Corporate Governance and Development
Show Less

Corporate Governance and Development

Reform, Financial Systems and Legal Frameworks

Edited by Thankom Gopinath Arun and John Turner

This book analyses the complex relationship between corporate governance and economic development by focusing on the reform of corporate governance, the role of the legal system, and the interconnections with the financial system.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 8: Improving Corporate Governance of Banks: Issues and Experience from Bangladesh

M. Masrur Reaz


M. Masrur Reaz INTRODUCTION Banks execute a crucial function of financial intermediation between savers and investors. Hence, it is essential for economies to develop efficient and stable banking sectors, and this need is particularly acute in developing countries. Having recognized the need, many developing countries have initiated financial reform measures in order to improve the efficiency of banking firms. Seminal studies by McKinnon (1973) and Shaw (1973) presented the theoretical arguments for the widespread adoption of financial reform measures, both authors strongly arguing that such reforms support the development of deeper financial systems which can, in turn, support economic growth. However, despite the implementation of rigorous financial sector reform measures, many argue that the results have been disappointing (Jalilian and Kirkpatrick, 2001). In many cases, a failure to recognize the imperfect characteristics of financial markets, and premature deregulation, has led to adverse consequences for the stability of the financial system itself (Brownbridge and Kirkpatrick, 2000). Hence, it is important to develop appropriate institutional mechanisms in advance of, or alongside, financial reform measures, which will ensure the smooth operation of liberalized financial systems. Since financial intermediaries gain total control of funds owned by depositors, mechanisms to mitigate moral hazard on the part of the intermediaries require particular attention. Corporate governance is considered to be one such institutional means that aims to align decision making in financial institutions with that of the best interest of their stakeholders. This chapter aims to highlight, using the case of the Bangladesh banking sector, issues that...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.