الفهرس 
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Abstract
The Egyptian banking sector has been undergoing a series of legislative reforms starting with
the promulgation of the 2003 Banking Law. The law incorporates the guidelines of the Basel
Accords and was declared a major step forward into facing global banking competition and
driving financial growth in Egypt. The purpose of this study is threefold. First, I examine
whether the promulgation of the 2003 Egyptian Banking Law resulted in an improvement in
the performance, governance, and cost of equity capital position of Egyptian banks. Being
more competitive implies better financial and non-financial performance, better protection for
stockholder interests, and lower cost of capital. Second, this study also examines the
association between governance quality on the one hand and performance and cost of capital
on the other hand. Third, I propose a framework for sound bank governance guidelines for
application in the Egyptian banking sector.
I estimate OLS regression models to test these relations. The sample consists of Egyptian
banks whose financial information is available. I measure governance as a multidimensional
composite index comprised of board structure characteristics (board size, board composition,
and CEO/Chairman duality) and ownership structure characteristics (ownership concentration,
foreign ownership, and institutional ownership). I measure performance also as a
multidimensional composite index comprised of Balanced Scorecard dimensions (financial
performance, customer, internal business processes, and learning and growth).
Results indicate well-specified models with high explanatory powers. Evidence indicates that
the law-motivated mergers taking place between 2004 and 2007 had a positive effect on bank
governance quality; specifically, foreign ownership and bank board size increased as a result
of the law. Empirical evidence also suggests that law-motivated mergers had a positive impact
on financial performance and internal business processes. Further, overall bank performance is
a function of governance quality, particularly for banks in the low governance category. I also
find that mergers lead to an increase in the cost of equity capital, especially for acquired or
divested banks. Bank cost of deposits was not affected by the mergers, while it decreases
significantly with high governance quality, especially for the high proportion of foreign
ownership.