IDEAS home Printed from https://ideas.repec.org/a/eme/jeaspp/jeas-12-2021-0254.html
   My bibliography  Save this article

The impact of public legal protection on the internal corporate governance efficiency in banking sector

Author

Listed:
  • Hani El-Chaarani
  • Zouhour El-Abiad

Abstract

Purpose - The purpose of this research is to reveal the impact of public legal protection on the efficiency of internal corporate governance in banks. In addition, this research proposes a new corporate governance index that could be employed by the banking sector to evaluate the performance of their internal corporate governance mechanisms. Design/methodology/approach - Orbis database, annual reports and direct questionnaire are used to collect corporate governance data of 127 banks from 14 countries during 2020. The Mann–WhitneyU-test is employed to compare the efficiency of corporate governance mechanisms based on three subsamples of countries having different legal protection levels (weak, middle and strong). Findings - This research suggests a new corporate governance index for banks based on seven constructs and 62 variables. This new non-parametric index could be used by bankers to improve the monitoring process and enhance the overall performance of banking. The results of this research show that the existence of a strong public legal protection environment within a specific country enhances the efficiency of corporate governance mechanisms in the banking sector and thus, leads to improve the protection of shareholders, depositors and other relevant stakeholders. However, in countries that are characterized by weak legal protection level, the efficiency of corporate governance mechanisms is very low and there are possibilities of entrenchment, expropriation and extraction of private benefits. These findings could be interpreted within the prediction of agency, moral hazard, asymmetric information, political and entrenchment theories. Originality/value - This research paper provides information that bankers and other relevant stakeholders in the banking sector working in MENA (the Middle East and North Africa) and European countries. A strong public legal protection level could improve the efficiency of internal corporate governance mechanisms within banks.

Suggested Citation

  • Hani El-Chaarani & Zouhour El-Abiad, 2022. "The impact of public legal protection on the internal corporate governance efficiency in banking sector," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 40(3), pages 482-515, April.
    • Handle: RePEc:eme:jeaspp:jeas-12-2021-0254
    DOI: 10.1108/JEAS-12-2021-0254
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JEAS-12-2021-0254/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/JEAS-12-2021-0254/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/JEAS-12-2021-0254?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jeaspp:jeas-12-2021-0254. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.