Carrots and sticks in bank governance: time for a bigger stick?
Journal of Financial Regulation and Compliance
ISSN: 1358-1988
Article publication date: 20 June 2019
Issue publication date: 16 September 2020
Abstract
Purpose
This paper aims to investigate how bank governance can be altered to reduce risk taking and engender greater financial stability.
Design/methodology/approach
The paper reviews existing bank governance arrangements, contemporary challenges and alternative reforms.
Findings
It is argued that recent reforms are incomplete. Greater countervailing incentives for bank managers and shareholders are required. This prompts an inquiry into the merits and demerits of four types of reform: changes to executive compensation arrangements; the introduction of a liability standard for directors; the removal of limited liability for bank shareholders; and a criminal offence for managers.
Originality/value
Discussion illumines several problems with the current approach to bank governance and provides insights that can help direct future reform.
Keywords
Acknowledgements
This paper forms part of special section “Progression or regression: Regulatory and governance challenges after the global financial crisis and Brexit”, guest edited by Steve Letza, Gary Evans and Jens-Hinrich Binder.
Citation
Ridyard, R. (2020), "Carrots and sticks in bank governance: time for a bigger stick?", Journal of Financial Regulation and Compliance, Vol. 28 No. 4, pp. 527-539. https://doi.org/10.1108/JFRC-05-2018-0084
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited