Stories of banks and bankers

by Frederick Martin

Hand in hand: public endorsement of climate change mitigation and adaptation

This research investigated how an individual’s endorsements of mitigation and adaptation relate to each other, and how well each of these can be accounted for by relevant social psychological factors. Based on survey data from two European convenience samples (N = 616 / 309) we found that public endorsements of mitigation and adaptation are strongly associated: Someone who is willing to reduce greenhouse gas emissions (mitigation) is also willing to prepare for climate change impacts (adaptation). Moreover, people endorsed the two response strategies for similar reasons: People who believe that climate change is real and dangerous, who have positive attitudes about protecting the environment and the climate, and who perceive climate change as a risk, are willing to respond to climate change. Furthermore, distinguishing between (spatially) proximal and distant risk perceptions suggested that the idea of portraying climate change as a proximal (i.e., local) threat might indeed be effective in promoting personal actions. However, to gain endorsement of broader societal initiatives such as policy support, it seems advisable to turn to the distant risks of climate change. The notion that “localising” climate change might not be the panacea for engaging people in this domain is discussed in regard to previous theory and research.

A proposed framework to operationalize ESS for the mitigation of soil threats

Despite various research activities in the last decades across the world, many challenges remain to integrate the concept of ecosystem services (ESS) in decision-making, and a coherent approach to assess and value ESS is still lacking. There are a lot of different – often context-specific – ESS frameworks with their own definitions and understanding of terms. Based on a thorough review, the EU FP7 project RECARE (www.recare-project.eu) suggests an adapted framework for ecosystem services related to soils that can be used for practical application in preventing and remediating degradation of soils in Europe. This lays the foundation for the development and selection of appropriate methods to measure, evaluate, communicate and negotiate the services we obtain from soils with stakeholders in order to improve land management. Similar to many ESS frameworks, the RECARE framework distinguishes between an ecosystem and human well-being part. As the RECARE project is focused on soil threats, this is the starting point on the ecosystem part of the framework. Soil threats affect natural capital, such as soil, water, vegetation, air and animals, and are in turn influenced by those. Within the natural capital, the RECARE framework focuses especially on soil and its properties, classified in inherent and manageable properties. The natural capital then enables and underpins soil processes, while at the same time being affected by those. Soil processes, finally, are the ecosystem’s capacity to provide services, thus they support the provision of soil functions and ESS. ESS may be utilized to produce benefits for individuals and human society. Those benefits are explicitly or implicitly valued by individuals and human society. The values placed on those benefits influence policy and decision-making and thus lead to a societal response. Individual (e.g. farmers’) and societal decision making and policy determine land management and other (human) driving forces, which in turn affect soil threats and natural capital. In order to improve ESS with Sustainable Land Management (SLM) – i.e. measures aimed to prevent or remediate soil threats, the services identified in the framework need to be “manageable” (modifiable) for the stakeholders. To this end, effects of soil threats and prevention / remediation measures are captured by key soil properties as well as through bio-physical (e.g. reduced soil loss), socio-economic (e.g. reduced workload) and socio-cultural (e.g. aesthetics) impact indicators. In order to use such indicators in RECARE, it should be possible to associate the changes in soil processes to impacts of prevention / remediation measures (SLM). This requires the indicators to be sensitive enough to small changes, but still sufficiently robust to provide evidence of the change and attribute it to SLM.

