Board governance regulation, practices and their relationships with financial performance: Cambodian bank and microfinance institution context

Abstract

To improve corporate governance practices of bank and microfinance institutions, the Cambodia National Bank has developed and imposed governance practices regulation for the sector. The current study investigates the current board governance practices of the sector and determines how the practices impact on financial performance. In addition, it tests the validity of relevant corporate governance theories to the context and the benefits of the regulation. The findings indicate that current board governance practices of the sector meet the minimum requirements of the regulation and, to a great extent, have positive impact on financial performance. The relevant theories validated and supported in the context of Cambodia banks and microfinance institutions.

The Relevance of Good Corporate Governance Practices to Bank Performance

“…Therefore, there is still room for contribution to the literature on the effectiveness of corporate governance mechanisms in the banking sector with evidence from developing countries such as Cambodia. Furthermore, since the implementation of the corporate governance code for banks and other financial institution in 2008 namely "Prakas on Governance in Banks and Financial Institutions" (Corporate Governance Code on Banks) by the National Bank of Cambodia (NBC), there is only one empirical study that investigates governance practices in the banking sector (Cheaseth, Samreth, & Sethyraon, 2010). Therefore, more studies are needed to investigate the current governance practices in the banking sector and assess how the practices affect banks' performance.…”

The Relevance of Good Corporate Governance Practices to Bank Performance

“…Therefore, there is still room for contribution to the literature on the effectiveness of corporate governance mechanisms in the banking sector with evidence from developing countries such as Cambodia. Furthermore, since the implementation of the corporate governance code for banks and other financial institution in 2008 namely "Prakas on Governance in Banks and Financial Institutions" (Corporate Governance Code on Banks) by the National Bank of Cambodia (NBC), there is only one empirical study that investigates governance practices in the banking sector (Cheaseth, Samreth, & Sethyraon, 2010). Therefore, more studies are needed to investigate the current governance practices in the banking sector and assess how the practices affect banks' performance.…”