THE IMPACT OF CORPORATE GOVERNANCE ON RISK AND PERFORMANCE IN TURKISH BANKS

Corporate governance (CG) refers to the practices and processes used to control firms and mitigate managerial opportunism and excessive risk-taking, particularly in the financial sector. This study investigates whether board structure (e.g., board size, independent directors, and gender diversity) and ownership concentration (e.g., largest shareholder, foreign investors, and traded equity rate) influence financial performance and risk-taking in Turkish commercial banks. Using a fixed-effects model on panel data from 20 banks between 2006 and 2012, we find that smaller board sizes are associated with lower risk-taking and improved financial performance. Conversely, independent directors and gender diversity show no statistically significant relationship with risk-taking or performance. Foreign investors and large shareholders—increases risk-taking and reduces financial performance while stock exchange listings are associated with significantly lower risk-taking and higher financial performance. These findings highlight the importance of balanced board structures, effective ownership controls, and market discipline in fostering long-term financial stability in the Turkish banking sector. Policymakers and regulators in emerging markets should address these corporate governance challenges to promote a stable and resilient banking system.