Banks and Misconduct

Abstract

This chapter deals with the issues and implications of misconduct scandals involving banks and the inter-bank market. The discussion begins by surveying the significant incidence of misconduct by banks across the globe and then presents an explanation for this based on systemic features of the banking market. This includes an account of the impact of a number of profound changes to the banking business model which have taken place in the last half-century as banks have shifted to a highly transactional business model and discovered that tax systems around the globe present fertile opportunities for exploitation. The discussion includes an analysis of why it is considered that the banks’ internal and external control mechanisms have materially failed.