Skip to main content

Kay Review

A few months ago, I had a post about the interim report of the Kay Review of UK equity markets.  The final report was published last week - click here for the full report.  Kay's report suggest that short-termism is an underlying problem in UK equity markets.  The recommendations of the Kay Report are radical and it will take a brave politician to implement them as the Kay Review is regarded as anachronistic by many (click here and here for examples).  As someone with a keen interest in financial history, the Kay Report certainly seems to pine for the halcyon days of equity markets before Big Bang.  

Modern equity markets certainly seem to have major problems.  Why have these arisen?  My hunch is that short-termism is symptomatic of a deeper problem - the rise of the institutional investor and the democratization of stock markets.  I think that an examination of this issue would make a fascinating PhD topic if anyone is interested!      

Popular posts from this blog

The Failure of Herstatt Bank

As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of

Boom and Bust: A Global History of Financial Bubbles

Boom and Bust: A Global History of Financial Bubbles, co-authored with my colleague Will Quinn , is forthcoming in August. It is published by Cambridge University Press and is available for pre-order at Amazon , Barnes and Noble , Waterstones and Cambridge University Press . 

The Great Depression

Marginal Revolution University has a great video on the Great Depression.