Developing “Best Practices” for bankers’ pay in line with Basel III

This paper proposes hybrid capital securities as a significant part of senior bank executive incentive compensation in light of Basel III, a new global regulatory standard on bank capital adequacy and liquidity agreed by the members of the Basel Committee on Banking Supervision. The committee developed Basel III in a response to the deficiencies in financial regulation brought about by the global financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The hybrid bank capital securities we propose for bank executives’ compensation are preferred shares and subordinated debt that the June 2004 Basel II regulatory framework recognised as other admissible forms of capital. The past two decades have witnessed dramatic increase in performance-related pay in the banking industry. Stakeholders such as shareholders, debtholders and regulators criticise traditional cash and equity-based compensation for encouraging bank executives’ excessive risk taking and short-termism, which has resulted in the failure of risk management in high profile banks during the global financial crisis. Paying compensation in the form of hybrid bank capital securities may align the interests of executives with those of stakeholders and help banks regain their reputation for prudence after years of aggressive risk-taking. Additionally, banks are desperately seeking to raise capital in order to bolster balance sheets damaged by the ongoing credit crisis. Tapping their own senior employees with large incentive compensation packages may be a viable additional source of capital that is politically acceptable in times of large-scale bailouts of the financial sector and economically wise as it aligns the interests of the executives with the need for a stable financial system.

Rensch's rule in large herbivorous mammals derived from metabolic scaling

Rensch’s rule, which states that the magnitude of sexual size dimorphism tends to increase with increasing body size, has evolved independently in three lineages of large herbivorous mammals: bovids (antelopes), cervids (deer), and macropodids (kangaroos). This pattern can be explained by a model that combines allometry,life-history theory, and energetics. The key features are thatfemale group size increases with increasing body size and that males have evolved under sexual selection to grow large enough to control these groups of females. The model predicts relationships among body size and female group size, male and female age at first breeding,death and growth rates, and energy allocation of males to produce body mass and weapons. Model predictions are well supported by data for these megaherbivores. The model suggests hypotheses for why some other sexually dimorphic taxa, such as primates and pinnipeds(seals and sea lions), do or do not conform to Rensh’s rule.

Survival of freeze dried Lactobacillus plantarum in instant fruit powders and reconstituted fruit juices

The aim of this study was to investigate the survival of freeze dried Lactobacillus plantarum cells mixed with several freeze dried instant fruit powders (strawberry, pomegranate, blackcurrant and cranberry) during storage for 12 months as well as after reconstitution with water each month. Inulin and gum arabic were also added to the instant fruit powders at two levels (10% and 20% w/w of dry weight) to improve the cell survival and functional properties of the product. The best cell survival over the 12 months of storage was observed for the blackcurrant powder (almost no decrease) followed by strawberry (~ 0.3 log decrease), pomegranate (~ 0.9 log decrease), whereas the worst survival was obtained in cranberry powder (~ 4.5 logs). To explain these results multiple regression analysis was conducted with the log decrease [log10N0 month − log10N12 months] as the dependent variable and water activity, pH, citric acid, dietary fibre and total phenol as the independent variables. The results indicated that among all the examined factors, the [log10N0 month − log10N12 months] depended only on the water activity (P < 0.05). Inulin and gum arabic demonstrated a substantial protective effect on cell survival (1–1.5 log) in the case of cranberry, which was likely due to a physical interaction between the cells and the carbohydrates. After reconstituting the dried fruit powders at room temperature and measuring cell viability for up to 4 h, it was shown that in the case of strawberry juice there was no decrease, and very little in the case of pomegranate and blackcurrant juices (< 0.5 log). On the other hand, a significant decrease was observed for cranberry juice (P < 0.05), which increased as the storage time of the dried cranberry powder increased, indicating that the cells became more susceptible with prolonged storage. Multiple regression analysis indicated that the main factors influencing cell survival were water activity and pH, while citric acid, dietary fibre and total phenol did not have an effect. Furthermore, inulin and gum arabic addition did not have a significant (P > 0.05) effect upon reconstitution of the dried fruit powder. This study showed that instant juice powders are very good carriers of probiotic cells and constitute good alternatives to highly acidic fruit juices.

