Tag: Regulation
Limited liability led to limited care for other people’s money
The financial sector in the 1980s and 1990s was characterised by a rush to incorporation. The mantra of “shareholder value” restored the nexus between finance and business that Smith had feared and Brandeis denounced. And the stage was set for negligence and profusion to prevail once again.
Rail privatisation has delivered improvements through accountability and autonomy
Both the leading candidates for the leadership of Britain’s opposition Labour party have now committed themselves to renationalising the country’s railways. But the state-owned British Rail was one if the most reviled institutions in the UK, and privatisation has delivered many relative benefits.
At last, is boring banking making a comeback?
Do the almost simultaneous announcements this month of a new regime at Deutsche Bank, and an extensive restructuring at HSBC, symbolise a fundamental change in the structure of financial companies?
Why our planes are growing safer and our finances are not
One reason modern air travel is reassuringly safe is that investigation into accidents is honest and thorough. The contrast with finance could hardly be greater.
Banks might improve with more women in charge
Senior jobs in private-sector finance are taken almost exclusively by men. Since there is a link between testosterone and risk taking perhaps now's the time to redress the balance.
To assess value it’s wise to escape the market crowd
The belief that an aggregate of casual opinions provides a better process of value discovery than a flow of informed judgment through close engagement by investors, is an article of faith rather than a matter of empirical evidence.
Rule of the vigilante is not the way to handle business...
There are good reasons for state action in areas of business misconduct. But announcing ad hoc measures against companies in the news is the wrong way.
Why simple and robust regulation is the way to reduce financial...
Much of the complexity of modern finance is the result of regulatory arbitrage – avoiding or minimising restrictions by engaging in a transaction with more or less identical effect but more favourable regulatory treatment. Many regulators still cling to the hope that it could be eliminated if only rules were sufficiently extensive and sufficiently carefully prescribed. But this is an illusion.
Competition in banking does not necessarily benefit consumers
Limited competition may actually yield worse results for customers than either full-blooded competition or a cartel. Perhaps that explains the particularly tentative approach of the Competition and Markets Authority.
How the health and safety culture can curb moral hazard
What does the death rate from violent accident in England over seven centuries tell us about moral hazard in the financial system?
