Systemically important banks: an analysis for the European banking system

In this paper we perform an empirical analysis to identify systemically important banks by a few individual bank characteristics that are easy to observe in practice. This analysis builds on a new method to construct measures of systemic relevance of individual institutions that are consistent with a risk analysis at the level of the banking system, taking correlations in bank asset returns into account. We derive asset return correlations for a sample of European publicly traded banks from market data and construct two risk measures: incremental value at risk and conditional expected shortfall. Incremental value at risk quantifies the individual contributions of banks to the system’s Value-at-Risk. Conditional expected shortfall measures the increase in the expected system wide deposit insurance liability that would follow from the default of an institution. The analysis of hypothetical defaults of institutions is performed consistently with the observed distribution of asset returns by using the conditional distribution. Both measures are then analyzed in a panel regression where individual characteristics are used to explain incremental value at risk and conditional expected shortfall.     

Embedded ties and the acquisition of competitive capabilities

We build on previous research that explores the external acquisition of competitive capabilities through the embedded ties that firms form in networks and alliances. While information sharing and trust have been theorized to be key features of the interorganizational ties that facilitate the acquisition of competitive capabilities, we argue that these mechanisms provide an incomplete explanation because they do not fully address the partially tacit nature of the knowledge that underlies competitive capabilities. Joint problem‐solving arrangements play a prominent role in capability acquisition by promoting the transfer of complex and difficult‐to‐codify knowledge. Drawing on a set of case studies and a survey of 234 job shop manufacturers we find support for the role of joint problem solving with suppliers in facilitating the acquisition of competitive capabilities. Copyright © 2005 John Wiley & Sons, Ltd.     

Reform of the UK Financial Policy Committee

We argue that: The FPC should have a wider remit; a much broader membership (covering many specialisms); should be wholly independent of Government and outside the Bank of England; its aim should be to comment publicly and authoritatively on any possible areas of risk to financial stability while itself controlling few, if any, levers of policy. The rationale for these conclusions is that: Macroprudential/financial risks come from many sources; many of these sources are structural and outside of the Bank’s regulatory purview/competence; in a sense, the Bank gets to mark its own homework as regards issues such as the SMR, resolution, appropriateness of capital, effectiveness of ring-fencing etc.; many aspects of macroprudential actions have distributional implications, and hence, politicians, not the Bank or any other body, should take and justify, or not, these decisions.     

Poverty: Deprivations in terms of basic needs

Although income-based poverty focuses on an important dimension of poverty, it only gives a partial picture of the many ways in which human lives can be blighted. This study focuses on deprivations in terms of the most basic needs, such as access to safe water and sanitation. Policy makers and other people usually ask, 'With the new government in place, has poverty become worse or are we winning the fight against poverty?' The study seeks to investigate if there have been improvements in the situation in South Africa between 1995 and 1999. The October Household Surveys conducted in 1995 and 1999 are used in the study. The t-test is used to assess the statistical significance of the changes.     

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Ohne Zusammenfassung     

The M-form: Industrial groups,American style

This paper reviews the evolution of industrial groups in the United States and then briefly compares their historical development with that of groups in other advanced market economies. The central role of the shift from attempting to achieve market control through contractual cooperation to achieve it through administrative efficiency, is underlined. Such a shift has occurred much earlier in the United States than in other economies.