Monetary policy rules and estimated reaction functions for the European Central Bank

This thesis studies the interest-rate policy of the ECB by estimating monetary policy rules using real-time data and central bank forecasts. The aim of the estimations is to try to characterize a decade of common monetary policy and to look at how different models perform at this task.The estimated rules include: contemporary Taylor rules, forward-looking Taylor rules, nonlinearrules and forecast-based rules. The nonlinear models allow for the possibility of zone-like preferences and an asymmetric response to key variables. The models therefore encompass the most popular sub-group of simple models used for policy analysis as well as the more unusual non-linear approach. In addition to the empirical work, this thesis also contains a more general discussion of monetary policy rules mostly from a New Keynesian perspective. This discussion includes an overview of some notable related studies, optimal policy, policy gradualism and several other related subjects. The regression estimations are performed with either least squares or the generalized method of moments depending on the requirements of the estimations. The estimations use data from both the Euro Area Real-Time Database and the central bank forecasts published in ECB Monthly Bulletins. These data sources represent some of the best data that is available for this kind of analysis. The main results of this thesis are that forward-looking behavior appears highly prevalent, but that standard forward-looking Taylor rules offer only ambivalent results with regard to inflation. Nonlinear models are shown to work, but on the other hand do not have a strong rationale over a simpler linear formulation. However, the forecasts appear to be highly useful in characterizing policy and may offer the most accurate depiction of a predominantly forward-looking central bank. In particular the inflation response appears much stronger while the output response becomes highly forward-looking as well.

Bank Run Risk and Optimal Reserves

We characterize the optimal reserves, and the generated probability of a bank run, as a function of the penalty imposed by the central bank, the probability of depositors’ liquidity needs, and the return on outside investment opportunities.

Essays on Banking Crises

This thesis aims at finding the role of deposit insurance scheme and central bank (CB) in keeping the banking system safe. The thesis also studies the factors associated with long-lasting banking crises. The first essay analyzes the effect of using explicit deposit insurance scheme (EDIS), instead of using implicit deposit insurance scheme (IDIS), on banking crises. The panel data for the period of 1980-2003 includes all countries for which the data on EDIS or IDIS exist. 70% of the countries in the sample are less developed countries (LDCs). About 55% of the countries adopting EDIS also come from LDCs. The major finding is that the using of EDIS increases the crisis probability at a strong significance level. This probability is greater if the EDIS is inefficiently designed allowing higher scope of moral hazard problem. Specifically, the probability is greater if the EDIS provides higher coverage to deposits and if it is less powerful from the legal point of view. This study also finds that the less developed a country is to handle EDIS, the higher the chance of banking crisis. Once the underdevelopment of an economy handling the EDIS is controlled, the EDIS separately is no longer a significant factor of banking crises. The second essay aims at determining whether a country s powerful CB can lessen the instability of the banking sector by minimizing the likelihood of a banking crisis. The data used include indicators of the CB s autonomy for a set of countries over the period of 1980-89. The study finds that in aggregate a more powerful CB lessens the probability of banking crisis. When the CB s authority is disentangled with respect to its responsibilities, the study finds that the longer tenure of CB s chief executive officer and the greater power of CB in assigning interest rate on government loans are necessary for reducing the probability of banking crisis. The study also finds that the probability of crisis reduces more if an autonomous CB can perform its duties in a country with stronger law and order tradition. The costs of long-lasting banking crises are high because both the depositors and the investors lose confidence in the banking system. For a rapid recovery of a crisis, the government very often undertakes one or more crisis resolution policy (CRP) measures. The third essay examines the CRP and other explanatory variables correlated with the durations of banking crises. The major finding is that the CRP measure allowing the regulation forbearance to keep the insolvent banks operative and the public debt relief program are respectively strongly and weakly significant to increase the durations of crises. Some other explanatory variables, which were found by previous studies to be related with the probability of crises to occur, are also correlated with the durations of crises.