Earth system commitments due to delayed mitigation

As long as global CO₂ emissions continue to increase annually, long-term committed Earth system changes grow much faster than current observations. A novel metric linking this future growth to policy decisions today is the mitigation delay sensitivity (MDS), but MDS estimates for Earth system variables other than peak temperature (ΔT max) are missing. Using an Earth System Model of Intermediate Complexity, we show that the current emission increase rate causes a ΔT max increase roughly 3–7.5 times as fast as observed warming, and a millenial steric sea level rise (SSLR) 7–25 times as fast as observed SSLR, depending on the achievable rate of emission reductions after the peak of emissions. These ranges are only slightly affected by the uncertainty range in equilibrium climate sensitivity, which is included in the above values. The extent of ocean acidification at the end of the century is also strongly dependent on the starting time and rate of emission reductions. The preservable surface ocean area with sufficient aragonite supersaturation for coral reef growth is diminished globally at an MDS of roughly 25%–80% per decade. A near-complete loss of this area becomes unavoidable if mitigation is delayed for a few years to decades. Also with respect to aragonite, 12%–18% of the Southern Ocean surface become undersaturated per decade, if emission reductions are delayed beyond 2015–2040. We conclude that the consequences of delaying global emission reductions are much better captured if the MDS of relevant Earth system variables is communicated in addition to current trends and total projected future changes.

Decision strategies for policy decisions under uncertainties: The case of mitigation measures addressing methane emissions from ruminants

Decision strategies aim at enabling reasonable decisions in cases of uncertain policy decision problems which do not meet the conditions for applying standard decision theory. This paper focuses on decision strategies that account for uncertainties by deciding whether a proposed list of policy options should be accepted or revised (scope strategies) and whether to decide now or later (timing strategies). They can be used in participatory approaches to structure the decision process. As a basis, we propose to classify the broad range of uncertainties affecting policy decision problems along two dimensions, source of uncertainty (incomplete information, inherent indeterminacy and unreliable information) and location of uncertainty (information about policy options, outcomes and values). Decision strategies encompass multiple and vague criteria to be deliberated in application. As an example, we discuss which decision strategies may account for the uncertainties related to nutritive technologies that aim at reducing methane (CH4) emissions from ruminants as a means of mitigating climate change, limiting our discussion to published scientific information. These considerations not only speak in favour of revising rather than accepting the discussed list of options, but also in favour of active postponement or semi-closure of decision-making rather than closure or passive postponement.

Operationalizing ecosystem services for the mitigation of soil threats: A proposed framework

Despite numerous research efforts over the last decades, integrating the concept of ecosystem servicesinto land management decision-making continues to pose considerable challenges. Researchers havedeveloped many different frameworks to operationalize the concept, but these are often specific to acertain issue and each has their own definitions and understandings of particular terms. Based on acomprehensive review of the current scientific debate, the EU FP7 project RECARE proposes an adaptedframework for soil-related ecosystem services that is suited for practical application in the preventionand remediation of soil degradation across Europe. We have adapted existing frameworks by integratingcomponents from soil science while attempting to introduce a consistent terminology that is understand-able to a variety of stakeholders. RECARE aims to assess how soil threats and prevention and remediationmeasures affect ecosystem services. Changes in the natural capital’s properties influence soil processes,which support the provision of ecosystem services. The benefits produced by these ecosystem servicesare explicitly or implicitly valued by individuals and society. This can influence decision- and policymak-ing at different scales, potentially leading to a societal response, such as improved land management.The proposed ecosystem services framework will be applied by the RECARE project in a transdisciplinaryprocess. It will assist in singling out the most beneficial land management measures and in identifyingtrade-offs and win–win situations resulting from and impacted by European policies. The framework thusreflects the specific contributions soils make to ecosystem services and helps reveal changes in ecosystemservices caused by soil management and policies impacting on soil. At the same time, the framework issimple and robust enough for practical application in assessing soil threats and their management withstakeholders at various levels.

