Corporate Governance in Banking: a Conceptual Framework
Corporate Governance in Banking: A Conceptual Framework
Penny Ciancanelli E-mail: p.ciancanelli@strath.ac.uk And Jose Antonio Reyes Gonzalez E-mail: areyes@eh.quik.co.uk
Department of Accounting and Finance Strathclyde University Glasgow, G4 0LN Tel: (44) (0) 141 548-3896 Fax: (44) (0) 141 548-3547
This paper can be downloaded from the Social Science Research Network Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=253714
Paper submitted for presentation at the European Financial Management Association Conference, Athens, June, 2000 The authors would appreciate that the copyright of this conference paper be respected and that no part of it is cited without the permission of the authors. The paper was presented by Jose A. Reyes-Gonzalez. Correspondance should be directed to Penny Ciancanelli.
Corporate Governance in Banking: A Conceptual framework
Abstract In the wake of far reaching financial system reforms, almost three fourths of the member countries of the IMF experienced significant episodes of systemic crisis and associated bank failures. Notably absent in the ensuing debates on the correlation between financial system reforms and systemic crisis was discussion of corporate governance in the affected banks and the role it may have played in the provoking financial crisis. Consideration of corporate governance in banks is, however, apparently easier said than done. While there is a great deal of empirical research on corporate governance, very little of it concerns the behaviour of owners and managers of banks; all of it assumes that banks conform to the concept of the firm used in Agency Theory. The aim of this paper is to demonstrate the limitations of that assumption and to propose an alternative conceptual framework more suitable to its analysis. We argue that commercial banks are distinguished by a more complex structure of information asymmetry arising from the presence of regulation. We show how regulation
Penny Ciancanelli E-mail: p.ciancanelli@strath.ac.uk And Jose Antonio Reyes Gonzalez E-mail: areyes@eh.quik.co.uk
Department of Accounting and Finance Strathclyde University Glasgow, G4 0LN Tel: (44) (0) 141 548-3896 Fax: (44) (0) 141 548-3547
This paper can be downloaded from the Social Science Research Network Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=253714
Paper submitted for presentation at the European Financial Management Association Conference, Athens, June, 2000 The authors would appreciate that the copyright of this conference paper be respected and that no part of it is cited without the permission of the authors. The paper was presented by Jose A. Reyes-Gonzalez. Correspondance should be directed to Penny Ciancanelli.
Corporate Governance in Banking: A Conceptual framework
Abstract In the wake of far reaching financial system reforms, almost three fourths of the member countries of the IMF experienced significant episodes of systemic crisis and associated bank failures. Notably absent in the ensuing debates on the correlation between financial system reforms and systemic crisis was discussion of corporate governance in the affected banks and the role it may have played in the provoking financial crisis. Consideration of corporate governance in banks is, however, apparently easier said than done. While there is a great deal of empirical research on corporate governance, very little of it concerns the behaviour of owners and managers of banks; all of it assumes that banks conform to the concept of the firm used in Agency Theory. The aim of this paper is to demonstrate the limitations of that assumption and to propose an alternative conceptual framework more suitable to its analysis. We argue that commercial banks are distinguished by a more complex structure of information asymmetry arising from the presence of regulation. We show how regulation
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