The global financial crisis has posed challenges to financial institutions governance. Meeting these challenges requires an understanding of governance dynamics in relation to institutions’ performance within a changing environment. The nature and scope of institutional response to a changing environment depends upon inherited governance structures, including socioeconomic conventions and rules of behavior at the macro level and time, expertise and common commitment of directors at the micro level. Innovation and learning-by-doing in governance can be an effective reform strategy. Innovation in governance may include the establishment of new norms of economic behavior and the transformation of decision-making process and the reallocation of responsibilities to directors and senior management. This may also inform regulatory approaches in strengthening financial institutions governance, based on improved disclosure, independent and competent boards.
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