The influence of Langmuir turbulence on the scaling for the dissipation rate in the oceanic boundary layer

A model for estimating the turbulent kinetic energy dissipation rate in the oceanic boundary layer, based on insights from rapid-distortion theory, is presented and tested. This model provides a possible explanation for the very high dissipation levels found by numerous authors near the surface. It is conceived that turbulence, injected into the water by breaking waves, is subsequently amplified due to its distortion by the mean shear of the wind-induced current and straining by the Stokes drift of surface waves. The partition of the turbulent shear stress into a shear-induced part and a wave-induced part is taken into account. In this picture, dissipation enhancement results from the same mechanism responsible for Langmuir circulations. Apart from a dimensionless depth and an eddy turn-over time, the dimensionless dissipation rate depends on the wave slope and wave age, which may be encapsulated in the turbulent Langmuir number La_t. For large La_t, or any Lat but large depth, the dissipation rate tends to the usual surface layer scaling, whereas when Lat is small, it is strongly enhanced near the surface, growing asymptotically as ɛ ∝ La_t^{-2} when La_t → 0. Results from this model are compared with observations from the WAVES and SWADE data sets, assuming that this is the dominant dissipation mechanism acting in the ocean surface layer and statistical measures of the corresponding fit indicate a substantial improvement over previous theoretical models. Comparisons are also carried out against more recent measurements, showing good order-of-magnitude agreement, even when shallow-water effects are important.

Effect of mountain breeze in ventilating the city under calm and neutral atmospheric environment: Interaction of airflow structures and ventilation efficiency

Many modern cities locate in the mountainous areas, like Hong Kong, Phoenix City and Los Angles. It is confirmed in the literature that the mountain wind system developed by differential heating or cooling can be very beneficial in ventilating the city nearby and alleviating the UHI effect. However, the direct interaction of mountain wind with the natural-convection circulation due to heated urban surfaces has not been studied, to our best knowledge. This kind of unique interaction of two kinds of airflow structures under calm and neutral atmospheric environment is investigated in this paper by CFD approach. A physical model comprising a simple mountain and three long building blocks (forming two street canyons) is firstly developed. Different airflow structures are identified within the conditions of different mountain-building height ratios (R=Hm/Hb) by varying building height but fixing mountain height. It is found that the higher ventilation rate in the street canyons is expected in the cases of smaller mountain-building ratios, indicating the stronger natural convection due to increasing heated building surfaces. However, there is the highest air change rate (ACH) in the lowest-building-height case and most of the air is advective into the street canyon through the top open area, highlighting the important role played by the mountain wind. In terms of the ventilation efficiency, it is shown that the smallest R case enjoys the best air change efficiency followed by the highest R case, while the worst ventilative street canyons occur at the middle R case. In the end, a gap across the streets is introduced in the modeling. The existence of the gap can greatly channel the mountain wind and distribute the air into streets nearby. Thus the ACH can be doubled and air quality can be significantly improved.

P-Prism: a computationally efficient approach to scaling up classification rule induction

Top Down Induction of Decision Trees (TDIDT) is the most commonly used method of constructing a model from a dataset in the form of classification rules to classify previously unseen data. Alternative algorithms have been developed such as the Prism algorithm. Prism constructs modular rules which produce qualitatively better rules than rules induced by TDIDT. However, along with the increasing size of databases, many existing rule learning algorithms have proved to be computational expensive on large datasets. To tackle the problem of scalability, parallel classification rule induction algorithms have been introduced. As TDIDT is the most popular classifier, even though there are strongly competitive alternative algorithms, most parallel approaches to inducing classification rules are based on TDIDT. In this paper we describe work on a distributed classifier that induces classification rules in a parallel manner based on Prism.

Scaling up classification rule induction through parallel processing

The fast increase in the size and number of databases demands data mining approaches that are scalable to large amounts of data. This has led to the exploration of parallel computing technologies in order to perform data mining tasks concurrently using several processors. Parallelization seems to be a natural and cost-effective way to scale up data mining technologies. One of the most important of these data mining technologies is the classification of newly recorded data. This paper surveys advances in parallelization in the field of classification rule induction.