Monetary Policy Implementation in the Interbank Market

The liquidity crisis that swept through the financial markets in 2007 triggered multi-billion losses and forced buyouts of some large banks. The resulting credit crunch is sometimes compared to the great recession in the early twentieth century. But the crisis also serves as a reminder of the significance of the interbank market and of proper central bank policy in this market. This thesis deals with implementation of monetary policy in the interbank market and examines how central bank tools affect commercial banks' decisions. I answer the following questions: • What is the relationship between the policy setup and interbank interest rate volatility? (averaging reserve requirement reduces the volatility) • What can explain a weak relationship between market liquidity and the interest rate? (high reserve requirement buffer) • What determines banks' decisions on when to satisfy the reserve requirement? (market frictions) • How did the liquidity crisis that began in 2007 affect interbank market behaviour? (resulted in higher credit risk and trading frictions as well as expected liquidity shortage)

Foreign Capital and Finland : Central government's first period of reliance on international financial markets, 1862-1938

The main objective of the study is to evaluate the Finnish central government s foreign borrowing between the years 1862 and 1938. Most of this period was characterised by deep capital market integration that bears resemblance to the liberal world financial order at the turn of the millennium. The main aim is to analyse the credit risk associated with the state and its determination by evaluating the world financial market centres perception of Finland. By doing this, the study is also expected to provide an additional dimension to Finland s political and economic history by incorporating into the research the assessments of international capital markets regarding Finland during a period that witnessed profound political and economic changes in Finnish society. The evaluation of the credit risk mainly relies on exchange-rate risk free time series of the state s foreign bonds. They have been collected from quotations in the stock exchanges in Helsinki, Hamburg, Paris and London. In addition, it investigates Finland s exposure to short-term debt and Moody s credit ratings assigned to Finland. The study emphasises the importance of the political risk. It suggests that the hey-day of the state s reliance on foreign capital markets took place during last few decades of the 19th century when Finland enjoyed a wide autonomy in the Russian Empire and prudently managed its economy, highlighted in Finland s adherence to the international gold standard. Political confrontations in Finland and, in particular, in Russia and the turbulence of the world financial system prevented the return of this beneficial position again. Through its issuance of foreign bonds the state was able to import substantial amounts of foreign capital, which was sorely needed to foster economic development in Finland. Moreover, the study argues that the state s presence in the western capital markets not only had economic benefits, but it also increased the international awareness of Finland s distinct and separate status in the Russian Empire and later underlined its position as an independent republic.

Fertility in Namibia : Changes in fertility levels in North-Central Namibia 1960-2001, including an assessment of the impact of HIV

The aim of this study was to estimate the development of fertility in North-Central Namibia, former Ovamboland, from 1960 to 2001. Special attention was given to the onset of fertility decline and to the impact of the HIV epidemic on fertility. An additional aim was to introduce parish registers as a source of data for fertility research in Africa. Data used consisted of parish registers from Evangelical Lutheran congregations, the 1991 and 2001 Population and Housing Censuses, the 1992 and 2000 Namibia Demographic and Health Surveys, and the HIV sentinel surveillances of 1992-2004. Both period and cohort fertility were analysed. The P/F ratio method was used when analysing census data. The impact of HIV infection on fertility was estimated indirectly by comparing the fertility histories of women who died at an age of less than 50 years with the fertility of other women. The impact of the HIV epidemic on fertility was assessed both among infected women and in the general population. Fertility in the study population began to decline in 1980. The decline was rapid during the 1980s, levelled off in the early 1990s at the end of war of independence and then continued to decline until the end of the study period. According to parish registers, total fertility was 6.4 in the 1960s and 6.5 in the 1970s, and declined to 5.1 in the 1980s and 4.2 in the 1990s. Adjustment of these total fertility rates to correspond to levels of fertility based on data from the 1991 and 2001 censuses resulted in total fertility declining from 7.6 in 1960-79 to 6.0 in 1980-89, and to 4.9 in 1990-99. The decline was associated with increased age at first marriage, declining marital fertility and increasing premarital fertility. Fertility among adolescents increased, whereas the fertility of women in all other age groups declined. During the 1980s, the war of independence contributed to declining fertility through spousal separation and delayed marriages. Contraception has been employed in the study region since the 1980s, but in the early 1990s, use of contraceptives was still so limited that fertility was higher in North-Central Namibia than in other regions of the country. In the 1990s, fertility decline was largely a result of the increased prevalence of contraception. HIV prevalence among pregnant women increased from 4% in 1992 to 25% in 2001. In 2001, total fertility among HIV-infected women (3.7) was lower than that among other women (4.8), resulting in total fertility of 4.4 among the general population in 2001. The HIV epidemic explained more than a quarter of the decline in total fertility at population level during most of the 1990s. The HIV epidemic also reduced the number of children born by reducing the number of potential mothers. In the future, HIV will have an extensive influence on both the size and age structure of the Namibian population. Although HIV influences demographic development through both fertility and mortality, the effect through changes in fertility will be smaller than the effect through mortality. In the study region, as in some other regions of southern Africa, a new type of demographic transition is under way, one in which population growth stagnates or even reverses because of the combined effects of declining fertility and increasing mortality, both of which are consequences of the HIV pandemic.

