One way to limit both company size and appetite for risk is to tie the fortunes of directors and shareholders directly to the fortunes of their company. This could be accomplished by removing limited liability for companies above a certain size. Removing limited liability would mean that directors and shareholders would be personally liable if things go wrong. So removing it above a certain size of company would provide strong pressure to keep a company under the size limit and generally to behave with more caution.
But what about other companies? Non-bank companies may not be quite so structurally important to the economy, but if Walmart or Tesco collapsed, people would go hungry…
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