Economic Activity in Turbulence: Banks and Financial Markets
In the aftermath of the failure of the Icelandic financial sector, embedded flaws of all the main pillars of the Icelandic economic system became evident. Individuals and institutions alike failed so that the system itself did not deliver the outcome it was set to do. This article presents a survey...
| Published in: | Tímarit um viðskipti og efnahagsmál |
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| Main Author: | |
| Format: | Article in Journal/Newspaper |
| Language: | Icelandic |
| Published: |
Institute of Business Research
2010
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| Subjects: | |
| Online Access: | http://www.efnahagsmal.is/article/view/a.2010.7.2.4 https://doi.org/10.24122/tve.a.2010.7.2.4 |
| Summary: | In the aftermath of the failure of the Icelandic financial sector, embedded flaws of all the main pillars of the Icelandic economic system became evident. Individuals and institutions alike failed so that the system itself did not deliver the outcome it was set to do. This article presents a survey of the main stakeholders of the financial system and maps out the incentive structure which defines the system and its outcome. The main conclusion is that the institutional structure of Iceland needs significant repairs so that Iceland can be considered favourable place for investments. The main weaknesses identified by this paper lie in the judicial system, given the lack of specialization among judges, as well as class-action suits being illegal; the low turnover and small size of the stock market; and a weak governance structure of firms. Incentive schemes of the fallen Icelandic banks proved also to be highly flawed in terms of protecting the interests of the minority shareholder. Eftir íslenska bankahrunið þykir ljóst að meginstoðir fjarmala- og efnahagskerfisins voru á veikum grunni reistar. Stofnanir jafnt sem einstaklingar brugðust og kerfið í heild stóðst ekki þær kröfur sem gerðar voru til þess. Hér verður farið yfir hverjir eru haghafar bankakerfisins sem knúðir eru áfram af ólíkum hagsmunum og hvötum. Þá er spurt hvaða veikleika megi finna meðal þeirra meginhvata sem eru byggingarefni hins íslenska efnahags- og fjármálakerfis. Niðurstaðan er sú að brotalamir má finna á öllum helstu stoðum kerfisins sem fjárfestar reiða sig á, svo sem í dómskerfi, skilvirkni markaða, hvatakerfum bankastofnana, og stjórnarháttum fyrirtækja. Valdhafar landsins verða að lagfæra þessar brotalamir hið fyrsta svo að íslenskt efnahagslíf og íslenskur fjármálamarkaður geti talist frjór jarðvegur fyrir fjárfesta að yrkja. |
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