Chapter

Enhancing Corporate Governance for Financial Institutions

Kern Alexander, Rahul Dhumale and John Eatwell

in Global Governance of Financial Systems

Published in print September 2005 | ISBN: 9780195166989
Published online September 2007 | e-ISBN: 9780199783861 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780195166989.003.0012
 Enhancing Corporate Governance for Financial Institutions

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This chapter argues that the adoption of international standards and principles of corporate governance should be accompanied by domestic regulations that prescribe specific rules and procedures for the governance of financial institutions that address national differences in political, economic, and legal systems. It begins by briefly considering “governance” within this context, using a principal-agent framework. It then discusses the general principles of corporate governance for financial institutions that the Basel Committee has adopted for all banking institutions operating in the G10 industrialized countries, followed by a discussion of the principles of corporate governance for securities firms as set forth by IOSCO. The overriding theme is the belief that transparency of information is integrally related to accountability in that transparency can provide government supervisors, bank owners, creditors, and other market participants with sufficient information and incentive to assess the management of a bank. The chapter concludes by considering these and other issues related to the governance role of financial institutions in the overall economy.

Keywords: international standards; corporate governance; financial regulation; Basel Committee; financial institutions; IOSCO

Chapter.  5000 words. 

Subjects: Financial Markets

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