Corporate governance determinants of asset quality in an emerging economy: evidence from Indian banks Prashant Kumar Gupta and Seema Sharma Department of Management Studies, IIT Delhi, New Delhi, India Abstract Purpose – This paper aims to identify specific corporate governance determinants of asset quality in the Indian banking system and suggest a future course of action for research in the Indian banking industry. The results will guide other developing nations to handle poor asset quality in banks. Nations with economic interest in India can take cognisance from the results. Design/methodology/approach – The authors identify the determinants of asset quality for the Indian banks using novel data from 2010 to 2019 through a dynamic panel data approach. The authors analyse 45 public and private sector banks using general method of moments. Findings – The results indicate that intensity of board activities, board functioning and ownership concentration are significant determinants of asset quality. Furthermore, the study hypotheses on board independence and board size are rejected as they do not significantly impact the asset quality. The authors also call for further research on the qualitative aspects of gender diversity, board independence and special committee activity for better insights. Originality/value – This is the first study to identify specific corporate governance determinants of asset quality for the Indian banking system using a dynamic panel data approach with data spanning over ten years from 45 banks. Unlike all other studies, the authors have used both bank-specific and macroeconomic variables as control variables, making the results accurate and reliable. The authors also recognise the persistent nature of asset quality. Keywords Asset quality, Banks, Corporate governance, Non-performing assets, NPA, Emerging market Paper type Research paper 1. Introduction The rising level of non-performing assets (NPA) is a critical concern for worldwide financial systems (Rizvi et al., 2020). With increasing cross-country financial transactions and rising complexities of banking operations, poor asset quality may have contagious effects. While Ukraine had the highest NPA level at 48.4 in 2019, Greece saw NPA levels at 36.4 [1]. Other nations such as Portugal, Russia, Hungary, Italy, India and Spain, too, have high NPA levels. The effect of NPAs will be prominent in countries where banks are an essential component of the financial system and render economic stability and prosperity. Mismanagement of NPA leads to bank failure and instability in the financial system (Prasanna et al., 2014; Ghosh, 2015). NPA level is, thus, an essential indicator of banking stability, making it necessary to identify its determinants. Several studies have identified the determinants of asset quality in banks. These studies classify these factors into three categories – bank-specific, macroeconomic and corporate governance. Many authors, such as Umar and Sun (2018), Amuakwa-mensah et al. (2017), Beck et al. (2015), Prasanna et al. (2014) and Louzis et al. (2012), have studied the first two categories. However, limited studies assess the impact of corporate governance on asset quality, some of which are Bezawada and Adavelli (2020), Tarchouna et al. (2017) and Meeker and Gray (1987). We intend to identify the key corporate governance determinants of asset quality of Indian commercial banks using Corporate governance factors of asset quality The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/0972-7981.htm Received 21 May 2021 Revised 30 August 2021 12 December 2021 Accepted 27 January 2022 Journal of Advances in Management Research © Emerald Publishing Limited 0972-7981 DOI 10.1108/JAMR-05-2021-0182