The Cypriot Banking Sector During the Financial Crisis and Its Reforms: An Examination in Light of the Case of the UK

Abstract

The article focuses on the role of banks in the financial crisis and compares the UK and Cyprus, since the banking sector of the latter was founded on the former’s model, because of its colonialism by the British Empire. However, Cyprus financial sector has been influenced by its accession to the EMU, while the UK remains outside Euro-zone. The article begins with the theoretical background; namely the ‘Too-Big-to-Fail’ theory, the deficient banking corporate governance and their ineffective supervision, and its reflection in the UK and Euro crisis. Afterwards, the measures imposed by the UK government to its banking sector and the corresponding EU financial measures are discussed. A brief evaluation of the causes of the crisis in Cyprus follows. The article concludes that Cyprus can follow the UK example and focus its efforts on the banks’ supervision, to improve its financial industry and avoid a future financial crisis.