Abstract:

High standards in the governance of banks and companies are essential for emerging markets and economic growth, banks having a critical position in the progress of economies due to their major role in running the financial system. Moreover, the banking industry is distinctive since it is concurrently consolidating and diversifying. Therefore, robust bank corporate governance is, indeed, an essential constituent for promoting a more resilient financial system. Previous literature analysis highlights the repercussions of banks’ specific traits on their corporate governance framework, emphasising two foremost aspects: higher opaqueness and imperviousness and, of course, higher regulation. In this context, our research aims to measure the level of bank corporate governance in Romania, by analysing the corporate governance quality and effectiveness in the main Romanian banks. Assessing the corporate governance eminence is constructed on own determined score of disclosure and transparency practices, the sample consisting in the 4 Romanian banks currently listed on Bucharest Stock Exchange: Banca Transilvania, BRD, Erste Group and Patria Bank.This was performed by appraising the importance level given to corporate governance principles, after a brief monitoring and dissemination of information regarding transparency and disclosure practices of the banks in the selected sample. By using the score function model, the research seeks to categorize to what degree concepts and principles of corporate governance are spread. Moreover, the paper seeks to give emphasis to the state of corporate governance in Romanian regulatory framework and the quality of corporate governance culture in Romanian banks that are listed on Bucharest Stock Exchange (BSE). In this respect, we performed an investigation of the mode in which the principles enforced by the Organisation for Economic Co-operation and Development (and other governance regulations) are respected in four top Romanian banks. Another objective of our paper finds its correspondent in providing a comprehensive synopsis of potential influence that the key players of corporate governance (board of directors, executive management, auditor and shareholders) might have on banks’ performance. We consider our goal important due to the growing number of governance failures and corporate scandals affecting banking environment, which gave rise to the last financial crisis and made from corporate governance a subject of controversy. In this framework, we reached valuable conclusions regarding a satisfactory compliance level with corporate governance requirements in regards to Romanian banks that are listed on BSE. In this sense, the research emphasized, to some degree, a high level of adoption of the best practice doctrines, in comparison with smaller banks in Romania.”