Predicting the past: Understanding the causes of bank distress in the Netherlands in the 1920s

Why do some banks fail in financial crises while others survive? This article answers this question by analysing the effect of the Dutch financial crisis of the 1920s on 142 banks, of which 33 failed. We find that choices of balance sheet composition and product market strategy made in the lead-up to the crisis had a significant impact on banks’ subsequent chances of experiencing distress. We document that high-risk banks – those operating highly-leveraged portfolios and attracting large quantities of deposits – were more likely to fail. Branching and international activities also increased banks’ default probabilities. We measure the effects of board interlocks, which have been characterized in the extant literature as contributing to the Dutch crisis. We find that boards mattered: failing banks had smaller boards, shared directors with smaller and very profitable banks and had a lower concentration of interlocking directorates in non-financial firms.

Agency Termination in Ireland: Culls and bonfires, or life after death?

The termination of state agencies has been a prominent aspect of administrative 'rationalization' programmes arising from the Global Financial Crisis. In this article, the frequency and type of agency terminations that have occurred in Ireland post-2008 are examined in longitudinal perspective. Following a consideration of agency types, the logic of agency rationalization is explored with a focus on the different ways in which agencies are terminated. Drawing on a unique dataset of Irish state agencies over a 90-year period, the article presents evidence concerning the degree to which terminations over the 2008-11 period differ, if at all, from those that have occurred previously. In concluding, the article proposes that rather than witnessing agency 'culls' and 'bonfires', there is 'life after death' for agencies and their work.

Shared Services in Ireland

The global financial crisis has forced governments across the globe to seek new ways of achieving efficiencies and savings in running their state administrations. Prominent amongst the variety of approaches adopted is the concept of shared services, which purports to offer a means of consolidating common tasks, reducing duplication, and achieving greater value for money. Based on successful experiences in the private sector, the phenomenon of shared service centres (SSCs) as a new co-ordination practice is of particular interest. In this chapter, the use of shared services and SSCs in Ireland is considered.

Banking compliance and dependence corruption: towards an attachment perspective

Why did banking compliance fail so badly in the recent financial crisis and why, according to many, does it continue to do so? Rather than point to the lack of oversight of individuals in bank compliance roles, as many commentators do, in this paper I examine in depth the organizational context that surrounded people in such roles. I focus on those compliance personnel who did speak out about risky practices in their banks, who were forced to escalate the problem and 'whistle-blow' to external parties, and who were punished for doing so. Drawing on recent empirical data from a wider study, I argue that the concept of dependence corruption is useful in this setting, and that it can be extended to encompass interpersonal attachments. This, in turn, problematises the concept of dependence corruption because interpersonal attachments in organisational settings are inevitable. The paper engages with recent debates on whether institutional corruption is an appropriate lens for studying private-sector organisations by arguing for a focus on roles, rather than remaining at the level of institutional fields or individual organisations. Finally, the paper contributes to studies on banking compliance in the context of the recent crisis; without a deeper understanding of those who were forced to extremes to simply do their jobs, reform of the banking sector will prove difficult.

Getting Away With It:Corruption, Moral Indignation and the Limits of Legal Accountability

In this paper we address the idea of ‘legal but corrupt’ through a discussion of two cases: abuse scandals in the Irish Catholic Church and the financial services industry in the wake of the Global Financial Crisis. We identify two important dynamics that generated the scandals: that they were driven by strong and stable groups existing within a peculiar kind of ‘accountability space’ that we describe as ‘monastic’ and that those groups persisted with tacit or explicit support from the state. ‘Legal but corrupt’ is, we argue, a matter of insider incomprehension sustained by the ceding of sovereignty over some aspect of social or economic life.

Ageing through Austerity: critical perspectives from Ireland

The book’s main contribution is the bringing together of varied discourses concerning the social policy impact of ageing within the context of fiscal austerity. As the editors rightly state, the economic recession has sharpened the focus of governments on the implication of demographic ageing. It is vital therefore, that the social policy implications of societal ageing are studied and understood within a wider political economy of austerity. Of course the fiscal crisis of the 1970s and the ensuing first wave of neo-liberalism in the Anglo-Saxon countries [in the 1980s] gave us a foretaste of the various ways in which the public burden thesis has been applied with great force to the older population. This recession is different, certainly in Ireland, but a combination of neo-liberal ideology and neo-classical economics is enforcing severe budgetary constraint on a range of countries (within and outside of the Eurozone) in the name of funding deficits. Policy makers appear to be disinterested in both the origins of the 2008 financial crisis and the distributional consequences of their austerity policies. In the absence of official concern social science research has a key role to play.

Austerity and Reform of the Irish Public Administration

The impact of the global financial crisis has been particularly severe in Ireland, and the 2008-14 period has been one defined by considerable state retrenchment. It has, however, also given rise to a period of unprecedented public service reform, and particularly following the election of a government with a strong reforming mandate in 2011. In this paper, the context and content of the reforms are examined along institutional, financial and politico-administrative dimensions respectively. A final section discusses the politics of reform in a time of crisis.

An analysis of implied volatility jump dynamics: Novel functional data representation in crude oil markets

The predominant fear in capital markets is that of a price spike. Commodity markets differ in that there is a fear of both upward and down jumps, this results in implied volatility curves displaying distinct shapes when compared to equity markets. The use of a novel functional data analysis (FDA) approach, provides a framework to produce and interpret functional objects that characterise the underlying dynamics of oil future options. We use the FDA framework to examine implied volatility, jump risk, and pricing dynamics within crude oil markets. Examining a WTI crude oil sample for the 2007–2013 period, which includes the global financial crisis and the Arab Spring, strong evidence is found of converse jump dynamics during periods of demand and supply side weakness. This is used as a basis for an FDA-derived Merton (1976) jump diffusion optimised delta hedging strategy, which exhibits superior portfolio management results over traditional methods.

