2005 Fiscal Year Final Research Report Summary
RESEARCH ON CORPORATE GOVERNANCE OF BANKS
| Project/Area Number |
16530058
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Civil law
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| Research Institution | Ryutsu Keizai University |
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Principal Investigator |
KANKI Shozo Ryutsu Keizai University, FACULTY OF LAW, ASSOCIATE PROFESSOR, 法学部, 助教授 (50337284)
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| Project Period (FY) |
2004 – 2005
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| Keywords | CORPORATE GOVERNANCE OF BANKS / MAXIMIZATION OF SHAREHOLDERS' PROFITS / PROTECTION OF DEPOSITORS / BANKING REGULATION / SAFE AND SOUND BANKING / MARKET DISCIPLINE / DUTY OF CARE OF BANK DIRECTORS |
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| Research Abstract |
This study focuses on the corporate governance of banks, particularly as it relates to the efforts of banks as stock corporations to coordinate two mandatory objectives : the maximization of shareholders' profits and the protection of depositors.
Some of the results from the earlier research completed in fiscal 2004 form the introductory part of this study. Specifically, I researched how banks have come to be required to have the standing of stock corporations, and how shareholders' rights are treated in the Banking Act of Japan. I also analyzed the duty of care of bank directors, by examining cases from two sources : first, lawsuits sued by The Resolution and Collection Corporation against directors of failed financial institutions ; second, the derivative actions of shareholders. In fiscal 2005 I studied the legal status of depositors. The study led to the following conclusions.
1.If a bank is to be a stock corporation, the principal requirement of the bank is not to maximize its shareholders' profits, but to soundly manage its business. 2.In most cases I analyzed, the duty of care of bank directors reflects to protect depositors and maintain safe and sound management of bank business. 3.The maximization of corporate value for a bank as a stock corporation is the maximization of value for creditors by enhancing the soundness of assets. 4.In balancing the profits of its shareholders and depositors, a bank should understand that the shareholders' profits to be maximized are profits from a mid- to long-term perspective. 5.A bank should understand that the maintenance of the "safety and soundness of banking business" is the interface necessary for achieving the two objectives of maximizing shareholders' profits and protecting depositors. 6.Depositors should have their banks disclose the "credit policies" applicable to the loan business.
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