Was the Crisis Due to a Shift from Stakeholder to Shareholder Finance? Surveying the Debate

Giovanni Ferri and Angelo Leogrande

No 1576, Euricse Working Papers from Euricse (European Research Institute on Cooperative and Social Enterprises)

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-toDistribute (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 governance-orientations/ownership-structures seems to add value reducing the probability of financial crises.

Keywords: Financial and Banking Crises; Bank Governance; Financial Regulation; Financial Institutions and Organizations (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)
Date: 2015
New Economics Papers: this item is included in 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:trn:utwpeu:1576

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