Does Basel Compliance Matter for Bank Performance ?

The global financial crisis underscored the importance of regulation and supervision to a well functioning banking system that efficiently channels financial resources into investment. In this paper, we contribute to the ongoing policy debate by assessing whether compliance with international regulatory standards and protocols enhances bank operating efficiency. We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). The relationship between bank efficiency and regulatory compliance is investigated using the (Simar and Wilson 2007) double bootstrapping approach on an international sample of publicly listed banks. Our results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters, has no association with bank efficiency.

Public Private Partnerships: A Global Review

This book provides an international perspective on Public Private Partnerships. Through 21 case studies, it investigates the existing and fast developing body of principles and practices from a wide range of countries and is the first book to bring together leading international academics and practitioners under a common framework that enables convenient cross-country comparisons. The authors focus on the impact of the financial crisis has had on how governments have reviewed and overhauled their PPP policies as they have examined or tested new ways of partnering more effectively, efficiently and sustainably with the private sector.
Readers will be able to gauge the level of maturity of PPP development in the book’s case studies, understand similarities and differences in their practices, and gain useful insights into the regulatory framework and institutional infrastructure in place to support implementation of PPP. Finally, the book offers insights into the future challenges and opportunities that PPP offers stakeholders.

Regulatory Change and Capital Adjustment of US Credit Unions

We investigate the determinants of US credit union capital-to-assets ratios, before and after the implementation of the current capital adequacy regulatory framework in 2000. Capitalization varies pro-cyclically, and until the financial crisis credit unions classified as adequately capitalized or below followed a faster adjustment path than well capitalized credit unions. This pattern was reversed, however, in the aftermath of the crisis. The introduction of the PCA regulatory regime achieved a reduction in the proportion of credit unions classified as adequately capitalized or below that continued until the onset of the crisis. Since the crisis, the speed of recovery of credit unions in this category following an adverse capitalization shock was sharply reduced.

Non-parametric bill of quantities estimation of concrete road bridges' superstructure: an artificial neural networks approach

Bridge construction responds to the need for environmentally friendly design of motorways and facilitates the passage through sensitive natural areas and the bypassing of urban areas. However, according to numerous research studies, bridge construction presents substantial budget overruns. Therefore, it is necessary early in the planning process for the decision makers to have reliable estimates of the final cost based on previously constructed projects. At the same time, the current European financial crisis reduces the available capital for investments and financial institutions are even less willing to finance transportation infrastructure. Consequently, it is even more necessary today to estimate the budget of high-cost construction projects -such as road bridges- with reasonable accuracy, in order for the state funds to be invested with lower risk and the projects to be designed with the highest possible efficiency. In this paper, a Bill-of-Quantities (BoQ) estimation tool for road bridges is developed in order to support the decisions made at the preliminary planning and design stages of highways. Specifically, a Feed-Forward Artificial Neural Network (ANN) with a hidden layer of 10 neurons is trained to predict the superstructure material quantities (concrete, pre-stressed steel and reinforcing steel) using the width of the deck, the adjusted length of span or cantilever and the type of the bridge as input variables. The training dataset includes actual data from 68 recently constructed concrete motorway bridges in Greece. According to the relevant metrics, the developed model captures very well the complex interrelations in the dataset and demonstrates strong generalisation capability. Furthermore, it outperforms the linear regression models developed for the same dataset. Therefore, the proposed cost estimation model stands as a useful and reliable tool for the construction industry as it enables planners to reach informed decisions for technical and economic planning of concrete bridge projects from their early implementation stages.

Reforming civil engineering studies in recession times

The recent global economic and financial crisis has led the economies of many countries into recession, in particular at the periphery of the European Union. These countries currently face a significant contraction of both public investment in infrastructure and private investment in buildings and, as a result, the unemployment is particularly noticeable in the civil engineering and building sectors. Consequently, in all countries in recession the professional development of fresh civil engineering graduates is disproportionate to their high study effort and qualifications, since they rarely have the opportunity to gain experience in practice and their knowledge gradually becomes obsolete. Under these circumstances, it is imperative for the technical universities in countries in recession to plan and implement a substantial reform of the civil engineering studies syllabus. The objective should be to enable graduates to broaden the scope of their professional activity and increase their employability. In this paper, the widening of civil engineering studies curricula is proposed, in particular in the light of the development of the graduates’ potential on project, programme and portfolio management. In this direction, after a thorough literature review, including ASCE's Body of Knowledge for the 21st century and IPMA's Competence Baseline, it is recommended among others: to increase significantly the offered modules on project management and add new modules on strategy management, leadership behavior, delivery management, organization and environment etc; to provide adequate professional training during the university studies five year period; and to promote fresh graduates’ certification by professional bodies. The proposals are exemplified by presenting a reformed syllabus for the civil engineering studies offered currently by the National Technical University of Athens.

Does Basel Compliance Matter for Bank Performance?

The global financial crisis underscored the importance of regulation and supervision to a well-functioning banking system that efficiently channels financial resources into investment. In this paper, we contribute to the ongoing policy debate by assessing whether compliance with international regulatory standards and protocols enhances bank operating efficiency. We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). The relationship between bank efficiency and regulatory compliance is investigated using the Simar and Wilson (2007. J. Econ. 136 (1), 31) double bootstrapping approach on an international sample of publicly listed banks. Our results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters,has no association with bank efficiency.