Taming the Tiger: solving the problems of banks. Why regulation and reforming ethics do not work and why there will be another banking crisis

Tigers, like banks, are kings in their jungle. Both survive because of their strength and both cause public fear when they 'run amok'. Mankind has always wished that it could tame tigers - and banks. Whilst banks are essential to an economy, this dissertation considers the desire to control the difficulties banks cause.

Using examples, it looks at the problems to which banks and bankers are prone. The traditional problem is of 'borrowing short and lending long', but the examples show other problems that have arisen, including those that led to the Financial Crisis 2007-2008. It is suggested that one cause of the problems of banks is of 'Financialisation' and, in particular, the demands of shareholders for 'Return on Equity'.

The dissertation considers two ways used to control banks. Firstly, it looks at regulation, with reference to the example of capital regulation. It outlines how equity capital appears on a bank's balance sheet, reviews the problems of capital regulation and concludes that bankers seek to circumvent or change regulations that hinder the aim to maximise profit. Secondly, having discussed the limits of regulation, it considers the alternative of changing organisational culture to improve the conduct of bankers. The dissertation looks at different approaches to such cultural change but concludes that the pressures to produce Return on Equity prevail over exhortations to act ethically.

The dissertation then considers whether shareholder control could ameliorate the problematic conduct of bankers and concludes that shareholders exacerbate the problem. Finally, the dissertation introduces the possible use of alternative legal structures, which are not subject to demands to provide Return on Equity. The dissertation suggests that such alternative legal structures present an area for future research.