Governance in financial institutions: key elements and preventing the failures

Ashish Srivastava

Asian Journal of Economics and Banking, 2023, vol. 7, issue 3, 424-434

Abstract: Purpose - The need for robust governance standards in financial institutions requires no overemphasis. However, instances of governance failures have been a recurring global phenomenon. This paper examines the key elements of governance in financial institutions, evaluates reasons for failures and suggests ways to strengthen governance and prevent such failures. Design/methodology/approach - The author follows a descriptive design and a behavioural approach to understand the governance issues in financial institutions. Findings - The author identifies key elements of governance, and the potential reasons for failures and highlights that the structure of boards, thrust on the adoption of best practices and regulatory guidelines are necessary but not sufficient to ensure failsafe governance standards. The author emphasises the need for recognition of behavioural factors and a focus on continuous monitoring and red flagging of the conduct of key stakeholders by the third and fourth lines of defence. An effective whistle-blower policy, a clear focus on organisational culture and the subjugation of individuals to the systems can improve the robustness of the governance standards in financial institutions. Originality/value - To the best of the author's knowledge and belief, the observations and suggestions made in the paper are original. The paper contributes by offering a nuanced perspective for strengthening governance in financial institutions.

Keywords: Governance; Financial institutions; Systems; Control; Board; Regulation; G20; G21; G28; G34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ajebpp:ajeb-05-2022-0049

DOI: 10.1108/AJEB-05-2022-0049

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