Publication of the week:

PROFESSOR GEOFFREY WOOD

Monday 9 February 2009

Geoffrey Wood, "Efficiency, stability and integrity in the finance sector: the functions of regulation and governance" [in Hebrew], Review of Banking and Finance of the Israeli Economics and Finance Association (2009), 49-67.

This article considers two possible approaches by governments to getting firms to take account of what the government regards as the public interest. One is termed regulation, and comprises telling firms what must be achieved, telling them what processes to follow, or both. The other is termed governance, and involves arranging incentive structures so that firms find it in their interest to achieve what the government wants. It is argued, first from three examples, drawn respectively from banking, investment management and accountancy, that governance will achieve objectives both more accurately and more durably. These three examples are then generalised by use of principal - agent theory, and it is maintained that the proposition is of general validity, well beyond the examples which prompted it.

The full text of the article is available in Hebrew at wood-bankingreview.pdf (PDF file of 3,798 KB).

Geoffrey Wood is Professor of Economics at Cass Business School and Professor of Monetary Economics at the University of Buckingham, where he teaches on the undergraduate Economics programme and the MA in Global Affairs.