International Journal of Commerce and Management Research

Authors
Siddharth Shankar Kanungo, Dr. Niranjan Nayak

Abstract
In the present day liberalized economic environment where the countries are well integrated into the world market, the banking sector cannot ignore the importance of Corporate Governance. Better Corporate Governance necessitates the separation of ownership from management. This separation of ownership and control gives rise to agency problems. The paper discusses mechanisms and their impediments to monitor and shape banks' behaviour to deal with such problems. It reviews the theoretical framework of Corporate Governance in the light of agency theory, stakeholder theory and the stewardship theory. It also highlights the need for Corporate Governance in banking sector in general and that of India in particular. The paper makes a modest attempt to establish the linkage between Corporate Governance and financial performance with the help of past studies and suggests that banks with effective Corporate Governance mechanisms have better financial performance.