Abstract
Opportunities for a Sustainable European Financial System
Highlights
In recent decades, public awareness of business sustainability has grown
Despite the importance of business stability and the financial system, few studies have focused on the sustainability of banks, and even fewer have examined banks’ financial sustainability
In the aftermath of the financial crisis of 2008, the sustainability of the banking sector finds itself at a critical point
Summary
Public awareness of business sustainability has grown. Awareness of financial stability has grown, as reflected by the creation of international indices such as the Dow Jones Sustainability Index (DJSI), the FTSE4Good Index Series, the Domini 400 Social Index, and the Index of Sustainable Economic Welfare (ISEW) [1]. Examples of banks’ improper behavior include investing in subprime mortgages, which has led to housing repossessions, selling high-risk complex products, which has cost small investors large sums of money, colluding in money laundering, taking excessive executive compensation packages, and irresponsibly managing brokerages, ratings agencies, accountancies, and management consultancies [8]. These actions have contributed to the financial system’s central role in the third major financial crisis, which followed the stock market crash of 1929 (due to demand) and the 1973 oil crisis (due to supply) [9].
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