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In the light of the global financial crisis, discuss how the remuneration of chief executives of banks should be determined.
Finance & Accounting
Pages 4 (1004 words)
In the Light of the Global Financial Crisis, Discuss How the Remuneration of Chief Executives of Banks Should Be Determined Table of Contents Table of Contents 2 Introduction 3 Discussion 3 Recommendations 5 Conclusion 5 References 6 Introduction The global financial crisis has been major bane in the recent times which has significantly influenced the growth and sustainability of economies around the world.
There are also macroeconomic factors for the occurrence of the crisis that include practices in accounting and lack of transparency among others. It has also been observed that major risks or weaknesses related to financial crisis lay in the fact that financial crisis occurred due to certain pre-crisis situations which arrived in relation the supervision and regulation of various activities. A few of the micro prudential regulations were poorly structured that contributed in systematic risks. Most of the banks became solvent due to the Basel capital rules (World Bank, 2012). Moreover, the global financial crisis has enabled to underline a critical agency problem which occurred due to excessive rise in the chief executives remunerations especially during the period of 2004 to 2007 in countries such as Australia and the United States (Ariff & et. al., 2012). With this consideration, the paper intends to discuss how the remuneration of chief executives of banks should be determined in order to ensue that the ill-effects of the crisis can be mitigated. Discussion The global financial crisis had brought about a greater concern regarding the usage and structure of remuneration which was based on the incentive systems. ...
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