Corporate Governance and Banks: What Have We Learned from the Financial Crisis?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractRecent academic work and policy analysis give insight into the governance problems exposed by the financial crisis and suggest possible solutions. We begin this paper by explaining why governance of banks differs from governance of nonfinancial firms. We then look at four areas of governance: executive compensation, boards, risk management, and market discipline. We discuss promising solutions and areas where further research is needed.

Board Characteristics and Firm Performance: Case of Saudi Arabia

“…According to Mehran, Morrison and Shapiro (2011), there are two main differences governance in the banking sector and non-financial sectors. The first is that banks have many more stakeholders than non-financial firms.…”

“…The second is that the business of banks is opaque and complex and can shift rather quickly. The complexity of the financial sectors, particularly the banking sector causes a difficulty of implementing formal regulations (Mehran, Morrison & Shapiro, 2011). Due to the differences in regulations between banks and non-financial firm, this study excludes the financial firms.…”

Why Does the FDIC Sue?

“…The corporate governance of banks is complicated by the unique status of banking as noted by Mehran, Morrison, and Shapiro (2011). Not only are banks are highly leveraged 1 and complex, more importantly, banks have multiple stakeholders such as depositors, creditors, and the government itself -on the one hand, in its explicit role as the backstop for deposit guarantees and, on the other hand, in a more implicit role involving idiosyncratic or aggregate risk-transfers, because of the potential for a dysfunctional banking and financial system to cause large economic contractions.…”

IMPACT of FINANCIAL CRISIS 2008-2009 on BANKING SECTOR STRUCTURE IN UKRAINE

“…Still in the 19th century, shareholder liability was being limited to the initial investment only. 31 See Mehran et al (2012) and references therein for a recent review of corporate governance issues at banks in the context of the crisis. …”