The Relationship Between Board of Directors Characteristics and Bank Value: Does Bank Loan Quality Matters (Empirical Study on EGX Listed Banks)

This study examines the relationship between board of directors’ characteristics and bank value and investigates whether bank loan quality mediates this relationship. Data were collected from banks listed on the Egyptian Stock Exchange over a 10-year period (2014–2023). The study uses a Tobin’s Q–based measure as a proxy for bank value. Seven board characteristics are analyzed: board size, CEO duality, board independence, gender diversity, education level, meeting frequency, and CEO experience. Bank loan quality is measured using non-performing loans. The analysis employs the SPSS PROCESS tool with 5000 bootstrap samples to estimate the total, direct, and indirect effects of board characteristics on bank value. Results confirm that bank loan quality significantly mediates the relationship between board characteristics and bank value. Banks with certain board characteristics show different levels of bank value compared to those without these characteristics. When bank loan quality is held constant, the effect of board characteristics on bank value remains significant. This research answers two key questions: How do board characteristics influence bank value? And does bank loan quality transfer the influence of these characteristics on bank value? The study offers practical recommendations for policymakers, bank managers, and investors.