Title:
A REVIEW OF THE CORPORATE GOVERNANCE AND PRACTICE IN JORDANIAN BANKS

Authors:
Ala’a Kopti, Hungary

Abstract:

The good corporate governance gained a lot of attention in the Jordanian banking system. Whereas it is widely accepted by many shareholders, managers, and governments as it is based on property rights and principal agent theories of any firm. Moreover, maximizing the profits and its distribution is the first concern of the shareholders perspective and accordingly they judge or decide if the firm has a good governance or no and accordingly recommends that banks should be managed under the same goal. In particular, the problem of the governance is focused on assessing the impact of the implementation of its systems in Jordanian banks and its application mechanism in accordance, with the Jordanian law and the responsibility of the shareholders. Therefore, the banks rapidly accept these regulations to provide a basis for their corporate performance and future development, to gain trust in its activities. The main objective of this study is to describe tendencies of corporate governance in Jordanian banks form a legal point of view, in parallel with the new regulations and financial market reform. This objective is achieved through a review of prior studies conducted in the banking sector in Jordan. Present studies attempts to examine the extent of corporate governance rules in the Jordanian legislation which regulates the activities of the Jordanian bank sector by achieving justice among shareholders in obtaining information and other rights. As an example, the ownership of employee’s shares in the capital is a way to ensure and maintain loyalty to the company, as well as control. Heightened without excessively preventing the firm and its innovations, and thus minimizing the risks that may occur from the misdeeds of corporate officers at the regional, national and global levels. The findings indicate that there is a development in the number of Jordanian banks and their operating branches while the regulations have different effects on bank risk management, depending on the bank's corporate governance structure. This study recommends conducting further studies regarding the development approach of the level of governance in Jordanian banks such as adopting the application of the principles and practices of the institutional governance of information technology.