Narrow Results

This research highlights the special problems facing the corporate governance of financial intermediaries and combines this theoretical perspective with bank observations in order to offer policy recommendations for their industry. The standard agency theory defines the corporate governance problem in terms of how equity and debt holders influence managers to act in the best interests of those providers of capital to firms. The results show that the relationship between directors’ collateralized shares, loan concentration and a bank’s non-performing loans has a significant positive, indicating that bad corporate governance and loan concentration are important warning signs for banks.