The
global ‘credit crunch’ and ensuing economic challenges have revealed a deep
crisis in the world of finance. Public opinion on the integrity of the
financial sector is at an all-time low and the faith of the banks in their own
customers has been severely undermined. Unsure of the security of their loans,
many credit providers withhold the lending that many, particularly SME clients,
rely on to survive and grow.
ResPublica
will be conducting a wide-reaching programme of research that will engage
practically with partners in the financial sector to determine how financial
mutuals, ethical investors and other alternative models of finance can be
incentivised to both add to the competition on the High Street and better meet
the needs of Britain’s small businesses. As part of this, this research will
also explore how mutual and community responsive models of finance can be used
to inculcate a culture of trust, ethics and reciprocity in the financial sector
as a whole.
Key
themes for investigation include:
- Local Banking and
Business Responsiveness – The theme will
examine how a new tier of local and regional banks could be established to
serve the needs of local businesses and communities. As part of this, the role
of local authorities as ‘civic investment platforms’ will be assessed to
determine their suitability as providers of local business finance. This strand
will also explore the potential for LEP-led ‘securitisation platforms’ that
would cater for the needs of local business. By encouraging smaller firms to
bundle together capital needs across their supply chains, it is possible that
business loans could be shared and commercial risk pooled.
- The Growing
Potential of Traditional Finance – Rightly, policy makers have highlighted the
need for greater competition from within the financial sector. But too often solutions focus on how standard
‘plc’ banks can be incentivised to start-up or enter the market, without paying
much attention to more established forms of finance – such as building
societies, friendly societies and credit unions. This theme will explore what can be done to
increase competition in the sector from more traditional and mutual forms of
finance.
- Democratising
Finance
– This theme will examine a range of
new financial platforms that are revolutionizing the way renewable energy
firms, social enterprises and SMEs raise capital. This theme will explore peer-to-peer
networks, ‘crowd-funding’, new models of infrastructure finance and the
resurgence of ‘old’ models such as co-operative finance. These will all be assessed to scope
people-centric solutions to currently unresponsive and undemocratic models of
finance.
- Beyond
Regulation, Towards Ethos – There is no shortage
of professional standards and ethical frameworks for industry actors to take
guidance from, but recent events have called into question their real utility.
Fundamentally, no externally imposed quotas can achieve meaningful cultural change,
as this must come from within the industry itself. Building on the work of the
Parliamentary Commission on Banking Standards, the project will propose ways in
which a fundamentally new configuration of standards can be instituted in a
self-governing form which recognises and certifies behaviour within the
industry, whilst at the same time remaining firmly rooted in an ethos-driven
framework.
The
project is now open to external engagement from the public, private and
third sectors. We would like to establish a consortium of sponsors who will
feed in to our further research and debate in this area and benefit from
co-branding on publications and events.
For
more information or to discuss partnership opportunities, please contact Adam Wildman, Research Manager, at adam.wildman@ respublica.org.uk or 020 7222 6552.