Shelagh heffernan modern banking phần 10 pot

It was also required to sign an ‘‘agreement’’ with the Federal Reserve Bank of New York, which required BT to: ž Allow the regulator to monitor and closely scrutinise the leveraged deriv

At the same time, management gave traders who proved themselves full rein to play theirpositions In theory, no trader could commit more than a predetermined level of capital, butonce that capital was earned back, the trader could play his/her position to amounts limited

by accumulated profits This meant there were single positions which exceeded a billiondollars BT’s reputation for taking the right positions encouraged herd instinct behaviour:traders at rival firms would take the same positions, which would magnify the extent BTmoved the market

Commercial Paper

Mr Sanford believed part of the BT strategy should be to offer a wide range of institutionalfinancial services on a global basis The execution of this strategy involved BT’s participation

in the domestic commercial paper market, an area normally reserved for investment banks

In 1978, BT began to act as an agent for corporations issuing commercial paper, therebychallenging Glass Steagall – the bank convinced the Federal Reserve that commercial paperwas a short-term loan, not a security

Derivatives and Risk Management

In 1978, BT improved on its internal risk management by establishing the Bankers TrustFutures Corporation It operated on the emerging futures and options markets, to provideinnovative hedging programmes to customers It was the second subsidiary of a US bankingcompany to receive full certification as a futures commission merchant

Mr Sanford introduced RAROC, or risk-adjusted return on capital, defined as totalrisk-adjusted returns divided by total capital (see Chapter 3), a risk measurement system.The idea was to have a common measure of risk for all BT operations, thereby ensuring anefficient allocation of capital A risk factor was assigned to each category of assets based onthe volatility of the asset’s market price For example, a CD trader who ended the day with

a long position in 60-day paper would be assigned a risk-adjusted amount of capital based

on the risk factor for this maturity Performance was assessed by dividing the trader’s profit

by the amount of capital allocated An example of the distribution of capital appears below:

In addition to being at the centre of a framework for risk management, RAROC was alsoused for:

ž Comparison of the performance of different parts of the BT business

ž Portfolio management for determining areas that appeared most appropriate for ment or divestment

The corporate finance division had five lines of business

ž The Capital Market Group: This section acted as financial advisor or agent for corporations

in the private placement of their securities with insurance companies, pension funds andother financial institutions The group was strongly affiliated with global markets andBT’s London merchant bank, Bankers Trust International It maintained a role ineurosecurities offerings and dealt extensively with interest rate and currency swaps

ž The Lease Financing Group: Arranged large leases, placing the assets with other institutions

and within BT It served as an advisor to the lessor and/or lessee in transactions

ž The Venture Capital Group: This group made equity and other investments for the holding

company (Bankers Trust New York Corporation) Most of the transactions were part

of the leveraged buyouts and expansion financing, rather than de novo financing of

companies BT developed a special product niche in structuring leveraged buyouts

ž The Public Finance Group: This group acted as a financial advisor, underwriter or sales

agent of tax-exempt financing for public and corporate issuers

ž Loan Sales: In 1984, as part of its merchant banking strategy, BT expanded its loan sales

programme One of the first commercial banks to be actively engaged in securitisation, the

bank believed that in some cases, it could achieve superior returns on equity by originatingand selling loans, rather than holding them on its own books Loan securitisation alsohelped to stabilise balance sheet growth, maintain high liquidity levels, and meant the

bank could provide more services to major corporations The timing of this effort wascoincidental with BT’s emphasis on the build-up of mergers and acquisitions advisorycapacity, which in turn related very well to the growing ‘‘leveraged buyout’’ (LBO)phenomenon, and ensured a superior return on equity.

Mr Beim followed an employment policy of hiring the best and paying accordingly.Traditional domestic corporate lending was de-emphasised in favour of initiating andcompleting highly leveraged deals and other specialised lending operations

By early 1985, BT had placed several groups of asset product managers and sales officers inNew York, Tokyo, London and Hong Kong The asset product management group workedwith account officers to design the loan sale structure and related documentation Most ofthe business was directed at large companies seeking substantial funding and broad access

to the financial markets The group could recommend financing programmes to improvethe market access of such companies Corporate finance product specialists might also beinvolved, so the bank provided credit expertise, technical advice and sales knowledge whenworking with customers

Sales officers targeted investors as potential purchasers of the loans, and kept in closecontact with them Loans were sold to foreign banks, pension funds and insurance firms.Sales officers would spend weeks educating potential investors The whole process ensuredthat a high proportion of the BT loan portfolio was in liquid form

The ‘‘tactical asset and liability committee’’ was BT’s policy-making body for loan sales

It met on a weekly basis to decide on the quarterly pricing of loan sales The Committeefocused on credit risk, market conditions and liquidity needs; it also sought out newopportunities for the loan origination function

Credit policy

In line with the greater emphasis on merchant banking and the loan sale programme,credit management procedures at BT were also tightened The old credit review system hadrequired loan approval by at least two account officers The new process required at leastone signature to be from a credit officer Thus, credit officers became lending officers.Line management was responsible for the credit approval process Each department had

to write a credit policy statement and specify lending authority for its line and creditofficers For example, division managers would be given a credit approval limit Loanamounts within this limit could be approved with the signature of an account officer andthe division manager Larger loans required the signature of the group credit head and theloan officer Loans larger than the group head’s credit limit went to the department creditofficer Loans in excess of $200 million required the signature of the department head orthe chief credit officer

Using RAROC, management could assess the amount of credit risk embedded in allareas of the bank Risks were placed in 60 industry categories, which were graded according

to expected performance The ranking was based on variables such as technical change,regulatory issues, capacity constraints, business cycle sensitivity, ability to protect pricing andmargins, and structural stress These variables were considered important because of theireffect on growth and cash flow variability over both near and intermediate term horizons

Global markets

Global markets were considered to be of increasing importance For example, foreignexchange facilities were expanded to provide 24-hour market-making capacity with 10geographic locations The bank was actively involved in the global syndicated loaneuronote market and equity-linked derivatives

Global markets was a functional division under the financial services side of BT Ithad seven divisions Half dealt with market-related activities, such as short-term fundingand foreign exchange The rest were concerned with financing activities, such as publicfixed income markets, private placements, commodities, short-term and variable ratefinance, and multiple currency derivatives The objective was to assist clients in themanagement of their own risk positions and to establish product areas whose profitabilitywas uncorrelated, to achieve a natural diversification and sustain profitability, no matterwhat the market situation

The seven divisions had 60 profit centres, globally organised across time zones, whichhelped interaction Customer, product and geographic variables were connected through aprocess of synergy Employees of ‘‘global markets’’ numbered about 2200 and made up about20% of the BT payroll They were located in seven countries and 10 cities, including all themajor world financial centres

The nature of the divisional organisation emphasised a global product focus across timezones, at the expense of a more client-oriented regional focus The system did appeal

to large corporate clients wanting to structure multi-market financing for a cross-borderacquisition However, the organisational structure discouraged the development of localclient relationships – BT acknowledged that the local clients had to be sold the approach

by being shown the superiority of the product There was an ongoing debate about whetherthe lack of strong client relationships would undermine the attempt to establish a leadershipposition BT had in financial engineering, deal making and trading

BT had very little in the way of a distribution and sales network typical of most WallStreet houses To maintain a competitive edge, the bank increasingly looked to financialengineering or structured finance, inventing complex and often lucrative products forspecific clients BT normally relied upon other firms to provide the distribution and salesfunctions it needed

Management style

The organisational changes at BT were designed to promote cooperation among BT businessunits, so as to provide a high-quality, innovative service to its clients For this reason, itmoved from a hierarchical structure typical of a commercial bank to the horizontal structure

of most investment banks However, there was hostility to the change among long-time BTemployees, who were concerned with the stress on entrepreneurial initiative

BT modified relationship banking by requiring staff to delve into product specialities andrelate these to business lines required by each customer Staff moved between the maincentres loosely assigned to institutional clients, improving, it was hoped, organisationalagility and fostering innovation and creativity The approach should sustain enoughflexibility in the organisation to allow BT to take advantage of new market opportunities

immediately, whether in the form of a long-term relationship or a one-off profit-makingopportunity Though employees were encouraged to foster relationships with clients, theywere also advised to look for opportunities to assist with an individual transaction.

Thus, the BT banking style differed from that of investment banks, where employeeswere rigidly assigned to either corporate or institutional customers, and from commercialbanking, which tended to rely on ‘‘hands off’’ relationships to generate spread income

To attract the top people into the organisation, BT dispensed with the standardcommercial bank compensation scheme Incentive compensation was introduced in theresource management department (RMD), then extended to other parts of BT Traderswere paid according to their performance, as measured by a high risk-adjusted rate of return

on capital, as opposed to limits The top performers received bonuses of 100% or more Inthe corporate finance department, BT also linked compensation to performance, but, unlikeRMD, bonuses were based both on the profitability of a new business and the degree towhich the officer cooperated with others in the organisation to foster ‘‘excellence throughcommon purpose’’ For example, in commercial banking, bonuses could now exceed 100%

of salary (compared to a previous limit of 50%) The size of the bonus pool was not just afunction of a department’s profitability, but of total profits generated throughout BT

Trouble with Swaps: 1993 – 98

In 1993, net profits at BT were $1.07 billion, $596 million of which came from proprietarytrading and advising corporations on the management of different types of market risk,such as currency and interest rate The bank congratulated itself for being a model moderninvestment bank with a performance-driven culture and innovative trading strategies such

as the use of derivatives to manage risk on BT’s own trading book, and for its corporateclients, too

However, in the spring of 1994, this part of BT was suddenly faced with serious problems.Several firms announced losses arising from swaps sold to them by Bankers Trust, New York

In March 1994, Gibsons Greetings Inc announced losses amounting to $19.7 million fromleveraged interest rate swaps, and in September of that year, commenced legal action – suing

BT for $23 million to cover its derivatives losses, and $50 million in punitive damages Thecase was settled out of court in January 1995 – BT paid $14 million to Gibson Greetings,after a tape revealed a managing director at Bankers had misled the company about the size

of its financial losses Bankers Trust had already (in December 1994) paid a $10 millionfine to US regulatory authorities in relation to the affair It was also required to sign an

‘‘agreement’’ with the Federal Reserve Bank of New York, which required BT to:

ž Allow the regulator to monitor and closely scrutinise the leveraged derivatives business

at Bankers Trust

ž Ensure clients using these complex derivatives understood the associated risks

ž Fund an independent investigation into the affair, to be undertaken by an enced counsel

experi-Two other firms also announced large losses from BT’s swaps They also accepted out ofcourt settlements – $67 million to Air Products and $12 million to Federal Paper BoardCompany At this point BT had paid out over $100 million in the settlements and fines

relating to improper behaviour by its leveraged swap group The bank sacked one manager,reorganised the leveraged derivatives unit and reassigned staff to other jobs.

