New challenges in bank corporate governance: Theory and practice. Does theory speak to practice?

Abstract

Corporate governance can be broadly defined as processes and relations by which firms are managed (Brogi & Lagasio, 2019a). In the last two decades, non-binding principles have been issued by various international organisations (Brogi, 2008) (such as stock exchanges, international organisations, associations, institutional investors mainly) for listed and unlisted companies, in order to preserve the effectiveness and the soundness of the corporate governance frameworks of the companies worldwide. As concerns banks, the quality of corporate governance is one of the requirements for the stability of the banking system (Draghi, 2008). Banks are risk-takers, carry out activities with externalities, are fundamental in supporting the economy, in providing liquidity to the system, in the transmission of monetary policy (Brogi & Lagasio, 2017). Corporate governance in banks therefore also affects the governance of non-financial companies and their sound and prudent management (Francis, Hasan, Koetter, & Wu, 2009)