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Journal of Finance & Economics Research - Volume 10, Issue 2 2025
By Sitara Bibi, Amna Noor, Zahra Batool
10.20547/jfer2510202
Keywords: Board Busyness, Firm Performance, Risk-Taking Behavior, Banking industry Pakistan
This research paper explores the determinant trade-off between director reputation and overload (busyness) and its systematic risk implication and performance of banks in the weak institutional environment by exploring a novelty unique aspect of Pakistan. Based on panel data of 27 commercial banks between 2018 and 2024 (189 observations), we use fixed-effects regression models to investigate how the nature of busyness (senior outside roles), busyness level (total directorships) and education and financial expertise of directors affect them. The results provide a more complex picture: the multiple-board seats relationship (the degree of busyness) proves bank performance and a reduction of risk- this finding supports the reputation hypothesis, whereas the senior extraneous position relationship (the character of busyness) indicates no significant effect. Most importantly, more-educated directors who are more likely to have financial expertise are busier and enhance performance, even though its relationship with risk is complex. The analysis will offer useful information on the attainment of Pakistan governance reform of 2017 that lowered directorship limits. Our findings provide key considerations in terms of regulators pondering over tiered directorship limits and differentiated governance rules, especially Islamic banks, to maximize the effectiveness of the board and to maintain financial stability.
Submission Date: 24 Jun, 2025 Reviews Completed: 28 Jul, 2025Acceptance Date: 1 Sep, 2025 Publication Date: 30 Nov, 2025