However, another big loser appeared determined to have their day in court In April

1994, the chairman of Procter and Gamble (P&G) announced losses of $157 million onleveraged interest rate swaps In 1993, the corporate treasurer at Procter and Gamble hadpurchased these swaps from Bankers Trust One of the swaps was, effectively, a bet andwould have yielded a substantial capital gain for Procter and Gamble had German and

US interest rates converged more slowly than the market thought they would In fact, thereverse happened, leading to large losses The second swap was known by both parties as the

‘‘5–30 swap’’, and involved P&G receiving a fixed rate pegged to the 5-year US Treasurynote and the 30-year Treasury bond and paying a floating rate pegged to the commercialpaper rate According to P&G, Bankers Trust guaranteed P&G would pay 40 basis pointsbelow the commercial paper rate However, short-term rates fell relative to long rates, soP&G ended up facing a loss Procter and Gamble refused to pay Bankers Trust the moneylost on the swap contracts P&G claimed it should never have been sold these swaps,because the bank did not fully explain the potential risks, nor did the bank disclose pricingmethods that would have allowed Procter and Gamble to price the product themselves.Bankers Trust countered that P&G owed the bank close to $200 million The question

is why these instruments were being used for speculative purposes by a consumer goodsconglomerate, and whether the firm had been correctly advised by Bankers Trust

In late 1994, BT set aside $423 million as a provision for derivatives contracts thatmight prove unenforceable; $72 million was written off immediately This provisioningsuggested BT could lose over $500 million Furthermore, the bank’s trading division wasbound to see a decline in business because so much of it depended on reputation andclients’ trust in the bank – trading had already experienced a steep decline in profits.Bankers Trust faced potential severe financial difficulties and even collapse because of thisderivatives-related scandal

The publication of internal tapes which revealed a cynical attitude in the treatment

of customers was unhelpful for the bank In one video instruction tape shown to newemployees at the bank, a BT salesman mentions how a swap works: BT can ‘‘get in themiddle and rip them (the customers) off take a little money’’, though the instructor does

apologise after seeing the camera Another explained how he would ‘‘lure people into thattotal calm, and then totally f- - - - them’’.62 Further revelations came to light in pre-trial

hearings, with, for example, a reference to an acronym used by BT derivatives staff: ‘‘ROF’’,

for rip-off factor.

Several rulings were made by the judge63over the two years leading up to the trial:

ž P&G’s argument that swaps came under federal jurisdiction was rejected, as was theirclaim that BT has a fiduciary duty to P&G

ž P&G had to prove the bank had committed fraud before it could ask the courts to judgewhether BT had engaged in racketeering.64

62Source: The Economist, ‘‘Bankers Trust-Shamed Again’’, 7 October 1995.

63 US District Court Judge John Feikens.

64 In the USA a firm or individual found guilty of racketeering (running a dishonest business) faces enormous fines and often jail.

ž The judge ruled that P&G knew the risks associated with one of the contracts and, unless

it could prove otherwise, should assume financial responsibility for that contract

ž However, the court also ruled that Bankers Trust had a duty of good faith under NewYork State commercial law Such a duty arises if one party has superior information andthis information is not available to the other party.65

Even though the judge appeared to be favouring Bankers Trust, if it went to court, the trialwould be by jury, and US banks often lose cases because juries see them as unscrupulous profitmachines Both companies also had reputations to maintain BT’s reputation had alreadysuffered and losing a court case would make matters worse For Procter and Gamble, if thedetails of the case were discussed in open court, they could reveal that P&G, an enormousconglomerate, had a financial team with little understanding of financial derivatives.More than two years after P&G announced its losses, and 11 days before the trial wasdue to begin, the two parties reached an out of court settlement It came after new rulings

by the judge, who dismissed or ruled against more allegations against BT made by P&G.P&G agreed to pay Bankers Trust $35 million in cash, and the bank was to absorb the rest

of the amount ($160 million) in the dispute P&G would also transfer $14 million worth

of securities to Bankers Trust in relation to another derivatives transaction, which P&Gclaimed was not part of the law suit.66

Recall one of the conditions set by US regulators: that the affair was to be investigated

by independent counsel The report, co-authored by a regulator and a lawyer, was published

in July 1996, after the law suits had been settled It cleared Bankers Trust of any intention

to defraud when it sold risky derivatives investments However, it criticised the bankfor failing to hold the derivatives section under senior management control Certainemployees had created an environment focused solely on profit at the expense of good riskmanagement controls The report called for disciplinary action to be taken against certainindividuals (not named) who had failed to meet their responsibilities and/or engaged inmisconduct with respect to these derivatives By this time, most of the management teamconnected to these incidents had left the bank In response to the report, Mr Newmannoted that the entire section had been revamped with state of the art risk managementtechniques

In 1994, derivatives sales and trading were the firm’s most profitable business by a longway Bankers Trust had excelled at selling derivatives to companies for hedge purposes (toprotect firms from fluctuations in interest rates, foreign currency values and commodityprices) and to speculate, or bet on moves in these rates and prices The bank also profitedfrom proprietary trading The scandals not only undermined BT’s reputation, but the bankalso lost its main source of profits

To avoid future law suits, BT decided to send product contracts to several members of aclient firm, not just the finance officers In February 1995, a senior committee was formed

to look at ways of improving BT customer relations, including employee compensation

65 A third criterion for duty of good faith was noted by the court: the informed party knows the other party is acting on the basis of misinformation, though the duty would arise even if this did not apply.

66Source: Lamiell, P (1996), ‘‘Analysts: Both Sides are Winners in Derivatives Settlement’’, The Associated Press,

9 May.

schemes that emphasised the importance of teamwork and longer-term client relationships,not just high sales Also, new information systems were introduced In May 1995, MrSanford announced his resignation as chairman, effective in 1996.

10.8.4 New Chairman New Strategy

In April 1996 Frank N Newman (a former deputy secretary of the US Treasury) wasnamed as the new chairman of Bankers Trust, succeeding Mr Sanford He had beenpresident and chief executive officer of Bankers Trust for a short time before being madechairman The appointment was a clear signal that the bank was determined to put itshouse in order, especially in the area of risky derivatives It is no coincidence that theP&G case was settled a month after his appointment Newman’s job was clear cut – hehad to restore the bank’s reputation, and ensure adequate risk management schemes were

in place Mr Newman also decided to reduce the banks’ dependence on risky derivatives,and not only because of the 1994 leveraged derivatives fiasco In July 1996, the riskmanagement services group lost $22 million (up from a loss of $9 million the previousyear) due to losses in commodity derivatives after copper prices plunged in June InNewman’s view, a more diversified bank was a safer, more profitable bank In severalstatements, Newman made it clear that rather than being known solely for its expertise

in proprietary trading and foreign exchange operations, the bank had to develop a highreputation and be able to offer a full range of investment banking services to globalcustomers in the developed and emerging markets He appeared to be backed up by thefigures In the second quarter of 1996, BT’s profits were largely due to the investmentbanking division

An important move to boost investment banking was the acquisition, in late 1996, of aniche investment bank, Wolfensohn & Co., for $200 million in BT stock The firm wasknown for its mergers and acquisitions and corporate advisory services Its chairman, MrPaul Volcker, agreed to stay on A former Chairman of the Federal Reserve, he would help

to improve BT’s reputation as a reformed bank, unlikely to repeat earlier mistakes In earlyApril 1997, BT announced that the highly respected and oldest US investment bank with

a retail stock broking interest, Alex Brown and Son Ltd, was to merge with Bankers Trust.This was the first merger between a US securities house and a commercial bank At the timeAlex Brown was a highly reputed stockbroker based in Baltimore A stock swap (1 AlexBrown share for 0.83 shares of BT) valued the acquisition at roughly $1.7 billion According

to the BT chairman, the bank would gain strength from Alex Brown’s US equity markets,research, institutional investor sales, high income retail67 and distribution underwriting.Its blue chip reputation would also help BT Alex Brown would have access to syndicatedlending derivatives, and risk management

The purchase reflected the changing scene in US financial services from a regulatorystandpoint Congress was proving very slow in repealing the Glass Steagall Act, which since

1933 had separated commercial68(BT) from investment banking (Alex Brown) The courts

67 Alex Brown’s had 460 brokers who focused on high income clients.

68 As explained in Chapter 5 (see section on US regulation), a reinterpretation of section 20 of the Glass Steagall Act made it possible for commercial banks to engage in investment banking operations provided the revenues

and regulators responded with more lenient treatment of commercial banks that wanted

to test the boundaries The purchase of Alex Brown is a good illustration of this point.69The deal was possible under section 20 of the Act because the revenues earned from AlexBrown would amount to about 20% of BT’s total earnings in underwriting Under the oldregulations (limit of 10%) the merger would not have been allowed However, this limit hadbeen raised to 25% earlier in 1997, which meant there was no violation of section 20 of theGlass Steagall Act It is interesting that at this juncture, Bankers Trust was, for regulatorypurposes, classified as a commercial bank, even though the strategy was to transform it into

an investment bank

Bankers Trust opted to buy a highly reputable investment banking businesses instead

of organic growth The jury is still out on which option is superior, if either Othercommercial banks, including some foreign ones such as Union Bank of Switzerland, hadcommitted themselves to building up investment banking expertise over time In the UK,attempts by the large commercial banks (Barclays, Midland, National Westminster Bank)

to take advantage of regulatory reform (‘‘Big Bang’’, in 1986) and move into investmentbanking (whether through organic growth or purchase of existing investment banks) largelyfailed and by the late 1990s, some of these banks had largely divested themselves of theirinvestment banking business

