Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors
Banks fail with alarming frequency, resulting in large losses of taxpayer money. A key factor in the high failure rate is the flawed governance mechanism, which exacerbates the risks inherent in banking. Bankers control a lot of other people's...
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| Format: | Viewpoint |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1999/10/439337/banking-governance-conflicts-interest-facing-bank-owners-supervisors http://hdl.handle.net/10986/11454 |
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okr-10986-114542021-06-14T11:03:10Z Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors Leechor, Chad BANK FAILURES GOVERNANCE BANK SUPERVISION CONFLICT OF INTERESTS BANKING CRISES DEPOSIT INSURANCE DISCLOSURE OF INFORMATION ACCOUNTABILITY ACCOUNTING ACCOUNTING STANDARDS AFFILIATES AGENTS ASSURANCE AUDITORS BANK FAILURES BANK MANAGEMENT BANKING CRISES BANKING DISTRESS BANKING SUPERVISION BANKS CONNECTED LENDING COVERAGE CREDIT RISKS DEBT DEPOSIT INSURANCE DEPOSITORS FINANCIAL CRISES FRAUD GNP INSOLVENCY INSURANCE INTEREST RATES MARKET VALUE OIL RESERVE REQUIREMENTS RISK TAKING RISK-WEIGHTED ASSETS RUNS ON BANKS SAVINGS SHAREHOLDERS SUPERVISORY AGENCIES TRANSPARENCY UNDERWRITING VULNERABILITY Banks fail with alarming frequency, resulting in large losses of taxpayer money. A key factor in the high failure rate is the flawed governance mechanism, which exacerbates the risks inherent in banking. Bankers control a lot of other people's money and have much discretion over the information they disclose. The temptation to engage in excessive risk taking is strong. Tightening banking supervision is seldom the solution. For their part, banking supervisors often face incentives at odds with those of taxpayers. At times they may prefer not to act to minimize taxpayer losses. These twin governance problems are further compounded by the common practice of disclosing banking information only to supervisors, not to markets. This Note explains the conflicts and proposes some solutions. 2012-08-13T15:06:59Z 2012-08-13T15:06:59Z 1999-10 http://documents.worldbank.org/curated/en/1999/10/439337/banking-governance-conflicts-interest-facing-bank-owners-supervisors Viewpoint. -- note no. 198 (October 1999) http://hdl.handle.net/10986/11454 English Viewpoint CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Viewpoint Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
BANK FAILURES GOVERNANCE BANK SUPERVISION CONFLICT OF INTERESTS BANKING CRISES DEPOSIT INSURANCE DISCLOSURE OF INFORMATION ACCOUNTABILITY ACCOUNTING ACCOUNTING STANDARDS AFFILIATES AGENTS ASSURANCE AUDITORS BANK FAILURES BANK MANAGEMENT BANKING CRISES BANKING DISTRESS BANKING SUPERVISION BANKS CONNECTED LENDING COVERAGE CREDIT RISKS DEBT DEPOSIT INSURANCE DEPOSITORS FINANCIAL CRISES FRAUD GNP INSOLVENCY INSURANCE INTEREST RATES MARKET VALUE OIL RESERVE REQUIREMENTS RISK TAKING RISK-WEIGHTED ASSETS RUNS ON BANKS SAVINGS SHAREHOLDERS SUPERVISORY AGENCIES TRANSPARENCY UNDERWRITING VULNERABILITY |
| spellingShingle |
BANK FAILURES GOVERNANCE BANK SUPERVISION CONFLICT OF INTERESTS BANKING CRISES DEPOSIT INSURANCE DISCLOSURE OF INFORMATION ACCOUNTABILITY ACCOUNTING ACCOUNTING STANDARDS AFFILIATES AGENTS ASSURANCE AUDITORS BANK FAILURES BANK MANAGEMENT BANKING CRISES BANKING DISTRESS BANKING SUPERVISION BANKS CONNECTED LENDING COVERAGE CREDIT RISKS DEBT DEPOSIT INSURANCE DEPOSITORS FINANCIAL CRISES FRAUD GNP INSOLVENCY INSURANCE INTEREST RATES MARKET VALUE OIL RESERVE REQUIREMENTS RISK TAKING RISK-WEIGHTED ASSETS RUNS ON BANKS SAVINGS SHAREHOLDERS SUPERVISORY AGENCIES TRANSPARENCY UNDERWRITING VULNERABILITY Leechor, Chad Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors |
| relation |
Viewpoint |
| description |
Banks fail with alarming frequency,
resulting in large losses of taxpayer money. A key factor in
the high failure rate is the flawed governance mechanism,
which exacerbates the risks inherent in banking. Bankers
control a lot of other people's money and have much
discretion over the information they disclose. The
temptation to engage in excessive risk taking is strong.
Tightening banking supervision is seldom the solution. For
their part, banking supervisors often face incentives at
odds with those of taxpayers. At times they may prefer not
to act to minimize taxpayer losses. These twin governance
problems are further compounded by the common practice of
disclosing banking information only to supervisors, not to
markets. This Note explains the conflicts and proposes some solutions. |
| format |
Publications & Research :: Viewpoint |
| author |
Leechor, Chad |
| author_facet |
Leechor, Chad |
| author_sort |
Leechor, Chad |
| title |
Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors |
| title_short |
Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors |
| title_full |
Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors |
| title_fullStr |
Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors |
| title_full_unstemmed |
Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors |
| title_sort |
banking on governance? conflicts of interest facing bank owners and supervisors |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/1999/10/439337/banking-governance-conflicts-interest-facing-bank-owners-supervisors http://hdl.handle.net/10986/11454 |
| _version_ |
1764416788993409024 |