Assessment of Corporate Governance Practice in Private Banks of Ethiopia

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Addis Ababa University


It is the separation of ownership and control that resulted the concept of corporate governance. Since governance is the center point for corporate success it needs the attention of all stakeholders. Unless given a focus it deserves in managing a business, it may result undesirable long term consequences. In the current business set up, banks are among the industry that are implementing the concept of corporate governance in the context of Ethiopia. Due to the sensitivity nature of the business and an irreplaceable role banks play in the macro economy of a given country, poor corporate governance practice in banks may have a macroeconomic impact that could potentially affect the whole economy. As a result, this research paper was prepared with the objective of measuring and understanding the level of corporate governance practice in private banks in Ethiopia in light of OECD principles and Basel committee on banking supervision, so as to improve the understating of various stakeholders and also to shed light on the adoption of best practices and principles into the country corporate governance system. Major components like board of directors, shareholders, Executive directors, supervisory organ, disclosure, risk management and internal control were taken as major determinant variables. A questionnaire prepared addressing those variables were distributed and related documents were also reviewed. The data collected were analyzed using descriptive statistics and the results were discussed based on the outcome and conclusion and recommendations were forwarded. From the output of the research, it was learnt that, private banks in Ethiopia are in good corporate governance foundation because of the regulatory organ strict supervision on each and every action of the banks in the market. However, some important and critical manifestation of good corporate governance are lacking both from regulatory side and from the banks side that would promote the practice some steps higher. It is the rule of the land that dictates the level of good corporate governance than the willingness and awareness of the banks to inculcate this business need into their management system



Practice in Private, Corporate governance