Implications of board size, board composition and bank size on the profitability of Philippine private universal banks for the period 2000-2005

• Main Authors: Andrada, Michelle Ann, Victor, Brenda Andrea, Macabebe, Joan
• Format: text
• Language: English
• Published: Animo Repository 2007
• Subjects: Banks and banking > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/17438
• Institution: De La Salle University

This study examines the influence of board attributes such as size, and composition, which will refer to seniority, service years and educational attainment of directors, and bank size in terms of total resources and number of branches on firm performance. The data employed were from 10 Philippine private universal banks for the period 2000-2005. The Pearson product moment coefficient of correlation and dummy variables were used to establish the relationship between the variables and to represent the categorical variables for board composition, respectively. Though there were previous studies suggesting that both resources and branch network do not influence profitability, it can not be excluded from the assessment of company's performance since it significantly contributes to a firm's overall profitability. Findings reveal that on a per bank basis, bank size has a significant effect on profitability particularly to key measures such as net income and net profit margin. Moreover, bank size in terms of total resources and number of branches is positively associated with firm performance. However, results for board size and composition indicate otherwise. It was largely affected by the constant number of directors obtained in some banks and a limited sample size for board composition due to unavailability of data. Thus the researchers recommend future researchers to increase the time frame and conduct study on a different industry to achieve more credible results.