Money, finances and credit

New dimensions of internal controls in banking after the GFC

Economic Annals-XXI

Economic Annals-ХХI: Volume 176, Issue 3-4, Pages: 38-48

Citation information:
Lentner, Cs., Vasa, L., Kolozsi, P. P., & Zéman, Z. (2019). New dimensions of internal controls in banking after the GFC. Economic Annals-XXI, 176(3-4), 38-48. doi: https://doi.org/10.21003/ea.V176-04

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Csaba Lentner
D.Sc. (Public Finance),
Full Professor,
Head of Department,
Faculty of Political Sciences and Public Administration,
Public Finance Research Institute,
National University of Public Service;
PADS Leader Economist, Central Bank of Hungary
5 Ménesi Str., Budapest, 1118, Hungary
lentner.csaba@uni-nke.hu
ORCID ID: http://orcid.org/0000-0003-2241-782X

László Vasa
D.Sc. (Economics),
Research Professor,
Széchenyi István University
1 Egyetem Str., Győr, H-9026, Hungary
laszlo.vasa@ifat.hu; vasa.laszlo@sze.hu
ORCID ID: https://orcid.org/0000-0002-3805-0244

Pál P. Kolozsi
PhD (Economics),
Associate Professor,
Corvinus University of Budapest and National University of Public Service
Hungary. Budapest, 1118, Ménesi út 5. 509/B
Kolozsi.Pal.Peter@uni-nke.hu
ORCID ID: https://orcid.org/0000-0001-5713-776X

Zoltán Zéman
D.Sc. (Economics),
Full Professor,
Head of Department,
Faculty of Economics and Social Sciences,
Business Institute,
Szent István University
1 Páter Károly Str., Gödöllő, 2100, Hungary
zeman.zoltan@gtk.szie.hu
ORCID ID: http://orcid.org/0000-0003-2504-028X

New dimensions of internal controls in banking after the GFC

Abstract. The weakness of the control function of governments and central banks was the main regulatory cause of the global financial crisis (GFC) broke out in 2007, but the suboptimal regulatory environment «corrupted» the quality of internal control and audit of banks as well. After the crisis, corporate governance issues appeared in the focus of international organizations. In this paper, we present the relevant international recommendations aimed at improvement of the weak corporate governance practices of the banking sector. Based on the comparison of pre- and post-crisis internal control functionalities which are presented as a meta-analysis and a systematic review of the existing empirical researches, the authors conclude that the stricter guidelines could and can have a positive impact on banks’ operations stabilizing through the strengthening of internal control practices.

Keywords: Internal Control; Banking Sector; Global Financial Crisis; GFC; Corporate Governance; Corporate Social Responsibility; CSR; CRM; RAR; CRD Directive; EBA; Basel Committee

JEL Classification: G21; G34; H12

Acknowledgements: This study is written as a part of support for Prof. Lentner at PADS Foundation – The National Bank of Hungary (Magyar Nemzeti Bank).

Authors’ Contribution: Each author contributed equally to the research.

DOI: https://doi.org/10.21003/ea.V176-04

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Received 20.10.2018
Received in revised form 20.03.2019
Accepted 25.03.2019
Available online 20.08.2019

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