Effective bank regulation: seven guiding principles

Purpose This article is a ‘Viewpoint’ article and as such, it presents the author’s opinion and interpretation. Its primary purpose is to propose seven guiding principles for effective bank regulation so that these may be subject to academic criticism. Design/methodology/approach The principal theme of this article has its origins in archival research into the nature of bank regulation in the UK in twenty-five to thirty years after the Second World War. This article draws upon insights gained into the nature of bank regulation in the UK arising from that research. It focuses on what aspects of bank regulation were effective in that earlier period. It then attempts to convert those insights into underlying principles. Findings Seven principles are proposed as the starting point for a discussion as to the principles which should underpin effective bank regulation. The seven principles are set out in the Introduction to the article. Originality/value The framework for the regulation of banks in the UK and in many other countries is a complex one. The general trend in bank regulation in the UK in the last four decades has been technocratic, characterised by a preference for codified rules which are often detailed and technically complex. It has also been characterised by the establishment, or further development, of intricate regulatory and supervisory structures at national, international and supranational levels. Scholarly attention has understandably been focused on those trends. Rather less attention has been given to the broader principles which might underpin and guide bank regulation. This article seeks to contribute to that question