The Significance of the Supervision of Directors of Financial Institutions and the Boom-And-Bust Cycles

Abstract

The thesis is focused on an analysis of the significance of the supervision of the directors of financial institutions and the impact that results from the cycles of booms-and-busts. The thesis examines whether or not the supervision of directors of financial institutions is impacted by these cycles in terms of the changes or the lack of changes that result. In doing so, the thesis examines the relevant case study of Ireland in the significant period from 1993 to 2012; in the case of Canada, the time period runs from 1987 to 2012. It is necessary to explain how the cycles of booms-and busts are related to the supervision of directors of the financial institutions. The thesis traces the extent to which the emergence of financial liberalisation along with the deregulation of financial services had a key role in giving impetus to the cycles of booms-and-busts. These liberalising and deregulatory effects led to increasing global integration of financial services and markets. It follows that the liberalisation and globalisation has impacted on the supervision of the directors of banks and financial institutions to a significant degree. The supervisory architecture both at international and national terms has a particularly challenging task in coming to terms with such cycles and its achieved decidedly mixed results. The efforts of Ireland and Canada to restructure the supervision of the directors as a result of such cycles have also had very mixed results. It is acknowledged that these boom-and-bust cycles are an ever-present reality. The supervision of directors as a result of the ever-present cycles is a complex process that involves a variety of approaches such as principles, rules and risk-based entities. It is argued that there is a need for the ongoing and collaborative interaction between the supervisors and directors alike if supervision is to taken seriously and if it is to have greater success in the future. There is therefore good reason for caution regarding the supervision of directors of the banks and financial institutions especially given the impact of boom-and-bust cycles generally.