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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Reform of Financial Institutions—Getting it Right
Author(s)
Matjaz Nahtigal
Full-Text PDF
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DOI:10.17265/2328-2185/2014.01.006
Affiliation(s)
Matjaz Nahtigal, associate professor of Law, Faculty of Management, University of Primorska, Koper, Slovenia.
ABSTRACT
The purpose of this article is to reflect upon the importance and the role of financial institutions before, during, and after the financial crisis and to outline proposals for alternative approaches to the financial crisis. Without an understanding of the historic development, nature and scope, and important limitations of modern financial institutions, the regulatory reform of modern financial institutions cannot be successful. The success of financial reforms and their restructuring can only be measured when modern financial institutions participate, support, and develop the real economy and support a more balanced, inclusive, and diverse social development process. This is what the really “exciting” banking and finance organizations should stand for. The regulatory reforms, bail-outs, and dominant ideas about the European banking union, for example, are impeding, rather than facilitating, hope for real economic and social recovery on both sides of the Atlantic. The method used in the present article, is legal and institutional analysis of the financial institutions. The empirical and comparative overview of the role and importance of financial institutions shows the variety of financial institutions developed in different historical and socio-economic circumstances. They show there is no one single best model of financial institutions that could be universally applicable. The design and the regulatory framework for the financial institutions should therefore take into account the overall strategy of economic and social development. In absence of any such comprehensive strategy it is unlikely that the regulatory reform of the financial institutions can be successful.
KEYWORDS
the role of financial institutions, regulatory reform of financial institutions, the tenuous linkages between the real economy and the financial institutions, financial hypertrophy and financial crisis, alternative financial institutions
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