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Corporate Governance In Banking Sector

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The Relationship between corporate governance and firm’s performance of Pakistan’s banking sector

Ahmed Waleed
M.Phill Scholar (Business Administration)
National College Business Administration & Economics, Multan

1. Introduction
We study the relationship between the corporate governance practices and the firm’s performance of the banking sector of the Pakistan. During the last 20 years, corporate governance issue have become essential in policy debates. Corporate governance is the framework of regulation, relationships and processes within and by which authority control the organization.

A definition would be to define corporate governance.
The definition which is used by Sir Adrian Cadbury, head of the Committee on the Financial Aspects
…show more content…
Listing in all stock exchanges is applicable to all public listed companies. This is dominant step in corporate governance improve in Pakistan. The legal corporate framework includes the Companies Ordinance 1984 which address the rules for the corporate governance and regulations of companies. All Banks of Pakistan regulated by the ordinance which is known as banking company ordinance Of Pakistan (BCO). This ordinance was issued in 1962 by State Bank of Pakistan (SBP). The primary object of code issued by SECP is to create a structure where by an organization controlled & directed by board of directors in consent with best practices and safeguard the interests of stakeholders. It is first big step for the restructuring of the board of director’s to recommend board-based structure by managerial, non-managerial directors and shareholders. Securities and Exchange Commission of Pakistan took action to authorize the Pakistan Institute of Corporate Governance (PICG) in public private partnership in …show more content…
The IFC was established in 1956 with the aim to promote private sector investment in developing economies to promote economic development & reduce poverty. IFC provide helps clients to improve environmental & social sustainability & also give counseling to business and Government. IFC launched its project in Pakistan which is known as Pakistan Corporate Governance Project. This projected was launched in 2006 to guide and improve the corporate governance practices in Pakistan.

The enhancement of corporate governance practices is broadly recognized as one of the major factor in strengthening the foundation for the long-term economic performance of countries and corporations (Ibrahim et al, 2010).

2. Aims and Objectives:

The objective of this study is determine the effect of good corporate governance practices on commercial bank performance in the comparisons of weak CG practices commercial bank in the economy of Pakistan.

3. Literature Review:

There are lot of studies related to corporate governance relationship with firm performance. But this study is focus on commercial bank in developing country. There is a common approach in the corporate globe that the adoption of “good corporate governance” practices raise organization performance (Economist, 2010). The governance of banking firms may be different from that of unregulated, nonfinancial firms for

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