Accumulation of point mutations and reassortment of genomic RNA segments are involved in the microevolution of Puumala hantavirus in a bank vole (Myodes glareolus) population

"The genetic diversity of Puumala hantavirus (PUUV) was studied in a local population of its natural host, the bank vole (Myodes glareolus). The trapping area (2.5x2.5 km) at Konnevesi, Central Finland, included 14 trapping sites, at least 500 m apart; altogether, 147 voles were captured during May and October 2005. Partial sequences of the S, M and L viral genome segments were recovered from 40 animals. Seven, 12 and 17 variants were detected for the S, M and L sequences, respectively; these represent new wild-type PUUV strains that belong to the Finnish genetic lineage. The genetic diversity of PUUV strains from Konnevesi was 0.2-4.9% for the S segment, 0.2-4.8% for the M segment and 0.2-9.7% for the L segment. Most nucleotide substitutions were synonymous and most deduced amino acid substitutions were conservative, probably due to strong stabilizing selection operating at the protein level. Based on both sequence markers and phylogenetic clustering, the S, M and L sequences could be assigned to two groups, 'A' and 'B'. Notably, not all bank voles carried S, M and L sequences belonging to the same group, i.e. SAMALA or SBMBLB.. A substantial proportion (8/40, 20%) of the newly characterized PUUV strains possessed reassortant genomes such as SBMALA, SAMBLB or SBMALB. These results suggest that at least some of the PUUV reassortants are viable and can survive in the presence of their parental strains."

Corporate Governance in European Banks: Essays on Bank Ownership

Banks are important as they have a central role in the financial system, where funds are channelled either through financial intermediaries, such as banks, or through financial markets, hence promoting growth in any economy. Recently, we have been reminded of the drawbacks of the central role of banks. The current financial crisis, which started out as a sub-prime mortgage crisis in the US, has become a global financial crisis with substantial impact on the real economy in many countries. Some of the roots to the current financial crisis can be sought in the changing role of banks and in bank corporate governance. Moreover, the substantial revitalising measures taken have been justified by the central role of banks. Not only are banks important, they are also very special. The fact that banks are regulated in conjunction with greater opacity, make bank corporate governance different from corporate governance in non-bank companies. Surprisingly little is, however, known about bank corporate governance, in particularly, in a European setting. Hence, the objective of this doctoral thesis is to provide new insights in this research area by examining banks from 37 different European countries. Each of the three essays included in the doctoral thesis examines a particular aspect of bank corporate governance. In the first essay the interaction between the regulatory environment a bank operates in and its ownership structure is explored. Indicators of the severity of the moral hazard problem induced by the deposit insurance system and implicit too-big-to-fail government guarantee, particular features of deposit insurance systems as well as legal protection of shareholders, legal origin of a country and level of integration to the European community are used in the analysis. The empirical findings confirm previous findings on the link between legal protection of shareholders and ownership structure. Moreover, they show that differences in deposit insurance system features can explain some of the differences in ownership structure across European banks. In the second essay the impact of management and board ownership on the profitability of banks with different strategy is examined. The empirical findings suggest that the efficiency of these two particular corporate governance mechanisms varies with the characteristics of the agency problem faced by the bank. More specifically, management ownership is important in opaque non-traditional banks, whereas board ownership is important in traditional banks, where deposit insurance reduces the monitoring incentives of outsiders. The higher profitability does, however, go together with higher risk. In the third essay the profitability and risk of commercial, savings and cooperative banks are compared. The empirical findings suggest that distinct operational and ownership characteristics rather than only the mere fact that a bank is a commercial, savings or cooperative bank explain the profitability and risk differences. The main insight from the three essays is that a number of different aspects should be addressed simultaneously in order to give the complexity of bank corporate governance justice.

