The purpose of this paper is to provide a provocative and critical introduction and solutions to significant contemporary issues of financial regulation.
Abstract
Purpose
The purpose of this paper is to provide a provocative and critical introduction and solutions to significant contemporary issues of financial regulation.
Design/methodology/approach
The paper is an expert’s review of contemporary issues and challenges in financial regulation.
Findings
The paper advocates that contemporary financial regulation challenges are addressed through governance reforms and an enhanced focus on maturity transformation, rather than a focus on just capital and liquidity management. In particular, more emphasis should be given to individual decision-makers within banks rather than institutions.
Practical implications
The review paper considers areas where future regulatory reform may be enhanced and redirected.
Originality/value
The review provides original and critical perspectives on contemporary regulatory challenges.
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Keywords
Learning often requires little or no expenditure in income; its real cost is that it takes time. The paper aims to discuss this issue.
Abstract
Purpose
Learning often requires little or no expenditure in income; its real cost is that it takes time. The paper aims to discuss this issue.
Design/methodology/approach
Since time is scarce, most people normally decide not to learn about many aspects of modern life, but rather to specialise on certain limited areas. When a matter arises outside our specialisation, we tend to follow others whose narratives we trust.
Findings
So, learning in many cases arises from social interaction, not from individual study. Consequently, informational contagion is baked into our social and economic systems.
Originality/value
Treating time, not income or wealth, as the ultimate constraint improves analysis of the learning process, clarifying its essential social nature.
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Charles A.E. Goodhart and Miguel A. Segoviano
This paper proposes an objective metric to trigger bank recovery. Banks’ living wills involve both recovery and resolution. Since it may not always be clear when recovery plans or…
Abstract
Purpose
This paper proposes an objective metric to trigger bank recovery. Banks’ living wills involve both recovery and resolution. Since it may not always be clear when recovery plans or actions should be triggered, there is a role for an objective metric to trigger recovery.
Design/methodology/approach
We outline how such a metric could be constructed meeting criteria of adequate loss absorption; distinguishing between weak and sound banks; little susceptibility to manipulation; timeliness; scalable from the individual bank to the system.
Findings
We show how this would have worked in the UK, during 2007-2011.
Originality/value
This approach has the added advantage that it could be extended to encompass a whole ladder of sanctions of increasing severity as capital erodes.
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To fill the gap in the literature with regard to public value measurement (PVM) and to provide a model for measuring public value at an individual organizational level, based on…
Abstract
Purpose
To fill the gap in the literature with regard to public value measurement (PVM) and to provide a model for measuring public value at an individual organizational level, based on managerial control systems (MCS).
Design/methodology/approach
This article helps review the literature on PVM and propose a model for measuring the value generated by individual organizations. Measurement challenges and potential solutions are investigated.
Findings
Public value generated by an individual organization can be calculated by measuring if and to what extent the organization’s outcomes and objectives have been achieved. Public value production and measurement are part of a wider PVM process, which is congruent with the major elements of MCS, from planning to operations, and measurement to evaluation.
Research limitations/implications
This article provides knowledge to support the measurement of public value produced by public sector organizations. However, the suggested use of MCS for a comprehensive measure of the public value produced by a public body does not allow for a comparison of the public values generated by different organizations, as the value is calculated against the objectives set by that specific organization. More research is needed in order to fully utilize this model in practice.
Practical implications
The findings may help public sector organizations, policymakers and public managers measure the public value produced by a public organization as a whole.
Social implications
This article may help citizens and other stakeholders understand the public value produced by a public organization.
Originality/value
This article is based on an original research undertaken by the author and faces the relatively neglected issue of PVM. It suggests the use of public value MCS as a model for measuring public value produced by individual organizations.
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This paper considers what purposes regulation and supervision of financial institutions are designed to serve. Historical experience with regulation and supervision is considered…
Abstract
This paper considers what purposes regulation and supervision of financial institutions are designed to serve. Historical experience with regulation and supervision is considered, and it is argued on the basis of that examination that a fairly ‘light touch’ in regulation is likely to achieve the objectives that governments and citizens require regulation to achieve. Accordingly, the paper concludes that when regulation is evaluated and compared against unregulated systems, one should be careful to compare fallible regulation with fallible markets, rather than implicitly assuming regulation is perfect. Otherwise over‐regulation will result.
The pre‐commitment approach to bank capital regulation proposes that banks self‐select capital reserve requirements, facing penalties ex post for incurring losses in excess of…
Abstract
The pre‐commitment approach to bank capital regulation proposes that banks self‐select capital reserve requirements, facing penalties ex post for incurring losses in excess of reserves, hence providing incentives for high‐ risk banks to choose higher capital requirements. In order to assess the validity of the pre‐commitment approach, this article analyzes its comparative statics within the context of a standard European option written against the bank's capital base. The author finds that this approach works when it is not needed (when banks possess unlimited capital and hence cannot fail), but not when it is.
Ilfryn Price and Elizabeth Clark
The purpose of this paper is to demonstrate the analysis of portfolios of office properties using measures of business outputs, namely occupation efficiency and staff satisfaction.
Abstract
Purpose
The purpose of this paper is to demonstrate the analysis of portfolios of office properties using measures of business outputs, namely occupation efficiency and staff satisfaction.
Design/methodology/approach
Satisfaction is measured using a proprietary online survey instrument that has proved highly reliable and repeatable in three separate trials. The data on 192 buildings are analysed using data envelopment analysis.
Findings
Instant and significant differences are revealed between clusters of buildings and individual properties. The approach reveals inefficiencies that are concealed by more conventional cost‐based metrics.
Practical implications
The study has proven to be of use in gaining organisational commitment to strategic property improvements.
Originality/value
The authors are not aware of this approach having been applied elsewhere in either research or application.
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The collapse of Barings Bank in February this year provided a stark illustration of the need for adequate systems and controls in managing trading risks. This paper reviews the…
Abstract
The collapse of Barings Bank in February this year provided a stark illustration of the need for adequate systems and controls in managing trading risks. This paper reviews the current advice on best practice from regulators, industry groups and government agencies. It emphasises the importance of strong corporate governance, the need for a strong risk management infrastructure, and suggests ways in which the incentives for excessive risk‐taking generated by existing systems of bonus payments might be corrected. The paper also recommends each firm perform an annual risk control assessment under the direction of its audit committee. It concludes by arguing that enhanced public disclosure has an essential role to play in providing an additional discipline on the board and senior management to ensure the adequacy of systems and controls.