Vietnamese Commercial Banks and Corporate Governance

J. Fin. Bank. Review 4 (2) 73–81 (2019)

9 Pages Posted: 10 Sep 2019

Date Written: July 11, 2019

Abstract

Objective - Corporate governance is a focus of bank managers and stakeholders, especially after the financial crisis. Contributing to firm and bank difficulties is weakness in managing internally and externally, making governance critical; even more so for banks which play a central role in the economy, allocating capital, lowering risk for businesses and individuals, and ensuring stability and sustainability. Bank failures in the crisis (2008-2016) highlighted governance and risk in developed nations and in developing ones, such as Vietnam. This paper studies governance in bank performance and risk, using theoretical frameworks and empirical study.

Methodology – Fundamental governance is reviewed, for banks in particular, in two widely used frameworks. Prior research relates bank performance (share return and return on assets, ROA), risk (capital adequacy ratio, CAR) and governance (board size, BS; number of committees, NC; independent directors to total, NID).

Findings – As our models show, NC and NID relate positively to bank performance. CAR has a positive link to governance.

Novelty – Our recommendation is that banks in Vietnam must have effective boards to boost performance.

Type of Paper - Empirical.

Keywords: governance; banking; crises; Vietnam; performance

JEL Classification: M14; D21; G21; G34

Suggested Citation

Bace, Edward , Vietnamese Commercial Banks and Corporate Governance (July 11, 2019). J. Fin. Bank. Review 4 (2) 73–81 (2019), Available at SSRN: https://ssrn.com/abstract=3438255

Edward  Bace (Contact Author)

Middlesex University ( email )

The Burroughs
London, NW4 4BT
United Kingdom

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