Corporate Governance and Corporate Risk Management on Indonesian and Malaysian Banking Industry Performance during the COVID-19 Pandemic

Research background The COVID-19 pandemic of 2020–2022 led to economic crises worldwide. Despite the financial risk, financial problems in each institution, banks still have a special task from governments to ease the crises. The risk is higher on countries that use a dual banking system. Purpose This research is intended to test the effect of Corporate Governance (CG) and Corporate Risk Management (CRM) on Banks’ Performance during the pandemic in emerging country’s that used a dual banking system during the COVID-19 pandemic. Research methodology This quantitative analysis uses archival data. Samples were taken from banks listed on the Indonesian and the Malaysian Stock Exchange during 2020–2022. Data was then analysed using Partial Least Square regression. Results The Indonesia data analysis results show that CRM mediates the relationship between CG effect on Performance. The Malaysia data analysis can conclude that CG affects firms’ performance. CG also affects CRM. Hence, CRM do not act as a mediating variable between CG and Performance. This result shows that the COVID-19 pandemic impacted Indonesia’s and Malaysia’s banking CG, CRM and industry performance. This is consistent with Compliance Theory. Novelty This research compares CG and CRM to the monetary conditions within dual banking systems in Indonesia and Malaysia due to the differences in monetary policy during the COVID-19 pandemic.