Corporate governance, ethics, and bank performance: Evidence from Nepalese commercial banks

This research aims to investigate how corporate governance and ethical practices affect the performance of commercial banks in Nepal, as well as to determine which governance mechanisms have a substantial impact on financial performance. The study used a quantitative design, collecting primary data from 27 Class “A” banks listed on the Nepal Stock Exchange (NEPSE). In 2024, employees received 425 questionnaires, with 386 valid responses obtained through convenience sampling. The survey measured constructs such as corporate governance practices, disclosure policies, board size, gender diversity, and ethnic diversity on a 5-point Likert scale. Data reliability was tested using Cronbach’s Alpha, and relationships among variables were explored through regression analysis. The findings show a significant positive impact of corporate governance practices (β = 0.335, p < 0.001), disclosure practices (β = 0.327, p < 0.001), and board size (β = 0.129, p < 0.01) on bank performance. Conversely, there was no statistically significant relationship between gender diversity, ethnic diversity, and performance. These results are significant for Nepalese banking regulators, emphasizing the need for stronger governance monitoring and mandatory disclosure transparency. Regulatory and corporate authorities like Nepal Rastra Bank may use these findings to monitor boards, perform data-driven benchmarking for board size, and establish common reporting requirements across commercial banks. This approach can increase institutional accountability, enhance investor trust, and support long-term financial stability in South Asia.