It was not expected the merger would result in a high number of redundancies or costsavings because the two firms’ activities complemented each other BT Alex Brown keptits headquarters in Baltimore The firm handled IPOs for small companies, specialising intechnology, retail, communications and health care It also had a fund management groupand offers stock brokerage services to high income individual investors

In the same month, BT announced it had acquired NationsBank’s institutional custodybusiness, which increased the bank’s total global assets under custody by just over $130 mil-lion to roughly $2000 billion BT also acquired National Westminster’s equity underwritingbusiness in 1998 These acquisitions – Wolfensohn, Alex Brown, equity underwriting and

a bigger custody business – showed how Mr Newman was changing the strategic direction

of Bankers Trust The bank was in a position to offer a broad range of investment ing/wholesale commercial banking products, though it remained in the second tier and wasvulnerable to takeover by one of the major global players

bank-In March 1997, Bankers Trust signalled a substantial commitment to emerging marketswhen it announced the formation of a new subsidiary: Emerging Europe, Middle East &Africa Merchant Bank (EEMA), to be managed from London The idea was to consolidateits trading and investment banking activities in Central and Eastern Europe, the MiddleEast and Africa London was to run BT’s offices in the Czech Republic, Greece, Hungary,Poland, Turkey, Russia, South Africa, Bahrain, Egypt and Israel

from the securities activities were limited to some percentage set by the Federal Reserve, and appropriate firewalls were in place to keep areas where there might be a potential conflict of interest separate.

69 In February 1997, Morgan Stanley, the investment bank with big corporates as their clients, merged with Dean Witter Discover, a largely retail brokerage and credit card company The more liberal interpretation of the Glass Steagall Act began in 1984 when the Supreme Court used section 20 of the Act to rule that the Bank of America could buy a discount brokerage house (Charles Schwab) – it has since been sold See Chapter 5 for more detail on section 20 subsidiaries.

10.8.5 New Problems and Merger Talks

Unfortunately, less than a year after Mr Newman had singled out emerging markets as part

of BT’s new diversified strategy, the company announced a major reduction in its emergingmarket operations, and any remaining emerging market activities were integrated into itscore businesses BT had been hit hard from its exposure in Thailand and Indonesia, where

it reported trading losses, due to the Asian crisis The bank lost about $72 million in boththe last quarter of 1997 and the first quarter of 1998 However, in the investment bankingbusiness, net income more than doubled to $177 million, reflecting the success of its mergerwith Alex Brown It also benefited from increased sales and trading in its New York office.Income from European emerging markets, Africa and the Middle East also improved

By September 1998, matters looked more serious Many western banks were caught out bythe suddenness and magnitude of the Russian crisis (see Chapter 6), when Russia declared

a moratorium on its foreign debt But Bankers Trust faced problems on several fronts First,its exposure to Russia was large relative to its size In July and August of 1998, trading lossesfrom its Russian exposure hit $260 million, bringing total trading losses to $350 million.BT’s other sources of income had slowed High-yield corporate (junk) bonds were hit bythe Asian and Russian crises Also, BT Alex Brown Inc was suffering from the slowdown

in initial public offerings and other equity underwriting For these reasons, it posted a netloss for the third quarter of 1998, of $488 million.70 This came soon after a report in the

Financial Times (October 1998) that BT was in merger talks with Deutsche Bank (DB) By

November, rumours were rife that the two banks were close to reaching a deal

The merger talks indicated that after the enormous third-quarter loss, the senior executives

at Bankers Trust concluded that a strategy of diversification, with a number of differentspecialised businesses (which should have ensured the bank could weather downturns), hadnot worked As a mid-sized player with large losses, they appear to have decided that it wasimportant to build up its capital base through a merger with a large financial institution.Better to choose the partner than to risk being taken over It was well known that Mr RolfBreuer, chief executive of Deutsche Bank, had been looking for a suitable US bank so DBcould expand its investment banking business and become one of the world’s leading banks

In November 1998 the rumours were confirmed when the Wall Street Journal71reported thelawyers from the two banks were meeting in New York In late November 1998, the twobanks announced a merger agreement had been reached, which, at the time, created theworld’s largest bank, with about $840 billion in assets.72Bankers Trust was also a bargain,having lost more than 42% of its value between July and October 1998, though the shareprice had recovered somewhat on rumours of a takeover The $9 billion sale price was 2.1BT’s book value and a 43% premium over BT’s share price at the time of the announcement

70 In the fourth quarter the firm managed a profit of $133.1 billion, so annual losses from 1998 were lower than expected- BT lost $6 million A strong showing in the fourth quarter was particularly important for the

$133.1 billion-asset company In the third quarter – before that deal was reached – Bankers Trust posted a $488 million loss.

71 ‘‘Deutsche Bank, Bankers Trust Near Pact – Deal for About $9.7 Billion Would Create Largest Financial-Services

Firm’’, The Wall Street Journal, 23 November 1998, p A2.

72 At the end of 2003, Deutsche Bank ranked 12th out of 1000 banks in terms of tier 1 capital, and 6th if measured

by assets Source: The Banker, July 2004, p 211.

TEAM FLY

10.8.6 An Odd Couple or Good Match?

On the face of it, the marriage seemed an odd one Deutsche had been trying to build

up its investment banking business – spending $3 billion73 on it over the last decade.Bankers Trust own strategy of moving into investment banking had not worked very well.However, Deutsche (especially the chairman, Herr Rolf Breuer) thought a move intoinvestment banking essential because of the change in how corporate clients financedtheir activities Most were no longer looking to save or borrow, but instead wanteddirect access to the capital markets Hence the bank needed to refocus its activities

on arranging, acting as lead managers, underwriting issues, brokering, advising and fundmanagement

At the time of the merger Herr Breuer spoke of a target ROE of 25% by 2001, upfrom 6.4% in 1997 The cost of ‘‘restructuring’’ was estimated at $1 billion, to pay forredundancies in overlapping areas Just under 6% of employees, mainly based in Londonand New York, would be made redundant in areas of overlap: IT, operations, global marketsand global equities

Herr Breuer was keen to see Bankers Trust absorbed into Deutsche’s investment andglobal operations as quickly as within three months of the takeover This attitude was

in marked contrast to when Deutsche took over Morgan Grenfell in 1989 but the firmcontinued to operate under its own name for nearly a decade DB appeared to have learned

a lesson from the Morgan Grenfell experience: the firm was given a great deal of autonomywhich made the task of integrating it into the DB culture very difficult The name, AlexBrown, was kept – Deutsche Alex and Brown was to run the US investment banking andequity businesses

From a regulatory standpoint, there do not appear to be any major problems BankersTrust is a wholesale commercial bank with few retail consumers Though Deutsche, as auniversal bank, had commercial interests, regulation K allows foreign banks operating inthe USA to keep these interests, provided a minimum of 50% of the bank’s profits andassets come from outside the USA Approval of the acquisition had to come from theEuropean Commission, The New York State Bank Regulator and the Federal Reserve Bank.Approval was forthcoming from the Fed, the last of the regulatory hurdles, in May 1999.The merger took place in June 1999, a good 18 months after the acquisition plan wasannounced

In March 1999, Bankers Trust was in the press again, for all the wrong reasons Itpleaded guilty to a felony in US District Court for misappropriation of client funds, andwas fined $60 million Dating back to 1996 (pre-Newman as chairman), it involved theclient services processing division which misappropriated $19.1 million of client funds fromdividend cheques sent out to shareholders but not cashed Apparently the money was used

to fund parties, offset expenses, or to make it look like the division was earning moreincome than it really was Deutsche Bank was lucky: the US Department of Labor allowedDeutsche Bank to continue to manage pension assets despite an admission of fraud by itsnewly acquired US operation

73Peterson, T (1998), ‘‘Bankers Trust is the Last Thing Deutsche Needs’’, Business Week; 2 November, p 52.

The question was whether the acquisition was going to work To quote The Economist:

‘‘Take a transatlantic combination of a lumbering, accident-prone universal bank with a prickly, free-wheeling investment bank, and only the foolhardy would bet on success.’’74

A $400 million retention or ‘‘handcuff’’ fund was set aside to retain the best of the DBand BT staff Deutsche proved successful in retaining some staff, but lost some key players

Mr Newman resigned because he had been promised a seat on the Deutsche managementboard at the time of the acquisition agreement, only to be refused membership after themerger took place However, many in the bank were content to see him go, though it was

an expensive departure – Newman collected up to $67 million

There were others Deutsche definitely wanted to keep on board In 1998 (before thetakeover announcement), Frank Quattrone left, taking about 100 of the technology group

he had built up with him The chief financial officer at BT, Richard Daniel, went in June

1999, despite being offered a $9m retention bonus Other department heads and deputiesleft around the same time, and the CSFB poached all the staff working in the US healthcare area Several top Deutsche staff also departed the bank In July 1999, a small butprofitable team of index fund managers joined Merrill Lynch 1999 also saw the loss ofsome senior experts in the leveraged finance/junk bond area, and Alex Brown lost a fewstars The defections raised questions about what DB stood to gain from the acquisition:

in the absence of expertise, areas such as high-yield bonds, asset management, custody andhigh-tech IPOs could flounder

Breuer’s key objective was to create a new type of universal bank with strengths in bothwholesale commercial and investment banking, de-emphasising the traditional holdings

of commercial concerns in Germany Deutsche’s $22 billion of German industrial andcommercial holdings were hived off to a separate profit centre, making it possible theywould be sold off at a future date.75

Analysts had thought Deutsche would lose many American clients post-acquisition, butthey were proved wrong 1999 turned into a record year for underwriting high-yield debt,equities and eurobonds, though the bank made few inroads into the M&A business In

2000, Herr Breuer announced that the bank was to merge with the second largest Germanbank, Dresdner Many of DB’s investment bankers in London and New York were againstthe deal because Dresdner was perceived as old-fashioned, and very weak in investmentbanking Dresdner pulled out of the deal after senior investment bankers persuaded Breuerthat if the merger did go through, Dresdner’s investment bank should be shut down

The London office proved instrumental in DB’s success in investment banking Twonames stand out Mr Mitchell joined Deutsche Bank in 1995 from Merrill Lynch, and MrAckermann arrived in 1996 from Credit Suisse Mitchell managed to attract hundreds ofemployees from other top investment banks Though Ackermann avoids publicity, he toohelped build up the London office By this time, the acquisition of Bankers Trust was beingseen in a new light: it had given Deutsche a foothold in the US securities markets just beforeone of the greatest bull runs in stock market history Profits from investment banking rose to

74‘‘Because it was there’’, The Economist, 28 November 1998, p 73.

