The relationship between corporate governance, corporate characteristics and agricultural credit supply: evidence from Bangladesh

Abstract

PurposeThe paper aims to examine the level of agricultural credit by commercial banks and the determinants that influence the commercial banks to the increased level of agricultural credit through the pressures of the institutional environment.Design/methodology/approachThe study selects seventeen sample commercial banks following the market capitalization method and investigates a total of 85 annual reports during the period from 2013 to 2017. The study conducts a pooled regression to conclude the proposed hypotheses.FindingsThe present study finding indicates that the average of agricultural credits to total credits is 2.25% among the sample commercial banks. The study finds a positive significant association between board gender diversity, foreign director, management team and agricultural credit. Furthermore, the study has found that the role of the deposit in enhancing agricultural credit is positive. On the other hand, the association between independent directors, profitability and agricultural credits is negative.Research limitations/implicationsThe study is based on secondary data with five firm-year observations of commercial banks. The study finding is based on commercial banks, so it should not be generalized to non-bank financial institutions.Practical implicationsThe study emphasizes policymakers’ attention towards the level of agricultural credit and determinants that influence the level of agricultural credit by commercial banks in emerging markets.Originality/valueThe key contribution of the study is to focus on the reformist role of the determinants in promoting the increased level of agricultural credit in the emerging markets.