Thursday, June 27, 2013

Bank Corporate Governance, Risk-Avoidance or Risk-Taking

DERMINE Jean
Gouvernement d’Entreprise de Banques, Evitement ou Prise de Risque (Bank Corporate Governance, Risk-Avoidance or Risk-Taking) Revue d'Economie Financière 112, Special issue (2013)


Following up on the publication of the Walker Report (2009) in the United Kingdom, international organizations such as the Basel Committee (2010), the OECD (2010), and  the European Union (2010a,b, 2012) have proposed guidelines to improve bank corporate governance and, more specifically, risk governance. These international reports vary widely on what the prime objective of bank corporate governance should be, with one group recommending a shareholder-based approach, and the other a stakeholder-based one. Moreover, the focus of these reports is exclusively on risk avoidance, with little guidance as to how an acceptable level of risk, the risk appetite, should be defined. Drawing on insights from economics and finance, this paper is intended to contribute to the debate on bank corporate governance.