Which Banks Create the Most Social Utility for the Least Systemic Risk?

May 18, 2011

In the same way that utilities spew smoke in the course of providing power, banks emit systemic risk in the process of financing our economy. Banks have been blamed by investors, politicians and regulators for excessive risk taking that destabilized the global economy. In our recent industry report, comparing social performance of 17 investment banks, we evaluate a more multi-dimensional question: which banks create the most social utility for the least systemic risk? The equilibrium between social utility on one hand and systemic risk on the other is a difficult and delicate balance to strike. In our view, it is emerging as a long-term driver of banks’ competitiveness.