Carrots and sticks in bank governance: time for a bigger stick?

Purpose This paper aims to investigate how bank governance can be altered to reduce risk taking and engender greater financial stability. Design/methodology/approach The paper reviews existing bank governance arrangements, contemporary challenges and alternative reforms. Findings It is argued that recent reforms are incomplete. Greater countervailing incentives for bank managers and shareholders are required. This prompts an inquiry into the merits and demerits of four types of reform: changes to executive compensation arrangements; the introduction of a liability standard for directors; the removal of limited liability for bank shareholders; and a criminal offence for managers. Originality/value Discussion illumines several problems with the current approach to bank governance and provides insights that can help direct future reform.

Reward associations do not explain transitive inference performance in monkeys

The observation that monkeys appear to make transitive inferences has been taken as evidence of their ability to form and manipulate mental representations. However, alternative explanations have been proposed arguing that transitive inference performance based on expected or experienced reward value. To test the contribution of reward value to monkeys’ behavior in TI paradigms, we performed two experiments in which we manipulated the amount of reward associated with each item in an ordered list. In these experiments, monkeys were presented with pairs of items drawn from the list, and delivered rewards if subjects selected the item with the earlier list rank. When reward magnitude was biased to favor later list items, correct responding was reduced. However, monkeys eventually learned to make correct rule-based choices despite countervailing incentives. The results demonstrate that monkeys’ performance in TI paradigms is not driven solely by expected reward, but that they are able to make appropriate inferences in the face of discordant reward associations.

Reward associations do not explain transitive inference performance in monkeys

The observation that monkeys appear to make transitive inferences has been taken as evidence of their ability to form and manipulate mental representations. However, alternative explanations have been proposed arguing that transitive inference performance based on expected or experienced reward value. To test the contribution of reward value to monkeys’ behavior in TI paradigms, we performed two experiments in which we manipulated the amount of reward associated with each item in an ordered list. In these experiments, monkeys were presented with pairs of items drawn from the list, and delivered rewards if subjects selected the item with the earlier list rank. When reward magnitude was biased to favor later list items, correct responding was reduced. However, monkeys eventually learned to make correct rule-based choices despite countervailing incentives. The results demonstrate that monkeys’ performance in TI paradigms is not driven solely by expected reward, but that they are able to make appropriate inferences in the face of discordant reward associations.

Reward associations do not explain transitive inference performance in monkeys

The observation that monkeys appear to make transitive inferences has been taken as evidence of their ability to form and manipulate mental representations. However, alternative explanations have been proposed arguing that transitive inference performance based on expected or experienced reward value. To test the contribution of reward value to monkeys’ behavior in TI paradigms, we performed two experiments in which we manipulated the amount of reward associated with each item in an ordered list. In these experiments, monkeys were presented with pairs of items drawn from the list, and delivered rewards if subjects selected the item with the earlier list rank. When reward magnitude was biased to favor later list items, correct responding was reduced. However, monkeys eventually learned to make correct rule-based choices despite countervailing incentives. The results demonstrate that monkeys’ performance in TI paradigms is not driven solely by expected reward, but that they are able to make appropriate inferences in the face of discordant reward associations.

Reward associations do not explain transitive inference performance in monkeys

The observation that monkeys appear to make transitive inferences has been taken as evidence of their ability to form and manipulate mental representations. However, alternative explanations have been proposed arguing that transitive inference performance based on expected or experienced reward value. To test the contribution of reward value to monkeys’ behavior in TI paradigms, we performed two experiments in which we manipulated the amount of reward associated with each item in an ordered list. In these experiments, monkeys were presented with pairs of items drawn from the list, and delivered rewards if subjects selected the item with the earlier list rank. When reward magnitude was biased to favor later list items, correct responding was reduced. However, monkeys eventually learned to make correct rule-based choices despite countervailing incentives. The results demonstrate that monkeys’ performance in TI paradigms is not driven solely by expected reward, but that they are able to make appropriate inferences in the face of discordant reward associations.