The Relationship between the Board Structure and Bank Profitability: Dynamic Panel Data Analysis

The aim of this study is to examine the relationship between board structure of commercial banks and their profitability in Turkey. The study covers the time period of 2007-2013 and dynamic panel regression models (Pooled OLS, fixed effects and system GMM estimators) are used in the analysis process. The variables such as board size, the proportion of independent directors, the proportion of foreign directors and the dual position of the chairman of the board and the general manager of the bank are used for the board characteristics. According to the results obtained from the study, there is no statistically significant association between board size and profitability. In addition, both the proportion of independent directors and the proportion of foreign directors are found to be negatively related to bank profitability. It has also been observed that the influence of dual position of the chairman of the board and general manager of the bank on profitability is positive. As for the control variables, there is no statistically significant link between bank size and lending level variables and profitability. However, the effect of bank capital on profitability is positive and statistically significant