75 If they were sold off, Deutsche would be the first German universal bank to end the tradition of holding equity shares in commercial outfits.

$3.7 billion in 2000, up from $1.3 billion in 1998 The London office began to have a greatdeal of power because by 2000, 60% of the bank’s profits came from investment banking.Ironically, Herr Breuer, who had always declared a move into investment banking as thekey strategy, saw his position being marginalised by the brash traders of the London office.

In early 2001, Breuer appeared to favour scaling down Deutsche Bank’s emphasis oninvestment banking Substantial job cuts in this area were announced, with 2600 staffmade redundant, mainly in Frankfurt, though London and New York were also affected

A potential source of worry was a comment by the chairman, who admitted there wereweaknesses in their investment banking business that could not be overcome through

an acquisition Herr Breuer revealed a new strategic focus: to increase profits in assetmanagement and private banking – Breuer himself took control of the new division Therewere also indications the bank wanted to increase its presence in retail asset management,having purchased an American on-line brokerage firm in December 2001 However,Breuer’s new division soon lost money due to costly hiring and reduced equity purchases byretail clients

Meanwhile, investment banking continued to make some impressive deals in 2001, andinvestment banking revenues were higher at Deutsche than at Goldman Sachs or MorganStanley Over 80% of these revenues came from outside Germany, indicating the bank waswell diversified in this area

In May 2002, Mr Josef Ackermann was set to take over from Herr Breuer as head ofthe Vorstand, or management board The German management system was beginning tobecome an issue for the bank, especially after it listed on the New York Stock Exchange inlate 2001, which meant adopting US accounting standards Under the German system theVorstand can overrule the head, and there were pressures from senior management, most

of whom are not German nationals, to replace this German style of management with theAmerican system which has a chairman and CEO Mr Ackerman supported the move tocut the size of the Vorstand in half, so it will have just four members The official language

of communication was changed to English in 2002

10.8.7 Deutsche Weathers a Banking Storm in Germany

Mr Ackerman, a Swiss national, succeeded Breuer as head of Deutsche Bank in the summer

of 2002 It is not just his background that will make it likely investment banking willcontinue to be given priority German bankers called 2002 their ‘‘annus horribilis’’ because

of the record number of corporate insolvencies and the decline in their investment portfoliosdue to the sharp drop in the stock market.76 However, the Deutsche Bank weathered thestorm better than other commercial banks in Germany In a year where the pre-tax profitsfor the other three major commercial banks were negative, Table 10.4 illustrates that notonly was Deutsche Bank in the black, its real profits were up on 2001 Deutsche Bank hasremained profitable because it is far less dependent on the German markets than the othercommercial banks at a time when Germany was suffering its worst recession in post-warhistory For example, Commerzbank was in the red in 2002 and 2003, with the size ofnegative pre-tax profits rising over the two years The same was true for HypoVereinsbank

76Wagner, J (2003), ‘‘Getting Back in the Black’’, The Banker, March 25–27, p 26.

and Dresdner Bank By contrast, Deutsche’s international operations in both investmentbanking and funds management ensured the bank remained profitable, though profits wereslightly down in 2003 Deutsche also managed to cut its cost to income ratio from 90% in

2001 to 79% and 81% in 2002 and 2003, respectively HypoVereinsbank Commerzbankhave also kept costs down – their ratios of cost to income dropped from 69% to 64% and77% to 73% Dresdner, by contrast, has seen costs soar from 71% in 2002 to 117% in

2003 – in other words, cost exceeded income

Unlike other European countries, these big commercial banks lack a strong retailpresence – each has about 5% of the deposit market, at most The state owned regional

Table 10.4 Annual Results for Deutsche Bank and Bankers Trust

Capital

($m)

Assets ($m)

Pre-tax profits (%)

Real profits growth (%)

C:I (%) ROA (%) ROE (%) Basel 1

(landesbanken) and local savings banks have about 80% of the retail deposit and loanmarket They also enjoy a state guarantee77 and thus an AAA rating, meaning they canattract deposits and make loans at lower rates The savings banks have remained profitableduring the recession because of their dominance in the retail and corporate markets Forthis and other reasons, they are resisting the Chancellor’s call for them to merge withprivate and cooperative banks, a strategy which has been so successful in France and Italyover the last few years The Federal government has little control over their actions becausethey are owned and controlled by state governments The result is over-banking in theGerman market, which keeps margins thin Another important player in the retail market

is Postbank, a bank operated by the German Post Office It has about 6% of bank depositsand was privatised in June 2004 The Post Office, which was privatised in 2000, maintainsmanagement control, because 49% of Postbank was sold off Deutsche Bank acted as leadmanager of the IPO and, reportedly, turned down an approach by the government to blockbuy the shares because the bank considered the shares to be overpriced, and probably balked

at the idea that they would not have management control.78Had DB been interested, therewould have been a tricky conflict of interest to resolve Should one of the commercial bankseventually take over Postbank, it would give it about an 11% share of deposits, making it apotentially serious competitor, especially after protection of the savings and regional banks

is withdrawn

Deutsche is now considered an investment bank, and it continues to cut back on itsrelatively small amount of corporate lending in Germany, though it has kept its domesticretail branch network In 1999, DB integrated its on-line banking service with its retailbanking department The on-line system had attracted half a million customers (though it

is unclear how many were already DB clients) and it was hoped the combination will allowcustomers to pick and choose on-line and off-line services according to their tastes DB haseven offered to share its on-line facility with other banks.79

In October 2003, Deutsche Bank received The Banker’s country and Western Europe

awards, and was recognised as the top investment bank for interest rate swaps The awardsare based on 2002 results, so the country award comes as no surprise It was named the

‘‘Bank for Western Europe’’ because of the big reduction in its operating costs (see the cost

to income ratios in Table 10.4), and took the number one spot for fund management inEurope, placing in the top five globally It was also the leading equities house in Europe

It attracted 500 000 new business and private clients in Europe.80 Thus, by 2003, it hadbecome the leading European investment bank While it continues to be outclassed by

77 An agreement with the EU means the guarantee must be phased out by July 2005.

78 This proved correct when in the end, the shares were sold at about 3 euros less ( ¤28.50) than the Chief Executive of Deutsche Post had been hoping to get The shares are split between German retail and institutional investors; about 48% of the shares sold went to foreign investors.

79 Its German rivals have adopted other strategies to return to profit Dresdner is focusing on bancassurance (it purchased the failing insurance giant Allianz) and niche investment banking through its London outlet, Dresdner, Kleinwort Wasserstein HVB is looking to Eastern Europe (through its ownership of Bank Austria and offering retail banking services in Northern Germany) Commerzbank looks the most vulnerable, hoping to gain from

Deutsche’s withdrawal from corporate lending See Wagner, J (2003), ‘‘Getting Back in the Black’’, The Banker,

March 25–27, p 27.

80The Banker Awards 2003, September.

many of the US banks on the global front, it seems that Deutsche Bank has achievedwhat Bankers Trust set out to do at the beginning of the case study: to move away fromtraditional core banking and into investment banking The only major difference is that

it has opted to keep its retail network in Germany After BT sold its retail network, itbecame a wholesale commercial bank, with expertise in trading and risk managementadvice However, that was not enough to keep its independence, and the name is allbut forgotten in the new century As Deutsche Bank strives to become a top tier globalbank, what does Mr Ackerman and the Vorstand have to do to ensure its continuedindependence?

Questions

1 In the USA, what is the difference between a money centre commercial bank and aninvestment bank?

2 Why has the term ‘‘money centre’’ largely disappeared in the USA?

3 In the first paragraph of the case, it was noted that in 1987 ‘‘the stock yielded a 41%return on equity before extraordinary allowance for credit losses .’’.

(a) Is ROE a good indication of the success of the new strategy at Bankers Trust?

(b) Identify other ways of measuring the success (or otherwise) of this bank

4 The case revealed, either directly or indirectly, the multifaceted nature of BT’s strategy.Answer the following questions:

(a) Why did BT sell its retail banking network? Given that retail banking is usuallyone of the most profitable areas of banking, was it the right decision?

(b) Why were ‘‘section 20’’ subsidiaries seen as a means of bypassing the Glass SteagallAct? Why was it important in BT’s acquisition of Alex Brown?

(c) Explain the meaning and consequences of a global product focus at the expense of

a regional client focus

(d) What effect would the absence of a distribution and sales network have on

BT operations?

(e) Explain why BT’s loan securitisation programme would stabilise balance sheetgrowth, increase liquidity and earn a higher return on equity

(f) What is RAROC? Identify the key problem associated with RAROC

5 To fulfil the objectives of its new strategy, BT had to change its management style andemployee compensation Explain the meaning of the following terms, and discuss howthey might encourage BT staff to achieve BT’s strategic goals:

(a) A horizontal management structure and how it differs from management style atcommercial banks

(b) ‘‘Excellence through common purpose’’

(c) Incentive compensation and the bonus system

6 What are the main lessons to be learned from the 1994 swaps debacle?

7 What were the main contributory factors to BT’s acquisition by Deutsche Bank?

8 What are the advantages and disadvantages of absorbing a well-known bank nameafter a takeover? Why did Deutsche Bank erase the Bankers Trust label withinweeks of takeover but keep the Alex Brown name, and for a decade, Morgan Gren-fell’s name?

9 (a) What actions did Mr Newman take to improve BT’s bottom line and its status as

11 Deutsche Bank is now a leading European investment bank but it is best described as a

universal investment bank Why? Is this a good strategic position for a bank wanting to

be a leading global player?

