Corporate Governance Of Banks Research Articles

Corporate governance disclosure and corporate performance of Nigerian banks

Corporate disclosure is a key mechanism of corporate governance. This study examined the effect of corporate governance disclosure (CGD) on the financial performance of commercial banks listed on the Nigeria Stock Exchange. Based on the provisions of the Code of Corporate Governance for Public Companies in Nigeria, 2011 and the Code of Corporate Governance for Banks and Discount Houses 2014, the study developed a disclosure checklist and employed content analysis technique to extract corporate governance (CG) from 78 annual reports of 13 Nigerian commercial banks from 2011 to 2016. The study trichotomized CGD into those relating to the board of directors, risk framework, and whistleblowing policy. The results of the hypothesized relationships showed a positive and significant association between CGD and the banks' financial performance, with a positive effect of CGD on the board of directors and whistleblowing policy. However, the study did not find a significant association between CGD of risk management framework and the banks' financial performance. This study contributes to the body of knowledge by providing a broader understanding of the effect of CGD on banks' financial performance. The development of a disclosure checklist based on the regulators’ codes of corporate governance is a useful addition to the literature.

Is the Journey more Important than the Destination? EU Accession and Corporate Governance and Performance of Banks

AbstractThis article examines how accession to and subsequent membership of the EU has influenced the dissemination of corporate governance characteristics and the financial performance of the banking industry. Using a hand‐collected, cross‐national dataset from EU member and candidate states the analysis indicates the candidacy period is associated with the better financial performance of banks than the latter period of EU membership. EU membership also has a significant negative influence on adopting some corporate governance arrangements. We infer this result is consistent with instrumental rationality explanations of Europeanization. While the process of accession has brought benefits, these are not always reinforced by subsequent EU membership.

Corporate board and default risk of financial firms

This paper analyses the impact of corporate board structure on default risk of European banking firms. We focus on four core aspects of boards that have been addressed in Directive 2013/36/EU to strengthen the corporate governance of banks: the size of boards, their independence, the participation of female directors and CEO duality. We employ panel data analysis to study the 109 European listed banks between 2002 and 2019. Default risk is estimated by Merton’s (1974) distance to default. We take into account the presence of unobservable heterogeneity, simultaneity and dynamic endogeneity and estimate the model using the dynamic difference and dynamic system GMM methodologies. The results show that the size of the board influences banks’ default risk. Furthermore, bank size, firm profitability and GDP also exert a considerable influence.

Towards an optimal composition of bail-inable debtholders?

ABSTRACT The core insight of the new EU framework for bank resolution is to allocate losses to bank's insiders (bail-inable creditors). This affects both financial stability and the corporate governance of banks. The current academic debate on bank resolution overlooks the relevance of identifying the investors in bail-inable securities (ie who is going to bear losses) and the role of counterparty risk. This article identifies the investors that are better suited to hold those instruments and highlights the trade-offs between the corporate governance role and the threat to financial stability posed by different investors. The article demonstrates that the composition of bail-inable debtholders matters and shows – empirically and theoretically – a transition towards a desirable composition of holders; although a considerable room for improvement remains. This exercise deepens the understanding of the impact of the resolution framework and the importance of counterparties for its credibility and future applications.

ISLAMIC BANKING PERFORMANCE MEASUREMENT: A CONCEPTUAL REVIEW OF TWO DECADES

This article aims to provide an overview of the development of research on the measurement of Islamic banking performance over the past 20 years from 89 selected papers with Scopus-indexed journals ranked Q4 to Q1 or accredited with Sinta 2 to Sinta 1. This study used a qual-quantitative meta-analysis approach using the Mendeley citation application. The distribution of the topic and the depth of research in paper samples based on keywords in publications were analyzed using the VOSviewer application. The results of the analysis showed that the research trend of Islamic banking performance in reputable journals is increasing in recent years. Most of the studies performed in the last two decades have focused on the practice and corporate governance of Islamic banks and comparisons between Islamic and conventional banks based on financial performance ratios and aspect of maqasid al-Shariah; Only a few studies that discuss efficiency, social performance on Islamic banks, regulation, intellectual capital and stability of the financial performance of Islamic banks were found. The further discussion is an empirical exposure without theoretical exploration or analysis which is supposed to become the direction of banking research in the future.
 JEL Classification Codes: G21, L25, P17, P47.

