Bank Governance Put to the Test by the Crisis: How Can the General Interest and Stakeholders Interests Be Reconciled?

Banks play an essential role in financing the economy and in society, hence the importance of their governance. In this article we will demonstrate the specificities of bank governance and the stakes involved. Indeed, banks are less transparent than non-financial firms and their business is more complex. Their products have become harder to grasp. The very nature of the risks taken has changed and the speed with which risk changes has clearly accelerated. The crisis has demonstrated the externalities banking activities may bear and the costs that they represent for society. The existence of a lender of last resort may increase moral hazard, especially when dealing with “too big to fail” banks. In the face of these lessons of the crisis, what measures have been taken to reconcile the general interest and the interests of the various stakeholders ? Are these measures adequate ? What proposals can be made for improved bank governance ?