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Culture, the senior managers regime and board decisions

Research output: Contribution to journalArticle

Original languageEnglish
JournalJournal of Financial Regulation and Compliance
DateAccepted/In press - 22 May 2018

Abstract

Purpose: This paper assesses the implications of the Senior Managers Regime on decision-making within bank boards.
Design/methodology/approach: Using literature from the field of psychology (notably on groupthink and the hidden profiles paradigm), the paper assesses the reasons why bank governance failed during the financial crisis and considers whether these failings could reoccur in light of post-crisis reforms.
Findings: The financial crisis highlighted the problems that arose through bank governance failing to fully understand the significance of the decisions they were making. This paper argues that the introduction of the Senior Managers Regime could exacerbate biases that affect groups making decisions and thus threatens the ability of bank managers to identify problems developing within their own institutions.
Research implications: Mechanisms will need to be developed to facilitate information exchange and ensure that procedures foster challenge and dissent rather than encourage a convergence of views if bank boards are to ensure they pursue prudent business practices and identify risk within their institution.
Originality/value: This is the first paper that attempts to enhance understanding of the operation and impact of the Senior Managers Regime on human behaviour within banks.

    Research areas

  • Senior Managers Regime; Bank Governance; Groupthink; Hidden Profiles; Culture

Documents

Documents

  • Full-text PDF (accepted author manuscript)

    Accepted author manuscript, 302 KB, PDF document

    Embargo ends: 1/01/99

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