Analisis Penerapan Good Corporate Governance (GCG) Pada Bank Umum Syariah

This study aims to determine the analysis of the implementation of good corporate governance(GCG) in Islamic Commercial Banks, which is represented by Bank Syariah Mandiri and BankMuamalat Indonesia. This research method is included in qualitative research with a library researchapproach, namely a series of studies relating to library data collection methods. The results showedthat the implementation of GCG in BUS as represented by Bank Syariah Mandiri and Bank MuamalatIndonesia has implemented the principles of Good Corporate Governance (GCG) in accordance withthe prevailing laws and regulations, namely Bank Indonesia Regulation Number. 11/33 / PBI / 2009dated 7 December 2009 and Circular Letter (SE) of Bank Indonesia No. 12/13 / DPbS dated 30April 2010 concerning the Implementation of Good Corporate Governance for Sharia CommercialBanks (BUS) and Sharia Business Units (UUS), especially Article 62 and Article 63 concerning theobligations of Banks to submit GCG Implementation Reports to Bank Indonesia (BI) and stakeholders.other interests.

Good Corporate Governance, Capital Adequacy, Financing Risk, Profitability and Islamic Social Reporting (ISR) of Sharia Commercial Banks in Indonesia

Aims: To empirically evaluate Sharia commercial banks in Indonesia for good corporate governance, capital adequacy, financing risk, profitability, and Islamic Social Reporting (ISR).
 Study Design: Explanatory research with a quantitative approach and using secondary data.
 Place and Duration of Study: Sharia commercial banks registered with the Financial Services Authority in the period 2015-2019.
 Methodology: The sample selection used a purposive sampling technique and resulted in 7 Sharia commercial banks. Data analyzed using path analysis with SmartPLS 3.0. The analysis only uses the inner model evaluation because each variable in this study only uses one proxy or one indicator.
 Results: Good corporate governance and capital adequacy affects financing risk, good corporate governance, capital adequacy, and financing risk affects profitability, financing risk affects Islamic Social Reporting (ISR), while good corporate governance, capital adequacy, and profitability do not affect Islamic Social Reporting (ISR).
 Conclusions: Management should be able to create good corporate governance, manage capital adequacy to mitigate financing risk so that it can generate optimal profits for conducting sharia-based social activities and express it using the Islamic Social Reporting (ISR) as business transparency for stakeholders, thus increasing stakeholder confidence in the existence of Islamic commercial banks.

Corporate Governance of Banks and Financial Institutions: Economic Theory, Supervisory Practice, Evidence and Policy

Banks are special, and so is the corporate governance of banks and other financial institutions. Empirical evidence, mostly gathered after the financial crisis, confirms this. Banks practicing good corporate governance in the traditional, shareholder-oriented style fared less well than banks having less shareholder-prone boards and less shareholder influence. The special governance of banks and other financial institutions is firmly embedded in bank supervisory law and regulation. Most recently there has been intense discussion on the purpose of (non-bank) corporations. For banks stakeholder governance and, more particularly, creditor or debtholder governance is more important than shareholder governance. The implications of this for research and reform are still uncertain. A key problem is the composition and qualification of the board. The legislative task is to enhance independent as well as qualified control. The proposal of giving creditors and even supervisors a special seat in the board is not convincing. Other important special issues of bank governance are for example the duties and liabilities of bank directors in particular as far as risk and compliance are concerned, but also the remuneration paid to bank directors and senior managers or key function holders. Claw-back provisions, either imposed by law or introduced by banks themselves, exist already in certain countries and are beneficial. Much depends on enforcement, an understudied topic.

Corporate Governance, Risk-taking and Efficiency of Islamic Banks: Comparative Study Between Pakistan and Malaysia

Purpose: This study aims to compare the governance, risk-taking, and efficiency of pure Islamic Banks between Pakistan and Malaysia. Design: Total 9 years of data from 2009 to 2017 used for analysis. Data Envelopment Analysis (DEA) has been used for the measurement of Islamic bank's efficiency. Efficiency has been measured by (Technical Efficiency, Pure Technical Efficiency, and Scale Efficiency). Z-score has been used to measure risk-taking. Results: This comparative study shows that Shariah Supervisory Board has a significant impact only on Malaysian Islamic Banks with technical, pure technical, and scale efficiency. At the same time, board independence has a meaningful relationship with the efficiency of IBs of both countries. Board meetings significantly impact Pakistani Banks' pure technical efficiency while it substantially affects Malaysian banks' technical efficiency. Results also show that risk-taking has a significant negative impact on the efficiency of both countries. Implications: Pakistani Islamic banks should focus more on Shariah Supervisory Boards to develop the Islamic Banking system in Pakistan because it significantly impacts the Efficiency of Malaysian IBs.

