Corporate Governance Quality in Emerging-market Banks: An Empirical Analysis Using a Composite Governance Index

Abstract

This study evaluates the corporate governance quality of five conventional commercial banks in Bangladesh using a disclosure-based composite governance index. The study adopts a quantitative, cross-sectional, disclosure-based design using secondary data collected from the audited annual reports of the top five conventional commercial banks (CCBs) in Bangladesh. Comparability across institutions was achieved by applying purposive sampling in selecting the sample. The study population comprised 33 conventional commercial banks operating in Bangladesh, from which the top five banks were selected through purposive sampling to ensure comparability across institutions. The analysis focuses on BRAC Bank PLC, City Bank PLC, Dutch-Bangla Bank PLC, Eastern Bank PLC, and Prime Bank PLC for the financial year 2024. Secondary data were collected from publicly available audited annual reports and assessed across six governance dimensions: board of directors, risk management committee, internal audit committee, nomination and remuneration committee, compliance and ethics committee, and disclosure and transparency. A total of 57 indicators were used after excluding experience-based indicators that were not consistently disclosed across the sampled banks. Each criterion was scored using a structured scale, and dimension-wise mean scores were combined to estimate the overall Corporate Governance Index. The results show that BRAC Bank PLC achieved the highest overall score of 4.34 and was classified as having very strong governance. Eastern Bank PLC, Prime Bank PLC, City Bank PLC, and Dutch-Bangla Bank PLC were classified as having strong governance, with overall scores of 3.65, 3.50, 3.48, and 3.41, respectively. Disclosure and transparency scores were generally high across the sample, while risk management and compliance-related dimensions showed comparatively weaker performance in some banks. The findings suggest that governance quality among the selected banks is relatively strong but uneven across dimensions, indicating the need for improved risk governance, compliance monitoring, and more consistent disclosure practices.