Impact of Corporate Governance on Bank Performance A Case Study of Equity Bank Kenya

TABLE OF CONTENTS

DECLARATION ..................................................................................................................................... i

APPROVAL ............................................................................................................................................ ii

DEDICATION ...................................................................................................................................... iii

ACKNOWLEDGEMENT ..................................................................................................................... iv

TABLE OF CONTENTS ........................................................................................................................ v

ABSTRACT ........................................................................................................................................... ix

CHAPTER ONE ................................................................................................................................... 1

INTRODUCTION .................................................................................................................................. 1

I. I Introduction ....................................................................................................................................... 1

1.2 Background of the study ................................................................................................................... 1

1.4 Objective ........................................................................................................................................... 3

1.5 Justification of the survey ................................................................................................................. 3

1.6 Conceptual Frainework ..................................................................................................................... 4

CHAPTER TWO .................................................................................................................................. 6

LITERATURE REVIEW ........................................................................................................................ 6

2.2 Corporate Failure .............................................................................................................................. 8

2.3 Overview of Development in Corporate Governance ..................................................................... 14

2.3.1 Global Initiatives on Corporate Governance ................................................................................ 14

2.3.2 Corporate Governance in the Common Wealth ........................................................................... 14

2.3.3 Corporate Governance in Africa .................................................................................................. 15

2.3.4 Corporate Governance in East Africa .......................................................................................... 15

2.3.5 Corporate Governance in I(enya .................................................................................................. 15

2.4. Theories of Corporate Governance ................................................................................................ 16

2.4.1 The silnple Finance Model ........................................................................................................... 16

2.4.2 The Stewardship Model ............................................................................................................... 18

V

2.4.3 'The Stake holders Model. ............................................................................................................ 19

2.4.4 The Political Model ...................................................................................................................... 20

2.4.5. E1nerging Political Issue ............................................................................................................. 21

2.5 Models of corporate governance ..................................................................................................... 22

2.5.1 Anglo-A1nerican Model ............................................................................................................... 22

2.5.2 Non- Anglo-American Model ...................................................................................................... 24

2.6 Principles of Corporate Governance ............................................................................................... 25

2.6.1 Authority and duties of members/shareholders ............................................................................ 25

2.6.2 Leadership .................................................................................................................................... 25

2.6.3 Appoint1nents to the Board .......................................................................................................... 26

2.6.4 Strategy values ............................................................................................................................. 26

2.6.5 Corporate Performance, Viability and Financial Sustainability ................................................... 26

2.6.6 Corporate co1npliance .................................................................................................................. 26

2.6.7 Corporate Communication and accountability to members ......................................................... 27

2.6.8 Responsibility to stakeholders ...................................................................................................... 27

2.6.9 Balance of Power ......................................................................................................................... 27

2.6.10 Internal control procedures ........................................................................................................ 27

2.6.11 Assessment of Performance of the Board of Directors .............................................................. 27

2.6.12 Induction, Development and Strengthening of Skill of Board Members ................................... 27

2.6.13 Appointment and development of executive management ........................................................ 28

2.6.14 Adoption of Technology and skills ............................................................................................ 28

2.6.15 Manage1nent Corporate risk ....................................................................................................... 28

2.6.16 corporate culture ......................................................................................................................... 28

2.6.17 Social and Environmental Responsibility .................................................................................. 28

CHAPTER THREE ............................................................................................................................ 29

METHODOLOGY ................................................................................................................................ 29

3.1 Introduction ..................................................................................................................................... 29

3.2 Research Design .............................................................................................................................. 29

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3 .3 Population and Sampling Design .................................................................................................... 29

3.3.1 Population .................................................................................................................................... 29

3.3.2 Sampling Design and Sample Size .............................................................................................. 29

3.3.2. l Sampling Frame ........................................................................................................................ 29

3.3.2.2 Sampling Technique and Sample Size ...................................................................................... 30

3.4 Data Collection Methods ................................................................................................................. 30

3.5 Research Procedures ....................................................................................................................... 30

3.6 Data Analysis Methods ................................................................................................................... 30

CHPTER FOUR .................................................................................................................................. 31

DATA FINDINGS AND ANLYSIS .................................................................................................... 31

4.1 Introduction ..................................................................................................................................... 31

4.2 General profile of the Respondents ................................................................................................. 31

4.2.1 Sex ................................................................................................................................................ 31

4.2.2 Bank ofRespondents .................................................................................................................... 31

4.2.3 Age of Respondents ..................................................................................................................... 32

4.2.4 E1nploy1nent ................................................................................................................................. 32

4.2.5 Education ..................................................................................................................................... 33

4.3 Screening ......................................................................................................................................... 33

4.4 expectations ..................................................................................................................................... 34

4.5 Actual perfonnance ......................................................................................................................... 37

4.6 Comparison of the expected and the actual performance of the board .......................................... .40

4. 7 Appointment to the Board of Directors .......................................................................................... .40

4.8 Interest of shareholders ................................................................................................................... 40

CHAPTER FIVE ................................................................................................................................. 42

CONCLUSIONS, LIMITATIONS OF THE STUDY AND RECOMMENDATIONS ....................... 42

5.1 Conclusion ...................................................................................................................................... 42

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5.2 Recommendations ........................................................................................................................... 42

5.3 Limitations of the study .................................................................................................................. 43

BIBLIOGRAPHY ............................................................................................................................... 44

TIME PLAN ......................................................................................................................................... 46

BUDGET .............................................................................................................................................. 47

APPENDICES ..................................................................................................................................... 48

APPENDIX I: QUESTIONNAIRE ...................................................................................................... 48