The purposeful corporation and the role of the finance industry

Abstract: The finance industry—banks, insurers, fund managers and the rest—play a pivotal role in our economy. In particular they have a profound influence on the behaviour of our corporations and the individuals that work for them. To provide its services, the finance industry has considerable powers in corporate governance. So, if we are to reconceptualise the purpose of the corporation, this article argues that we also need to do the same for the role of the finance industry. The article begins with a review of the limited literature around ‘the purpose of the finance industry’. It then poses the question about what that purpose should be, whether the industry’s current practices are adequately fulfilling that purpose, and how this affects corporate behaviour. The article argues that if the finance industry itself were more purposeful, that would help to promote purposeful companies. Finally, the article makes a series of recommendations on how stakeholders can create a model of change within the industry to support purposeful outcomes.

Keywords: Finance, purpose, trust, purpose of finance.

Article posted to Journal of the British Academy, volume 10, supplementary issue 5 (Foundations of the Future of the Corporation programme report ‘Policy & Practice for Purposeful Business’).