Andegraund : Istorija i mify leningradskoj neoficial'noj literatury

The history of the Leningrad underground is one of the key themes of late socialism. Samizdat, "black humour", religious syncretism, dissidence, apolitical bohemianism, the pathos of freedom of individuality and the mechanics of literature are closely interlinked with the cultural mythology of this passed epoch. Describing conceptions that, when taken together, form the contemporary understanding of unofficial culture, the author creates a historical portrait of this environment. Amongst the central figures here, there are well-known writers (Bitov, Brodsky, Dovlatov, Khvostenko, Krivulin) and literary activists who still await recognition. The analysis of works, many of which were only distributed in typewritten publications in the 1960s-1980s, gives a preliminary definition of the key factors that united the authors of the unofficial community. The book begins with a critique of the identification of the Soviet underground with political dissidence or with a society living in autonomous independence with regard to the state. Describing the historical development of the various names for this environment (the underground, samizdat, unofficial culture, podpolie and others), the author follows the genesis of the community from its appearance, in the years of "the Thaw", through to perestroika, when it dissolved. Taking the history of the publication of Bitov's "The Pushkin House" as an example, the concept of the unofficial is interpreted as a risky interaction with the authorities. Unofficial culture is then viewed as a late Soviet reflection of the Western underground in the 1950s-1960s. Unlike the radical-utopian-anarchistic source, it proclaimed a liberalist and democratic ideology in the context of the destruction of the socialist utopia. The historical portrait of the community is built up from the perceptions of its members regarding literature practice and rhetorical approaches, with the aid of which these perceptions are expressed. Taking typewritten publications as source material, four main representations are given: privacy, deviancy, criticism and irrationality. An understanding of literature as a private affair, neo-avant-garde deviancy in social and literary behaviour and the pathos of the critical relationship with officialdom and irrational message of literary work, comprise the basis for the worldview of unofficial authors, as well as the poetic system, genre preferences and dictums. An analysis of irrationality, based on the texts of Khvostenko and Bogdanov, leads to a review of the cultural mythologies that were crucial to the unofficial conception of the absurd. Absurd is an homonym. It contains ideas that are important for the worldview of unofficial authors and the poetics of their works. The irrationality of the Soviet order is reflected in the documentary nature of the satirical prose of Dovlatov. The existential absurd of Camus is perceived here as the pointlessness of social realities and the ontological alienation of man, while existentialist practices for consciousness in the "atmosphere of absurd" remain bracketed off. The third homonym of absurd - the conception of reality as an illusion - is a clear demonstration of religious syncretism, where neo-Christian ideas are interweaved with a modernized version of Hinduism, as taken from Rolland s books on Ramakrishna and Vivekananda. The unofficial community was influenced by the ideology of westernization. Even "the East" arrived here via French retellings and accounts. As a whole, unofficial Leningrad culture can be understood as a neo-modernist phenomenon which, unlike the western neo-modernism of the 1940s and 1950s, arose in the years of the Thaw and ended its existence in the mid-1980s.

