The Value of Banks and Their Business Models to Society (original) (raw)

The role of banks

1992

Rapidly changing technology, financial innovation, and increased linkages among the world’s financial markets pose many challenges for commercial banks, other financial firms and markets, and their public regulators. History suggests, however, that while the challenges we face today may be unique, many are not fundamentally dissimilar from the problems others have faced in the past. For example, regulators now confront the issue of whether and, if so, how to regulate the issuance of private electronic money. In the nineteenth century, the private issuance of banknotes raised a similar regulatory question. A second example is the current problem, for banks, of increased competition from nonbank financial firms and markets that is associated with regulatory and technological change. As Eugene White points out in the first article in this Review, banks faced a similar challenge in the nineteenth century. The twenty-second annual economic policy conference of the Federal Reserve Bank of...

Taming the Tiger: solving the problems of banks. Why regulation and reforming ethics do not work and why there will be another banking crisis

2017

Tigers, like banks, are kings in their jungle. Both survive because of their strength and both cause public fear when they 'run amok'. Mankind has always wished that it could tame tigers - and banks. Whilst banks are essential to an economy, this dissertation considers the desire to control the difficulties banks cause. Using examples, it looks at the problems to which banks and bankers are prone. The traditional problem is of 'borrowing short and lending long', but the examples show other problems that have arisen, including those that led to the Financial Crisis 2007-2008. It is suggested that one cause of the problems of banks is of 'Financialisation' and, in particular, the demands of shareholders for 'Return on Equity'. The dissertation considers two ways used to control banks. Firstly, it looks at regulation, with reference to the example of capital regulation. It outlines how equity capital appears on a bank's balance sheet, reviews the pro...