The Public Duties and Social Responsibilities of Big British Banks

Andy Mullineux ()

International Advances in Economic Research, 2011, vol. 17, issue 4, 436-450

Abstract: The implicit social compact between the big British banks and the U.K. government broke down in the 1980s. Since then, the banks have sought to maximize shareholder value by closing less profitable branches, thereby reducing access to finance and increasing risk taking. Post-1990, the big banks also substantially increased their dependency on wholesale funding and dramatically reduced their liquid asset holdings, which increased their leverage and risk exposure. The U.K. government’s response to the financial crisis was to encourage mergers between banks, increasing concentration in the industry. The government bail-outs allowed the big banks to enjoy free insurance paid by taxpayers. The establishment of an autonomous retail banking (and insurance) utility regulator and a system for taxing the big banks fairly is recommended. Copyright International Atlantic Economic Society 2011

Keywords: Bank regulation; Corporate governance; Corporate social responsibility; H41; G21; G38 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1007/s11294-011-9319-y

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