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The paper takes both an historical and an international perspective on the issue of mutuality and identifies a number of important themes in the current debate on mutuality versus "plc" conversion. The paper accordingly argues that in the short term the problem of excess capacity and the need to reduce capital is an important motive behind the recent spate of conversions. In the long term, however, the greater flexibility and the opportunities to raise additional capital which are associated with public company status are an important impetus behind this debate. In this respect, a number of alternatives to outright conversion which have not been sufficiently debated in the literature are identified and examined. Emphasis is placed on the European and US experience where savings and loans institutions have introduced a number of alternatives to outright flotation. In particular, the various merits and de‐merits of mutual holding companies are examined as an alternative to outright conversion.

The paper examines the economics of the mutual organisation and the stakeholder models of corporate governance with its emphasis on informal contracts, trust and co‐operation. These concepts are important in informal governance systems such as mutuals because they economise on transaction costs and promote efficient exchange. In this respect, the paper argues that mutuals have a comparative advantage compared with joint stock banks in ameliorating problems associated with adverse selection and moral hazard. These comparative advantages, however, are enhanced in small mutuals such as credit unions which focus on relatively small memberships with a common bond. The paper concludes by suggesting that although the credit union movement will not necessarily develop along similar lines to the building societies, it does have a future in providing banking facilities to the relatively poor and disenfranchised sectors of society.

Current research is beginning to question the role and effectiveness of traditional rules‐based bank regulatory oversight in favor of incentive‐compatible regulatory design and market discipline and, in particular, mandatory subordinated debt market discipline. However, research on the suitability of a mandatory subordinated debt policy (MSNDP) has focused primarily on the United States. The primary aims of this article, therefore, are to examine the market for subordinated debt (SND) issued by UK credit institutions and to assess the suitability of introducing an MSNDP into UK banking regulation. A further contribution of this article is that it explores SND issuance and its characteristics at a bank level and, uniquely, considers them in relation to regulatory, structural, and economic events that either are specific to the UK or otherwise affect international banks. The article compares the UK findings with research on SND markets in the United States and Europe and, in so doing, raises concerns over whether an MSNDP for the largest global credit institutions would be feasible. Although the focus of this study is the UK banking industry, the country‐focused bank‐level approach provides conclusions that might be relevant to other countries considering the implementation of an MSNDP.(JEL G18, G28)

Risk behaviour and risk management in business life influence a wide range of fields in which only a very limited amount of research has been undertaken. These topics have often been treated as if they were theoretically and practically isolated from other fields, the so called risk archipelago problem. What is actually needed is another focus, in which the problem of risk is treated as a central theme. The demand for interdisciplinary research means that there is a need for crossing scientific boundaries. In approaching risk problems from a holistic perspective there is also a parallel need for linking the scientific and the business worlds. Researchers must work closely together in concrete multidisciplinary research projects and in co-operation with the industrial world in seeking out and solving research problems of importance. This book contains selected and re-written papers, and key-note speeches presented in a risk-seminar that Stockholm University organised in June 1997. The seminar, in which 200 researchers and practitioners from 26 countries participated, was divided into four main topic areas: Risk Assessment and Credit Management, Psychology in Business Life, Risk Management in Small Firms and Law and Business Risk. In writing this book, the editor invited eight professors from four continents to assist him in introducing the reader to the different and scientific disciplines and in explaining the need for interdisciplinary, multidisciplinary and cross-disciplinary risk research projects. The book consists of eight chapters and the target groups are researchers, doctoral and master students at universities and business people working in the risk management area