Impact of Corporate Governance on Performance of Banking Sector: A Test of Mediating Role of Stakeholders Satisfaction: A Case from banking sector of Pakistan

by

ACKNOWLEDGEMENT

For this research, I would like to thank my family, friends and specifically my supervisor, for supporting and guiding me throughout my journey of learning. Without their support, it would not have been possible for me to conduct this research.

DECLARATION

I, (Your name), declare that all the contents of this dissertation is my individual work without any aid. Furthermore this dissertation has not been submitted previously at any academic or professional level. The study also represents my very own views and not which are associated with university.

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ABSTRACT

In this study we try to explore the concept of impact of corporate governance on firm performance in a holistic context. The main focus of the research is on the relation between corporate governance and firm performance and its relation with stakeholders' satisfaction. The research also analyses the role of stakeholders' satisfaction as a mediator between corporate governance and form performance. This research demonstrates the role of stakeholder satisfaction to further improve the banking sector of Pakistan by examining the corporate governance of the banking industry's corporate governance structure and procedure. As strong corporate governance leads to higher profitability and thus increase the confidence of stakeholders in the firm. This research also provides an opportunity to the banking sector to improve their financial and non-financial performance and enhance their cooperation with stakeholders to produce a satisfactory result. Research will ensure the organisation in managed in a manner that fits the best interest of stakeholder. The case of Pakistani banking sector has been analysed through primary qualitative methodology. Interviews were conducted from managers working in the Pakistani banking sector. The results show that stakeholders' satisfaction is an important factor that forms a bridge between corporate governance and firm performance. Leaders within the SBP are focused and very much on track in establishing a corporate governance code that can regulate banking sector of Pakistan. The results show that the corporate governance structure is efficient in Pakistani banking industry. Since the quality of bank performance is affected by the satisfaction of stakeholders, the regulators need to monitor the management in order to reduce the effect of the conflict of interests resulting from agency costs on the bank profitability.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background of the Study1

Corporate Governance Concept2

Research Aims4

Research Objectives4

Significance of the Study5

Strategic Significance5

Research Questions6

Overview of Pakistani Banking Sector6

CHAPTER 2: LITERATURE REVIEW8

Corporate Governance9

Corporate Governance Theories10

Agency Theory10

Conflict of Interests15

Stewardship Theory16

Stakeholder Theory19

Stakeholders22

Organisation Performance25

Corporate Governance Structure and Corporate Performance25

Conclusion26

CHAPTER 3: METHODOLOGY28

Research Design28

Research Philosophy and Approach32

Research Technique and Process33

Sampling Method34

Participants35

Research Instrument35

Interview Questions36

Ethical Concerns37

CHAPTER 4: DISCUSSION AND ANALYSIS38

Strengthening Corporate Governance in Pakistan's Rising Economy38

Corporate Leadership and Stakeholders38

Branchless Banking42

Future Challenges and Opportunities43

Stakeholder Approach to Corporate Governance43

The Importance of the Stakeholder Approach45

Stakeholder Focus and its Impact on Customer Satisfaction and Firm Performance48

CHAPTER 5: CONCLUSION51

Conclusion51

Recommendations52

Action Plan53

REFERENCES55

CHAPTER 1: INTRODUCTION

Background of the Study

Traditionally, a banks performance was measured through stock price and financial ratios (Akhter, 2002, 567). However, nowadays in the presence of ...