Corporate Governance and Risk Management among Banks in Ghana

Abstract

Risk management is gradually becoming an area of concern to many organizations including banks due to the frequent banking crises. As a result of the 2007 global financial crisis and several corporate failures, there have been immense calls for good corporate governance practices to be employed in the running and managing of corporations. Good corporate governance helps corporations in managing risks. This study examined the relationship between corporate governance and risk management of banks in Ghana. The study used panel data generated from the annual reports of 18 sampled commercial banks for an eleven-year period, 2008 to 2018. The study employed fixed and random effect models of regression via GLS based on the outcome of the Hausman (1978) specification test. The findings revealed that institutional ownership and bank expert are positively associated with banks risk management specifically liquidity risk. Also the presence of risk management committee is positively significant with capital risk. The study recommends that Shareholders must review the banks governing board to include more bank expert to serve as a control mechanism to enhance proper risk management. The study also recommends that shareholders must establish or strengthen risk management committee to serve as a control mechanism.