In the context of corporate governance reforms following the global financial crisis, policymakers have focused on how to reduce the bank manager' incentives to take risks in order to promote financial stability. On both sides of the Atlantic, legislation seeks to pursue this goal by enhancing...

This article presents a dynamic approach to liquidity based on uncertainty as conceptualized by Knight, developed in a theory of long-term expectations by Keynes, and applied to banking by Minsky. This perspective reveals that banks perform maturity transformation and create monetary liabilities...