A survey of corporate governance practices of banks in Kenya

Abstract

Corporate governance has become an issue of global significance. The improvement of corporate governance practices is widely recognized as one of the essential elements in strengthening the foundation for the long-term economic performance of countries and corporations. Following the financial crisis of the latter part of the 1990's the issue of corporate governance has gained prominence internationally and Kenya has not been left behind. Kenya has had its fair share of collapse of financial institutions in the last decade. This research paper examines the corporate governance practices in the banking industry in Kenya and the survey shows an awareness and existence of corporate governance practices. It further illustrates the need to strengthen these practices owing to the special nature of banking with a diversity of stakeholders. The empirical findings of this paper are consistent with the guidelines developed by the capital markets authority and the prudential guidelines issued by the central bank of Kenya. They also relates to practices recommended by other jurisdictions outside Kenya like the Basel Committee on Banking Supervision, the guidelines by the Commonwealth association for corporate governance and the organization for economic cooperation and development.