The role of board committees in monitoring the performance of Jordanian listed banks

Abstract

Bank failure gives rise to a systemic risk that can affect the whole of the banking system not just an insolvent bank. Because of this systemic risk, it is recognised that special regulatory provisions are required to ensure bank security. The Global Financial Crisis (GFC) in 2008 motivated governments around the world to re-evaluate their financial regulatory systems and to consider new measures to avoid a future banking crisis. This thesis considers the role that bank Board Committees should perform in ensuring bank security. It draws on international literature and experience to examine the importance of Board Committees (Audit Committee, Risk Management Committee, Remuneration Committee and Appointments Committee) and their role in improving the monitoring of the performance of directors and overall performance in Jordanian listed banks. The focus is bank governance in Jordan because in Jordan the financial market is underdeveloped and banks are typically the most important source of finance giving rise to the problems of systemic risk and catastrophic collapse of the financial system. The thesis argues that the Board Committees and their independence are important in monitoring the performance of directors in Jordanian listed banks as well as providing stability and integrity of the banking system in Jordan in facing any financial crisis. It argues that, in relation to banks, Board Committees should provide objective oversight of the banks operations, be independent and mandatory as a response to agency problems and the serious risks to investors, depositors and the economy from risk taking by bank management.

Date of Award	2014
Original language	English