Dual Governance in State-Owned Banks
University of CEMA
Documento de Trabajo 319
State-owned enterprises set a clear example of a mixed governance, in which the public and private realms blend together to bring about a complex structure we are going to define as dual governance. This paper puts forth a new design of governance for state-owned banks. Firstly, the whole subject is framed within the transaction costs approach to financial intermediation. Next, we move on to the formal governance of state-owned banks. Afterwards, we focus on dual governance and expand on agency problems that arise from the fiduciary role, accountability, transparency, rent-seeking and soft-budget constraints. The paper's proposal hinges upon the subsidiarity portfolio, to which the state-owned bank should manage as a trustee only, so that dual governance could be enhanced. We conclude bringing forth a minimal set of dual governance principles.
Number of Pages in PDF File: 45
Keywords: governance, public governance, dual governance, state-owned banks, subsidiarity
JEL Classification: G34, G21, D23, D73, H20working papers series
Date posted: June 28, 2007
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