A theory of bank regulation and management compensation

We show that concentrating bank regulation on bank capital ratiosmay be ineffective in controlling risk taking. We propose, instead,a more direct mechanism of influencing bank risk-taking incentives,in which the FDIC insurance premium scheme incorporates incentivefeatures of top-management compensation. With this scheme, weshow that bank owners choose an optimal management compensationstructure that induces first-best value-maximizing investmentchoices by a bank's management. We explicitly characterize theparameters of the optimal management compensation structureand the fairly priced FDIC insurance premium in the presenceof a single or multiple sources of agency problems.     

Reconsidering performance evaluative style

Journal of Accounting Research, 10, 156–182, modeled “performance evaluative style” as the predictor of unintended effects from performance measurement control systems, stimulating one of the few areas of cumulative research in behavioral accounting. However, despite twenty-five years of empirical testing, this stream of research has failed to converge. This paper considers the validity issues created by evolution in the conceptualisation and specification of the relevant variables and classifies them by calculation type. Results of an empirical test designed to explore comparability between the variable types are reported. Finally, implications for interpreting prior research and for future research directions are considered. ©     

The Relationship between Federal Deficits and Real Interest Rates

Real interest rates fluctuated a great deal since the 1970s. In the 1980s federal deficits accelerated and their impact on both nominal and real interest rates gained lots of attention. Based on monthly and quarterly data from January 1971 to December 1997 it is found that federal deficits had significant positive effect on the real interest rates: Personal income or consumption are found to have significant positive impact on the real interest rates, whereas expected inflation and money supply are found to have negative impact on the real interest rates. These findings are consistent with the conventional economic theory.     

Interest rate clustering in UK financial services markets

This study forwards an explanation and empirical investigation of price clustering in retail banking markets. It is proposed that price or interest rate clustering forms in retail markets as firms wish to maximise returns from customers, some of whom have difficulties in recalling and processing price information. This theory is developed and tested using a dataset of retail interest rates from the UK which enables interest rate clustering to be viewed in both lending and investment markets, and at different levels of financial involvement. It is found that interest rate clustering occurs in a manner consistent with firms maximising returns from customers. These findings are viewed to be a key policy concern for financial regulators and firms concerned with consumer protection.     

INFLATION,NONOPTIMAL MONETARY ARRANGEMENTS AND THE BANKING IMPUTATION IN THE NATIONAL ACCOUNTS*

This paper demonstrates, with the use of some recent developments in neoclassical monetary theory, that the banking imputation problem in the national accounts arises because of the regulation of banks by Authorities. It demonstrates as well that the banking imputation problem is a manifestation of the failure of the Authorities to provide optimal monetary arrangements. Some comments on existing imputations, in the light of this theory, are provided.     

Managing absence in an NHS hospital

Absence studies often pay little attention to institutional settings. This study of a large hospital looks at factors affecting absence, and worker attitudes to time off. It reveals a highly committed workforce, but one with low morale, deeply distrustful of a management initiating rapid changes.