The great bank escape

It’s not a case of all for one and one for all between financial institutions and shareholders, writes Anat Admati

LAST YEAR proved to be yet another replete with futile efforts to manage the outsized grip that banks and bankers have on the world economy. The global financial system remains distorted and dangerous.

Since the 1980s, “shareholder value” has increasingly become the focus of corporate governance. Managers and board members often receive stock-based compensation which gives them equity ownership rights and, in turn, creates a powerful incentive to maximise the market value of their companies’ shares.