The current Basel accord lays even greater stress on risk measurement and management. Bank Supervisors must make the Boards of banks the main locus of accountability and assess board effectiveness. Regulatory and supervisory systems that foster more accurate information disclosure and empower private investors, legal rights, substantially boost banking system and profitability.
Large investors may manipulate the firm contrary to the broad interests of Banks and other shareholders. The task of the Bank supervisor is indeed onerous. Information asymmetries plague all sectors but this is even more tangential in finance; in product or other service markets, purchasers part with money in exchange for something new.