Financial governance in a neoliberal era: controlling the banks by controlling their managerial recruitment sources

Abstract

This paper asks: What are the factors that affect the recruitment sources of the two most senior management functions in banks—the board chairperson and the chief executive officer? Prior research has focused on the factors affecting the recruitment sources of senior management in corporations in general and has accorded less attention to banks. Therefore, research thus far has not fully accounted for the ability of banking regulators to affect the recruitment sources of these managers. The paper applies an in-depth qualitative study to delineate the recruitment sources of the chairpersons and the CEOs, from the inception of the State of Israel in 1948 to 2019, asserting that Israel’s central bank affects the recruitment sources of the banks’ chairpersons and CEOs through both formal and informal measures. This has enabled the banking regulators to wield influence over the banks and maintain their financial stability in the long run. The paper can thus be read as part of a wider effort to demonstrate that even in the neoliberal era, state actors are still key players.