Legal intersection between corporate governance and bank financing of companies in Burundi

Abstract

In Burundi, corporate governance is a new concept in the legal perspective; we find a poor legal system and reluctance to enforce the laws. The end result is that we find many companies in a bad position and in their downfall they also involve banks that give them debts which they are unable to repay. The main objective of this study is to analyze whether the laws governing bank financing can, in one way or another, influence the way corporate governance is done in companies. What the researcher has found is that through the system of monitoring, bank finance influences corporate governance in Burundi but also that though bank financing plays an important role in corporate governance, the law in Burundi is extremely weak and enforcement inadequate. This to mean that there is still a long way to go, whether in the financial sector or in the arrangements of the regulatory framework before we reach effective corporate governance in Burundi. The main recommendation is that after improving the legal and institutional framework of corporate governance, coaching is necessary to help to reach a good practice in that domain. Also, as banks are a part of the corporate governance system, they should be able to ensure compliance with core company law obligations.