Abstract
This paper is pre-occupied with how bank governance can be altered to reduce risk taking and engender greater financial stability. Its approach is to review existing bank governance arrangements, contemporary challenges, and alternative reforms. It is argued that recent reforms are incomplete. Greater countervailing incentives for bank managers and shareholders are required. This prompts an inquiry into the merits and demerits of four types of reform: changes to executive compensation arrangements; the introduction of a liability standard for directors; the removal of limited liability for bank shareholders; and a criminal offence for managers. Discussion illumines several problems with the current approach to bank governance and provides insights that can help direct future reform.
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