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The Complementarity of Regulatory and Internal Governance Mechanisms in Banks

Bouaiss, Karima; Alexandre, Hervé (2009), The Complementarity of Regulatory and Internal Governance Mechanisms in Banks, Bankers, Markets & Investors, 98, p. 6-15

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Type
Article accepté pour publication ou publié
Date
2009
Journal name
Bankers, Markets & Investors
Number
98
Publisher
Revue Banque
Pages
6-15
Metadata
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Author(s)
Bouaiss, Karima
Alexandre, Hervé
Abstract (EN)
Decisions taken by the manager of a bank are subject to the regulatory discipline of the Basel Committee in conjunction with the supervisory discipline of the Board of Directors, a body that represents shareholders. This research demonstrates that the two types of discipline act in complement to each other, whereas the extant literature shows that regulatory discipline is replacing the internal discipline exercised by the Board of Directors. We also show that these internal and external governance mechanisms are relevant to explain the simultaneous influences between financial performance, risk-taking and the capitalization of French banks from 1998 to 2004.
Subjects / Keywords
Bank governance; financial performance; capital adequacy; risk-taking; banking regulation
JEL
G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
G34 - Mergers; Acquisitions; Restructuring; Corporate Governance