Letter of Submission

To

Md. Ataur Rahman

Assistant Professor

Department of Finance and Banking

Begum Rokeya University, Rangpur.

Subject: Submission of report titled “The Impact of Corporate Governance on Firm

Performance: A Review of Banking Sector in Bangladesh.”

Dear Sir,

I would like to submit the report titled “The Impact of Corporate Governance on Firm
Performance: A Review of Banking Sector in Bangladesh.” as a requirement of the MBA
(Professional) Course Curriculum. It was a great achievement to work under your
supervision. In my report, I have tried to reflect in effects of corporate governance on firm
performance of banking sectors. I also confess that this report has some limitations due to
limited resources. So I hope that you will be kind enough to consider the limitations of this
report.

I would like to thank you for your encouragement and support which inspired me to work
enthusiastically. It would be my pleasure to clarify any discrepancy that may arise or any
clarification that you may require regarding my report.

Sincerely,

---------------------

Md. Aktaruzzaman
ID: 0317052036, Session: Summer-17
Reg. No. : 300764, MBA (Professional), 5th Batch.
Department of Finance and Banking
Begum Rokeya University, Rangpur.

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 Declaration

I am Md. Aktaruzzaman, the student of the department of Finance and Banking, Master
of Business Administration (Professional), bearing ID: 0317052036, Reg. No. 300764,
Begum Rokeya University, Rangpur, hereby I would like to declare that the report on “The
Impact of Corporate Governance on Firm Performance: A Review of Banking Sector in
Bangladesh.” is an authentic work prepared under the supervision of Md. Ataur Rahman,
Assistant Professor, Department of Finance and Banking, Begum Rokeya University,
Rangpur.

I also confirm that the content of report has not been submitted or published in any form to
any other university or institutions for any degree for other process.

………………………………..

(Md. Aktaruzzaman)

ID: 0317052036

Reg. No. : 300764

Session: Summer-17

MBA (Professional), 5th Batch.

Department of Finance and Banking

Begum Rokeya University, Rangpur.

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 Supervisor’s Certificate

This is to certify that the report on “The Impact of Corporate Governance on Firm
Performance: A Review of Banking Sector in Bangladesh.” has been prepared by Md.
Aktaruzzaman, ID: 0317052036, Reg. No. 300764, Master of Business Administration
(Professional), Department of Finance and Banking, Begum Rokeya University, Rangpur,
under my close supervision and guidance.

I wish his success at every sphere of life.

………………………………

Md. Ataur Rahman

Assistant Professor
Department of Finance and Banking
Begum Rokeya University, Rangpur.

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 Acknowledgement

All praise to Almighty Allah, who gave me strength to complete this report. The writing of
this report has been difficult, but the preparation was a more difficult journey. Without the
help of few people I would have not been possible to complete this report on due time. So
I am really much thankful to those people for their tremendous support to make this report
a reality. To start with, I am utmost grateful to my supervisor Md. Ataur Rahman, for her
great support and assistance. His guidance in choosing the subject area of the report helped
me immensely and guided me to stay on the right track and successfully complete my
report.

My gratitude goes to all the people for their active cooperation and willingness to help me
at all times. Without them, I would not have the amazing experience to finish my report.

I would like to give a special thanks to the Department of Finance and Banking, Begum
Rokeya University, Rangpur, authority for making this opportunity available for me and
putting this kind of content which will help us to fight the real world. Finally, I would like
to thank my friends and family members who gave me mental support and strength to
complete my report successfully.

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 Preface

Corporate Governance involves the building of a set of relationships between the company,
its board, the management, the shareholders and other stockholders by putting in place a
structure and a system through which the established goals of the company may be
achieved. The Corporate boards, as the apex governing organizations, are responsible for
practicing good governance. The quality of governance is reflected in many ways, inter
alia, investors’ willingness to invest, customer satisfaction or dissatisfaction, and whether
company’s equity is trading at prices well above or below the real economic value of the
company. The recurrent corporate failures and corporate misconduct are a symptom that
corporate governance mechanism has failed to come up to the expectations of various
corporate constituencies. There is perceptible lack of public confidence in the develop
governance structures and tools that are capable of thwarting attempts to undermine norms
of good governance.

Corporations today are responsible for generating the majority of world economic activity.
They are the prominent players in all markets ranging from goods and services to capital
and resources. So, the Corporations and Corporate Governance, which have remained the
matters of domestic policy interest for many decades, have moved to forefront of
international thinking with the gradual integration of global economics. There is a growing
interaction among different stakeholders about Corporate Governance and the ways to cope
up with increasingly dynamic business paradigm. It has become more critical as companies
operate in an increasingly complex environment.

Md. Aktaruzzaman

ID: 0317052036

Reg. No. : 300764, Session: Summer-17

MBA (Professional), 5th Batch.

Department of Finance and Banking

Begum Rokeya University, Rangpur.

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 Abstract
Corporate Governance (CG) becomes a buzzword due to its serious attractiveness to
different stakeholders like academicians, practitioners, policy makers etc. In the wake of
the century, corporate management becomes the threat of financial manipulator which
raises concern to all. CG enters into the realm of board room as a survivor from
unscrupulous attitude of few active agents who always search for loopholes to plug in.
Banking sector in Bangladesh is not an exception. Like other developing economies, the
banking sector becomes the dominant financial intermediary in the financial system of
Bangladesh due to underdeveloped capital markets, limited availability of financial
instruments and lack of confidence in financial system. Given the bank's intermediary role
in providing stability to the financial system, Bangladesh as well as many emerging
economies has implemented policies to develop and restructure the banking sector. An
important feature of these policies was to design guidelines for 'best practices' known as,
‘CG of banks'. The unique feature of banking industry which deals with the money of the
depositors conveys the inevitability to implement CG in this sector. Bangladesh owns a
rich history of code of CG. At regular intervals, such code has been updated. Bangladesh
Bank, the central bank of Bangladesh, has also issued a separate code which is applicable
to banks in addition to the guidelines issued by Bangladesh Securities and Exchange
Commission (BSEC). These guidelines are based on the Agency Theory and follow Anglo
American model of CG. However, different theories and models are developed globally to
address the particular needs under consideration. This study aims to find out any
relationship between CG as practiced by banks with performance. This study uses both
primary and secondary sources of data for the analysis and exploits different descriptive
and inferential statistical tools for drawing conclusions. It also employs ethnography as a
research method. The very purpose of this methodology is to interpret social reality.

Keywords: Corporate Governance, Banks, Bangladesh, BSEC, Agency Theory.

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