bank size and age. These variables are chosen because of their crucial roles in the survival of rural and community banks. Figure | is a display of the conceptual framework. Puni and Anlesinya (2020) pronounced the corporate governance system to entail all the mechanisms designed to control and direct managers and lessen the conflict of interest associated with its cost. Investors, business practitioners, regulators, and scholars all hold considerable interest in the governance mechanisms of modern firms. The mechanisms can generally be categorised as either internal or external. The internal mechanisms deal with the roles and functions of the ownership structure, the size of the board of directors, CEO duality, board composition, board committees, and the compensations of directors and executives, among others. Table 1: Descriptive Statistics of Variables Table 1 demonstrates that ROA is on average lower than ROE. The average ROA is 0.03340, with a standard deviation of 0.0378 and low and maximum values of -0.1054 and 0.3644 respectively. This means that rural and community banks may make 3.397 percent profits on their total assets on average. ROA has a mean of 0.0340 and a standard deviation of 0.0378 showing a closely studied performance. The average ROE is 0.2549, with a degree of variability measured using a standard deviation of 0.4694. Given that the least and highest values recorded for all rural banks are -4.3990 and 3.591 respectively, ROE appears to be dispersed around the mean. This means that rural banks may earn a 25.5 percent return on investment for their shareholders on average. Table 2: Correlation Matrix Table 3: Variance Inflation Factor Results Source: author’s calculation (2023) Table 4: Hausman Test for Board Effects on ROA Source: author’s calculation (2023) Table 5: Fixed Effect Regression Results for ROA Table 6: Hausman Test for Board Effects on ROE
