Are Depositors Aware of the Governance of their Banks?1

In the discussion of corporate governance from the standpoint of economists, it is common for economists to pay more attention to the stockholders of a corporation (as stakeholders) than to the creditors. However, the behaviors of depositors as creditors should not be neglected in the management of banking institutions. The purpose of this paper is to analyze statistically the decision factors of depositors in opening an account at a particular bank with respect to corporate governance variables. My result shows that depositors with risk aversion consider banks well managed based on the following: a lower rate of external auditors, a longer time of service by the bank’s president, and the existence of a simultaneous promotion system of the bank’s president and chairperson.