Abassi, B and R.J Taffler (1982), ‘‘Country Risk: A Model of Economic Performance Related toDebt Servicing Capacity’’, The City University Business School, Working Papers Series No 36.Acharya, V (2002), ‘‘India: Crisis Reform and Growth In the Nineties’’, Stanford Center for Research

on Economic Development and Policy Reform, Working Paper No 139

Acharya, V., I Hasan and A Saunders (2002), ‘‘Should Banks be Diversified? Evidence from vidual Bank Loan Portfolios’’, BIS Working Papers No 118, September

Indi-Adams, J.R (1991), ‘‘The Big Fix: Inside the S&L Scandal; How an Unholy Alliance of Politics and

Money Destroyed America’s Banking System’’, Journal of Finance, Mar, 457–459.

Aharony, J., A Saunders and I Swary (1985), ‘‘The Effects of the International Banking Act on

Domestic Bank Profitability and Risk’’, Journal of Money, Credit and Banking, 17(4), 493–511.

Ahluwalia, M (2002), ‘‘Economic Reforms in India Since 1991: Has Gradualism Worked?’’, Journal

of Economic Perspectives, 16(3), 67–88.

Aigner, D., C Lovell and P Schmidt (1977), ‘‘Foundation and Estimation of Stochastic Frontier

Models’’, Journal of Econometrics, 6, 21–37.

Akerlof, G (1970), ‘‘The Market for ‘Lemons’ ’’, Quarterly Journal of Economics, 84(3), 488–500.

Akerlof, G and P Romer (1993), ‘‘Looting: The Economic Underworld of Bankruptcy for Profit’’,

Brookings Papers on Economic Activity, 2, 1–73.

Akhavein, J., A Berger and D Humphrey (1997), ‘‘The Effects of Megamergers on Efficiency and

Prices: Evidence from a Bank Profit Function’’, Review of Industrial Organisation, 12, 95–139.

Alchian, A and H Demsetz (1972), ‘‘Production, Information Costs and Economic Organisation’’,

American Economic Review, 62, 777–795.

Alford, A., P Healy and N.K Hwa (1998), ‘‘The Performance of International Joint Ventures: A

Study of the Merchant Banking Industry in Singapore’’, Journal of Corporate Finance, 4, 31–52 Aliber, R.Z (1984), ‘‘International Banking: A Survey’’, Journal of Money, Credit and Banking, 16(4),

661–695

Allen, F and D Gale (2000), ‘‘Bubbles and Crises’’, The Economic Journal 110(460), 236–255 Allen, F and G Gorton (1993), ‘‘Churning Bubbles’’, Review of Economic Studies, 60, 813–836.

Allen, L and A Rai (1996), ‘‘Operational Efficiency in Banking: An International Comparison’’,

Journal of Banking and Finance, 20, 655–672.

Altman, E.I (1968), ‘‘Financial Ratios, Discriminant Analysis, and the Prediction of Corporate

Bankruptcy’’, Journal of Monetary Finance, 23(4), 589–609.

Altman, E.I (1977), ‘‘Predicting Performance in the Savings and Loan Association Industry’’, Journal

of Economics, Oct, 443–466.

Altman, E.I (1983), Corporate Financial Distress: A Complete Guide to Predicting, Avoiding and Dealing

with Bankruptcy, New York: John Wiley & Sons.

Altman, E.I (1985), ‘‘Managing the Commercial Lending Process’’, in R.C Aspinwall and

R.A Eisenbeis (eds), Handbook in Banking Strategy, New York: John Wiley & Sons, pp 473–510.

Altunbas, Y and P Molyneux (1994), ‘‘The Concentration Performance Relationship in EuropeanBanking – A Note’’, Institute of European Finance Research Papers in Banking and Finance, RP94/12, pp 1–12

Altunbas, Y and P Molyneux (1996), ‘‘Cost Economies in EU Banking Systems’’, Journal of Business

and Economics, 48, 217–230.

Altunbas, Y., M Liu, P Molyneux and R Seth (2000), ‘‘Efficiency and Risk in Japanese Banking’’,

Journal of Banking and Finance, 24, 1605–1628.

Altunbas, Y., L Evans and P Molyneux (2001a), ‘‘Ownership and Efficiency in Banking’’, Journal of

Money, Credit and Banking, 33(4), 926–954.

Altunbas, Y., E Gardener, P Molyneux and B Moore (2001b), ‘‘Efficiency in European Banking’’,

European Economic Review, 45, 1931–1955.

Aluwalia, M.S (2002), ‘‘Economic Reforms in China Since 1991: Has Gradualism Worked?’’, Journal

of Economic Perspectives, 16(3), 67–88.

Amato, J and C Furfine (2003), ‘‘Are Credit Ratings Procyclical?’’, BIS Working Papers No 129,February

Anderson, R and B Rivard (1998), ‘‘The Competition Policy Treatment of Shared EFT Networks’’,

in Federal Reserve Bank of Chicago (ed.), Proceedings of the Bank Structure and Competition

Conference, Chicago, pp 174–198.

Andersson, M and S Viotti (1999), ‘‘Managing and Preventing Financial Crises – Lessons from the

Swedish Experience’’, Sveriges Riksbank Quarterly Review, 1/1999.

Andreades, A (1966), A History of the Bank of England, 1640–1903, 4th edn, London: Frank, Cass

and Company

Andrews, D (1985), Real Banking Profitability, London: IBCA.

Angelini, P and N Cetorelli (2003), ‘‘The Effects of Regulatory Reform on Competition in the

Banking Industry’’, Journal of Money, Credit and Banking, 35(5), 664–684.

l’Anson, K and A Fight (2002), Bank and Country Risk Analysis, London: Euromoney.

APACS (Association of Payments and Clearing Services) (2003), UK Payment Markets Trends and

Forecasts, available on line from www.apac.org.uk

Archer, S and T Ahmed (2003), ‘‘Emerging Standards for Islamic Financial Institutions: A Case forAccounting and Auditing Organization for Islamic Financial Institutions’’, Mimeo, World Bank

Ardnt, H.W (1988), ‘‘Comparative Advantage in Trade in Financial Services’’, Banca Nationale Del

Lavoro, 164(Mar), 61–78.

Argy, V (1987), ‘‘International Financial Liberalisation: The Australian and Japanese Experiences

Compared’’, Bank of Japan Journal of Monetary and Economic Studies, 5(1), 105–167.

Arshadi, N and E.C Lawrence (1987), ‘‘An Empirical Investigation of New Bank Performance’’,

Journal of Banking and Finance, 11, 33–48.

Avery, R.B and A.N Berger (1991), ‘‘Risk-Based Capital and Deposit Insurance Reform’’, Journal of

Banking and Finance, 15(4/5), 847–874.

Avery, R.B and G.A Hanweck (1984), ‘‘A Dynamic Analysis of Bank Failures’’, in Bank Structure

and Competition Conference Proceedings, Chicago: Federal Reserve Bank of Chicago.

Bae, K.-H., J.-K Kang and C.-W Lim (2002), ‘‘The Value of Durable Bank Relationships’’, Journal

of Financial Econometrics, 64, 181–214.

Bagehot, W (1873), Lombard Street: A Description of the Money Market, reissued in 1962 by Richard

D Irwin, Homewood, IL and in 1999 by John Wiley & Sons, Chichester, UK [The quotes inChapter 7 come from the 1962 reprint.]

Bainbridge, A., D Meere and P Veal (2001), ‘‘Web Only and Traditional Banks Need to Sharpen

Migration Skills’’, The American Banker, 17 August, p 8.

Balen, M (2002), A Very English Deceit, London: Fourth Estate/Harper Collins.

Balkan, E.M (1992), ‘‘Political Instability, Country Risk, and the Probability of Default’’, Applied

Economics, 24, 999–1008.

Baltazar, R and M Santos (2003), ‘‘The Benefits of Banking Mega-mergers: Event Study Evidence

from the 1988 Failed Mega-Merger Attempts in Canada’’, Canadian Journal of Administrative

Sciences, 20(3), 196–208.

Baltensperger, E (1980), ‘‘Alternative Approaches to the Theory of the Banking Firm’’, Journal of

Monetary Economics, 6, 1–37.

Bank of England (1978), ‘‘The Secondary Banking Crisis and the Bank of England Support

Operations’’, Bank of England Quarterly Bulletin, 18(2), 230–239.

Bank of England (1980), ‘‘Measurement of Capital’’, Bank of England Quarterly Bulletin, 20(3),

324–330

Bank of England (1983), ‘‘The International Banking Scene: A Supervisory Perspective’’, Bank of

England Quarterly Bulletin, 23(2), 61–65.

Bank of England (1984a), ‘‘International Debt – Thinking About the Longer Term’’, Bank of England

Quarterly Bulletin, 24, 51–53.

Bank of England (1984b), ‘‘The Business of Financial Supervision’’, Bank of England Quarterly Bulletin,

24, 46–50.

Bank of England (1985a), ‘‘Change in the Stock Exchange and Regulation of the City’’, Bank of

England Quarterly Bulletin, 25(4), 544–550.

Bank of England (1985b), ‘‘Managing Change in International Banking’’, Bank of England Quarterly

Bulletin, 25(4), 551–558.

Bank of England (1986), ‘‘Developments in International Banking and Capital Markets’’, Bank of

England Quarterly Bulletin, 27(2), 234–236.

Bank of England (1987a), ‘‘Japanese Banks in London’’, Bank of England Quarterly Bulletin, 27(3),

Bank of England (1994b), ‘‘The Development of a UK Real-Time Gross Settlement System’’, Bank of

England Quarterly Bulletin, 34(2), 163–171.

The Banker (1987), ‘‘Top 100 By Size: Importance of Capital’’, July, 153–172.

The Banker (1991–2004), ‘‘Top 1000 Banks’’, July issues of each year, 102–207.

The Banker (2004), ‘‘Reality Check on Basel II’’, July, 154–165.

Bannock, G (2002), ‘‘Financial Services Regulation: Controlling the Costs’’, The Financial Regulator,

6(4), 31–35.

