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.

Information Sharing in Banking: A Collusive Device?

We show that information sharing among banks may serve as a collusive device. An informational sharing agreement is an a-priori commitment to reduce informational asymmetries between banks in future lending. Hence, information sharing tends to increase the intensity of competition in future periods and, thus, reduces the value of informational rents in current competition. We contribute to the existing literature by emphasizing that a reduction in informational rents will also reduce the intensity of competition in the current period, thereby reducing competitive pressure in current credit markets. We provide a large class of economic environments, where a ban on information sharing would be strictly welfare-enhancing.

Profitable Customer Management: A Study in Retail Banking

The increasing focus of relationship marketing and customer relationship management (CRM) studies on issues of customer profitability has led to the emergence of an area of research on profitable customer management. Nevertheless, there is a notable lack of empirical research examining the current practices of firms specifically with regard to the profitable management of customer relationships according to the approaches suggested in theory. This thesis fills this research gap by exploring profitable customer management in the retail banking sector. Several topics are covered, including marketing metrics and accountability; challenges in the implementation of profitable customer management approaches in practice; analytic versus heuristic (‘rule of thumb’) decision making; and the modification of costly customer behavior in order to increase customer profitability, customer lifetime value (CLV), and customer equity, i.e. the financial value of the customer base. The thesis critically reviews the concept of customer equity and proposes a Customer Equity Scorecard, providing a starting point for a constructive dialog between marketing and finance concerning the development of appropriate metrics to measure marketing outcomes. Since customer management and measurement issues go hand in hand, profitable customer management is contingent on both marketing management skills and financial measurement skills. A clear gap between marketing theory and practice regarding profitable customer management is also identified. The findings show that key customer management aspects that have been proposed within the literature on profitable customer management for many years, are not being actively applied by the banks included in the research. Instead, several areas of customer management decision making are found to be influenced by heuristics. This dilemma for marketing accountability is addressed by emphasizing that CLV and customer equity, which are aggregate metrics, only provide certain indications regarding the relative value of customers and the approximate value of the customer base (or groups of customers), respectively. The value created by marketing manifests itself in the effect of marketing actions on customer perceptions, behavior, and ultimately the components of CLV, namely revenues, costs, risk, and retention, as well as additional components of customer equity, such as customer acquisition. The thesis also points out that although costs are a crucial component of CLV, they have largely been neglected in prior CRM research. Cost-cutting has often been viewed negatively in customer-focused marketing literature on service quality and customer profitability, but the case studies in this thesis demonstrate that reduced costs do not necessarily have to lead to lower service quality, customer retention, and customer-related revenues. Consequently, this thesis provides an expanded foundation upon which marketers can stake their claim for accountability. By focusing on the range of drivers and all of the components of CLV and customer equity, marketing has the potential to provide specific evidence concerning how various activities have affected the drivers and components of CLV within different groups of customers, and the implications for customer equity on a customer base level.

Yhden äänen muotokuvia : Queer-luentoja Marguerite Yourcenarin teoksista

The present dissertation belongs to the tradition of queer theoretical and feminist literary scholarship. The study deals with the literary works of Marguerite Yourcenar (1903-1987), who was the first woman ever to be elected to the French Academy. The study seeks to lead an acclaimed classical French author into a dialogue with the characteristically Anglo-American queer theory and American tradition of queering Lacanian psychoanalysis. Queering the psychoanalytic notions of homosexuality and the categories of perversion and pervert will be elaborated in the present study. The main corpus of the scrutiny consists of five pieces of fiction written in French by Yourcenar. The first person narration and especially récit genre maintain a narrative strategy that the study explores with reference to the representations of non-normative genders and sexualities. Analyzing various radically queer aspects of Yourcenar's texts, the study focuses on the topical questions of masculinity in men, women, and texts. The study also discusses the representations of sexual desire between men, and the various constructions of male homosexuality in Yourcenar's fiction. The present study addresses Yourcenar's fiction from the points of view of female masculinity and textual female masculinity. The investigation finds its study questions and methodology in the area of queer studies, especially queer theoretical literary scholarship and the queer history and historiography of sexuality. That is why the study approaches Yourcenar's fiction in the context of historical and literary representations of male homosexual love and desire. The articulation of the closet, or textual and discursive strategies of sexual secrecy especially concerning male homosexuality, is simultaneously constructed and deconstructed in Yourcenar's fiction, as the analysis indicates. The study analyzes the Yourcenarian queer textual strategies with reference to concepts such as the epistemology and rhetoric of the closet, and the structure of the open secret as a part of the rhetoric of queer or non-straight sexuality. The present investigation puts the queer, non-normative representations of gender and sexuality in the centre of the Yourcenarian oeuvre and studies, ascertaining the strong bond between Yourcenar's work and the history, tradition, and the modern strategies of representing male homosexuality and queerness.

