Key Questions and Core Failures in Bank Governance

Francesco de Zwart
Additional contact information
Francesco de Zwart: University of Adelaide

Chapter Chapter 6 in The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia, 2022, pp 71-81 from Springer

Abstract: Abstract In Chapter 6 of the Key Code and Advanced Handbook we postulate the key questions for the governance and supervision of major banks in the GFC and beyond to the Australian Banking Royal Commission Inquiry into banking misconduct. In the GFC, Sahlman found five related systems which had failed – incentives, control and information technology, accounting, human capital and culture. We then identify the ‘core’ areas of corporate governance failures from the GFC and beyond including the securitisation of mortgage-backed securities. There follows an overview of multiple governance failures in banks – incentives, corporate/bank and risk culture, technology, boards, risk identification, assessment, control/management and reporting, (again) securitised mortgage products, the system of bank regulation and shareholders. We then examine failures identified in commentator studies and governmental and market participant reports – primarily incentives, board structure/composition and processes and risk management. We find that these failures were exacerbated by complex and opaque bank structures, independence being emphasised at the expense of expertise and weaknesses leading to excessive risk-taking where risk management and compensation structures encouraged high risk. We identify excessive reliance on rating agencies and self-regulatory regulation, opaque corporate reporting, complexity, risk and valuation of new derivatives products.

Keywords: Key questions; Core failures of corporate governance; Global Financial Crisis; Securitisation; Incentives; Risk culture; Independence; Expertise; Risk management; Significant causes (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-1710-2_6

Ordering information: This item can be ordered from
http://www.springer.com/9789811617102

DOI: 10.1007/978-981-16-1710-2_6

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().