Inferring the biggest and best: a measurement model for applying recognition to evoke consideration sets and judge between multiple alternatives

It has long been supposed that preference judgments between sets of to-be-considered possibilities are made by means of initially winnowing down the most promising-looking alternatives to form smaller “consideration sets” (Howard, 1963; Wright & Barbour, 1977). In preference choices with >2 options, it is standard to assume that a “consideration set”, based upon some simple criterion, is established to reduce the options available. Inferential judgments, in contrast, have more frequently been investigated in situations in which only two possibilities need to be considered (e.g., which of these two cities is the larger?) Proponents of the “fast and frugal” approach to decision-making suggest that such judgments are also made on the basis of limited, simple criteria. For example, if only one of two cities is recognized and the task is to judge which city has the larger population, the recognition heuristic states that the recognized city should be selected. A multinomial processing tree model is outlined which provides the basis for estimating the extent to which recognition is used as a criterion in establishing a consideration set for inferential judgments between three possible options.

Scaling up data mining techniques to large datasets using parallel and distributed processing

Advances in hardware and software technology enable us to collect, store and distribute large quantities of data on a very large scale. Automatically discovering and extracting hidden knowledge in the form of patterns from these large data volumes is known as data mining. Data mining technology is not only a part of business intelligence, but is also used in many other application areas such as research, marketing and financial analytics. For example medical scientists can use patterns extracted from historic patient data in order to determine if a new patient is likely to respond positively to a particular treatment or not; marketing analysts can use extracted patterns from customer data for future advertisement campaigns; finance experts have an interest in patterns that forecast the development of certain stock market shares for investment recommendations. However, extracting knowledge in the form of patterns from massive data volumes imposes a number of computational challenges in terms of processing time, memory, bandwidth and power consumption. These challenges have led to the development of parallel and distributed data analysis approaches and the utilisation of Grid and Cloud computing. This chapter gives an overview of parallel and distributed computing approaches and how they can be used to scale up data mining to large datasets.

Femtosecond pulse shaping using differential evolutionary algorithm and wavelet operators

Evolutionary meta-algorithms for pulse shaping of broadband femtosecond duration laser pulses are proposed. The genetic algorithm searching the evolutionary landscape for desired pulse shapes consists of a population of waveforms (genes), each made from two concatenated vectors, specifying phases and magnitudes, respectively, over a range of frequencies. Frequency domain operators such as mutation, two-point crossover average crossover, polynomial phase mutation, creep and three-point smoothing as well as a time-domain crossover are combined to produce fitter offsprings at each iteration step. The algorithm applies roulette wheel selection; elitists and linear fitness scaling to the gene population. A differential evolution (DE) operator that provides a source of directed mutation and new wavelet operators are proposed. Using properly tuned parameters for DE, the meta-algorithm is used to solve a waveform matching problem. Tuning allows either a greedy directed search near the best known solution or a robust search across the entire parameter space.

Impression management, myth creation and fabrication in private social and environmental reporting: insights from Erving Goffman

This paper explores the nature of private social and environmental reporting (SER). From interviews with UK institutional investors, we show that both investors and investees employ Goffmanesque, staged impression management as a means of creating and disseminating a dual myth of social and environmental accountability. The interviewees’ utterances unveil private meetings imbued with theatrical verbal and physical impression management. Most of the time, the investors’ shared awareness of reality belongs to a Goffmanesque frame whereby they accept no intentionality, misrepresentation or fabrication, believing instead that the ‘performers’ (investees) are not intending to deceive them. A shared perception that social and environmental considerations are subordinated to financial issues renders private SER an empty encounter characterised as a relationship-building exercise with seldom any impact on investment decision-making. Investors spoke of occasional instances of fabrication but these were insufficient to break the frame of dual myth creation. They only identified a handful of instances where intentional misrepresentation had been significant enough to alter their reality and behaviour. Only in the most extreme cases of fabrication and lying did the staged meeting break frame and become a genuine occasion of accountability, where investors demanded greater transparency, further meetings and at the extreme, divested shares. We conclude that the frontstage, ritualistic impression management in private SER is inconsistent with backstage activities within financial institutions where private financial reporting is prioritised. The investors appeared to be in a double bind whereby they devoted resources to private SER but were simultaneously aware that these efforts may be at best subordinated, at worst ignored, rendering private SER a predominantly cosmetic, theatrical and empty exercise.