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Mutuality and Corporate Governance: The Evolution of UK Building Societies Following Deregulation

Author

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  • J.Cook
  • S.Deakin
  • A.Hughes

Abstract

This 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.

Suggested Citation

  • J.Cook & S.Deakin & A.Hughes, 2001. "Mutuality and Corporate Governance: The Evolution of UK Building Societies Following Deregulation," Working Papers wp205, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp205
    Note: PRO-2
    as

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    References listed on IDEAS

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    Cited by:

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    2. J. N. Marshall & A. Pike & J. S. Pollard & J. Tomaney & S. Dawley & J. Gray, 2012. "Placing the run on northern rock," Journal of Economic Geography, Oxford University Press, vol. 12(1), pages 157-181, January.
    3. Patrizia Battilani & Vera Zamagni, 2012. "The managerial transformation of Italian co-operative enterprises 1946--2010," Business History, Taylor & Francis Journals, vol. 54(6), pages 964-985, October.
    4. J Neill Marshall & Richard Willis & Ranald Richardson, 2003. "Demutualisation, Strategic Choice, and Social Responsibility," Environment and Planning C, , vol. 21(5), pages 735-760, October.
    5. Francesc Relano, 2015. "Disambiguating the concept of social banking," Post-Print hal-01507875, HAL.
    6. Elisabetta Montanaro, 2010. "Islamic Banking: A Challenge for the Basel Capital Accord," Chapters, in: M. Fahim Khan & Mario Porzio (ed.), Islamic Banking and Finance in the European Union, chapter 7, Edward Elgar Publishing.
    7. Neill Marshall & Stuart Dawley & Andy Pike & Jane Pollard, 2018. "Geographies of corporate philanthropy: The Northern Rock Foundation," Environment and Planning A, , vol. 50(2), pages 266-287, March.
    8. Manuel Hensmans, 2011. "WHAT IS STRATEGY? The case of retail finance and English Building Societies," Working Papers CEB 11-049, ULB -- Universite Libre de Bruxelles.
    9. Jean-Robert Alcaras & Jean-Noël Ory & Nathalie Dompnier & François Rousseau & Mireille Jaeger & Emmanuelle Gurtner & Laurent Ducau, 2008. "La gouvernance partenariale des Banques coopératives françaises," Working Papers hal-00501816, HAL.
    10. Jean-Noël Ory & Mireille Jaeger & Emmanuelle Gurtner, 2006. "La banque à forme coopérative peut-elle soutenir durablement la compétition avec la banque SA?," Revue Finance Contrôle Stratégie, revues.org, vol. 9(2), pages 121-157, June.

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    More about this item

    Keywords

    corporate governance; deregulation; mutuality; property rights; building societies; demutualisation; path dependence.;
    All these keywords.

    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; Social Entrepreneurship

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