Was the Crisis due to a shift from stakeholder to shareholder finance? Surveying the debate

Giovanni Ferri and Angelo Leogrande

No 108, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: We discuss the literature on the shift from stakeholder to shareholder finance behind the Great Financial Crisis (GFC). Traditional banks generally maximized stakeholder value (STV). But before the GFC also many of them started maximizing shareholder value (SHV). Moving from STV to SHV often meant shifting credit management from Originate-to-Hold (OTH) to Originate-to-Distribute (OTD). Moving from STV-OTH to SHV-OTD increased systemic risk damaging the common good of financial stability. STV-oriented banks seemed to weather the GFC relatively better with more heterogeneous systems proving more resilient. Heterogeneity in banking governanceorientations/ownership-structures seems to add value reducing the probability of financial crises.

Keywords: Bank Governance; Financial Institutions and Organizations; Financial Regulation; Financial and Banking Crises (search for similar items in EconPapers)
JEL-codes: G0 G01 G14 G15 G18 G20 G21 G24 G28 G30 G32 (search for similar items in EconPapers)
Pages: 36
Date: 2015-05
New Economics Papers: this item is included in nep-ban and nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Was the Crisis Due to a Shift from Stakeholder to Shareholder Finance? Surveying the Debate (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:108

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