Is corporate governance effective in preventing bank failure? A Case study of the collapse of Chase Bank Limited

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Is corporate governance effective in preventing bank failure - A Case study of the collapse of Chase Bank Limited.pdf(2.26 MB)
Date
2023
Authors
Arina, G. W.
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Publisher
Strathmore University
Abstract
Kenya experienced an onslaught of bank failures between 2015 and 2016 which had serious adverse effects on the economy and bank stakeholders. The bank failures have been attributed to corruption, weak internal control systems and poor Corporate Governance (CG) Kenya being a Commonwealth country adopts the Anglo-American CG model. The model is shareholder-centric and arguably unsuitable for banking institutions, due to their unique features of being quasi-public, highly leveraged institutions with a wide range of key stakeholders, thus increasing the stakeholder conflict. The peculiarities of banking institutions vis-a-vis corporations and the crucial stakeholder concerns, necessitate a probe into CG as a crisis prevention mechanism particularly because it has been used as an off-the-rack solution for a variety of problems in recent years despite its failure being elucidated globally by the Global Financial Crisis (GFC) and nationally by the bank failures experienced between 2015 and 2016. This is a doctrinal research that analyses both primary and secondary sources of data on bank governance. The research interrogates several models of CG to determine the most suitable for Kenyan banking institutions, analyses the regulatory framework on bank governance in Kenya to determine whether the same is sufficient in curbing failure and includes a case study on the failure of Chase Bank Limited (CBL), which was felled by the failure of its CG mechanism and lax regulatory supervision. Success in curbing future bank failures depends on the gatekeeper's accountability and the regulator’s willingness to enforce already existing laws. To do so, the regulators must coordinate amongst themselves and be independent of external influence.
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Arina, G. W. (2023). Is corporate governance effective in preventing bank failure? A Case study of the collapse of Chase Bank Limited [Strathmore University]. http://hdl.handle.net/11071/13434
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http://hdl.handle.net/11071/13434
Collections
LLM Theses and Dissertations (2023)