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In this chapter we study the intra-group transactions between the parent bank and its foreign subsidiaries in European Union (EU) countries during the crisis. We use hand-collected data from annual statements on related party transaction and find that they may create a serious problem for the stability of the foreign banks’ subsidiaries. Moreover, as some of those subsidiary banks were large by assets in some of the member states the related party transactions with the parent bank created a serious threat to the host countries’ financial system stability. We attribute this transaction to the weak governance in foreign subsidiaries. We suggest improvements in governance as well as greater disclosure of related party transactions in bank holding companies in Europe.

The 2008 financial crisis emerged in the United States. However, the crisis spread across other countries very rapidly. The European Union countries were also affected by the crisis. The uncertainties and the decreases in balance sheet assets observed in European countries complicated the discharge of debts of countries, which have more fragile structures, and turned the financial crisis into a debt crisis in the year 2010. The European debt crisis caused a significant pressure on the Eurozone, put the financial sector under stress, and expanded the gaps in capital budgets. In order to restructure after the crisis and to eliminate the effects of the crisis, many measures were taken, and various mechanisms were developed. As a result of the measures are taken and the policies implemented, recovery was seen in financial and economic indicators as of the year 2012, but the COVID-19 pandemic emerging in the year 2019 brought a new shock wave. As a result, it became necessary to review the economic and financial measures taken before, to add new ones to the current mechanisms, and determine and monitor the vulnerability of the system. For this purpose, in January 2021, European Commission declared that a new strategy was set. In the present study, the measures taken and the mechanisms developed after the 2008 crisis were summarized and the advancements in financial and economic variables were examined by making use of the statistical data. Moreover, also information about the new strategy set after the year 2021 was provided. It is projected that, in the long run, the consistent and uniform implementation of measures taken and ensuring the efficient functioning of mechanisms developed would strengthen the economic and financial structures of European economies, support the integration, and increase the competitive power.

This paper aims to analyze the effects of internal and external governance mechanisms on the performance and risk taking of banks from the Euro zone before and after the 2008 financial crisis.

To avoid macroeconomic problems and shocks and because of data availability, the authors select some countries of the Euro zone, namely, France, Belgium, Germany and Finland, during the 2004-2009 period. These countries share similar macroeconomic environments (unemployment, inflation and economic growth rates). All the data relating to the banks are manually drawn from the supervising reports submitted to banks and are available on the banks’ websites and/or on that of the AMF website. The banks included in our sample are drawn from the list of European central banks on www.ecb.int

The empirical results show that banks undertake tradeoffs between different governance mechanisms to alleviate the intensity of the agency conflicts between the shareholders and managers. The findings also confirm that internal mechanisms and capital regulations are complementary and significantly impact bank performance.

This analysis can be extended through studying the interaction between bondholders’ governance and shareholders’ governance and their impact on the 2008 financial crisis.

The changes in banking governance help banks find a useful and necessary way to avoid ill-considered risks that can cause a systemic risk. Therefore, some conditions should be met so that banking governance can contribute to the economic development.

Culture and mentality of good banking governance must grow as much as possible through awareness-raising, training, promotion, recognition of performance, enhancing procedure transparency and stability of good banking governance and regulations, strengthening the national capacity to fight against corruption, and preventive mechanisms.

This paper complements previous studies, mainly those of Andres and Vallelado (2008) who examine the impact of the components of the board on banking performance and of Laeven and Levine (2009) who estimate the combined effect of regulatory and ownership structure on the risk-taking of each bank.

The purpose of this paper is to examine the literature of CSR before and in the aftermath of the financial crisis in 2008. The aim of the research question is to map out the consequences upon CSR derived from the crisis and to derive new principles of future CSR models to come consistent with the consequences of the financial crisis, and to suggest new research as well as policy-making possibilities to highlight the importance and necessary survival of CSR as an instrument for sustainable and financial progress.

This paper uses a literature review of CSR prior to and after the financial crisis 2008, with an emphasis on academic papers published in peer-reviewed journals.

The findings of the paper reveal that post-crisis CSR-models do not articulate anything that has not been mentioned before; however, they do strengthen former values of CSR, but still lack an overall formula of how the financial sector can adopt CSR in the core of their businesses, and transparently display their products, and the risk adhering to them. The paper proposes a new Four-“E”-Principle that may guide new CSR-models to accomplish this deficit. See under “Originality”.

The paper calls for a discussion on ways in which governments and businesses can enhance social responsibility, though balancing the requirements of more engagement from businesses, as well as public sector companies in CSR. This paper suggests some instrumental mechanisms of how governments can engage, not only multinational companies, but also smaller companies, and other kinds of organizations acting on the market, to make them engage more in CSR.

The paper proposes a new Four-“E”-Principle to guide the development of new CSR-models based upon the core of Schwartz and Carroll's “Three-domain CSR-model”, which the Principle extends and revises to: Economy, L/Egal, Environment, and Ethics. This Principle disentangles the dialectic relationship between economic and social responsibility; takes financial products into consideration; refines the definitions of good stakeholder engagement without the illusions of corporate “Potemkinity”; and considers the benefit of replacing the semiotic meaning of the “C” in CSR from “corporate” to “capitalism's social responsibility” in order to extend the concept towards a broader range of market agents.

