What they do with your money: Does the finance industry do its job well?
The finance industry plays a vital role in addressing the world’s most pressing problems. Yet, although there are many studies of finance industry, few that start by asking “what is its purpose”; and therefore few which are aimed at telling us whether it serves that purpose well. Those that do are very challenging; the most definitive, for example, calculates that, as far as the “real economy” is concerned there has been no increase in the productivity of intermediation in over more than a century.
Reflection on how the industry is currently structured can give us clues to this very poor performance, and suggest how we might begin a process of reform. But to do so will mean that we need to move away from the exclusive use of “competitive markets” and “regulation”, which dominate today’s policy discussion.
David Pitt-Watson is a leading thinker and practitioner in the field of responsible investment and business practice. As co-founder, and former CEO of the Focus Funds and Equity Ownership Service, he built and led Britain’s first significant shareholder activist fund, and the largest “responsible investment” group of any institutional fund manager in the world. He is currently an Executive Fellow at the London Business School, and leads and supports a variety of initiatives to challenge and improve the performance of the finance industry, including the UN Environment Programme’s Finance Initiative. His book, co-authored with Stephen Davis and Jon Lukomnik, “What They Do With Your Money; How the Financial System Fails Us and How to Fix It” will be published in June. To find out more, visit: http://yalebooks.co.uk/display.asp?K=9780300194418