The Optimal Capital Structure of Banks: Balancing Deposit Insurance, Capital Requirements and Tax-Advantaged Debt

The capital structure and regulation of financial intermediaries is an important topic for practitioners, regulators and academic researchers. In general, theory predicts that firms choose their capital structures by balancing the benefits of debt (e.g., tax and agency benefits) against its costs (e.g., bankruptcy costs). However, when traditional corporate finance models have been applied to insured financial institutions, the results have generally predicted corner solutions (all equity or all debt) to the capital structure problem. This paper studies the impact and interaction of deposit insurance, capital requirements and tax benefits on a bankÇs choice of optimal capital structure. Using a contingent claims model to value the firm and its associated claims, we find that there exists an interior optimal capital ratio in the presence of deposit insurance, taxes and a minimum fixed capital standard. Banks voluntarily choose to maintain capital in excess of the minimum required in order to balance the risks of insolvency (especially the loss of future tax benefits) against the benefits of additional debt. Because we derive a closed- form solution, our model provides useful insights on several current policy debates including revisions to the regulatory framework for GSEs, tax policy in general and the tax exemption for credit unions.

Lease Defaults and the Efficient Mitigation of Damages

The traditional law of leases imposed no duty on landlords to mitigate damages in the event of tenant breach, whereas the modern law of leases does. An economic model of leases, in which absentee tenants may or may not intend to breach, shows that the traditional rule promotes tenant investment in the property by discouraging landlord entry. In contrast, the modern rule prevents the property from being left idle by encouraging landlords to enter and re-let abandoned property. The model reflects the historic use of the traditional rule for agricultural leases, where absentee use was valuable, and the emergence of the modern rule for residential leases, where the primary use entails continuous occupation.

Productivity Growth and Efficiency in Indian Banking: A Comparison of Public, Private, and Foreign Banks

India's public sector banks (PSBs) are compared unfavorably with their private sector counterparts, domestic and foreign. This comparison rests, for the most part, on financial measures of performance, and such a comparison provides much of the rationale for privatization of PSBs.In this paper, we attempt a comparison between PSBs and their private sector counterparts based on measures of productivity that use quantities of outputs and inputs. We employ two measures of productivity: Tornqvist and Malmquist total factor productivity growth. We attempt these comparisons over the period 1992-2000, comparing PSBs with both domestic private and foreign banks. Out of a total of four comparisons we have made, there are no differences in three cases, PSBs do better in two, and foreign banks in one. To put it differently, PSBs are seen to be at a disadvantage in only one out of six comparisons. It is difficult, therefore, to sustain the proposition that efficiency and productivity have been lower in public sector banks relative to their peers in the private sector.

The Performance of Domestic and Foreign Banks: The Case of Korea and the Asian Financial Crisis

This paper considers the performance of banks, domestic and foreign, in Korea prior to, during, and immediately after the Asian financial crisis, examining how the profitability of those banks differed and identifying factors that explain why those differences existed. The performance of Korean banks deteriorated dramatically in 1998 with most banks recovering somewhat in 1999. Foreign banks did not experience the same negative effect on their returns on assets and equity as a rule. Several standard findings emerge. For example, equity to assets correlates positively with domestic, but not foreign, bank performance, as measured by the returns on assets and equity, even when the government recapitalized institutions that were performing quite badly. Also, foreign-currency deposits significantly and negatively correlate with domestic Korean bank performance, although only in the post-crisis period for regional banks. In sum, the domestic Korean banks suffered more severely from the Asian financial crisis than foreign banks.

The Effect of the Asian Financial Crisis on the Performance of Korean Nationwide Banks

The Asian financial crisis spread its effect quickly across a number of countries. Korea faced serious problems in her financial and corporate sectors. This paper considers the performance of Korean nationwide banks before, during, and immediately after the Asian financial crisis. The performance of Korean nationwide banks took a big hit in 1998. Most banks recovered somewhat in 1999 with the notable exception of the further deterioration of Seoul. Several factors possess strong correlations with bank performance. Among other standard findings, equity to assets correlates positively with bank performance, even when the government recapitalized a number of institutions that performed poorly. The Asian crisis did not affect the normal rules of good bank management. The government, however, directly intervened in the banking sector on a large scale to limit the scope of the crisis in the Korean economy.

Banks' Langschwanzkakadu

Von Dr. Chr. Lindemann

Die Banks-Rose

Prof. Dr. Wilh. Seelig