Corporate Governance in the State-Owned Banks

Abstract

In the article, based on application of agency theory, the specifics of corporate governance in state-owned banks are highlighted. It is determined that the key distinction of state-owned banks is the fact that a state simultaneously can act as an owner, manager, creditor and regulator. The differences of corporate relations in state-owned banks such as the more complicated multilevel system of agency relations, the higher level of information asymmetry and risk of agent's opportunism, the another character of trust manifestation are substantiated. It is highlighted that the presence of complicated corporate relations causes the following risks: the state as an agent of population may be ineffective and use the state-owned banks not so for ensuring of socioeconomic development, as for financing the state's projects or state-owned enterprises; in the case of certain political forces' impact on the formation of the government the state-owned banks activities may be subordinated by motives of certain politicians, interested in using of state-owned banks for achieving their own political goals; the ineffective multi-level delegation of management, monitoring and regulation functions can lead to inefficiencies of state-owned banks in general; the lobbying of state-owned banks' interests may lead to the breach of competitive environment of financial market, manipulation of movement of credit and investment resources etc. The hypotheses, regarding to the factors that can be decisive for the effective corporate governance in the stateowned banks, are formulated. As main factors which may determine the efficiency of corporate governance in the state-owned banks are considered follow: the structure and composition of agency contracts of management in the state-owned banks, level of banking regulator independence and character of its relations with state-owned banks and other government structures; the formation of supervisory boards, taking into account the absence of political engagement of supervisory boards, the appropriate level of professionalism and reputation, the presence of independent members, the application other procedures for the selection of state-owned banks managers, based on the balance of all stakeholders' interests; the appropriate balanced level of transparency.

Analysis of the Impact of State-Owned Banks on the Sustainability of Public Finances

“…The political aspect of state-owned banks has the largest number of scientific studies and the most active academic debate. Controversial aspects of the activities of state-owned banks are the decision making on banking activities and banking operations under political pressure or in the interests of individual politicians (La Porta et al 2002;Yeyati et al 2007;Aysan and Ceyhan 2010;Iannotta et al 2013;Ashraf et al 2018;Smovzhenko et al 2019;Sus and Onychuk 2019;Akimova 2020;Lee et al 2022), lending to political parties during elections under political pressure (Dinç 2005;Ashraf et al 2018;Svistun 2020), lending at low interest rates for political reasons (AlAli and Saeed 2020), lending to companies related to political leaders by ownership (Ohorodnyk 2018a(Ohorodnyk , 2018c, inefficient use of budget funds, and the development of corruption (La Porta et al 2002;Kostohryz and Khutorna 2018;Kasych et al 2020). In his study of state-owned banks, Marois points to the possibility of politicisation of state-owned banks, i.e., dependence on the political will of individual politicians and democratised state-owned banks.…”

Research on Debt Risk Management and Control of High Liability Enterprises

“…The asset liability ratio of real estate enterprises is generally high and increasing year by year. Currently, the asset liability ratio of most enterprises has exceeded 75%, which has also exceeded the standards in the latest three red line regulatory indicators [8]. A high debt ratio can lead to high financial leverage and high financial risks for enterprises, leading to a tendency to pursue short-term benefits.…”

Peculiarities of Financial Policy Formation in the Sector of Enterprises With the State Participation

“…Специфічною проблемою підприємств державної форми власності є складна система агентських контрактів на уп равління. Держава будучи агентом населення в ролі принципала доручає управління під приємств, які їй належать, через делегування ряду функцій урядовим та виконавчим інсти тутам, а ті в свою чергу іншим виконавцям [4].…”