The Corporate Governance of Banks: A Concise Discussion of Concepts and Evidence
The author examines the corporate governance of banks. When banks efficiently mobilize and allocate funds, this lowers the cost of capital to firms, boosts capital formation, and stimulates productivity growth. So, weak governance of banks reverber...
| Main Author: | |
|---|---|
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/09/5168087/corporate-governance-banks-concise-discussion-concepts-evidence http://hdl.handle.net/10986/14239 |
| Summary: | The author examines the corporate
governance of banks. When banks efficiently mobilize and
allocate funds, this lowers the cost of capital to firms,
boosts capital formation, and stimulates productivity
growth. So, weak governance of banks reverberates throughout
the economy with negative ramifications for economic
development. After reviewing the major governance concepts
for corporations in general, the author discusses two
special attributes of banks that make them special in
practice: greater opaqueness than other industries and
greater government regulation. These attributes weaken many
traditional governance mechanisms. Next, he reviews emerging
evidence on which government policies enhance the governance
of banks and draws tentative policy lessons. In sum,
existing work suggests that it is important to strengthen
the ability and incentives of private investors to exert
governance over banks rather than to rely excessively on
government regulators. These conclusions, however, are
particularly tentative because more research is needed on
how legal, regulatory, and supervisory policies influence
the governance of banks. |
|---|