The Effect of Board Quality and Credit Risk on Financial Performance at Banks in Indonesia and Malaysia

Abstract

This study aims to analyze the impact of board size, independent commissioners, meeting frequency, non-performing loans (NPLs), capital adequacy ratio (CAR), bank age, bank size, and inflation on bank performance in Malaysia and Indonesia. The data used are secondary data sourced from the annual reports of banks listed on the Indonesia Stock Exchange (IDX) for Indonesia and the Bursa Malaysia for Malaysia, covering the period 2013–2017. The research sample was selected using purposive sampling, resulting in 46 banks as the sample. Data analysis for hypothesis testing was conducted using multiple regression with the Eviews 9 program. The results indicate that board size and inflation have a positive effect on bank performance, while bank age has a negative effect. Meanwhile, independent commissioners, meeting frequency, NPL, CAR, and bank size do not have a significant effect on bank performance.