The Impact of Corporate Governance to Business Performance: Meta-Analysis from Other Select Asian Bank Settings versus the Philippines

Abstract

Corporate governance has been a blueprint of many organizations across different industries. It is a concept that serves as a driver for firms to do well and good in terms of managing their business resources, systems, processes, and stakeholders. It can be likened to a code of ethics so that businesses can function well and ensure that it has rightfully complied with all regulations and business standards. Issues related to good governance still exists – whether they may be favorable or not. There are still other firms that do away with the set rules to be adhered to in the Corporate Governance stipulations. Specifically, banks, both local and foreign, still experience mishaps and the integrity of the board or management is still tested against circumstances. The weight of importance of corporate governance for investors and other stakeholders may not matter so long as their major or main interest is protected. However, the question of being sustainable relating to good governance should be established. When no one is looking, all deals done within the banking operations should always be ethically aligned in the Code set forth by the company. The adage “The end justifies the means” is not enough to verify that good governance is in place. The applicability of the aforementioned does not conform with the concept in this study. The means is very important as it becomes a standard and practice that will be difficult to change in the long run. Moreover, if you are used to doing it, to the point that it can also cause you to deviate from what is supposed to be rightfully and ethically done, then the process will collapse and eventually create lapses in the corporate governance system of banks. Different banks may have different practices and executions of what is called corporate governance. However, this concept is benchmarked and has a common denominator – that is, to be guided accordingly. The foundations set by banking firms should be in their culture or incorporated in their everyday operations so that stakeholders will be used to its customs and just do things naturally, and ethically.

As for the methods employed to analyze various related studies, observations and utilization of secondary data were employed. Eventually, the results showed that in the Philippines, it may be viewed for local banks to have integrity when it comes to monitoring mechanisms. Audit, both internal and external, is in place. Controls are a vital part of local banks’ operations. There are various specialized units within the banking operations, whose thrust is very specific. There is a compliance unit, which is totally separate from the general affairs of the Legal department. The compliance covers concerns specific to depositors’ welfare and regulations related such as Agri-Agra and due diligence. There is also a separate division that monitors various risks as identified usually by banks. Operational risk that covers fraud, market and liquidity risk that also cover interest rate risk, credit risk that maintains tools for loan defaults and behaviors, and business continuity management that ensures operations will not be hampered in times of fortuitous events. Eventually, such controlled measures have put local banks at their utmost integrity whilst attaining their profit-driven objectives.

Further, the meta-analysis is focused on select Asian setting only, not mentioning other areas or scope of practices from other borders or countries. Future researchers can dig dipper and create more variables to interrelate business performance and good corporate governance.