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The purpose of this paper is to provide a provocative and critical introduction and solutions to significant contemporary issues of financial regulation.

The paper is an expert’s review of contemporary issues and challenges in financial regulation.

The paper advocates that contemporary financial regulation challenges are addressed through governance reforms and an enhanced focus on maturity transformation, rather than a focus on just capital and liquidity management. In particular, more emphasis should be given to individual decision-makers within banks rather than institutions.

The review paper considers areas where future regulatory reform may be enhanced and redirected.

The review provides original and critical perspectives on contemporary regulatory challenges.

Learning often requires little or no expenditure in income; its real cost is that it takes time. The paper aims to discuss this issue.

Since time is scarce, most people normally decide not to learn about many aspects of modern life, but rather to specialise on certain limited areas. When a matter arises outside our specialisation, we tend to follow others whose narratives we trust.

So, learning in many cases arises from social interaction, not from individual study. Consequently, informational contagion is baked into our social and economic systems.

Treating time, not income or wealth, as the ultimate constraint improves analysis of the learning process, clarifying its essential social nature.

This paper proposes an objective metric to trigger bank recovery. Banks’ living wills involve both recovery and resolution. Since it may not always be clear when recovery plans or actions should be triggered, there is a role for an objective metric to trigger recovery.

We outline how such a metric could be constructed meeting criteria of adequate loss absorption; distinguishing between weak and sound banks; little susceptibility to manipulation; timeliness; scalable from the individual bank to the system.

We show how this would have worked in the UK, during 2007-2011.

This approach has the added advantage that it could be extended to encompass a whole ladder of sanctions of increasing severity as capital erodes.

This paper considers what purposes regulation and supervision of financial institutions are designed to serve. Historical experience with regulation and supervision is considered, and it is argued on the basis of that examination that a fairly ‘light touch’ in regulation is likely to achieve the objectives that governments and citizens require regulation to achieve. Accordingly, the paper concludes that when regulation is evaluated and compared against unregulated systems, one should be careful to compare fallible regulation with fallible markets, rather than implicitly assuming regulation is perfect. Otherwise over‐regulation will result.

The pre‐commitment approach to bank capital regulation proposes that banks self‐select capital reserve requirements, facing penalties ex post for incurring losses in excess of reserves, hence providing incentives for high‐ risk banks to choose higher capital requirements. In order to assess the validity of the pre‐commitment approach, this article analyzes its comparative statics within the context of a standard European option written against the bank's capital base. The author finds that this approach works when it is not needed (when banks possess unlimited capital and hence cannot fail), but not when it is.

The purpose of this paper is to demonstrate the analysis of portfolios of office properties using measures of business outputs, namely occupation efficiency and staff satisfaction.

Satisfaction is measured using a proprietary online survey instrument that has proved highly reliable and repeatable in three separate trials. The data on 192 buildings are analysed using data envelopment analysis.

Instant and significant differences are revealed between clusters of buildings and individual properties. The approach reveals inefficiencies that are concealed by more conventional cost‐based metrics.

The study has proven to be of use in gaining organisational commitment to strategic property improvements.

The authors are not aware of this approach having been applied elsewhere in either research or application.

The collapse of Barings Bank in February this year provided a stark illustration of the need for adequate systems and controls in managing trading risks. This paper reviews the current advice on best practice from regulators, industry groups and government agencies. It emphasises the importance of strong corporate governance, the need for a strong risk management infrastructure, and suggests ways in which the incentives for excessive risk‐taking generated by existing systems of bonus payments might be corrected. The paper also recommends each firm perform an annual risk control assessment under the direction of its audit committee. It concludes by arguing that enhanced public disclosure has an essential role to play in providing an additional discipline on the board and senior management to ensure the adequacy of systems and controls.