The financial and economic crisis demands that fundamental reforms be made. In the financial sector to start with. To be able to overcome the crisis there is a real need for more diversity in the banking landscape, based on institutions which provide common sense banking. That is the view of Matthijs Bierman, director of Triodos Bank and Alumnus of the Year of the University of Groningen, and Professor of Econometrics at the University of Groningen, Laura Spierdijk.
‘We can learn a lot from Islamic banks, small cooperative banks and what are termed “sustainable banks”. These banks put the interests of the customer first rather than maximizing shareholder value. Recent research has shown that such banks have coped with the crisis better than the “normal” banks. That’s something to think about. Now most of the banks are almost identical, such that a single shock immediately affects them all. It would be better if there were more diversity in the banking landscape. You could compare this with biodiversity in nature. If a particular animal species is finding it tough, then another species can flourish, following which the balance restores itself. We need this type of ecological resilience in the financial world too.’
‘It is no accident, for example, that Islamic banks have withstood the financial crisis relatively well. The main principle that they abide by is that a bank should serve society by extending credit to consumers and businesses. By choosing to serve the consumer market they did not invest in the financial products which have since resulted in billions in losses for the conventional banks. Another important aspect of Islamic banks is that they work on the basis of risk sharing rather than risk transfer. An Islamic bank receives no interest but shares in the economic risk of the business to which it lends – irrespective of whether the company makes a profit or a loss. Taking this argument a step further, a return to the small-business banks of the past would be a benefit: a bank whose sole task is to support the sector.’
‘It’s time for common sense banking. The implicit state guarantee for the major globally operating banks which are considered “too big to fail”, is pernicious. This guarantee gives banks the impression that they can take risks because they will still be saved even if it all goes wrong. We feel that only institutions which serve society should be permitted to call themselves a “bank” in the future. We should reserve this title for institutions which maintain large capital buffers and are focused only on consumers and ordinary businesses. Banks which are covered by the Dutch deposit protection system should be required to limit themselves to providing support to the real economy rather than the financial one. At the same time parties investing in a Common Sense Bank will have to accept that such an organi\ation will take less risk and is therefore unlikely to make “double digit” profits.’
‘Finding a solution to the debt crisis and the even worse environmental crisis requires that individual consumers change their behaviour. Now we spend money we don’t have, to buy goods which we don’t need and which don’t make us happy. In the meantime we are depleting the Earth’s natural resources. It’s time to start investing in things of real value, in the relationships between people and with the nature surrounding us. Today’s society has become totally disconnected, we have no idea how our lives are connected with those of other people and how our actions affect the lives of other people. We need to show that every action has an impact. Through their wallets everyone is influencing the world a dozen times a day. The individual consumer is becoming increasingly powerful. We should not wait for Europe, the IMF or the UN to come up with a solution. We can create the solution ourselves through all the small steps taken by individual people.’
Laura Spierdijk (1976) studied Econometrics and Mathematics at VU University Amsterdam. She was awarded her PhD in 2003 at Tilburg for a thesis on large share transactions on the New York Stock Exchange. After gaining her PhD, she went on to work for the Pensions and Insurance Supervisory Authority (now De Nederlandsche Bank, the Dutch central bank) and the University of Twente. In 2006 she was appointed as a Rosalind Franklin Fellow to the Econometrics Department of the University of Groningen. Since 2010 she has been Associate Professor of the Econometrics of Pensions, Insurance and Finance. Laura Spierdijk specializes in quantitative risk management for banks, pension funds and insurers.
Matthijs Bierman (1964) graduated from the University of Groningen in 1991 in both Business Administration and Dutch Law. He then went on to work in various positions, including as an aid worker in Botswana for several years, before joining Triodos Bank in 1996, where he became director in 2003. Triodos Bank is a values-driven organization with more than 400,000 customers in the Netherlands and abroad. He specifically chose to work for this idealistic bank because he wanted to manage a socially committed organization.
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