Barker, D and D Holdsworth (1994), ‘‘The Causes of Bank Failure in the 1980s’’, Federal ReserveBank of New York, Research Paper No 9325.

Barnard, G and P.M Thomsen (2002), ‘‘Financial Sector Reform in Russia: Recent Experience,Priorities, and Impact on Economic Growth and Stability’’, available from www.imf.org/moscow

Basel Committee on Banking Supervision (1988), International Convergence of Capital Measurement

and Capital Standards, Basel.

Basel Committee on Banking Supervision (1993), The Prudential Supervision of Netting, Market Risks

and Interest Rate Risks (Consultative Proposal by the Basel Committee on Banking Supervision),

Basel

Basel Committee on Banking Supervision (1996), Amendment to the Capital Accord to Incorporate

Market Risks, Basel.

Basel Committee on Banking Supervision (2001a), Overview of New Capital Accord, Basel Can be

downloaded from www.bis.org

Basel Committee on Banking Supervision (2001b), Results of Second Quantitative Impact Study, Basel.

Can be downloaded from www.bis.org

Basel Committee on Banking Supervision (2003a), The 2002 Loss Data Collection Exercise for

Operational Risk: Summary of the Data Collected, Basel Can be downloaded from www.bis.org

Basel Committee on Banking Supervision (2003b), Overview of the New Basel Capital Accord, Basel.

Can be downloaded from www.bis.org

Basel Committee on Banking Supervision (2004), International Convergence of Capital Measurement

and Capital Standards: A Revised Framework, Basel Can be downloaded from www.bis.org

Batchelor, R.A (1986), ‘‘The Avoidance of Catastrophe: Two Nineteenth-Century Banking Crises’’,

in F Capie and G.E Wood (eds), Financial Crises and the World Banking System, London: Macmillan.

Batunaggar, S (2002), ‘‘Indonesia’s Banking Crisis Resolution: The Way Forward’’, Mimeo, BankingCrisis Resolution Conference, Centre for Central Banking Studies, December

Bauer, P., A Berger, G Ferrier and D.B Humphrey (1998), ‘‘Consistency Conditions for Regulatory

Analysis of Financial Institutions: A Comparison of Frontier Efficiency Models’’, Journal of Economics

and Business, 50, 85–114.

Beaver, W.H (1966), ‘‘Financial Ratios as Predictors of Failure’’, Empirical Research in Accounting:

Selected Studies, Supplement to Journal of Accounting Research, 71–111.

Beder, T (1995), ‘‘VAR: Seductive But Dangerous’’, Financial Analysts Journal, 51, 12–24.

Beim, D and C Calomiris (2001), Emerging Financial Markets, New York: McGraw Hill.

Beitel, P., D Schiereck and M Wahrenburg (2003), ‘‘Explaining the M&A – Success in European

Bank Mergers and Acquisitions’’, European Financial Management, 10(1), 109–140.

Bennett, R (1993), ‘‘The Six Men Who Rule World Derivatives’’, Euromoney, Aug, 45–49 Benston, G.J (1965), ‘‘Branch Banking and Economies of Scale’’, Journal of Finance, 20, 312–331.

Benston, G (1973), ‘‘Bank Examination’’, Bulletin of the Institute of Finance, Graduate School of Business

Administration, New York University, May, 89–90.

Benston, G.J (1985), An Analysis of the Causes of Savings and Loans Association Failures, Monograph

Series in Finance and Economics, New York: New York University

Benston, G.J (1989), The Separation of Commercial and Investment Banking: The Glass Steagall Act

Reconsidered, New York: St Martins Press.

Benston, G.J (1990a), The Separation of Commercial and Investment Banking, The Glass–Steagall Act

Revisited and Reconsidered, New York: Oxford University Press.

Benston, G.J (1990b), ‘‘US Banking in an Increasingly Integrated and Competitive World Economy’’,

Journal of Financial Services Research, 4, 311–339.

Benston, G.J (1992), ‘‘International Regulatory Coordination of Banking’’, in J Fingleton (ed.), The

Internationalisation of Capital Markets and the Regulatory Response, London: Graham and Trotman,

pp 197–209

Benston, G and G Kaufman (1986), ‘‘Risks and Failures in Banking: Overview, History, and

Evaluation’’, Federal Reserve Bank of Chicago Staff Memoranda, 1–27.

Benston, G., R Eisenbeis, P Horvitz, E Kane and G Kaufman (1986), Sage and Sound Banking,

Cambridge, MA: MIT Press

Benston, G., W Hunter and L Wall (1995), ‘‘Motivations for Bank Mergers and Acquisitions:

Enhancing the Deposit Insurance Put Option versus Earnings Diversification’’, Journal of Money,

Credit and Banking, 27(3), 777–788.

Bentley, R.J (1987), ‘‘Debt Conversion in Latin America’’, Columbia Journal of World Business, Fall,

37–49

Berger, A.N (1993), ‘‘‘Distribution Free’ Estimates of Efficiency in the US Banking Industry and

Tests of Standard Distributional Assumptions’’, Journal of Productivity Analysis, 4, 261–292.

Berger, A.N (1995), ‘‘The Profit Structure Relationship in Banking – Tests of Market Power and

Efficient Structure Hypothesis’’, Journal of Money, Credit and Banking, 27(2), 404–431.

Berger, A (1998), ‘‘The Efficiency Effects of Bank Mergers and Acquisition: A Preliminary Look at

the 1990s Data’’, in T Amihud and G Miller (eds), Bank Mergers and Acquisitions, New York:

Kluwer Academic Publishers

Berger, A.N (2003), ‘‘The Economic Effects of Technological Progress: Evidence from the Banking

Industry’’, Journal of Money, Credit and Banking, 35, 141–176.

Berger, A.N and T.H Hannan (1989), ‘‘The Price–Concentration Relationship in Banking’’, Review

of Economics and Statistics, 74(May), 291–299; also, their ‘‘Reply to a Comment’’ by W.E Jackson

(1992), Review of Economics and Statistics (May), 373–376.

Berger, A and T Hannan (1998), ‘‘The Efficiency Cost of Market Power in the Banking Industry: A

Test of the ‘Quiet Life’ and Related Hypotheses’’, Review of Economics and Statistics, 80, 454–465.

Berger, A and D Humphrey (1991a), ‘‘The Dominance of Inefficiencies Over Scale and Product Mix

Economies in Banking’’, Journal of Monetary Economics, 28, 117–148.

Berger, A and D Humphrey (1991b), ‘‘Megamergers in Banking and the Use of Cost Efficiency and

an Antitrust Defense’’, The Antitrust Bulletin, 37(3), 541–600.

Berger, A and D Humphrey (1997), ‘‘Efficiency of Financial Institutions: International Survey and

Directions for Further Research’’, European Journal of Operation Research, 98, 175–212.

Berger, A and L Mester (1997), ‘‘Inside the Black Box: What Explains Differences in the Efficiencies

of Financial Institutions’’, Journal of Banking and Finance, 21, 895–947.

Berger, A and L Mester (2003), ‘‘Explaining the Dramatic Changes in the Performance of US Banks:

Technological Change, Deregulation, and Dynamic Changes in Competition’’, Journal of Financial

Intermediation, 12(1), 57–96.

Berger, A., W Hunter and S Timme (1993), ‘‘The Efficiency of Financial Institutions: A Review and

Preview of Research Past, Present, and Future’’, Journal of Banking and Finance, 17, 221–249.

Berger, A., D Humphrey and L Pulley (1996), ‘‘Do Consumers Pay for One-Stop Banking? Evidence

from an Alternative Revenue Function’’, Journal of Banking and Finance, 20, 1601–1621.

Berger, A.N., R.S Demsetz and P.E Strahan (1999), ‘‘The Consolidation of the Financial Services

Industry: Causes, Consequences, and Lessons for the Future’’, Journal of Banking and Finance, 23,

135–194

Berlin, M., A Saunders and G.F Udell (eds) (1991), ‘‘Deposit Insurance Reform’’, Special Issue,

Journal of Banking and Finance, 15(4/5), 733–1040.

Bernanke, B and M Gertler (1990), ‘‘Financial Fragility and Economic Performance’’, Quarterly

Journal of Economics, 105(1), 87–114.

Bernanke, B and M Gertler (1995), ‘‘Inside the Black Box: The Credit Channel of Monetary Policy

Transmission’’, Journal of Economic Perspectives, 9(4), 27–49.

Bernard, H and J Bisignano (2000), ‘‘Information, Liquidity, and Risk in the Interbank Market:Implicit Guarantees and Private Credit Market Failure’’, Bank for International SettlementsWorking Papers No 86, March

Bhattacharya, S and U Patel (2002), ‘‘Financial Intermediation In India: A Case of AggravatedMoral Hazard?’’, Stanford Center for Research on Economic Development and Policy Reform,Working Paper No 145

Bhattacharya, S and U Patel (2003), ‘‘Reform Strategies for the Indian Financial Sector’’, StanfordCenter for Research on Economic Development and Policy Reform, Working Paper No 208,February

Bhattacharya, S and P Pfleiderer (1985), ‘‘Delegated Portfolio Management’’, Journal of Economic

Theory, 36(1), 1–25.

Bikker, J and K Haaf (2002), ‘‘Competition, Concentration, and their Relationship: An Empirical

Analysis of the Banking Industry’’, Journal of Banking and Finance, 26, 2191–2214.

BIS (1990), The Lamfalussy Report, Basel: Bank for International Settlements.

BIS (1999), ‘‘Strengthening the Banking System in China: Issues and Experience’’, BIS Policy Papers

No 7, October Can be downloaded from www.bis.org

BIS (2000a), Quarterly Review, Basel: Bank for International Settlements.

BIS (2000b), ‘‘Sound Practices for Managing Liquidity in Banking Organisations’’, February, Basel:Basel Committee on Banking Supervision Can be downloaded from www.bis.org

BIS (2000c), Statistics on Payment Systems in the Group of 10 Countries, Basel: Committee on Payments

and Settlements Systems Can be downloaded from www.bis.org

BIS (2001), ‘‘The Banking Industry in the Emerging Market Economies: Competition, Consolidation,and Systemic Stability’’, Bank for International Settlements Papers No 4

BIS (2003a), Overview of the New Basel Capital Accord, April, Basel: Basel Committee on Banking

BIS (2003d), 73rd Annual Report, Basel: Bank for International Settlements.

