Board characteristics and financial performance: Evidence from Indian cooperative banks

Abstract The paper examines the association between financial performance and boards of urban cooperative banks in India. Utilizing cross-sectional data on 1263 banks for 2012, the findings indicate that, after controlling for various factors, board size does not affect performance. Further disaggregation suggests that board size matter in high-income districts, although bigger boards per se are less conducive to performance, reflecting the challenges of free-riding problems and time-consuming decision making process among board members. In terms of implications, the results suggest that board sizes need to be carefully tailored, taking on board regional and economic considerations.