Corporate Governance of Banks and Risk Management by Stockholders

This paper reviews previous and current research on corporate governance in the banking sector through mechanisms in the hands of the shareholders. This is a potentially rich area for research, because of the interplay between governance that is desirable for bank shareholders and governance that is desirable for the regulator. It is difficult to conclude that governance rules for nonfinancial firms are also appropriate for banks, and major improvements are still expected regarding the influence of laws and regulations on bank governance.
Keywords: Corporate governance; Bank; Literature review; Risk-taking; Regulatory mechanisms;
Ownership structure; Capital structure; Board of directors; Internal control.
JEL: G28, G34