The Role of Board Structure in Driving Bank Performance: Evidence from Indian Commercial Banks

Abstract

This study examines the influence of board structure on the financial performance of Indian commercial banks. Utilizing a balanced panel dataset comprising nine Nifty Bank constituents over the period of 2015-2024, the study employs panel data regression techniques to evaluate the relationship between board structure and key financial performance indicators, namely Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). Board structure is quantified as the Board Composition Score (BCS) through a binary scoring framework based on factors such as board independence, size, diversity, duality, frequency of board meetings, and the composition of executive and non-executive directors. The findings demonstrate a consistently positive and statistically significant impact of BCS on all selected performance measures, highlighting the importance of effective board design in enhancing managerial oversight and strategic decision-making. The study offers practical implications for regulators and banking institutions, suggesting that strengthening board composition can serve as a lever for improving financial efficiency and governance quality in the Indian banking sector.