BIS (2003e), Credit Risk Transfer, Basel: Bank for International Settlements.

BIS (2003f), Payment Systems in the Euro Area, Basel: Bank for International Settlements.

BIS (2004a), 74th Annual Report, Basel: Bank for International Settlements.

BIS (2004b), ‘‘Bank Failures in Mature Economies’’, Basel Committee of Banking SupervisionWorking Paper No 13, April

Bisignano, J (1992), ‘‘Banking in the European Community: Structure, Competition and Public

Policy’’, in G.G Kaufman (ed.), Banking Structures in Major Countries, Dordrecht: Kluwer Academic

Publishers

Black, F (1975), ‘‘Bank Funds Management in an Efficient Market’’, Journal of Financial Economics,

2(Sept), 323–339.

Blair, M (1998), Blackstone’s Guide to the Bank of England Act, London: Blackstone Press.

Blake, D and M Pradhan (1991), ‘‘Debt Equity Swaps as Bond Conversions: Implications for Pricing’’,

Journal of Banking and Finance, 15(1), 29–42.

Bliss, R.T and R.J Rosen (2001), ‘‘CEO Compensation and Bank Mergers’’, Journal of Financial

Economics, 61, 107–138.

Boddy, M (1980), The Building Societies, London: Macmillan.

Boleat, M (1982), The Building Society Industry, London: Allen & Unwin.

Bollard, A (2003), ‘‘Bollard Refocuses New Zealand Banking Supervision’’, The Financial Regulator,

8(2), 17–18.

Bond Markets Online (2002), ‘‘European Securitisation Issuances Hits¤92.4 billion through

Septem-ber’’, Newsletter Online, available from www.bondmarkets.com

Bonin, J and Y Huang (2001), ‘‘Dealing with the Bad Loans of the Chinese Banks’’, Journal of Asian

Economics, 12, 197–214.

Bordo, M., B Eichengreen, D Klingebiel and M Soledad Martinez-Peria (2001), ‘‘Is the Crisis

Problem Growing More Severe?’’, Economic Policy, 32(Apr), 51–82.

Boreo, C (2003), ‘‘Towards a Macroprudential Framework for Financial Supervision and Regulation’’,BIS Working Papers No 128, February

Bouchet, M and H Clark (2004), Country Risk Assessment, Chichester, UK: John Wiley & Sons.

Bourgheas, S (1999), ‘‘Contagious Bank Runs’’, International Review of Economics and Finance, 8,

131–146

Bovenzi, J.F., J.A Marino and F.E McFadden (1983), ‘‘Commercial Bank Failure Prediction Models’’,

Federal Reserve Bank of Atlanta Economic Review, Nov, 14–26.

Boyd, G.H and M Gertler (1994a), ‘‘Are Banks Dead? Or are the Reports Greatly Exaggerated?’’,

in Federal Reserve Bank of Chicago Conference Proceedings, ‘The Declining Role of Banking’, 30th

Annual Conference on Bank Structure and Competition, Chicago, May, pp 85–117

Boyd, G.H and M Gertler (1994b), ‘‘The Role of Large Banks in US Banking Crisis’’, Federal Reserve

Bank of Minneapolis Quarterly Review, 18(1), 2–21.

Boyd, J.H and S.L Graham (1991), ‘‘Investigating the Banking Consolidation Trend’’, Federal Reserve

Bank of Minneapolis Quarterly Review, 15(2), 3–15.

Boyd, T (1998), ‘‘Nikkei gets a Boost from Bank Rescue’’, Australian Financial Review, 1(9), 36.

Brainard, L.J (1991), ‘‘Reform in Eastern Europe: Creating a Capital Market’’, in R O’Brien and

S Hewin (eds), Finance and the International Economy: 4 The Amex Bank Review Essays, Oxford:

Oxford University Press, pp 8–22

Brewer, T.L and P Rivoli (1990), ‘‘Politics and Perceived Country Creditworthiness in International

Banking’’, Journal of Money, Credit and Banking, 22(3), 357–369.

Briault, C (2000), Draft Paper, ‘‘FSA Revisited and Some Issues for European Securities MarketsRegulation’’, London: Financial Services Authority, December

British Bankers Association (2002), Annual Abstract of Banking Statistics, London: British Bankers

Association

Brozen, Y (1982), Concentration, Mergers, and Public Policy, New York: Macmillan.

Brunner, K and A.H Meltzer (1990), ‘‘Money Supply’’, in B.M Friedman and F.H Hahn, Handbook

of Monetary Economics, Volume 1, New York: Elsevier, pp 557–398.

Buch, C (2000), ‘‘Information or Regulation: What is Driving the International Activities ofCommercial Banks’’, Kiel Working Paper 1101, Kiel Institute of World Economics

Buckle, M and J Thompson (1998), The UK Financial System: Theory & Practice, Manchester:

Manchester University Press

Building Societies Association (2000, 2001), Annual Report, London: Building Societies Association.

Burton, F.N and H Inoue (1987), ‘‘A Country Risk Appraisal Model of Foreign Asset Expropriation

in Developing Countries’’, Applied Economics, 19, 1009–1048.

Buser, S., A Chen and E Kane (1981), ‘‘Federal Deposit Insurance, Regulatory Policy, and Optimal

Bank Capital’’, Journal of Finance, 36, 51–60.

Business Week (1974), ‘‘Franklin Faces a Long Summer’’, May 25, 53–54.

Business Week (1974), ‘‘Money and Credit: What Went Wrong at Herstatt’’, August 3, 13–14.

Butt-Philips, A (1988), ‘‘Implementing the European Internal Market: Problems and Prospects’’,Royal Institute of International Affairs, Discussion Paper 5, London.

Cagan, P (1965), Determinants and Effects of Changes in the Stock of Money 1875–1960, Washington:

National Bureau of Economic Research

Calomiris, C (1998), ‘‘Blueprints for a New Global Financial Architecture’’, Mimeo (unpublished),

New York: Columbia Business School Cited in Fischer (1999), op cit.

Calomiris, C and D Beim (2001), Emerging Financial Markets, London: McGraw Hill/Irwin.

Calomiris, C and A Meltzer (1999), ‘‘Fixing the IMF’’, The National Interest, 56(Summer), 88–96.

Calomiris, C and A Powell (2000), ‘‘Can Emerging Market Bank Regulators Establish Credible cipline? The Case of Argentina, 1992–99’’, National Bureau of Economic Research, Washington,Working Paper No 7715

Dis-Calverley, J (1990), Country Risk Analysis, London: Butterworths.

Camerer, C (1989), ‘‘Bubbles and Fads in Asset Prices: A Review of Theory and Evidence’’, Journal

of Economic Surveys, 3, 3–41.

Cameron, R (1967), Banking in the Early Stages of Industrialization, New York: Oxford University

Press

Cameron, R (ed.) (1972), Banking and Economic Development: Some Lessons of History, New York:

Oxford University Press

Campbell, T and W Kracaw (1980), ‘‘Information Production, Market Signaling, and the Theory of

Financial Intermediation’’, Journal of Finance, 35, 863–882.

Capie, F (2002), ‘‘The Emergence of the Bank of England as a Mature Central Bank’’, in P O’Brien

and D Winch (eds), The Political Economy of British Historical Experience, 1688–1914, Oxford:

Oxford University Press (for the British Academy), pp 295–318

Caprio, G and D Klingebiel (2003), ‘‘Episodes of Systemic and Bordeline Financial Crises’’, Mimeo,World Bank

Carbo, S., E Gardener and J Williams (2000), ‘‘Efficiency and Technical Change in Europe’s Savings

Banks Industry’’, Revue de la Banque, 6, 381–394.

de Carmoy, H (1990), Global Banking Strategy, Oxford: Basil Blackwell.

Carrow, K.A and R.A Heron (1998), ‘‘The Interstate Banking and Branching Efficiency Act of

1994: A Wealth Event for the Acquisition Targets’’, Journal of Banking and Finance, 22, 175–196 Carver, N (2003), ‘‘Credit Derivatives’’, Financial Regulator, 8(1), 17–19.

Casserley, D and G Gibb (1999), Banking in Asia: the End of Entitlement, Chichester, UK: John Wiley

& Sons

Caves, R (1974), ‘‘Causes of Direct Investment: Foreign Firms Shares in Canadian and UK

Manu-facturing Industries’’, Review of Economics and Statistics, 56, 279–293.

Caves, R (1982), The Multinational Enterprise and Economic Analysis, London: Cambridge University

Press

Cebula, R (1999), ‘‘New Evidence on the Determinants of Bank Failures in the US’’, Applied Economic

Letters, 6, 45–47.

Cecchini, P (1988), The European Challenge: 1992, London: Wildwood House.

Centre for Economic Business Research (2003), The City’s Importance to the UK Economy, London:

Corporation of London, January Also available at www.cityoflondon.gov.uk

Centre for the Study of Financial Innovation (2001), Bumps on the Road to Basel: An Anthology of

Views on Basel 2, London: Centre for the Study of Financial Innovation

Centre for the Study of Financial Innovation (2001), Sizing up the City – London’s Ranking as a

Financial Centre, London: Corporation of London, June Also available at www.cityoflondon.gov.uk

Chakravarty, S.P., E.P.M Gardener and J Teppett (1995), ‘‘Gains from a Single European Market in

Financial Services’’, Current Politics and Economics of Europe, 5.1, 1–14.

Chamberlain, G (1980), ‘‘Analysis of Covariance with Qualitative Data’’, Review of Economic Studies,

Chew, D (ed.) (1991), New Developments in Commercial Banking, Oxford: Basil Blackwell.

Chionsini, G., A Foglia and P Reedtz (2003), ‘‘Bank Mergers, Diversification and Risk’’, Mimeo,Banca d’Italia, March

Choi, S.-R., D Park and A.E Tschoegl (1996), ‘‘Banks and the World’s Major Banking Centres,

1970–1980’’, Weltwirtschaftliches Archiv, 122, 48–64.