Do board characteristics and ownership structure matter for bank non-performing loans? Empirical evidence from US commercial banks

This paper aims to study the ability of the corporate governance of banks to reduce non-performing loans. The dynamic panel GMM estimation is applied to 184 US commercial banks over 2000–2013 period. Given that bank-size groups have different risk profiles, the full sample of US banks is divided into three asset-size classes. For every asset-size group of banks, we successively integrate five corporate governance variables in addition to the bank-specific and macroeconomic variables in separate regressions. The central finding of this research is that small banks are characterized by a weak and fragile corporate governance system which leads to a bad loan quality. This result can be explained by small banks’ reliance on personal connections. Concerning medium banks, we notice a sound corporate governance system. As far as large banks are concerned, it is to mention that the corporate governance system of these banks is neutralized. On account of the high level of liquidity, large banks are engaged in excessive lending practices without taking notice of the undue losses. This paper notably contributes to the financial literature via empirically proving that the effect of banks’ corporate governance on their loan quality depends on bank size.

THE IMPLEMENTATION OF CORPORATE GOVERNANCE IN ISLAMIC BANKING IN INDONESIA BASED ON AAOIFI STANDARD

<p>This study aims to analyze the implementation of Corporate Governance in Islamic banking in Indonesia and the implementation of Corporate Governance in Islamic banking in Indonesia according to the standards of Corporate Governance by AAOIFI. This study used secondary data obtained from the annual report of Good Corporate Governance of Sharia Commercial Bank which has been published in 2019. The method used in this study is qualitative with the type of research is content analysis from the annual Good Corporate Governance report of Islamic bank in Indonesia. The results of this study indicate that the implementation of Corporate Governance at Sharia Commercial Banks in general have done good corporate governance which is marked with the result of self-assessment of every Sharia Commercial Bank which on average gets a good predicate. The results of research on the implementation of AAOIFI standards of Corporate Governance in general have applied some of the AAOIFI standards, but there is one standard AAOIFI that has not been applied by Sharia Commercial Banks other than Bank Muamalat. The standard that has not been applied is Internal Sharia Reviews which should be established in the policy.</p><strong>Keywords: Islamic Banking, Corporate Governance, AAOIFI</strong>

СИСТЕМА КОРПОРАТИВНОГО УПРАВЛЕНИЯ КОМПАНИЕЙ

The article is devoted to the study of the corporate governance system in the bank and the development of measures to improve its efficiency. The authors believe that the problems of developing corporate governance in banks are associated with a liquidity crisis, non-transparency of bank refinancing procedures and a decrease in confidence in the banking system. Corporate governance in Russian banks has been undergoing a new stage of development in recent years, which is aimed at eliminating gaps in ensuring the transparency of management and ownership. Building a corporate governance model in domestic banks, we took as a basis the principles of influential international organizations and used the best European practices.

Corporate governance in the Indian banking sector: A survey of literature

A system of transparent interactions between an institution's management, board, shareholders, and other stakeholders is at the heart of corporate governance. The nature and goal of corporate governance have been examined in the first half of this survey of, with a focus on the difficulties that banks face in the area of good corporate governance. In the particular circumstance of an India, the conflicts have also been detailed. In the second part, the Basel Committee's report is described, as well as how it aids in overall bank corporate governance. Finally, in the third section, the best practises in bank corporate governance are shown. Finally, the research finds that banks, as a distinct type of financial firms, need a set of good governance standards which is specific and unique to them.

Corporate governance and market performance of European banks: analysing differences and similarities between one-tier and two-tier models

Due to the relevant role of banks in economies, the subject of corporate governance of banks is attracting growing attention by researchers worldwide. They generally focus on the relationships between board structure and bank performance and risk level. Unfortunately, the results of the studies are somehow contradictory. Thus, this is calling for further investigation on this topic. We have tested the effects of several corporate governance variables (board size, women size, average age and board duration) on bank performance of 46 European banks with one-tier and two-tier corporate governance models. The results show differences and similarities within the two subgroups of banks (i.e., relating to board size, independence and number of female directors). Findings are presented and commented for inspiring policy makers and regulators as well as for driving the management strategy to foster profitability.

