IDEAS home Printed from https://ideas.repec.org/a/eee/quaeco/v70y2018icp112-120.html
   My bibliography  Save this article

An FSB board member can better align corporate governance with SIFI sustainability

Author

Listed:
  • Phillips, Emir
  • Desmoulins-Lebeault, Francois

Abstract

•The recommendation herein bifurcates regulation, amends shareholder theory and its consequent legal expression by putting a Financial Stability Board Stakeholder on every Systematically Important Financial Institution Board, and the Board of its holding company if applicable.•A FSB Stakeholder would take on the CRO role from the Board perspective with the entire financial system in mind rather than only assessing long-term risk for that particular SIFI.•At present, SIFI organizational theory and application allows diffuse shareholders the rewards of a diversified portfolio of SIFI assets, while exerting no potent corporate governance through what are commoditized voting rights.•The highly contextual nature of a fiduciary duty makes prediction of executive management extremely difficult and requires a more rigorous judicial function best executed by a FSB Stakeholder with Board vantage.•Financial stability is not forecasting, masterminding the future, an attempt to eliminate risk or even an attempt to minimize risk, but rather guarantees the core SIFI activities are capable of sustained functioning able to over-ride any action or pursuit that systematically or unreasonably threatens the public good of international banking.

Suggested Citation

  • Phillips, Emir & Desmoulins-Lebeault, Francois, 2018. "An FSB board member can better align corporate governance with SIFI sustainability," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 112-120.
  • Handle: RePEc:eee:quaeco:v:70:y:2018:i:c:p:112-120
    DOI: 10.1016/j.qref.2018.04.014
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1062976917302211
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:hrv:faseco:30728046 is not listed on IDEAS
    2. Stiroh, Kevin J. & Rumble, Adrienne, 2006. "The dark side of diversification: The case of US financial holding companies," Journal of Banking & Finance, Elsevier, vol. 30(8), pages 2131-2161, August.
    3. Allen, William A. & Wood, Geoffrey, 2006. "Defining and achieving financial stability," Journal of Financial Stability, Elsevier, vol. 2(2), pages 152-172, June.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. Markus K. Brunnermeier, 2008. "Deciphering the Liquidity and Credit Crunch 2007-08," NBER Working Papers 14612, National Bureau of Economic Research, Inc.
    6. Taleb, Nassim N. & Sandis, Constantine, 2014. "The Skin In The Game Heuristic for Protection Against Tail Events," Review of Behavioral Economics, now publishers, vol. 1(1-2), pages 115-135, January.
    7. Nassim N. Taleb & Constantine Sandis, 2013. "The Skin In The Game Heuristic for Protection Against Tail Events," Papers 1308.0958, arXiv.org, revised Jan 2014.
    8. Adam B. Ashcraft, 2008. "Are Bank Holding Companies a Source of Strength to Their Banking Subsidiaries?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(2-3), pages 273-294, March.
    9. Easterbrook, Frank H & Fischel, Daniel R, 1993. "Contract and Fiduciary Duty," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 425-451, April.
    10. Dieter Gerdesmeier & Hans-Eggert Reimers & Barbara Roffia, 2011. "Early Warning Indicators for Asset Price Booms," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 1-19, June.
    11. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    12. DeYoung, Robert & Roland, Karin P., 2001. "Product Mix and Earnings Volatility at Commercial Banks: Evidence from a Degree of Total Leverage Model," Journal of Financial Intermediation, Elsevier, vol. 10(1), pages 54-84, January.
    13. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
    14. Gorton, Gary & Metrick, Andrew, 2012. "Securitized banking and the run on repo," Journal of Financial Economics, Elsevier, vol. 104(3), pages 425-451.
    15. Aebi, Vincent & Sabato, Gabriele & Schmid, Markus, 2012. "Risk management, corporate governance, and bank performance in the financial crisis," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3213-3226.
    16. Broekstra, Gerrit & Sornette, Didier & Zhou, Wei-Xing, 2005. "Bubble, critical zone and the crash of Royal Ahold," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 346(3), pages 529-560.
    17. Taylor, Michael & Fleming, Alex, 1999. "Integrated financial supervision : lessons of Northern European experience," Policy Research Working Paper Series 2223, The World Bank.
    18. Jackson, Howell E, 1993. "The Superior Performance of Savings and Loan Associations with Substantial Holding Companies," The Journal of Legal Studies, University of Chicago Press, vol. 22(2), pages 405-456, June.
    19. Kashyap, Anil K. & Rajan, Raghuram G. & Stein, Jeremy C., 2008. "Rethinking capital regulation," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 431-471.
    20. Demirguc-Kunt, Asli & Huizinga, Harry, 2004. "Market discipline and deposit insurance," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 375-399, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:quaeco:v:70:y:2018:i:c:p:112-120. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/620167 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.