Separation of Investment Banking Activities from Universal Banks. Preventing Financial Instability (en Inglés) - Nikitas E. Bompotis

This book serves a dual purpose. First, to present the concept of ‘structural reforms’ in the banking sector (mostly associated with the separation of investment banking activities from the so-called Universal Banking model), as a means to address the recurring issue of ‘Too-Big-To-Fail’ (TBTF) institutions that resurface during financial crises. Second, it offers a deeper analysis of such reforms across key jurisdictions-namely the US, UK, EU, Canada, and Japan – exploring how, why, and when these measures were adopted, repealed, or reconsidered, especially following the recent Global Financial Crisis of 2007–2009.

By focusing on these jurisdictions, the book examines the legal foundations, motivations, and effectiveness of structural reforms in mitigating systemic financial risk. It begins by situating banks within the broader financial system and explaining other regulatory measures before connecting them to the concept of structural reforms. It also traces the evolution of these reforms across different historical periods, showing how crises often serve as catalysts for regulatory change.

A major component of the book involves comparing the jurisdictions studied to assess the practical outcomes of their reform strategies. This comparative approach helps evaluate whether structural reforms genuinely reduce TBTF risks or if alternative regulatory tools might offer better results with fewer downsides. The analysis concludes with a discussion on the necessity and justification of such strict regulatory approaches based on the evidence from these key jurisdictions.

Designed for a varied audience – including students, academics, regulators, and financial practitioners – the book offers a comprehensive and accessible discussion of a highly complex but critical area of financial regulation. While some familiarity with the concept of ‘structural reforms’ is beneficial, the book’s clear structure allows readers with general interest in financial regulation to follow the arguments and gain valuable insights into the ongoing global debate on how best to regulate large financial institutions.