Mutuality and Corporate Governance: The Evolution of UK Building Societies Following Deregulation
AbstractThis paper studies the effects of deregulation following the UK Building Societies Act 1986, which opened the way for competition between building societies and commercial banks and introduced a procedure for the demutualisation of a building society. it is argued that the Act brought about a rearrangement of property rights which destabilised the building society form. A wave of demutualisations followed in the 1990's. the beneficiaries of change included corporate managers whose earnings and status were enhanced following conversion, and speculative investors who profitted from windfall gains. These were set against losses to borrowers, in the form of higher costs of loans, and to communities, in the form of reduced diversity of services. There is no guarentee that the recent trajectory of the sector is one of evolution to efficiency. Rather, its experience illustrates the often enexpected consequences for corporate governance of changes in regulation and property rights.
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Bibliographic InfoPaper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp205.
Date of creation: Jun 2001
Date of revision:
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Web page: http://www.cbr.cam.ac.uk/
corporate governance; deregulation; mutuality; property rights; building societies; demutualisation; path dependence.;
Find related papers by JEL classification:
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-04-25 (All new papers)
- NEP-IFN-2002-04-25 (International Finance)
- NEP-LAW-2002-04-25 (Law & Economics)
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