Carrots and sticks in bank governance: time for a bigger stick?

Richard Ridyard

Journal of Financial Regulation and Compliance, 2019, vol. 28, issue 4, 527-539

Abstract: Purpose - This paper aims to investigate how bank governance can be altered to reduce risk taking and engender greater financial stability. Design/methodology/approach - The paper reviews existing bank governance arrangements, contemporary challenges and alternative reforms. Findings - It is argued that recent reforms are incomplete. Greater countervailing incentives for bank managers and shareholders are required. This prompts an inquiry into the merits and demerits of four types of reform: changes to executive compensation arrangements; the introduction of a liability standard for directors; the removal of limited liability for bank shareholders; and a criminal offence for managers. Originality/value - Discussion illumines several problems with the current approach to bank governance and provides insights that can help direct future reform.

Keywords: Corporate governance; Banking system; Banking reform; Bank regulation; Banking law (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-05-2018-0084

DOI: 10.1108/JFRC-05-2018-0084

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