Given and News : Media discourse and the construction of community on national days

National anniversaries such as independence days demand precise coordination in order to make citizens change their routines to forego work and spend the day at rest or at festivities that provide social focus and spectacle. The complex social construction of national days is taken for granted and operates as a given in the news media, which are the main agents responsible for coordinating these planned disruptions of normal routines. This study examines the language used in the news to construct the rather unnatural idea of national days and to align people in observing them. The data for the study consist of news stories about the Fourth of July in the New York Times, sampled over 150 years and are supplemented by material from other sources and other countries. The study is multidimensional, applying concepts from pragmatics (speech acts, politeness, information structure), systemic functional linguistics (the interpersonal metafunction and the Appraisal framework) and cognitive linguistics (frames, metaphor) as well as journalism and communications to arrive at an interdisciplinary understanding of how resources for meaning are used by writers and readers of the news stories. The analysis shows that on national anniversaries, nations tend to be metaphorized as persons having birthdays, to whom politeness should be shown. The face of the nation is to be respected in the sense of identifying the nation's interests as one's own (positive face) and speaking of citizen responsibilities rather than rights (negative face). Resources are available for both positive and negative evaluations of events and participants and the newspaper deftly changes footings (Goffman 1981) to demonstrate the required politeness while also heteroglossically allowing for a certain amount of disattention and even protest - within limits, for state holidays are almost never construed as Bakhtinian festivals, as they tend to reaffirm the hierarchy rather than invert it. Celebrations are evaluated mainly for impressiveness, and for the essentially contested quality of appropriateness, which covers norms of predictability, size, audience response, aesthetics, and explicit reference to the past. Events may also be negatively evaluated as dull ("banal") or inauthentic ("hoopla"). Audiences are evaluated chiefly in terms of their enthusiasm, or production of appropriate displays for emotional response, for national days are supposed to be occasions of flooding-out of nationalistic feeling. By making these evaluations, the newspaper reinforces its powerful position as an independent critic, while at the same time playing an active role in the construction and reproduction of emotional order embodied in "the nation's birthday." As an occasion for mobilization and demonstrations of power, national days may be seen to stand to war in the relation of play to fighting (Bateson 1955). Evidence from the newspaper's coverage of recent conflicts is adduced to support this analysis. In the course of the investigation, methods are developed for analyzing large collections of newspaper content, particularly topical soft news and feature materials that have hitherto been considered less influential and worthy of study than so-called hard news. In his work on evaluation in newspaper stories, White (1998) proposed that the classic hard news story is focused on an event that threatens the social order, but news of holidays and celebrations in general does not fit this pattern, in fact its central event is a reproduction of the social order. Thus in the system of news values (Galtung and Ruge 1965), national holiday news draws on "ground" news values such as continuity and predictability rather than "figure" news values such as negativity and surprise. It is argued that this ground helps form a necessary space for hard news to be seen as important, similar to the way in which the information structure of language is seen to rely on the regular alternation of given and new information (Chafe 1994).

Moderneja ryijyjä, metritavaraa ja käsityötä : Tekstiilitaide ja nykyaikaistuva taideteollisuus Suomessa maailmansotien välisenä aikana

