Corporate Governance in Financial Institutions Impact on the company’s performance

 
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2010 (EL)
Corporate Governance in Financial Institutions Impact on the company’s performance (EN)

Spahiu, Herjola (EN)

Prof Levis, Marios (EN)
Leventis, Stergios (EN)
Dr Rafail, Markelos (EN)
School of Economics, Business Administration and Legal Studies, Executive MBA (EN)
Tsekrekos, Dr Andrianos (EN)

The Corporate Governance in banks is one of the most important discussions overall the world, being reinforced especially after the crises period. It is related with the sensitive situation and the stage of developments of the local economy and moreover with the impact of the crises that is still ongoing. As an answer, during late 2008 and beginning 2009, it has been noticed a fast reaction and total focus from all banks on building (if missing) and improving their structures of Corporate Governance. The liquidity problems suddenly affecting the banking sector constrained Banks to enlarge their activities /operations and forced them in better evaluating their investments. The financial sector in the Balkan countries, especially the banking sector is having gradual improvement on the last years (from 2000 onwards). An important contribution on that has the strong reform undertaken by international institutions like International Monetary Fund, WorlBank, EBRD and OEDC. The reforms imposed have as objective the Balkan countries to catch up as soon as possible the European Financial system by strengthening the financial supervision. It is noticeable that Balkan countries, being less economically advanced have higher rate of convergence than the developed countries (Catching up their Integration in the European Financial System, Fabienne Bonetto, Srdjan Redzepagic, Anna Tykhonenko, Panoeconomicus, 2009) The importance of a strong financial sector in impacting the country’s economy growth through both level of banking development and stock market liquidity (Levine and Sara Zervos 1996, 1998) is quite evident even in the developing countries. Moreover, Peter Rousseau and Watchel (2000) findings’ confirm the positive impact of the stock market activity and the banking development. For this reason the governments in the developing countries are insisting in increasing credits of banks towards the private firms. The Balkan countries, being in developing stage and experiencing for the last 15 years, an aggressive penetration of foreign banks in the markets (75% of establishment of new banks, or purchase of local banks from international groups, in the Balkan countries happened during the period 2000 – 2008) are still in process of improving their local financial system and establishing corporate governance structures. Throughout the year 2008, the banking sector in the Balkan countries experienced strong growth despite the financial crises spread overall the world. The main reasons for that were the low level of integration at the international markets, low level of exposure to the international institutions, as well as the strong capitalization of the banks in the Balkans. 4 The regional economies and the banking structure are under frequent improvements through the new legal and institutional reforms that are obligatory in the framework of the European integration process. (F. Bonetto, S. Redzepagic, A. Tykhonenko, 2009) The impact of the financial crises in Balkan, as for other countries of the CEE, is not having the same negative level as for the rest of the world due to relative insulation; however, the need of the local economy for further financings towards the private companies in order to stimulate the country economic growth will somehow expose these countries to possible difficulties. The banking system in Bulgaria, Romania, Serbia and Albania has certain similarities in terms of development stage, related with the economic growth rate as well. Greece IS much more advanced in these terms having a totally established and steady banking system for a long time. The banking system there is operating for more than 100 years instead of 15-20 years of development in the remaining countries. Moreover, Greek banks are the most active ones in terms of expansion in the Balkan countries (7 Greek banks have a considerable presence and market share in the 4 studied countries). One of the reasons for including Greece in the study is to examine at what level the corporate governance of the Greek groups has been propagated in the other 4 countries. It is to be mentioned that despite the long history of the banking market, the terminology of corporate governance was introduced in Greece only on the year 1999. (Principles of Corporate Governance, Standard report Greece, October 2008) This dissertation aims to analyze the corporate governance policy and related topics in the major banks / international groups in 5 countries of the Balkan area (Greece, Bulgaria, Romania, Albania and Serbia). The research involves 45 banks out of 122 operating in the region, composing 37% The analysis, are based on researches and evaluations of banks’ organizational structure, functions of the supervising bodies like Board of Directors and Audit Committees, implementation of internal control policies, role of independent units (i.e. risk, internal audit and compliance), role of local authorities (central banks, antimoney laundering authorities), etc. The target is to evaluate the importance of corporate governance in banks’ performance in the region (in terms of profitability, size and expansion, as well as market positioning). In addition, it will be analyzed the impact that has the presence of international groups in the region by improving or not the corporate governance of the system. The analysis will include even the role of the supervisory authorities and the impact of regulatory framework in the respective countries in the formulation and implementation of corporate governance. (EN)

masterThesis

Διεθνές Πανεπιστήμιο της Ελλάδος (EL)
International Hellenic University (EN)

2010


School of Economics and Business Administration, Executive MBA programme (EN)



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