Board Structure and Financial Stability of Commercial Banks in Rwanda

Purpose: To assess the relationship between board structure and financial stability has been a subject of extensive research and debate globally. Methodology: The target population for this study consists of the board members from the 13 commercial banks operating in Rwanda. The sample of the study was nine commercial banks based on purposive sampling technique. Findings: Panel regression analysis was used and the findings indicated that board size significant affected financial stability of the banks negatively; board independence insignificantly affected financial stability of the banks positively. The outcome further indicated that board gender diversity insignificantly affected the banks financial stability negatively while board age affected the financial stability of Rwandan commercial banks insignificantly and positively. Unique Contribution to Theory, Practice and Policy: The study recommends that the regulatory bodies and bank management should consider implementing guidelines to optimize board composition. Specifically, banks should aim to establish a more streamlined board structure that balances diversity of thought with effective governance. This could involve setting a maximum limit on the number of board members, ensuring that boards remain manageable and conducive to clear communication and swift decision-making.