Modern ryijys, fabric by the yard and handicrafts. Finnish textile art and modernizing applied art during the inter-war years Textile art was in the 1920s and 1930s in the front rank of Finnish applied art and design. Modern ryijys, tapestries and fabrics by the yard by contemporary textile artists were on show in Finland and abroad. Textile art had also become interesting commercially, especially in interior textiles of modern homes. The research uses sources of the Ornamo Association of Decorative Artists, for example the Ornamo year books published from 1927, the Finnish Society of Crafts and Design and the country s only school of applied arts, the Central School of Arts and Crafts and the Museum of Applied Arts maintained by the society and also the national specialist organisation the Friends of Finnish Handicraft. It also refers to the magazines Käsiteollisuus and Kotiliesi. The art historical dissertation studies the renaissance of weaving art of the inter-war years in Finland. It problematizes the relation of the succesfull and appreciated textile art to the concept of breakthrough of Modernism (Functionalism). With the material from textile artists activities it questions the prevailing idea of slow modernization of Finnish applied art and design and challenges the polarization of craft and industry in the discourses of Modernisms of design. The public discussions about modernization of design and applied art where textile art and especially the ryijy got sometimes into difficult positions are interpreted as power struggles. After taking independence in 1917 the Finnish tradition of ryijy rugs was set as a symbol of the original culture of the young nation. The research studies the development of the so called art ryijy and the notions and meanings of hand weaving in the national context and also in relation to contemporary events in international applied art and design. It highlights the continuity of hand crafted production of textiles and the strong position of textile artists working in this field. The research opens new perspectives to Finnish textile artists by showing their activities as entrepreneurs in their own weaving studios or design studios and referring to their many relations and functions as pattern designers and educators in the growing handicraft industries.

Kirjan tie lukijalle : Kirjakauppojen vakiintuminen Suomessa 1740 - 1860

Books Paths to Readers describes the history of the origins and consolidation of modern and open book stores in Finland 1740 1860. The thesis approaches the book trade as a part of a print culture. Instead of literary studies choice to concentrate on texts and writers, book history seeks to describe the print culture of a society and how the literary activities and societies interconnect. For book historians, printed works are creations of various individuals and groups: writers, printers, editors, book sellers, censors, critics and finally, readers. They all take part in the creation, delivery and interpretation of printed works. The study reveals the ways selling and distributing books have influenced the printed works and the literary and print culture. The research period 1740 1860 covers the so-called second revolution of the book, or the modernisation of the print culture. The thesis describes the history of 60 book stores and their 96 owners. The study concentrates on three themes: firstly, how the particular book trade network became a central institution for printed works distribution, secondly what were the relations between cosmopolitan European book markets and the national cultural sphere, and thirdly how book stores functioned as cultural institutions and business enterprises. Book stores that have a varied assortment and are targeted to all readers became the main institution for book trade in Finland during 1740 1860. It happened because of three features. First, the book binders monopoly on selling bound copies in Sweden was abolished in 1740s. As a consequence entrepreneurs could concentrate solely to trade activities and offer copies from various publishers at their stores. Secondly the common business model of bartering was replaced by selling copies for cash, first in the German book trade centre Leipzig in 1770s. The change intensified book markets activities and Finnish book stores foreign connections. Thirdly, after Finland was annexed to the Russian empire in 1809, the Grand duchy s administration steered foreign book trade to book stores (because of censorship demands). Up to 1830 s book stores were available only in Helsinki and Turku. During next ten years book stores opened in six regional centres. The early entrepreneurs ran usually vertical businesses consisting of printing, publishing and distribution activities. This strategy lowered costs, eased the delivery of printed works and helped to create elaborated centres for all book activities. These book stores main clientele consisted of the Swedish speaking gentry. During late 1840s various opinion leaders called for the development of a national Finnish print culture, and also book stores. As a result, during the five years before the beginning of the Crimean war (1853 1856) book stores were opened in almost all Finnish towns: at the beginning of the war 36 book stores operated in 21 towns. The later book sellers, mainly functioning in small towns among Finnish speaking people, settled usually strictly for selling activities. Book stores received most of their revenues from selling foreign titles. Swedish, German, French and Belgian (pirate editions of popular French novels) books were widely available for the multilingual gentry. Foreign titles and copies brought in most of the revenues. Censorship inspections or unfavourable custom fees would not limit the imports. Even if the local Finnish print production steadily rose, many copies, even titles, were never delivered via book stores. Only during the 1840 s and 1850 s the most advanced publishers would concentrate on creating publishing programmes and delivering their titles via book stores. Book sellers regulated commissions were small. They got even smaller because of large amounts of unsold copies, various and usual misunderstandings of consignments and accounts or plain accidents that destroyed shipments and warehouses. Also, the cultural aim of a creating large and assortments and the tendency of short selling periods demanded professional entrepreneurship, which many small town book sellers however lacked. In the midst of troublesome business efforts, co-operation and mutual concern of the book market s entrepreneurs were the key elements of the trade, although on local level book sellers would compete, sometimes even ferociously. The difficult circumstances (new censorship decree of 1850, Crimean war) and lack of entrepreneurship, experience and customers meant that half of the book stores opened in 1845 1860 was shut in less than five years. In 1858 the few leading publishers established The Finnish Book Publishers Association. Its first task was to create new business rules and manners for the book trade. The association s activities began to professionalise the whole network, but at the same time the earlier independence of regional publishing and selling enterprises diminished greatly. The consolidation of modern and open book store network in Finland is a history of a slow and complex development without clear signs of a beginning or an end. The ideal book store model was rarely accomplished in its all features. Nevertheless, book stores became the norm of the book trade. They managed to offer larger selections, reached larger clienteles and maintained constant activity better than any other book distribution model. In essential, the book stores methods have not changed up to present times.

