The Influence of Board of Directors, Audit Committee, and Non-Performing Loans on Capital Structure in ASEAN Banking (Jurnal Madani Ilmu Pengetahuan Teknologi dan Humaniora)

Summary

• The study tests the number of directors, the number of audit committee members and non-performing loans (NPL) against the debt to asset ratio (DAR) for 15 state-owned banks in five ASEAN countries over 2020–2024.p.1
• The panel contains 75 observations from annual and financial reports, analysed with a Random Effect Model in EViews 13 at a 5% significance level.p.1
• NPL shows a significant negative relationship with DAR, with a coefficient of -0.353723 and a probability of 0.0001.p.1
• The number of directors and the number of audit committee members are not significantly related to DAR.p.1
• The simultaneous test is significant with a probability of 0.000336, while the Adjusted R-squared is 19.62%.p.1
• DAR has a mean of 84.44%, a minimum of 24.00% and a maximum of 99.00% in the sample.p.4
• In Indonesia, the banking system NPL ratio fell from 2.6% to 2.0% in the first quarter of 2024, and CAR was recorded at 24.3%.p.2

Key insights

1. Board size, measured only by the number of members, does not significantly explain DAR in this sample and model specification.p.6
2. The audit committee coefficient of -0.004456 with a probability of 0.1812 is not significant at the 5% level.p.6
3. The F-statistic of 7.019888 with a probability of 0.000336 shows that the three variables are jointly significant with DAR.p.6
4. An Adjusted R-squared of 19.62% means most of the variation in DAR is not explained by the model.p.6
5. The board of directors coefficient is 0.000303 with a probability of 0.8575, which is not significant.p.5
6. Because CAR, bank size, profitability, liquidity and year effects are not in the model, results are read as associations rather than causal estimates.p.4