The Impact of Corporate Governance Principles on the Credit Risk of Private and Public banks in Iran

This study aimed to estimate and compare the effect of applying some principles of corporate governance on credit risk of selected private and public banks in Iran during 2011-2018. In the present study, after calculating the credit risk using the Basel Committee's proposed model for each bank, the relationship between shareholder rights and board size as two variables representing corporate governance principles, bank size and return on assets as control variables on the credit risk has been estimated. The results of the study indicate that in both groups of public and private banks, shareholder rights have no significant effect on credit risk. Increasing the size of the board of directors in public banks reduces credit risk more than private banks. Increasing the size of banks increases the credit risk in both groups of public and private banks. In private banks, increase in return on assets reduces credit risk, whereas in public banks, return on assets has no significant effect on credit risk.