Do Corporate Governance Mechanisms Matter for Bank Performance? Evidence from UK Banks

Abstract

This study aims to examine the effect of corporate governance mechanisms on the financial performance of UK banks during the period 2013–2022. Using a quantitative research approach, panel data regression analysis is applied to secondary data collected from UK-listed banks, with Return on Assets (ROA) serving as the measure of financial performance and audit committee size, managerial ownership, institutional ownership, and non-executive director presence as key explanatory variables. The results indicate that audit committee size and managerial ownership have a positive and statistically significant impact on ROA, while institutional ownership shows a negative marginal effect and non-executive directors exhibit a positive but insignificant relationship with performance. These findings imply that effective internal monitoring and incentive alignment are crucial for enhancing bank profitability, offering practical insights for bank management in designing governance structures, guidance for regulators in strengthening governance frameworks, and useful signals for investors when evaluating governance quality in the UK banking sector.