Good Corporate Governance, Credit Risk Management, and NPLs: A Systematic Review of Rural Banking

This study systematically reviews empirical evidence on the relationships between Good Corporate Governance (GCG), credit risk management, and non-performing loans (NPLs), with implications for global rural banks. Guided by PRISMA 2020, the review searched Scopus using five complementary search strategies and applied quantitative empirical inclusion criteria. Following screening and deduplication, 13 studies were retained in the preliminary synthesis, pending final verification of eligibility and screening records. A qualitative thematic synthesis examined governance mechanisms, credit risk management practices, their interrelationships, and implications for rural banking. The findings reveal mixed governance effects: some board and audit committee characteristics are associated with lower NPLs, whereas other mechanisms exhibit adverse, insignificant, or context-dependent relationships. Risk-management evidence links internal ratings-based approaches to lower aggregate NPLs and risk-manager involvement to lower individual loan default rates; these outcomes are distinct. These outcomes are distinct and should not be treated as equivalent. Overall, GCG and credit risk management do not uniformly reduce NPLs; their relationships with credit quality depend on specific mechanisms, institutional contexts, implementation, and outcome measures. The review identifies priorities for future research, including integrated governance–risk management models, stronger causal identification, improved measurement of implementation quality, and broader empirical investigation across rural banking systems. The findings should be interpreted cautiously pending final verification of study eligibility and screening records

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