Corporate Governance Report Corporate Governance Report We are a global company with an international shareholder base, so we need sound governance.
Conclusions and Recommendations 1. Introduction Financial institutions are usually faced with liquidity risk when they are unable to sale off their assets on time and on a price that is fair and reasonable without incurring or allowing a decline in their earnings. Liquidity gap may arise in a financial institution as a result of mass withdrawal of deposits by customers Kumar, Massive withdrawal of deposit is not necessarily the primary source of liquidity risk in a financial institution as they are other various types of scenarios that could cause liquidity risk in a financial institution Holmstrom and Tirole, ; Diamond and Rajan, Such scenarios involve long-term lending and large commitment base Diamond and Rajan, This is due to the fact that large commitment and extensive long-term lending may push financial institutions into a liquidity risk especially in a period of liquidity pressure as they are bound to honour them as they become due.
However, it is worthy to mention that when an asset or liability can be sold without any significant loss, financial institutions need not to be concerned about its asset-liability maturity transformation. Liquidity risk may also arise due to economic recession. Liquidity risk arising due to economic downturn can cause banks or the entire banking industry to fail.
This is because of mass withdrawal of fund by depositors occasioned by low revenue generation during the period of severe economic crisis Diamond and Rajan, Liquidity risk is also likely to occur when a project is terminated early or there is a breakdown or delay in cash flow from customers or borrowers Diamond and Rajan, Moreover, Ahmed and Ahmed Liquidity risk may also originate from the very nature of banking; macro factors that are exogenous and financing and operating policies that are endogenous.
A severe liquidity crisis may cause massive drowning in form of bankruptcies and bank runs leading to a drastic financial crisis.
Liquidity risk will affect both the reputation of a bank and its financial performance in any part of the world Jenkinson, For instance, the image of the Nigerian banking industry has been affected in recent years due to liquidity problem.
Most of the commercial banks published annual reports that suggest they were liquid and have the ability to attend to their numerous customers as at when due when they were not. In an attempt to address this problem, the Central Bank of Nigeria being the regulator of bank practices in the country started investigating the liquidity position of various commercial banks in Nigeria in a bit to improve the image of Nigerian banking industry and improve their capacity to satisfy the need of their numerous customers.
During the exercise, some banks were found to have serious liquidity problem and they were dully penalized. This led to a spate of failures of nine banks. Therefore, maintaining a sufficient liquidity is not an option to any bank in Nigeria but a necessity as failure to do so will lead to massive withdrawal funds by the depositors and penalties from CBN.
High competition for customer deposits, a wide array of funding products in wholesale and capital markets with technological advancements have changed the funding and risk management structure in the banking industry.
The inability of a financial institution in Nigeria to maintain appropriate liquidity will result in failures or financial crisis irrespective of their strong earnings, capital base and the quality of its assets Akhtar, It therefore, becomes imperative for financial institutions in Nigeria to put up measures that will help them to deal with the challenges that will arise due to fluctuations in monetary policy.
It is against this backdrop that the study seeks to determine the effect of board committees on liquidity risk management of commercial banks in Nigeria. Specifically, the study examines the influence of board committees on liquidity risk management of commercial Banks in Nigeria as a measure of risk management.
The study makes contribution in different ways. First, whereas prior studies within Nigerian context have considered the effect of corporate governance on financial performance of banks none has considered the influence of board committees on liquidity risk management of commercial banks in Nigeria.
This study makes contribution by bridging the literature gap.Our corporate governance Intertek is committed to high standards of corporate governance, business integrity and professionalism in all its activities. The Board is responsible for the proper management of the Company and is also accountable to the Company's shareholders for ensuring that principles of good governance are applied.
A REVIEW OF CORPORATE GOVERNANCE IN UK BANKS AND OTHER FINANCIAL INDUSTRY ENTITIES We agree with the analysis that corporate governance in the UK is a ‘somewhat present Combined Code or the Walker Report recommendations.
The financial. to , where the Combined Code (henceforth, the Code) was in operation. We construct a unique dataset by hand-collecting information from the Corporate Governance statements included .
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Gatekeepers: The Role of the Professions and Corporate Governance (Clarendon Lectures in Management Studies). The UK Corporate Governance Code (formerly the Combined Code) is primarily a best practice standard of governance for the quality of a company’s board leadership, effectiveness, accountability, remuneration process and investor relations.