Effect of Risk Management Committee (rmc) Independence on the Financial Performance of Commercial Banks in Malaysia
Year: 2025
Type: article
Abstract: This study aims to investigates the impact of Risk Management Commitments (RMC) independence on the financial performance of commercial banks in Malaysia, using Return on Assets (ROA) as the performance indicator. The study examines RMC independence, quantified by the proportion of independent members within RMC along with bank size (total assets) and leverage ratio (debt-to-equity ratio) as independent variables. Utilizing a quantitative research design, the study analyses panel data from 2018 to 2023 sourced from the annual reports of commercial banks in Malaysia. The findings indicate a positive association between RMC independence and financial performance as measured by ROA. However, this relationship is not statistically significant in both Random Effects and Fixed Effects models. Therefore, the study highlights that while RMC independence is positively correlated with financial performance, its effect is not strong enough to be considered statistically significant. The practical implications suggest that improving RMC independence may enhance risk management practices contributing to better governance and potentially fostering long-term financial stability in Malaysian commercial banks. This study offers valuable insights for stakeholders and policymakers to refine corporate governance structures and strengthen risk management practices in line with regulatory frameworks.
Institutions: Universiti Teknologi MARA System, Universiti Teknologi MARA
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4413962262