Conclusion

Citation

Paulet, E. (2011), "Conclusion", Corporate Governance, Vol. 11 No. 3. https://doi.org/10.1108/cg.2011.26811caa.002

Conclusion

Article Type: Conclusion From: Corporate Governance, Volume 11, Issue 3

History has shown us the role the financial and banking crisis has had in the economic transformation. The last crisis was particularly significant because of its extent and its effect worldwide. Instead of analysing the responsibility of the financial actors, this crisis should be seen as a turning point in the necessary transformation of institutions to guarantee the stability of the global financial system.

Two aspects are equally important. Firstly, governance is a key concept to be clearly defined. Both entrepreneurial and financial actors must measure the impact of their different actions (transparency in decision-making processes, strategic choices to reach profit …) to maintain their market position while preserving social welfare for all partners. Secondly, from a more technical point of view, the relevance of mathematical and quantitative methods should be discussed for the evaluation of asset performance. Securitization has always been a tool to increase financial institutions’ profit margins but it cannot become their primary goal. The error does not come from the use of this technique but its misuse at the international level.

The last crisis and the ongoing effect it has on economic agents, leads us to question the role played by regulation. There is no doubt about its relevance in controlling ex-post situations; however its efficiency is far from being perfect. This gives strong evidence of the importance of ethics in business. While one might claim that ethical behaviour is more of a fashion than a necessity, the consequent events of the subprime crisis (Kerviel and Madoff affairs, speculative attacks against the Euro, the Greek crisis …) prove the opposite. It also shows that financial actors usually minimize unstable factors to their advantage. Hence, governments have great difficulty in imposing new regulations leading to more ethical behaviour.

However, under social and economic pressure, some actors have freely chosen to substitute the profit maximisation principle for the profit optimising principle. The objective is to combine economic performance with social value in order to guarantee social value for the whole community.

Last but not least, the recent crisis will no doubt serve as an excellent alibi for rethinking the purpose of life: to pursue the logic of “animal spirits” of a minority or to collectively define “fair social welfare” for the majority. Far from giving a solution to our delicate situation, the contributors hope to have been of some help in providing new insight into perspectives for the future.

About the author

Elisabeth Paulet is Professor of Economics and Finance at ESCEM, Business School in Tours-Poitiers. After a PhD at the European University Institute of Florence, she is now in charge of Economics, Sustainable Development Department. She is the Scientific Director of the PhD Ecricome. Her main interests are in banking structures and financial policy of firms on a historical and contemporary level. She has published several books and articles in this field.

Elisabeth Paulet