Corporate Governance in the Hungarian Banking and Insurance Sector

Zusammenfassung

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The financial sector has been one of the most profitable sectors of the Hungarian economy for years. The same financial sector which, in the nineties, underwent a painful and very expensive consolidation period. This matter of fact has drawn the researchers' attention to that particular sector. Is this the result, or at least partly, of outstanding corporate governance structures and practices? Making use of the questionnaire developed by the University of Chemnitz, the researchers wanted to get a detailed picture about the Hungarian financial sector's corporate governance structures and its approach of the corporate governance topic. Corporate governance is not the greatest preoccupation of the Hungarian financial institutions, their outstanding financial results are not due to outstanding governance structures, and they broadly have a legal approach of this topic.

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Auszug

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Corporate Governance in the Hungarian Banking and Insurance Sector

1. Introduction

The field of corporate governance generally is concerned with the basic issue of instilling investors with the confidence that will permit them to hand over their money to managers. Over the past two decades, corporate governance has become a leading topic of discussion for researchers of finance, management, and law. Their goal is to find the optimal organizational arrangements to both protect shareholders' rights and at the same time increase economic efficiency.

Recent developments in corporate governance were mainly influenced by spectacular collapses in the United States and the United Kingdom caused by fraud, by mismanagement, or by the executives' pay and incentives. It is enough to mention the scandal linked to Barings Bank, one of the world's historic banks.

However, the situation of the Hungarian financial sector is extremely good: it has been one of most profitable sectors of the economy for years. The same Hungarian financial sector which, in the nineties, underwent a painful and very expensive consolidation period.

It is exactly the outstanding financial situation that draws the researcher's attention to that particular sector. Are these the result, or at least partly, of outstanding corporate governance structures and practices? Making use of the questionnaire developed by the University of Chemnitz, we wanted to get a detailed picture about the Hungarian financial sector's corporate governance structures and its approach of the corporate governance topic.

In our initial hypothesis, presently corporate governance is not the greatest preoccupation of Hungarian financial institu...

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