Assessing and Measuring Banking Culture

Beatriz Fernández Muñiz (), José Manuel Montes Peón () and Camilo José Vázquez Ordás ()
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Beatriz Fernández Muñiz: University of Oviedo
José Manuel Montes Peón: University of Oviedo
Camilo José Vázquez Ordás: University of Oviedo

Chapter Chapter 16 in Contemporary Issues in Banking, 2018, pp 363-387 from Palgrave Macmillan

Abstract: Abstract A crucial lesson to be learned from the latest financial crisis is the importance of the strength of the banking system. A strong banking system needs appropriate prudential regulation that requires institutions to have a level of capital that is high enough to absorb the losses they may suffer due to the risks they take. However, this is no longer enough. The crisis has shown that it is necessary to analyse the soundness of an entity including aspects related to banking culture as a fundamental driver of excessive risk-taking, misconduct and compliance risks. The pre-crisis banking culture was characterized by very poor standards of conduct, which not only led to putting the solvency of financial institutions at risk but also to manipulating the market and improperly marketing banking products and services, resulting in economic harm to clients and serious risk to the stability of the financial system as a whole. Having learned from this lesson, post-crisis banking regulation and supervision now promotes new practices and methods of forward-looking prudential supervision. This chapter reviews the evolution and current state of the issue, paying special attention to the possible methods that may be applied to the assessment and measurement of banking culture.

Keywords: Banking culture; Post-crisis banking regulation; Compliance; Corporate behaviour (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-319-90294-4_16

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DOI: 10.1007/978-3-319-90294-4_16

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