Governance Practices in Nepalese Commercial Banks

Shova Neupane

doi:10.3126/njdrs.v17i0.34980

Abstract

This article tries to to analyze the existing practices of corporate governance in commercial banks of Nepal. The state of corporate governance can have an important effect on all firms, and good corporate governance of financial firms is essential in fostering financial stability and healthy economic growth. This study found that good corporate governance frameworks help firms and countries improve accountability, more efficiently use capital, and attract quality and long-term investors at lower costs. These, in turn, contribute to a country’s competitiveness and thereby its development.The descriptive research design has been adopted for fact-finding and searching adequate information about effect of corporate governance on financial performance. In conclusion, the rapid globalization, international legal deregulation and rapid development in information technology has resulted both opportunity and challenges for the companies. In this context, the success of the organization in global arena is essentially determined by the level of corporate governance that the company is practicing. The efficient and effective corporate governance provides a competitive edge to the company. Management of commercial banks should follow the principles of sound corporate governance to ensure transparency, and accountability through their daily operational process and procedures with clients, and subsequently improve the performance, and enhance investors, shareholders, and stakeholders trust, which contribute to attain the banks goals. Banks require good corporate governance practices.

Highlights

Corporate governance has been emerging as one of the screening tools for both financial and nonfinancial organizations as series of corporate frauds happened in developed and underdeveloped countries
The majorities (41.94 percent) of the respondents agreed that board is responsible for developing mission, vision and strategic objectives of the banks, they decides the ‘corporate governance policy’ of banks and all board members participate in the board meetings, 20.97 percent of people are neutral, 17.75 percent of them strongly agreed, 11.3 percent are disagree, 8.04 percent are strongly disagree with this statement
This study comes to the conclusion that corporate governance is becoming an issue of global significance

Summary

Introduction

Corporate governance has been emerging as one of the screening tools for both financial and nonfinancial organizations as series of corporate frauds happened in developed and underdeveloped countries. The level of corporate governance can be measured on the dimensions as, financial stakeholder’s right and relations, financial transparency, information disclosure, and board structure and process. Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance involves the interest of the different stakeholders in the company. The ultimate objective is to ensure that all financial stakeholders receive their fair share value of the companies earning and assets. In this respect, the world of corporate governance needs place high priority on making its culture, leadership, alignment, systems, and structure more rationalized in terms of their flexibility, complexity and centralization or decentralization

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Conclusion