Mutuality and Corporate Governance: The Evolution of UK Building Societies Following Deregulation

J.Cook, S.Deakin and Alan Hughes

Working Papers from Centre for Business Research, University of Cambridge

Abstract: This paper studies the effects of deregulation following the UK Building Societies Act 1986, which opened the way for competition between building societies and commercial banks and introduced a procedure for the demutualisation of a building society. it is argued that the Act brought about a rearrangement of property rights which destabilised the building society form. A wave of demutualisations followed in the 1990's. the beneficiaries of change included corporate managers whose earnings and status were enhanced following conversion, and speculative investors who profitted from windfall gains. These were set against losses to borrowers, in the form of higher costs of loans, and to communities, in the form of reduced diversity of services. There is no guarentee that the recent trajectory of the sector is one of evolution to efficiency. Rather, its experience illustrates the often enexpected consequences for corporate governance of changes in regulation and property rights.

Keywords: corporate governance; deregulation; mutuality; property rights; building societies; demutualisation; path dependence. (search for similar items in EconPapers)
JEL-codes: K22 L31 (search for similar items in EconPapers)
Date: 2001-06
New Economics Papers: this item is included in nep-ifn and nep-law
Note: PRO-2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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