Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC Insights
The Middle East and North Africa (MENA) region has faced challenges like political instability and economic fluctuations, which have impacted non-performing loans (NPL) levels. At the same time, over the years, reforms and regulations have encouraged stronger board structures to enhance corporate go...
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2025-06-01
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| author | Abdelaziz Hakimi Hichem Saidi Soumaya Saidi |
| author_facet | Abdelaziz Hakimi Hichem Saidi Soumaya Saidi |
| author_sort | Abdelaziz Hakimi |
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| description | The Middle East and North Africa (MENA) region has faced challenges like political instability and economic fluctuations, which have impacted non-performing loans (NPL) levels. At the same time, over the years, reforms and regulations have encouraged stronger board structures to enhance corporate governance and improve risk management. The purpose of this paper is to investigate how board characteristics affect non-performing in the MENA region. Board characteristics shape governance quality, which influences risk management and reduces banks’ risk-taking behaviours. Hence, effective governance can reduce non-performing loans by improving oversight and credit decisions. To this end, we used a sample of 70 banks operating in 12 countries in the MENA region from 2010 to 2022. The System Generalized Method of Moments (SGMM) was employed as an empirical technique. To benefit from a comparative analysis, we divided the entire sample into two subsamples. The first subsample covers six Gulf Cooperation Council (GCC) countries with 42 banks. The second subsample is also relative to six non-Gulf Cooperation Council (non-GCC) countries with 28 banks. The empirical findings indicate that the presence of independent board members, a higher number of female board members, board remuneration, and the board index decrease NPLs across all regions, including MENA, GCC, and non-GCC. However, we found that board size, tenure, and duality increase NPLs. The results of this paper are beneficial for both policymakers and bankers, as they provide insights into how governance through board characteristics influences credit risk. These results support better decision-making in board appointments and governance practices to improve risk management and reduce non-performing loans. |
| format | Article |
| id | doaj-art-1b0fc9e1084e40e289d4512768916bd2 |
| institution | Kabale University |
| issn | 2227-7072 |
| language | English |
| publishDate | 2025-06-01 |
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| spelling | doaj-art-1b0fc9e1084e40e289d4512768916bd22025-08-20T03:24:36ZengMDPI AGInternational Journal of Financial Studies2227-70722025-06-0113210110.3390/ijfs13020101Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC InsightsAbdelaziz Hakimi0Hichem Saidi1Soumaya Saidi2V.P.N.C Lab, Faculty of Law, Economics, and Management of Jendouba, University of Jendouba, Jendouba 8189, TunisiaDepartment of Economics, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 13318, Saudi ArabiaV.P.N.C Lab, Faculty of Law, Economics, and Management of Jendouba, University of Jendouba, Jendouba 8189, TunisiaThe Middle East and North Africa (MENA) region has faced challenges like political instability and economic fluctuations, which have impacted non-performing loans (NPL) levels. At the same time, over the years, reforms and regulations have encouraged stronger board structures to enhance corporate governance and improve risk management. The purpose of this paper is to investigate how board characteristics affect non-performing in the MENA region. Board characteristics shape governance quality, which influences risk management and reduces banks’ risk-taking behaviours. Hence, effective governance can reduce non-performing loans by improving oversight and credit decisions. To this end, we used a sample of 70 banks operating in 12 countries in the MENA region from 2010 to 2022. The System Generalized Method of Moments (SGMM) was employed as an empirical technique. To benefit from a comparative analysis, we divided the entire sample into two subsamples. The first subsample covers six Gulf Cooperation Council (GCC) countries with 42 banks. The second subsample is also relative to six non-Gulf Cooperation Council (non-GCC) countries with 28 banks. The empirical findings indicate that the presence of independent board members, a higher number of female board members, board remuneration, and the board index decrease NPLs across all regions, including MENA, GCC, and non-GCC. However, we found that board size, tenure, and duality increase NPLs. The results of this paper are beneficial for both policymakers and bankers, as they provide insights into how governance through board characteristics influences credit risk. These results support better decision-making in board appointments and governance practices to improve risk management and reduce non-performing loans.https://www.mdpi.com/2227-7072/13/2/101board characteristicsnon-performing loansMENA RegionSGMM |
| spellingShingle | Abdelaziz Hakimi Hichem Saidi Soumaya Saidi Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC Insights International Journal of Financial Studies board characteristics non-performing loans MENA Region SGMM |
| title | Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC Insights |
| title_full | Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC Insights |
| title_fullStr | Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC Insights |
| title_full_unstemmed | Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC Insights |
| title_short | Do Board Characteristics Affect Non-Performing Loans? GCC vs. Non-GCC Insights |
| title_sort | do board characteristics affect non performing loans gcc vs non gcc insights |
| topic | board characteristics non-performing loans MENA Region SGMM |
| url | https://www.mdpi.com/2227-7072/13/2/101 |
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