Corporate Governance And Bank Performance In The Light Of Agency Theory

Abstract

Abstract: Over recent years, a lot of attention has been given on corporate governance which has become a mainstream concern in all advanced economies, as well as in developing countries especially after the financial devastation of many companies and banks, which in turn endangered the stability of the global financial system. And given the major role played by banks in any economy, corporate governance of banks is necessary to ensure a sound financial system. This former is supposed to have a positive impact on the performance of banks under the assumptions of agency theory. Our contribution aims to verify the assumptions of agency theory concerning the relation between the mechanisms of corporate governance and the financial performance of banks on the basis of recent empirical researches. The analysis of the relation between corporate governance mechanisms and financial performance in the banking industry, allowed us to point out that the assumptions of agency theory concerning the impact of corporate governance mechanisms on banks financial performance are valid and robust after a synthesis of a different recent empirical studies.