Inefficient and/or ineffective corporate governance arrangements of banks can end up endangering financial stability. Therefore, the efficiency of such arrangements is of paramount importance.
To be efficient, corporate governance structures of banks have to put in place mechanisms allowing them to keep risks under control. With these mechanisms, indeed, decision-makers can react when risks overcome the safety thresholds by bringing them back to acceptable levels.
In the aftermath of the global financial crisis of 2007– 2009, the EU legislator, following the recommendations of the Basel Committee on Banking Supervision, has adopted a number of new rules, which look apt to enhance the efficiency of banking corporate governance arrangements.
However, more time is needed to assess in practice whether such new rules are effectively efficient in enabling banks to manage risk.Business Law Review