Corporate management in the banking sector of the national economy: problems and solutions

Current trends in the development of Ukrainian banks are associated with the intensification of financial globalization processes. Under the influence of the growing presence of foreign capital, Ukrainian banks have faced increased competition and an exacerbation of the problem of limited financing in the domestic market. In the open national market, banks are forced to look for competitive advantages in order to improve access to financial resources and implement effective long-term partnerships with foreign investors. The creation of quality corporate management under international standards is an important advantage for the investors. The need to increase the level of corporate management according to the best international practices determines the importance of the investigation and substantiation of the areas for improvement based on the analysis of internal factors and conditions of banking business development. Conflict of interest is a major problem of corporate management. The investment community, professional circles, as well as regulatory authorities of the countries pay great attention to the problems of organizing relations of companies and banks with shareholders and other stakeholders. There are some approaches to determining the range of stakeholders. Managers and shareholders are considered in the narrow sense. In the broad sense, the list can include all the possible stakeholders. High quality of corporate management is one of the key conditions for bank efficiency. The interests of the owners are completely consistent with the achievement of high profitability, which is the main criterion of efficiency. In turn, the requirements of creditors to the level of risk on the operations of the credit institution is largely the factor of its sustainability in the long run. The ways of solving problems of corporate governance in banks are proposed in this paper. The theoretical foundations of corporate management in banks are substantiated. The specifics of the organization of relations between the participants of corporate relations in the bank are highlighted. It is noted that many issues related to corporate management in credit institutions lie outside the legal system and are ethical rather than legal.

Non-performing loans and bank corporate governance: conceptual framework and literature review

Non-performing loans and bank corporate governance: conceptual framework and literature review

The Role of the Core Requirements of Basel III Committee's Decisions in Improving Internal Audit Quality under Corporate Governance in Jordanian Commercial Banks

The Role of the Core Requirements of Basel III Committee's Decisions in Improving Internal Audit Quality under Corporate Governance in Jordanian Commercial Banks

Effect of corporate governance practices on bank performance: The perspective of board members

The lingering poor financial performance by banks and bank failure in the past three decades, despite various regulatory actions, has led to a debate on the efficacy of the various regulatory actions and the effectiveness of the practices of corporate governance in Nigerian banks (CBN, 2014; Berger, Imbierowicz, & Rauch, 2016). The study seeks to understand how corporate governance practices influence banks’ performance. The qualitative approach purposively selected three banks and three board interview respondents. Using thematic analysis, the results show that, large board size is not sufficient to improve performance but the broader expertise and other resources the directors bring are the critical elements. The study finds consensus that, outsider directors were desirable, as they provide additional expertise, and assist in making strategic input to improve management decisions. Enhanced monitoring and oversight responsibilities and access to information of board committees improve board effectiveness with favourable effects on bank performance. While the moderating effect of female representation with other governance characteristics on bank performance is subject to the female complementary expertise and their proportion of the board, that of foreign directors appear to be negligible. Bank boards are recommended to be of the right caliber and quantity with adequate resources to offer enhanced monitoring and oversight responsibilities

Impact of corporate governance and financial stability on bank risk in Malaysia

Banks may not survive a major financial shock or in the coming financial crisis especially in Asia are most at risk. As bank governance and financial stability have potential adverse and destabilising effects on banks, this study is carried out to investigate the influence of bank corporate governance and financial stability on bank risk. Based on a panel of Malaysian listed conventional banks from 2010 to 2018, we adopt panel cointegration test and fully modified ordinary least squares estimator. The results provide strong evidence of the adverse influence of financial instability and poor bank governance on bank risk. Thus, policy makers should attempt to formulate appropriate course of actions to overcome the unfavourable consequences stemming from the bank financial instability and quality of bank governance, considering of the multidimensional facets of financial instability and bank governance.

Impact of corporate governance and financial stability on bank risk in Malaysia

Banks may not survive a major financial shock or in the coming financial crisis especially in Asia are most at risk. As bank governance and financial stability have potential adverse and destabilising effects on banks, this study is carried out to investigate the influence of bank corporate governance and financial stability on bank risk. Based on a panel of Malaysian listed conventional banks from 2010 to 2018, we adopt panel cointegration test and fully modified ordinary least squares estimator. The results provide strong evidence of the adverse influence of financial instability and poor bank governance on bank risk. Thus, policy makers should attempt to formulate appropriate course of actions to overcome the unfavourable consequences stemming from the bank financial instability and quality of bank governance, considering of the multidimensional facets of financial instability and bank governance.