This document outlines an assignment to review an article on corporate governance in Ethiopian banks. The article investigates the relationship between board structure, composition, and selection on bank performance. Specifically, it examines the impact of board size, independence of board members, and frequency of board meetings on the financial performance of public and private commercial banks in Ethiopia. The assignment asks students to formulate the research topic, questions, objectives, and hypotheses based on the abstract, background, and statement of problem provided. It also asks students to evaluate the referencing style used in the article.
This document outlines an assignment to review an article on corporate governance in Ethiopian banks. The article investigates the relationship between board structure, composition, and selection on bank performance. Specifically, it examines the impact of board size, independence of board members, and frequency of board meetings on the financial performance of public and private commercial banks in Ethiopia. The assignment asks students to formulate the research topic, questions, objectives, and hypotheses based on the abstract, background, and statement of problem provided. It also asks students to evaluate the referencing style used in the article.
This document outlines an assignment to review an article on corporate governance in Ethiopian banks. The article investigates the relationship between board structure, composition, and selection on bank performance. Specifically, it examines the impact of board size, independence of board members, and frequency of board meetings on the financial performance of public and private commercial banks in Ethiopia. The assignment asks students to formulate the research topic, questions, objectives, and hypotheses based on the abstract, background, and statement of problem provided. It also asks students to evaluate the referencing style used in the article.
This document outlines an assignment to review an article on corporate governance in Ethiopian banks. The article investigates the relationship between board structure, composition, and selection on bank performance. Specifically, it examines the impact of board size, independence of board members, and frequency of board meetings on the financial performance of public and private commercial banks in Ethiopia. The assignment asks students to formulate the research topic, questions, objectives, and hypotheses based on the abstract, background, and statement of problem provided. It also asks students to evaluate the referencing style used in the article.
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2013 EC Academic year
Zemen Post Graduate College
Department of Management Program: Masters of Business Administration Course: Business Research Methods (MBA612) Assignment III: Article review Individual assignment (Out of 15%)
Dear student, please properly review the presented paper abstract, Background of the study and statement of the problem, and properly replay to the proceeded questions below.
Abstract The study was aimed to investigate the board size, independence of the board members and frequency of the board meetings on the performances of public and private commercial banks in Ethiopia. The data was gathered from both primary and secondary sources. The study found that public banks have greater number of board members compared to private banks though the difference was not significant and the average frequency of meetings for private banks is greater than that of public banks and this has strong correlation for private banks. The correlation between independence of board of directors and performances of public banks is weak while there exists a strong correlation for private banks. Banks with a greater number of external board members have better profitability. It was concluded that banks with frequent board meetings have better financial performances.
Background of the study
Corporate Governance is aimed at ensuring proper governance of business as well as complying with all the governance norms prescribed by regulatory body for the benefit of all interested parties including society. Particularly in banking sector, good corporate governance is very much essential for justifying its role in money management. Best practices of corporate governance in banks are of great value to a number of stakeholders’ viz., depositors, creditors, customers, shareholders
Of course, poor corporate governance in banks is not a new subject. This inefficiency has been around for a very long time. Since the beginning of the modern banking, many banks across the world were lost primarily because of factors related to poor corporate governance. Most banks did not fail due to lack of customers but due to how they were managed and governed
1 2013 EC Academic year
(Zabihollah, 2005). The Ethiopian commercial Code of 1963, the licensing and Supervision of Banking Proclamation No.84/94, and the Monetary and Banking Proclamation No. 83/94; and subsequently issued Directives are important Laws and regulations governing registration, formation and governance of commercial banks in Ethiopia.
According to these proclamations, banks in Ethiopia can only be formed as share companies. Since commercial banks are crucial to economy, prudent corporate governance is an important factor in the wellbeing of the economy in general and financial sector in particular. The boards of directors have an important role in alleviating the agency costs that arise from the separation of ownership and decision control in corporations (Fama and Jensen, 1983). Short et al. (1999) also took this view and argued that the boards of directors are the central corporate governance control mechanism responsible for monitoring the activities of managers, whilst Jensen (1993) describes the board of directors as the apex of the internal control mechanism in an organization. Therefore, the sole existence of board of directors is to protect the interests of shareholders from where it receives its authority for internal control (Jensen, 1993).
However, a board nominated by insiders, clearly would not be able to perform its supervisory functions properly, as personal relations make critical reflections of corporate policy less likely, given the fact that insiders are subordinates of CEO and they are not in a strong position either to monitor or discipline the CEO, (Daily and Dalton, 1993).This could be avoided with the adoption of outsiders in the board who could enhance the board's monitoring power since they do not hold active role in the company except for their directorship which puts them in the best position to judge managerial decisions objectively (Fame, 1980).
The Ethiopian code and the subsequently issued banking proclamation obviously serve only as a guideline to be implemented with the wise discretions of the board members; hence the stance of being an effective measure lies totally on the abilities, composition and judgments of those that make the board. This study therefore, is aimed to investigate the composition and role of the board of directors of commercial banks in Ethiopia. The study also examined the selection criteria for board membership and remuneration being paid to the members of the board of directors. The study further envisages examining the role of the corporate governance on the financial Performance of commercial banks in Ethiopia.
Statement of the problem
Following the financial sector reforms introduced since 1992, the Ethiopian banking industry has undergone many developments, of which the proliferation of private banks is noteworthy. In 2010/11, four public banks and around 13 private banks are operating in the country and some more three banks are under formation. Understanding the governance of banking firms is arguably more important than ever before. The purpose of this paper, therefore, is to examine board structure, composition and selection in the banking industry and its relationship with their performance.
2 2013 EC Academic year
The Ethiopian Commercial Code of 1963, the Licensing and Supervision of Banking Proclamation No.84/94, and the Monetary and Banking Proclamation No. 83/94; and subsequently issued Directives are important Laws and regulations governing registration formation, governance including the rights, duties and responsibilities of shareholders, directors, and chief Executive Officers of commercial banks in Ethiopia. According to these proclamations, banks in Ethiopia can only be formed as share companies and required to be governed by Board of Directors. The effectiveness of commercial banks primarily relies totally on the abilities, composition and judgments of those that make the board. To the best of my knowledge, studies on the role of board of directors, their composition and remuneration practice and the impact of board size and composition on the financial performance of commercial banks in Ethiopia have not been adequately addressed and hence this study was aimed to fill such a huge literature gap in the area.
Critically review the abstract, background and statement of the problem for the above article and formulate the following 1. Possible research topic 2. Four possible research questions 3. General objective of the study 4. Possible four Specific objectives of the study 5. Possible three research hypothesis 6. Critically evaluate the referencing style ATTENTION FOR BOTH ASSIGNMENTS:
- Submission date: May 10, 2021
- A plagiarized research proposal will be automatically unconsidered - Submit only through an email address: tmuleye@gmail.com - Any delay of submission will be penalized 2 points for each day of late submission - Any confusion, you can contact your teacher via 0913504464
