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Why are banks special? An approach from the corporate governance perspective

Author

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  • Vasile Cocris
  • Maria Cristina Ungureanu

    (The Department of Business Administration, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University)

Abstract

High standards in the governance of banks and firms are very important for economic growth. Banks have a critical position in the development of economies due to their major role in running the financial system. The banking industry is unique because it is simultaneously consolidating and diversifying. There is a significant public dimension to the banking firm; bank managers function in the light of two distinct sets of interests: one is the private interest, internal to the firm, and the other is the public interest, external to the firm. Previous literature analyses the implications of banks' specific attributes on their corporate governance framework. It emphasises two major aspects: greater opaqueness and greater regulation. Whether these attributes have a weakening effect on the traditional corporate governance mechanism is a matter debated by most research papers on the subject. This study is done on the specific characteristics of banks from the point of view of current economic framework, and the implications of these characteristics on the governance of banks. This paper analyses the environment with increased regulation of the banking firm, as a governance control mechanism.

Suggested Citation

  • Vasile Cocris & Maria Cristina Ungureanu, 2007. "Why are banks special? An approach from the corporate governance perspective," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 54, pages 55-66, November.
    • Handle: RePEc:aic:journl:y:2007:v:14:p:55-66
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    References listed on IDEAS

    as
    1. Furfine, Craig H, 2001. "Banks as Monitors of Other Banks: Evidence from the Overnight Federal Funds Market," The Journal of Business, University of Chicago Press, vol. 74(1), pages 33-57, January.
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    Cited by:

    1. Vitor Oliveira & Clara Raposo, 2021. "The Determinants of European Banks' Capital Structure: Is There a Difference between Public and Private Banks?," International Journal of Central Banking, International Journal of Central Banking, vol. 17(3), pages 155-202, September.

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