The global financial crisis (GFC) of 2007–2008 had far-reaching consequences for the global economy, triggering widespread economic turmoil. We use the event-study method to investigate whether investors priced the effect of significant events before the Lehman Brothers' bankruptcy in European and Asia-Pacific banks. Abnormal returns on the event days range from −4.32% to 5.03% in Europe and −5.13% to 6.57% in Asia-Pacific countries. When Lehman Brothers went bankrupt on September 15, 2008, abnormal returns averaged the lowest at −4.32% in Europe and −5.13% in Asia-Pacific countries. The significant abnormal returns show that Lehman Brothers' collapse was a turning point, and investors paid attention to the precrisis events as warning signs of the oncoming crisis.

The financial crisis at the end of the past decade resulted in downturns in stock markets and the collapse of many large banks around the world. It encouraged economists worldwide to consider alternative financial solutions. Attention has been focused on Islamic finance as an alternative model. This study examines the performance of Islamic banks in 10 Middle Eastern and North African (MENA) countries over the period of 2005–2010.

It is an intertemporal analysis where it compares the profitability, liquidity, risk and solvency, and efficiency of 43 Islamic banks before and after the financial crisis.

The results show that the financial crisis negatively affected the performance of Islamic banks. The profitability and liquidity of Islamic banks in Gulf Cooperation Council (GCC) countries decreased drastically after the crisis. Islamic banks in non-GCC countries were efficient and more profitable compared to GCC countries. However, they took excessive risk during and after the financial crisis. The chapter concludes that Islamic financial institutions are not immune from the effects of the global recession.

The financial crisis has led to a greater recognition of the importance of liquidity risks. Reinforcing regulations and setting up a strong liquidity management framework are needed to improve the Islamic financial industry.

The purpose of this study is to conduct a comparative analysis of the economic determinants of the compensation for chief executive officers (CEOs) between the pre- and post-financial crisis periods. To conduct the comparative analysis, the authors consider five years before and five years after the financial crisis of 2008. The authors use the data from the US financial service institutions and run separate regressions for the pre- and post-crisis periods to check if there is any significant difference in the economic determinants of executive compensation before and after the financial crisis. The authors find that total compensation and its incentive components decreased significantly in the post-crisis period. In the pre-crisis period, total compensation was determined by stock performance, accounting profit, growth, and leverage, whereas in the post-crisis period stock returns and leverage are the major factors influencing total compensation. The authors also find that firms’ leverage negatively influences the sensitivity of the pay for performance, but the influence of leverage on pay for performance is weaker in the post-crisis period. Our research is significant in the context of the US economy, the regulatory reforms of financial institutions, and the perspectives of the executive compensations. This is the first study that compares the relationship between compensation and firm performance over the pre- and post-crisis periods. It is an explicit attempt to develop a theoretical understanding of the compensation/performance relationship for the financial industry, which is blamed for the financial crisis and is affected by the Dodd–Frank regulation after the crisis.

At the time they occurred, the savings and loan insolvencies were considered the worst financial crisis since the Great Depression. Contrary to what was then believed, and in sharp contrast with 2007–2009, they in fact had little macroeconomic significance. Savings and Loan (S&L) remediation cost between 2 percent and 3 percent of Gross Domestic Product (GDP), whereas the Troubled Asset Relief Program (TARP) and the conservatorships of Fannie and Freddie actually made money for the US Treasury. But the direct cost of government remediation is largely irrelevant in judging macro significance. What matters is the cumulative output loss associated with and plausibly caused by failing financial institutions. I estimate output losses for 1981–1984, 1991–1998, and 2007–2026 (the latter utilizing forecasts and projections along with actual data through 2015) and, for a final comparison, 1929–1941. The losses associated with 2007–2009 have been truly disastrous – in the same order of magnitude as the Great Depression. The S&L failures were, in contrast, inconsequential. Macroeconomists and policy makers should reserve the word crisis for financial disturbances that threaten substantial damage to the real economy, and continue efforts to identify in advance financial institutions which are systemically important (SIFI), and those which are not.

The purpose of this paper is to investigate textual issues and communication patterns of CEOs/chairmen/presidents’ letters to shareholders in the post-2008 financial crisis period. By taking a global perspective, the work specifically explores how 307 banks from 15 countries communicated the issues of financial crisis with shareholders, customers and other stakeholders in their letters to shareholders published in the banks’ annual reports.

By using content analysis and qualitative research, the work specifically analyzes 307 letters to shareholders that constitute 1,028 pages.

Results of the work suggest that textual features and communication patterns of letters to shareholders remain distinct regarding corporate messages that banks delivered to their shareholders. There was little resemblance between financial institutions regarding their communicative patterns. This could be the result of cultural issues, diverse business environments, regulatory standards, discursive information and hidden business practices.

Within our limited data (307 banks), the significance of this paper lies in its timeliness and relevance to the post-2008 financial crisis period and its worldwide business disruptions.

Practitioners need to use the results of this research and should be familiar with the main causes of the crisis that remain controversial and complex.

Global markets and society as a whole were impacted by the severity and longevity of this crisis because of losses, socioeconomic disruptions and business bankruptcies.

Original value of this work falls within the domains of global financial markets and multinational banks.