• Banking and Finance in Historical Perspective
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37. Jahrgang | Jahr 2011 | Heft 2


Aufsatz: Seite 137–163

Christopher Kobrak
Banking on Governance
U.K. and U.S. Financial Markets and Management in the 20th Century
Banking occupies a rather unique space in corporate governance literature. Historically and in some corporate governance systems today, banks serve as active intermediaries, resolving conflicts among shareholders, managers and other stakeholders. In some systems, the German for example, they even replaced direct government regulation in overseeing companies and markets. Although most banks are private, with the usual corporate government issues – shareholders rights, incentive schemes, board responsibilities and constitution, reporting and stock exchange requirements – many today are completely or partially in government hands. Moreover, much of their governance is in the form of national (in some countries, state also), central bank, industry association, and supranational regulatory bodies. As part of the fallout from our recent financial crisis, these collective mechanisms have come under particularly harsh criticism. Abuses in pay and moral hazard issues, for example, are often seen as convincing evidence of a complete breakdown in bank governance. This paper deals with the changes in U.S. and British bank governance in the 20th century; how and why their own national brands of financial regulations varied overtime. Inspired by changes in financial markets and theory – and buttressed by technological and management changes – in some key respects, these two countries have over the past few decades drifted away from national oversight without any convincing supranational or private replacement, a transition that has been less dramatic in some other countries but that has, nonetheless, set the pace for changes in bank governance in most major markets.