BOARD OF DIRECTOR’S SIZE, INDEPENDENCE, INSTITUTIONAL SHAREHOLDINGS AND PERFORMANCE: AN ANALYSIS OF PRIME BANK LIMITED

Abstract

Banks lend money that is in effect borrowed from depositors, and the failure of banks could result in a monetary loss for the depositors. The interests of depositors should be protected, and for this reason, amongst others, the Task Force believes that the importance of corporate governance of banks differs from that of other companies and needs special attention. The boards and management of banks have to take into account the interests of these non-shareholding stakeholders, i.e. depositors. Reflecting the relatively short history of economic development in the region, many Asian jurisdictions do not have in place sufficient institutional infrastructure (e.g. sufficient resources, experience, focus, and know-how) necessary for effective enforcement of the corporate governance policy framework. Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the goals for which the corporation is governed. The principal players are the shareholders, management and the board of directors. This research is done basically to give an idea about the corporate governance of Prime bank ltd. Both primary and secondary data are used. Data are collected through informal discussion and secondary method (book, official manual). No questionnaire has developed here. The research was structured on a number of objectives. Research starts with an overview of the corporate governance of Prime bank ltd. Some people still don’t think the corporate governance as a most important and sensitive issue of banking sector. Corporate governance is of course not just important for banks. It is something that needs to be addressed in relation to all companies. It is to be believed that sound corporate governance is particularly important for banks. Unlike other companies, most of the funds used by banks to conduct their business belong to their creditors, in particular to their depositors. Linked to this is the fact that the failure of a bank affects not only its own stakeholders, but may have a systemic impact on the stability of other banks. All the more reason therefore to try to ensure that banks are properly managed. This report is done because there were only no research found on corporate governance on individual bank specifically Prime bank LTD. This paper will aim to find out that whether board of director’s size, independence, institutional shareholdings is related to bank’s performance. The significance of this study is that now a particular research gap will be filled up and it will indicate if any further related research is needed or not. I have tried my best to complete this research but there are some limitations. I need forgiveness for my unintentional mistakes.