Corporate governance in financial intermediaries

By doing so, the corporate governance complements the efforts of the governments to regulate the financial institutions. According to Singh, Satwinder, et al. , corporate governance can get defined in a broader perspective as a concept that seeks for appropriate management and control mechanisms as well as regulations relating to relationships among all the stakeholders (p. In other words, it provides the framework for objective and strategy formulation and monitoring to ascertain good governance outcomes. This essay examines the factors that influence the relevancy of corporate governance in financial institutions to enable sufficient and accurate understanding of the formulation and implementation of effective good governance strategies. According to Armstrong, Chris, et al. , the lending activity is susceptible to risks which are almost inevitable, and that, the success depends on the level of risk acceptance by a given intermediary (p.

Notably, a financial institution may suffer bad debts due to irrelevant business decisions or may ineffective loan assessment or poor and insufficient customer performance monitoring. In some cases, the loan may turn bad when the concerned executive decide to get involved in the looting of the firm’s resources. Consequently, the core need of the banking sector for the identification and monitoring of reliable clients to ensure that the loan gets repaid. The industrial psychologists ascertain that the hiring and appraisal system in place adhered to relevant ethical standards to ensure that appropriate recruitment and retaining of the talented workers for the realization of the desired levels of corporate governance. Works Cited Armstrong, Chris, et al. "The role of information and financial reporting in corporate governance: A review of the evidence and the implications for banking firms and the financial services industry.