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

2020 ◽  
Author(s):  
Klaus J. Hopt
Keyword(s):  
Economic Theory ◽  
Corporate Governance ◽  
Financial Institutions ◽  
Supervisory Practice

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

2021 ◽  
Vol 22 (1) ◽  
pp. 13-37
Author(s):  
Klaus J. Hopt
Keyword(s):  
Economic Theory ◽  
Corporate Governance ◽  
Financial Crisis ◽  
Empirical Evidence ◽  
Financial Institutions ◽  
Senior Managers ◽  
Good Corporate Governance ◽  
Bank Governance ◽  
Supervisory Practice

AbstractBanks 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.

scholarly journals Problematika Pengawasan Dewan Pengawas Syariah Pada BMT Almaun Berkah Madani dan BMT Mandiri Ukhuwah Persada

2020 ◽  
Vol 6 (11) ◽  
pp. 2361
Author(s):  
Fathin Su'aidi ◽  
Irham Zaki
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Financial Institution ◽  
Descriptive Case Study ◽  
Good Corporate Governance ◽  
Islamic Financial Institutions ◽  
Lack Of Commitment ◽  
Supervisory Practice

Sharia Board is an commite in sharia financial institution and assigned overseeing the implementation of the decisions of the National Sharia Board (DSN) in Islamic financial institutions. Sharia Board functions to supervise sharia compliance in sharia financial institutions including the Baitul Maal Waat Tamwil (BMT). BMT is a sharia micro finance institution that combines the concept of maal and tamwil . This study aims to determine the problems faced by the Sharia Board in conducting supervision in BMT. The point that is necessary reviewed in this supervisory practice are based on Decree MUI DSN No. 3 of 2000 concerning instructions for implementing the determination of members of the sharia board in sharia financial institutions. This study use qualitative methods with descriptive case study strategy. From the results of the research occur several problems were encountered by the Sharia Board including: lack of the professionalism of Sharia Board, lack of commitment, lack of independence, and challange to mobilize all elemnts os sharia financial institution to comply with sharia law.The sloution of the problematic is by upgrade an increase faith and taqwa ang commitment to enforce sharia especially as the Sharia Board. always implementing the principles of Good Corporate Governance, and the governmemt making strong and clear rules of sharia supervisions.Keywords: Problematic , Sharia Board , Baitul Maal Wat Tamwil

Do disclosure and transparency affect bank’s financial performance?

2019 ◽  
Vol 19 (6) ◽  
pp. 1344-1361
Author(s):  
Isaiah Oino
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Content Type ◽  
Loan Portfolios ◽  
Cent Level ◽  
Transparency And Disclosure ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

Corporate governance and the social performance: investigation on Tunisian financial institutions

2018 ◽  
Vol 60 (6) ◽  
pp. 1412-1431
Author(s):  
Nejia Nekaa ◽  
Sami Boudabbous
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Financial Institution ◽  
Stock Exchange ◽  
Social Performance ◽  
Financial Sector ◽  
Content Type ◽  
The Social ◽  
Questionnaire Method ◽  
The Impact

Purpose The purpose of this study is to show the specificities of the corporate governance of Tunisian financial institutions and the impact of the internal mechanisms of corporate governance of these institutions on their social performance. It is therefore interesting to establish the existing relationship between these mechanisms of corporate governance and the performance of a financial firm. Design/methodology/approach This study aims to study the financial sector, generally characterized by its opacity, its regulation, its evolution and its obscurity. Therefore, a study based on the questionnaire method was recommended. The questionnaire is intended for managers. Therefore, the authors interviewed 138 managers of Tunisian financial institutions dispersed between agencies and headquarters in different regions (Gabes, Tozeur, Gafsa, Sfax, Sousse and Tunisia). Findings As a result, an impact on performance was observed according to the empirical study. Therefore, the authors can conclude an essential role of internal mechanisms for improving the social performance of a financial institution. The empirical findings in this paper lead to important conclusions. Indeed, the variables measuring the governance mechanisms have divergent effects on the social performance of the financial institutions subject to the sample. For the variables board of directors, confidence, culture, auditing, they have a positive effect. While, the incentive remuneration effect negatively the social performance. Originality/value This study will be based essentially on the financial sector in Tunisia: the credit institutions (22 banks), the establishments of leasing (eight companies of leasing), two factoring companies and two banks of cases which are listed on the Stock Exchange of Tunis (BVMT).

scholarly journals An Overview of Corporate Governance Models in Financial Institutions

2019 ◽  
Vol 8 (4) ◽  
pp. 181-195
Author(s):  
Md Kausar Alam ◽  
Suhaimi Ab Rahman ◽  
Hasri Mustafa ◽  
Sabarina Mohammed Shah ◽  
Md Mizanur Rahman
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Governance Models

Vertical and Horizontal Problems in Financial Regulation and Corporate Governance

2018 ◽  
Author(s):  
Jonathan R. Macey ◽  
Maureen O'Hara
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Insider Trading ◽  
Financial Regulation ◽  
Fiduciary Duty ◽  
Federal Law ◽  
Regulatory Arbitrage ◽  
Holding Companies ◽  
The Third ◽  
And Control

This chapter discusses vertical and horizontal problems in financial regulation and corporate governance. More specifically, it examines three contexts in which efforts to mitigate systemic risk and moral hazard in capital markets and financial institutions clash with long-standing principles of corporate governance. The first issue relates to the so-called “vertical” challenge between financial institutions and the separately incorporated holding companies that own and control them. The second issue relates to the “horizontal” challenge, in which regulatory arbitrage occurs between the banking subsidiaries of complex holding companies and their less-regulated nonbank and shadow bank siblings. The third and final issue deals with the conflict between the conception of fiduciary duty in the federal law of insider trading and the concept of fiduciary duty in state law.

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