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.

Technical efficiency of blood component preparation in blood centres of 10 European countries

Various reasons, such as ethical issues in maintaining blood resources, growing costs, and strict requirements for safe blood, have increased the pressure for efficient use of resources in blood banking. The competence of blood establishments can be characterized by their ability to predict the volume of blood collection to be able to provide cellular blood components in a timely manner as dictated by hospital demand. The stochastically varying clinical need for platelets (PLTs) sets a specific challenge for balancing supply with requests. Labour has been proven a primary cost-driver and should be managed efficiently. International comparisons of blood banking could recognize inefficiencies and allow reallocation of resources. Seventeen blood centres from 10 countries in continental Europe, Great Britain, and Scandinavia participated in this study. The centres were national institutes (5), parts of the local Red Cross organisation (5), or integrated into university hospitals (7). This study focused on the departments of blood component preparation of the centres. The data were obtained retrospectively by computerized questionnaires completed via Internet for the years 2000-2002. The data were used in four original articles (numbered I through IV) that form the basis of this thesis. Non-parametric data envelopment analysis (DEA, II-IV) was applied to evaluate and compare the relative efficiency of blood component preparation. Several models were created using different input and output combinations. The focus of comparisons was on the technical efficiency (II-III) and the labour efficiency (I, IV). An empirical cost model was tested to evaluate the cost efficiency (IV). Purchasing power parities (PPP, IV) were used to adjust the costs of the working hours and to make the costs comparable among countries. The total annual number of whole blood (WB) collections varied from 8,880 to 290,352 in the centres (I). Significant variation was also observed in the annual volume of produced red blood cells (RBCs) and PLTs. The annual number of PLTs produced by any method varied from 2,788 to 104,622 units. In 2002, 73% of all PLTs were produced by the buffy coat (BC) method, 23% by aphaeresis and 4% by the platelet-rich plasma (PRP) method. The annual discard rate of PLTs varied from 3.9% to 31%. The mean discard rate (13%) remained in the same range throughout the study period and demonstrated similar levels and variation in 2003-2004 according to a specific follow-up question (14%, range 3.8%-24%). The annual PLT discard rates were, to some extent, associated with production volumes. The mean RBC discard rate was 4.5% (range 0.2%-7.7%). Technical efficiency showed marked variation (median 60%, range 41%-100%) among the centres (II). Compared to the efficient departments, the inefficient departments used excess labour resources (and probably) production equipment to produce RBCs and PLTs. Technical efficiency tended to be higher when the (theoretical) proportion of lost WB collections (total RBC+PLT loss) from all collections was low (III). The labour efficiency varied remarkably, from 25% to 100% (median 47%) when working hours were the only input (IV). Using the estimated total costs as the input (cost efficiency) revealed an even greater variation (13%-100%) and overall lower efficiency level compared to labour only as the input. In cost efficiency only, the savings potential (observed inefficiency) was more than 50% in 10 departments, whereas labour and cost savings potentials were both more than 50% in six departments. The association between department size and efficiency (scale efficiency) could not be verified statistically in the small sample. In conclusion, international evaluation of the technical efficiency in component preparation departments revealed remarkable variation. A suboptimal combination of manpower and production output levels was the major cause of inefficiency, and the efficiency did not directly relate to production volume. Evaluation of the reasons for discarding components may offer a novel approach to study efficiency. DEA was proven applicable in analyses including various factors as inputs and outputs. This study suggests that analytical models can be developed to serve as indicators of technical efficiency and promote improvements in the management of limited resources. The work also demonstrates the importance of integrating efficiency analysis into international comparisons of blood banking.