Corporate Governance Practices in Commercial Banking Sector of Malawi: Evidence from Annual Reports

Effective corporate governance practices are essential to achieving and maintaining the public trust and confidence in the banking system, as a result they are critical to the proper functioning of the banking sector and economy as a whole. However, little attention has being given to corporate governance of banking sector especially in developing economies. The study examines corporate governance practices of commercial banks in a developing country by measuring the level of corporate governance related disclosures in the annual reports in light of the corporate governance guidelines for Banks. Using a corporate governance disclosure index the study results give an overall disclosure score of 0.69 indicating that on average 69% of the items of disclosure were actually disclosed in the annual reports of the sampled banks. The overall score is a comforting and good sign of progress by the banks. The study apart from providing insight and evidence of the extent of corporate governance practices of banks in developing countries, it further highlights to the regulators and practitioners in the banking industry of existing gaps that need filling in order to fully comply with the corporate governance guidelines for banks in Malawi.