A lack of corporate governance and ethics in banking was the root cause of the global financial crisis in 2008

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O'Mahony, Brian
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MSc International Banking and Finance
Dublin Business School
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Executive Summary: The purpose of this thesis is to investigate, analyse and conclude on the following statement ‘A Lack Of Corporate Governance & Ethics In Banking Was the Root Cause of the Global Financial Crisis In 2008’. The title of this thesis was chosen to make the point that strong corporate governance and ethics are the foundation of successful banking and that a lack of this can lead to disastrous consequences. This is particularly relevant to the last number of years where we have seen unprecedented failures in the global banking systems, failures which culminated in a near meltdown of the system and placed banking as we know it close to the abyss of systematic failure. This thesis will critically review literature on the various aspects of the topic including a wide view of the main factors which were identified as key drivers of the meltdown. Next a number of specific case studies included to introduce key details regarding this crisis, particularity the roles of some of the Chief Executive Officers (CEOs) within the banking system. From this the elements of Corporate Social Responsibility (CSR) and ethics will be introduced along with the external challenges which managers face at the top. Essentially this is all about getting the mix right, higher profits, success and growth on one hand and also strong corporate governance and ethical practices on the other. Some argue you can’t have one without the other, others argue by focusing on one there is a trade off from another. Underpinning all of this is the most important concept, trust, Coppola (2013) ‘without trust, banking is impossible’. Trust has been included as the central element. The research section of the thesis will focus on key themes and drivers identified during the literature review process. Examples include the argument for and against CSR and also people’s opinion on how much progress has been made post financial crisis. Recent examples of huge losses at the banks through fines or fraud are also included in more detail to highlight aspects which are perhaps unchanged post crisis. Through surveys and interviews the research will conduct a deeper analysis of respondent’s current views and opinions and help quantify the level of trust people have with the financial system as a whole. The future of Corporate Governance and ethics will also be addressed along with social media and how this is of huge focus for the banks, a new tool to communicate their message. Some aspects of this new shift towards a new media are included in this thesis to specifically underscore the steps banks are taking to amend the mistakes of the past and move forward into a new beginning. Winning back business and investment is not just about the right product offerings but also about restoring trust. Author keywords: Corporate governance, ethics, corporate social responsibility, financial crisis