Transcending “the Impossible” : From Dead End to Expansive Learning

This dissertation investigates changes in bank work and the experience of impossibility attached to these by workers at the local level from the viewpoint of work-related well-being and collective learning. A special challenge in my work is to conceptualize the experience of impossibility as related to change, and as a starting point and tool for development work. The subject of the dissertation, solving the impossible as a collective learning process, came up as a central theme in an earlier project: Work Units between the Old and the New (1997 – 1999). Its aim was to investigate how change is constructed as a long-term process, starting from the planning of the change until its final realization in everyday banking work. I studied changes taking place in the former Postipankki (Postal Bank), later called Leonia. The three-year study involved the Branch Office of Martinlaakso, and was conducted from the perspective of well-being in a change process. The sense of impossibility involved in changes turned out to be one of the most crucial factors impairing the sense of well-being. The work community that was the target of my study did not have the available tools to construct the change locally, or to deal with the change-related impossibility by solving it through a mutual process among themselves. During the last year of the project, I carried out an intervention for development in the Branch Office, as collaboration between the researchers and the workers. The purpose of the intervention was to resolve such perceived change-related impossibility as experienced repeatedly and considered by the work community as relevant to work-related well-being. The documentation of the intervention – audio records from development sessions, written assignments by workers and assessment or evaluation interviews – constitute the essential data for my dissertation. The earlier data, collected and analysed during the first two years, provides a historical perspective on the process, all the way from construction of the impossibility towards resolving and transcending it. The aim of my dissertation is to understand the progress of developmental intervention as a shared, possibly expansive learning process within a work community and thus to provide tools for perceiving and constructing local change. I chose the change-related impossibility as a starting point for development work in the work community and as a target of conceptualization. This, I feel, is the most important contribution of my dissertation. While the intervention was in progress, the concept of impossibility started emerging as a stimulating tool for development work. An understanding of such a process can be applied to development work outside banking work as well. According to my results, it is pivotal that a concept stimulating development is strongly connected with everyday experiences of and speech about changes in work activity, as well as with the theoretical framework of work development. During this process, development work on a local level became of utmost interest as a case study for managing change. Theoretically, this was conceptualized as so-called second-order work and this concept accompanies us all the way through the research process. Learning second-order work and constructing tools based on this work have proved crucial for promoting well-being in the change circumstances in a local work unit. The lack of second-order work has led to non-well-being and inability to transcend the change-related sense of impossibility in the work community. Solving the impossible, either individually or situationally, did not orient the workers towards solving problems of impossibility together as a work community. Because the experience of the impossibility and coming to terms with transcending it are the starting point and the target of conceptualization in this dissertation, the research provides a fresh viewpoint on the theoretical framework of change and developmental work. My dissertation can facilitate construction of local changes necessitated by the recent financial crisis, and thus promote fluency and well-being in work units. It can also support change-related well-being in other areas of working life.