Corporate Governance in Banking

Corporate Governance in Banking

A Global Perspective

Edited by Benton E. Gup

Recent corporate scandals, together with the effects of globalization, have led to an increasing interest in corporate governance issues. Little attention has been paid, however, to international laws and recommendations dealing with corporate governance in banking from a global perspective. This impressive international set of expert contributors – academics, practitioners and regulators – remedies the lack of attention by examining the various issues and concerns of this important topic.

Chapter 8: A Cross-country Analysis of Bank Performance: The Role of External Governance

James R. Barth, Mark J. Bertus, Valentina Hartarska, Triphon Phumiwasana and Hai Jason Jaing

Subjects: business and management, corporate governance, economics and finance, corporate governance, financial economics and regulation, money and banking, law - academic, corporate law and governance, finance and banking law


James R. Barth, Mark J. Bertus, Valentina Hartarska, Hai Jason Jiang and Triphon Phumiwasana INTRODUCTION Perhaps the most striking feature of the financial landscape of the past two decades is the number and severity of banking crises across the globe. While many of these crises occurred in association with currency crises, many did not, being rather the result of, for example, excessive growth in bank credit. Regardless of the causes, over the past decade or so – and particularly in the wake of the East Asian and Russian banking crises of the late 1990s – a strong consensus has emerged among policymakers and industry observers that, fundamentally, both the existing management practices of bankers and bank regulatory and supervisory practices were insufficient to promote well-functioning banking systems. It is by now commonly understood that healthy banking systems require a more insightful approach to regulation and supervision, and that information and discipline from market participants can complement and support sound regulatory and supervisory practices. Such an approach is in the process of being implemented under the New Basel Capital Accord (‘Basel II’). In addition, supervisors around the world are switching from traditional financial ratio analysis and ‘counting the cash’ to ‘risk-based’ supervision, a process that requires supervisory authorities to develop both tools and insights that allow them to more accurately assess banks’ risk profiles and risk management measures. Beyond this, it is widely recognized that government ownership of banks is generally at odds with efficient, as well as safe and...

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