Julien Dhima and Catherine Bruneau
This study aims to demonstrate and measure the impact of liquidity shocks on a bank’s solvency, especially when the bank does not hold sufficient liquid assets.
Abstract
Purpose
This study aims to demonstrate and measure the impact of liquidity shocks on a bank’s solvency, especially when the bank does not hold sufficient liquid assets.
Design/methodology/approach
The proposed model is an extension of Merton’s (1974) model. It assesses the bank’s probability of default over one or two (short) periods relative to liquidity shocks. The shock scenarios are materialised by different net demands for the withdrawal of funds (NDWF) and may lead the bank to sell illiquid assets at a depreciated value. We consider the possibility of second-round effects at the beginning of the second period by introducing the probability of their occurrence. This probability depends on the proportion of illiquid assets put up for sale following the initial shock in different dependency scenarios.
Findings
We observe a positive relationship between the initial NDWF and the bank’s probability of default (particularly over the second period, which is conditional on the second-round effects). However, this relationship is not linear, and a significant proportion of liquid assets makes it possible to attenuate or even eliminate the effects of shock scenarios on bank solvency.
Practical implications
The proposed model enables banks to determine the necessary level of liquid assets, allowing them to resist (i.e. remain solvent) different liquidity shock scenarios for both periods (including eventual second-round effects) under the assumptions considered. Therefore, it can contribute to complementing or improving current internal liquidity adequacy assessment processes (ILAAPs).
Originality/value
The proposed microprudential approach consists of measuring the impact of liquidity risk on a bank’s solvency, complementing the current prudential framework in which these two topics are treated separately. It also complements the existing literature, in which the impact of liquidity risk on solvency risk has not been sufficiently studied. Finally, our model allows banks to manage liquidity using a solvency approach.
Details
Keywords
- Liquidity shock scenarios
- Bank solvency
- Probability of default (over one and two periods)
- Net demand for the withdrawal of funds (NDWF)
- Liquid and illiquid assets
- Second-round effects
- Probability of the occurrence of second-round effects
- Internal liquidity adequacy assessment process (ILAAP)
- C30
- G01
- G21
- G33
Abstract
Details
Keywords
Mark Thomas, Muriel Durand, Maram Hassan and Mathieu Tabourier
Skillful management of employees after a merger or acquisition (M&A) is one of the key aspects to ensuring a successful deal, and most notably to ensure talent retention. This…
Abstract
Purpose
Skillful management of employees after a merger or acquisition (M&A) is one of the key aspects to ensuring a successful deal, and most notably to ensure talent retention. This paper aims to describe how Bristol Myer Squibb (BMS) efficiently integrated Celgene after it bought the company for a near-record $74bn in 2019. The authors explain the structural elements applied during the premerger phase (acquisition experience, partner location and portfolio alignment) and the subsequent postmerger decisions to ensure rapid integration (choice of the leadership team, cultural integration and the communication strategy).
Design/methodology/approach
This paper adopts a single-case approach of the second largest acquisition in the pharmaceutical industry. It analyzes the management and talent retention decisions taken to ensure rapid integration of Celgene while ensuring that employees felt engaged in the process. This was achieved despite the consideration challenges posed by the COVID-19 global lockdown.
Findings
M&As are well known for the HR challenges they generate such as change management, cultural clashes and increased employee turnover. This paper demonstrates how BMS was able to overcome these hurdles, combining a fast speed of integration with managerial dexterity.
Originality/value
This paper offers a concise and clear outline of the management strategies used by BMS to ensure a successful integration strategy. This approach included a strong respect for the human as well as financial and strategic aspects of the deal. For even greater clarity, this paper offers a diagrammatic representation of the strategy of BMS to improve the speed of integration.
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Keywords
A VERY interesting winter lies ahead for all students and other librarians; for, we suppose, almost immediately attempts will be made to harmonize the practice of the Library…
Abstract
A VERY interesting winter lies ahead for all students and other librarians; for, we suppose, almost immediately attempts will be made to harmonize the practice of the Library Association with the expressed wishes of its last Annual Meeting. We publish some notes in Letters on Our Affairs on the crisis, if it may be so called, but we would add such voice as we have to that of those who plead for moderation. Violent changes are rarely justified, and violent expressions still less rarely, and as there appears to be now a disposition to bury hatchets and to get to work we hope that every advantage will be taken of it.
Rod B. McNaughton and Brendan Gray
The purpose of this paper is to introduce the special issue on links between entrepreneurship and resilience.
Abstract
Purpose
The purpose of this paper is to introduce the special issue on links between entrepreneurship and resilience.
Design/methodology/approach
The authors discuss some key themes in this emerging area of research and reflect on how the papers in the issue contribute to debates in the literature on resilience.
Findings
While the papers in the special issue make important contributions, there is still scope for more research.
Originality/value
This is one of the first issues of a journal devoted to investigating this topic.
Details
Keywords
Gabriel Bamie Kaifala, Sonja Gallhofer, Margaret Milner and Catriona Paisey
The purpose of this paper is to explore perceptions and lived experiences of Sierra Leonean chartered and aspiring accountants, vis-à-vis their professional identity with a…
Abstract
Purpose
The purpose of this paper is to explore perceptions and lived experiences of Sierra Leonean chartered and aspiring accountants, vis-à-vis their professional identity with a particular focus on two elements of postcolonial theory, hybridity and diaspora.
Design/methodology/approach
A qualitative methodological framework was employed. Semi-structured interviews were conducted with 18 participants about their perceptions of their professional identity and their professional experiences both within and outside Sierra Leone.
Findings
The current professionalisation process is conceptualised as a postcolonial third space where hybrid professional accountants are constructed. Professional hybridity blurs the local/global praxis being positioned as both local and global accountants. Participants experience difficulty “fitting into” the local accountancy context as a consequence of their hybridisation. As such, a diaspora effect is induced which often culminates in emigration to advanced countries. The paper concludes that although the current model engenders emancipatory social movements for individuals through hybridity and diaspora, it is nonetheless counterproductive for Sierra Leone’s economic development and the local profession in particular.
Research limitations/implications
This study has significant implications for understanding how the intervention of global professional bodies in developing countries shapes the professionalisation process as well as perceptions and lived experiences of chartered and aspiring accountants in these countries.
Originality/value
While extant literature implicates the legacies of colonialism/imperialism on the institutional development of accountancy (represented by recognised professional bodies), this paper employs the critical lens of postcolonial theory to conceptualise the lived experiences of individuals who are directly impacted by such institutional arrangements.