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The role of trust in maintaining the resilience of financial markets.

Tomasic, Roman and Akinbami, Folarin (2011) 'The role of trust in maintaining the resilience of financial markets.', Journal of corporate law studies., 11 (2). pp. 369-394.

Abstract

The Global Financial Crisis (GFC) threatened to bring world financial markets to a halt. It is now coming to light that in the run-up to, and at the height of, the GFC, investment banks and other participants in the financial markets acted unethically as well as imprudently. This article takes a closer look at this unethical behaviour and the way in which it constitutes a failure of trust. The article defines trust and outlines why it is important in the regulation of financial markets. It then looks at three examples of breakdowns or failures of trust in the run-up to the financial crisis. The article concludes by arguing that trust is important in commercial relationships at both the intra-firm level (the relations between the different constituents of the firm) and the inter-firm level (the relations between the firm and other firms).

Item Type:Article
Keywords:Trust, Global Financial Crisis, Progressive corporate law, Financial innovation, Moral hazard, Too big to fail, Creative accounting.
Full text:PDF - Accepted Version (628Kb)
Status:Peer-reviewed
Publisher Web site:http://dx.doi.org/10.5235/147359711798110628
Record Created:15 Mar 2012 15:20
Last Modified:30 Mar 2012 12:02

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