The Impact of Corporate Governance Variables on the Financial Performance of Libyan Commercial Banks Analytical application study

Abstract

This study aimed to investigate the impact of the variables of the Corporate Governance (the size of the board of directors, the independence of the board of directors [the composition of the board of directors], the separation between the position of the chairman of the board of directors and the job of the executive director, the number of meetings of the board, the number of committees emanating from the board of directors, the number of members of the committees emanating from the board, the independence of the members of the committees emanating from the board, and the percentage of ownership members of the board of directors in the bank, and the percentage of ownership of the executive management in the bank) on the financial performance of the commercial banks measured by the return on assets and the earnings per share ratio. The study also aimed to identify the reality of Corporate Governance in Libyan commercial banks. The sample of study represented four commercial banks in the period from (2011 to 2017), the study adopted the analytical descriptive inductive approach and used a set of statistical tests as one-way ANOVA and multiple liner regression. The study found a set of results, including the presence of a statistically significant effect of the independent variables, the size of the board of directors and the percentage of ownership of the members of the board of directors in the bank on the return on assets, and the presence of a statistically significant effect of the percentage of ownership of the members of the board of directors in the bank and the percentage of ownership of the executive management in the bank on the return on assets. The study also found that most banks apparently follow a set of rules, standards and clauses that came in the Corporate Governance Guide issued by the Central Bank of Libya for the year 2010 in terms of independence, the formation of committees and the number of meetings, even if they were not ideal, but in a good proportion. The study recommended the banks to follow the Corporate Governance Guide issued by the Libyan Central Bank, creating united model for measuring the level of bank's obligation to implement the Corporate Governance, and the need to give the mechanisms that have a direct impact on the financial performance adequate attention and priority by the competent authorities.

Key words: Corporate Governance, Financial Performance, Commercial Banks.