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The Public Duties and Social Responsibilities of Big British Banks

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  • Andy Mullineux

Abstract

The implicit social compact between the big British banks and the U.K. government broke down in the 1980s. Since then, the banks have sought to maximize shareholder value by closing less profitable branches, thereby reducing access to finance and increasing risk taking. Post-1990, the big banks also substantially increased their dependency on wholesale funding and dramatically reduced their liquid asset holdings, which increased their leverage and risk exposure. The U.K. government’s response to the financial crisis was to encourage mergers between banks, increasing concentration in the industry. The government bail-outs allowed the big banks to enjoy free insurance paid by taxpayers. The establishment of an autonomous retail banking (and insurance) utility regulator and a system for taxing the big banks fairly is recommended. Copyright International Atlantic Economic Society 2011

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  • Andy Mullineux, 2011. "The Public Duties and Social Responsibilities of Big British Banks," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(4), pages 436-450, November.
    • Handle: RePEc:kap:iaecre:v:17:y:2011:i:4:p:436-450:10.1007/s11294-011-9319-y
    DOI: 10.1007/s11294-011-9319-y
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    References listed on IDEAS

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    1. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(3), pages 393-414.
    2. Jonathan R. Macey & Maureen O'Hara, 2003. "The corporate governance of banks," Economic Policy Review, Federal Reserve Bank of New York, vol. 9(Apr), pages 91-107.
    3. Andy Mullineux, 2009. "The regulation of British retail banking utilities," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 17(4), pages 453-466, November.
    4. Andy Mullineux, 2006. "The corporate governance of banks," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 14(4), pages 375-382, November.
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    Cited by:

    1. Douglas da Rosa München & Herbert Kimura, 2020. "Regulatory Banking Leverage: what do you know?," Working Papers Series 540, Central Bank of Brazil, Research Department.

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    More about this item

    Keywords

    Bank regulation; Corporate governance; Corporate social responsibility; H41; G21; G38;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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