High leverage levels can lead to virtually limitless expansion of bank asset size, which maximizes, in the short to medium term, banks' return on equity. In the absence of regulatory controls on leverage, all it takes to assume excessive risks, even for benign bankers, is to imitate competitor...

In the wake of the Great Financial Crisis and the attendant collapse of faith in market discipline, there has been a concerted attempt by regulators and state officials to address the perceived ethical deficit in banking. This chapter asks which form of approach has the best chance of success in...

In the wake of the Great Financial Crisis and the attendant collapse of faith in market discipline, there has been a concerted attempt by regulators and state officials to address the perceived ethical deficit in banking. This chapter asks which form of approach has the best chance of success in...

Declines in property markets played a central role in the Great Financial Crisis. Off-balance sheet financing activities, particularly securitisations, were used to fund higher volumes of bank lending, concentrated in real estate. Post-crisis reforms and low investor appetite for securitisations...

Debt has traditionally been viewed as an effective corporate governance tool. On the other hand, high leverage levels can lead to rapid expansion of the size of bank assets maximizing, in the short-to-medium term, banks return on equity. In the absence of regulatory controls on leverage, all it...

A traditional response to information asymmetries in financial markets has been to require disclosure and heightened transparency in investment chains. We argue in this chapter that the trust placed in such regulatory techniques will fail to deliver sustainable investment for two reasons. The...

The current model of corporate governance needs reform. There is mounting evidence that the practices of shareholder primacy drive company directors and executives to adopt the same short time horizon as financial markets. Pressure to meet the demands of the financial markets drives stock...

In this paper we argue that the program of compensation reform at financial institutions – despite recent wide-ranging changes – remains incomplete. The issue of compensation of senior bankers at financial institutions has gained huge attention since the Global Financial Crisis of 2007-2010....

There is growing presumption that central banks have a significant role to play in addressing environmental challenges, especially climate change. This article explains, on the basis of both theoretical and empirical evidence, that attempting to use existing central bank powers to tackle climate...

Achieving sustainability is possible. The adoption of the UN Sustainable Development Goals (SDGs) in 2015 and the Paris Agreement in the same year created a new impetus for the debate on how to do so. With an emerging recognition of the serious risks of continuing with unsustainability, there is...