Corporate Goverance Of Commercial Banks

Published Date: 02 Nov 2017

Introduction to Commercial banks and corporate governance.

Commercial banks are the banks that we see today, meant to serve the needs of various multinational companies. These commercial banks offer various services to the companies which help them develop their area of operations in other countries and fulfill their monetary requirements either to complete their respective consignments or for the purpose of growth and expansion.

Corporate governance means keeping an eye on the working on these commercial banks. That through corporate governance the government gives directions and regulates the working of its commercial banks which fosters the needs of these corporate houses.

Objective of the Study

The objective of the study is to find out the benefits of corporate governance on the commercial banks of Bahrain.

Commercial banks offering such services which prove valuable to the corporate houses

The corporate governance helps in safeguarding the interest of shareholders

The retail customers dealt through corporate governance by the commercial banks.

Statement of the problem

The statement of the problem is to find out the following.

Commercial banks fair in imposing fines and fees for non completion of their requirements

The corporate governance helps in safeguarding the interest of shareholders.

The retail customers dealt through corporate governance by the commercial banks.

Methodology, Sampling & Sample size

The data will collected from primary sources via questionnaire and secondary sources like previous studies and researches, book and magazines, and online resources.

The population for the study is the employees of commercial banks. Commercial banks include the leading banks in Bahrain. The bank provides a variety of investment solutions to its customers. Thus the bank is a provider of a various alternate investment related products like mutual funds, hedge funds, insurance, fixed deposits, term deposits, real estate etc. These banks have their operations in North America and Europe and thereby facilitate investment in these countries.

The sample size foreseen to fulfill the study is 25 questionnaires which are solved by the commercial bank employees that work in the accounting and finance department.

Research Questions:

Do commercial banks offer such services which prove valuable to the corporate houses?

Are commercial banks fair in imposing fines and fees for non completion of their requirements?

Does the corporate governance helps in safeguarding the interest of shareholders?

Does the corporate governance limits the working of commercial banks?

How is the retail customers dealt through corporate governance by the commercial banks?

Scope and limitations:

The scope of the research will be limited to the benefits of corporate governance on the commercial banking system in Bahrain. The study will be conducted on the chosen for this purpose and not otherwise. The reason for that is because the study must be submitted within a previously set time frame in order to pass the requirement of the subject.

Significance of the study:

This study will be helpful and handy to serve other banks and investment companies and any related parties Thus; it will be significant for the following groups:

Stakeholders

Investors

Students and other researchers

Definition of terms

Commercial banks are such banks which provide present day requirements of big business houses and retail customers in the form of investment, insurance, and other financial related services.

Corporate governance is defined as the rules and regulations that banks have to follow as per the requirements of the government instructions so as to clarify the present status of the company to the shareholders, investors, suppliers, government agencies and customers.

Related Literature:

Over time, technological advances have undoubtedly transformed the economics of banking. Automation in retail banking and innovation in both risk management practices

and the design of financial products have all triggered changes in the provision of the three core financial services. But the net effect of these changes on economies of scale and scope is unclear. On the one hand, the unit cost of processing power continues to decline. But at the same time, banks have adopted new financial technologies and increased the breadth and quality of their services, requiring increased expenditure(Berger and Mester (2003)).

Smaller banks may also have been unable to keep up with the pace of technological change (Wheelock and Wilson (2010)). One outcome of this is increased market-wide reliance on a limited number of large firms in the provision of technology-intensive services, such as trade-execution and post-trade infrastructure provision.

For example, as execution services in foreign exchange have become more automated, the banks with the financial capacity to make the largest up-front information technology investment have gained market share (Barker (2007)

There is evidence that large companies value the provision of investment banking services by their bankers. For example, bonds underwritten by commercial banks appear to outperform those underwritten by investment banks, due to the perceived ‘certification’ of the issue by a party with privileged information on the borrower (Puri (1996), Gande et al (1997) and Yasuda (2005)).

Multinational companies may also value being able to work with one bank present in a range of countries. Indeed, according to Frontier Economics (2009), banks often enter

new markets purely on the basis of demand from their multinational clients. However, the Association of Corporate Treasurers noted that, while some very large companies will occasionally find it convenient to deal with one or two large banks, corporate customers generally ‘do not need very large banks’ (Association of Corporate Treasurers (2009)