Chong, B.S (1991), ‘‘The Effects of Interstate Banking on Commercial Banks’ Risk and Profitability’’,

Review of Economics and Statistics, 73(1), 78–84.

Citigroup Smith Barney (2003), ‘‘Basel II-Strategic Implications’’, Citigroup Smith Barney, October.Clark, J (1988), ‘‘Economies of Scale and Scope at Depository Financial Institutions: A Review of

the Literature’’, Federal Reserve Bank of Kansas City Economic Review, Sept/Oct, 16–33.

Clarke, G., R Cull, M Peria and S Sanchez (2001), ‘‘Foreign Bank Entry: Experience, Implicationsfor Developing Countries, and Agenda for Further Research’’, Background Paper for the WorldBank, World Development Report 2002: Institutions for Markets, October

Coase, R.H (1937), ‘‘The Nature of the Firm’’, Economica, 4, 386–405.

Colwell, R.J and E.P Davis (1992), ‘‘Output, Productivity, and Externalities – the Case of Banking’’,Bank of England Discussion Paper No 3

Compton, E (1981), Inside Commercial Banking, London: John Wiley & Sons.

Cooke, W.P (1983), ‘‘The International Banking Scene: A Supervisory Perspective’’, Bank of England

Quarterly Bulletin, 23(1), 61–65.

Cooke, W.P (1985), ‘‘Some Current Concerns of an International Banking Supervisor’’, Bank of

England Quarterly Bulletin, 25(2), 219–223.

Cooper, J (1984), The Management and Regulation of Banks, London: Macmillan.

Cornett, M and H Tehranian (1992), ‘‘Changes in Corporate Performance Associated with Bank

Acquisitions’’, Journal of Financial Economics, 31, 211–234.

Corrigan, G (1990), ‘‘The Role of Central Banks and the Financial System in Emerging Market

Economies’’, Federal Reserve Bank of New York Review, 15, 2–17.

Corvoisier, S and R Gropp (2002), ‘‘Bank Concentration and Retail Interest Rates’’, Journal of

Banking and Finance, 26, 2155–2189.

Coulbeck, N (1984), The Multinational Banking Industry, London: Croom Helm.

Courtis, N (2002), ‘‘Endgame in Basel’’, Financial Regulator, 6(4), 26–30.

Cowling, K and P.R Thomlinson (2000), ‘‘The Japanese Crisis – A Case of Strategic Failure’’, The

Economic Journal, 110(464), F358–F382.

Craig, V.V (1999), ‘‘Financial Deregulation in Japan’’, FDIC Banking Review, 11(3).

CreditMetrics (1997), Technical Document, New York: JP Morgan (for updates see the website:

http://riskmetrics.com/)

Crouhy, M (2004), The Essentials of Risk Management, New York: McGraw Hill.

Crouhy, M and D Gali (1986), ‘‘An Economic Assessment of Capital Adequacy Requirements in

the Banking Industry’’, Journal of Banking and Finance, 10, 231–241.

Crouhy, M., D Gali and R Mark (2000), Risk Management, New York: McGraw Hill.

Cruickshank (2000), Competition in UK Banking, Norwich: The Stationary Office.

Cumming, C (1987), ‘‘The Economics of Securitization’’, Federal Reserve Bank of New York Quarterly

Review, 11(3), 11–23.

Cumming, C and L.M Sweet (1988), ‘‘Financial Structure of G10 Countries: How Does the United

States Compare?’’, Federal Reserve Bank of New York Quarterly Review, 12(4), 14–25.

Curry, E.A., J.G Fung and I.A Harper (2003), ‘‘Multinational Banking: Historical, Empirical, and

Case Perspectives’’, in Mullineux and Murinde, op cit, pp 27–59.

Cybo-Ottone, A and M Murgia (2000), Journal of Banking and Finance, 24, 831–859.

Dale, R (1992), International Banking Deregulation, Oxford: Basil Blackwell.

Damanpour, F (1986), ‘‘A Survey of Market Structure and Activities of Foreign Banking in the US’’,

Columbia Journal of World Business, 21(4), 35–45.

Daniel, K., D Hirshleifer and A Subramanyam (1998), ‘‘Investor Psychology and Security Market

Under-Reaction and Over-Reaction’’, Journal of Finance, 53, 1839–1886.

Danielsson, J (2000), ‘‘VaR: A Castle Built on Sand’’, The Financial Regulator, 5(2), 46–50.

Danielsson, J (2002), ‘‘The Emperor has no Clothes: Limits to Risk Modelling’’, Journal of Banking

and Finance, 26(7), 1273–1296.

Danielsson, J and C de Vries (1997), ‘‘Beyond the Sample: Extreme Quantile and ProbabilityEstimation’’, Tinbergen Institute Discussion Paper No 98-016/2, Rotterdam

Dar, H.A and J.R Presley (2003), ‘‘Islamic Banking’’, in Mullineux and Murinde, op cit, pp 191–206.

Darby, M.R (1986), ‘‘The Internationalisation of American Banking and Finance: Structure, Risk

and World Interest Rates’’, Journal of International Money and Finance, 5(4), 403–428.

Davis, E.P (1992), Debt, Financial Fragility and Systemic Risk, Oxford: Oxford University Press.

Davis, E.P and R.J Colwell (1992), ‘‘Output, Productivity and Externalities: The Case of Banking’’,Bank of England Working Paper No 3, August

Davis, P (1999), ‘‘Institutionalisation and EMU: Implications For European Financial Markets’’,

International Finance, 2, 33–61.

Davis, S (1983), The Management of International Banks, London: Macmillan.

Davis, S (1985), Excellence in Banking, London: Macmillan.

Davis, S (1989), Managing Change in the Excellent Banks, London: Macmillan.

Davis, S (2000), Bank Mergers: Lessons for the Future, London: Macmillan.

Davis, E.P and K Touri (2000), ‘‘The Changing Structure of Banks’ Income – An Empirical gation’’, Mimeo

Investi-Deane, M (2001), ‘‘Basel II: Limping Towards Completion’’, The Financial Regulator, June, 20–21.

De Bandt and E.P Davis (2000), ‘‘Competition, Contestability and Market Structure of European

Banking Structures in the European Banking Sectors on the Eve of EMU’’, Journal of Banking and

DeLong, G (2003), ‘‘The Announcement Effects of US versus Non-US Bank Mergers: Do they

Differ?’’, Journal of Financial Research, XXVI(4), 487–500.

Demirguc-Kunt, A (1988), ‘‘Deposit-Institution Failures: A Review of Empirical Literature’’,

Eco-nomic Review – Federal Reserve Bank of Cleveland (4th Quarter).

Demirguc-Kunt, A and E Detragiache (1998), ‘‘The Determinants of Banking Crises: Evidence from

Developing and Developed Countries’’, IMF Staff Papers, 45(1), 81–110.

Demirguc-Kunt, A and R Levine (1999), ‘‘Bank Based and Market Based Financial Systems:

Cross-Country Comparisons’’, World Bank Policy Research Working Paper No 2143.

Demsetz, R and P Strahan (1995), ‘‘Diversification, Size, and Risk at Bank Holding Companies’’,Federal Reserve Bank of New York Research Paper, 95-06

de Pauw, X and W Ross (2000), Introduction to Securitisation, London: Merrill Lynch.

Derivatives Policy Group (1995), A Framework for Voluntary Oversight.

Dermine, J (ed.) (1993), European Banking in the 1990s, 2nd edn, Oxford: Basil Blackwell.

Dewatripont, M and J Tirole (1993), The Prudential Regulation of Banks, London: MIT Press.

De Young, R (1997), ‘‘Bank Mergers, X-Efficiency, and the Market for Corporate Control’’, Managerial

Finance, 23, 32–47.

De Young, R (2001), ‘‘The Financial Performance of Pure Play Internet Banks’’, Economic

Perspec-tives – Federal Reserve Bank of Chicago, 25(1), 60–83.

De Young, R and K Roland (1999), ‘‘Product Mix and Earnings Volatility at Commercial Banks:Evidence from a Degree of Leverage Model’’, Federal Reserve Bank of Chicago Working Paper,99-6

Diamond, D.W (1984), ‘‘Financial Intermediation and Delegated Monitoring’’, Review of Economic

Studies, 51, 393–414.

Diamond, D.W (1991), ‘‘Monitoring and Reputation: The Choice Between Bank Loans and Directly

Placed Debt’’, Journal of Political Economy, 99(4), 689–721.

Diamond, D and P Dybvig (1983), ‘‘Bank Runs, Deposit Insurance, and Liquidity’’, Journal of Political

Economy, 91, 401–419.

Dimson, E and P Marsh (1993), ‘‘The Debate on International Capital Requirements: Evidence onEquity Position Risk for UK Securities Firms’’, London Business School, June

Dirienzo, T and K Hanson (1994), ‘‘Global Cash Management Security’’, in B Welch (ed.),

Electronic Banking and Security: A Guide For Corporate and Financial Managers, Oxford: Blackwell

Business

Dmitriev, M., M Matovnikov, L Mikhailov, L Sycheva and E Timofeyev (2001), ‘‘The Banking

Sector’’, in B Granville and P Oppenheimer (eds), Russia’s Post Communist Economy, Oxford:

Oxford University Press

Dotsey, M and A Kuprianov (1990), ‘‘Reforming Deposit Insurance: Lessons from the Savings and

Loan Crisis’’, Federal Reserve Bank of Richmond Economic Review, 76(12), 3–28.

Dowd, K (1993), Laissez-Faire Banking, London: Rutledge.

Dowd, K (1999), Too Big to Fail? LongTerm Capital Management and the Federal Reserve, Washington,

DC: Cato Institute

Drake, L (1992), ‘‘Economies of Scale and Scope in UK Building Societies: An Application of the

Translog Multiproduct Cost Function’’, Applied Financial Economics, 2, 211–219.

Drake, L and T.G Weyman-Jones (1992), ‘‘Technical and Scale Efficiency in UK Building Societies’’,

Applied Financial Economics, 2, 211–219.

Drake, L and R Sniper (2002), ‘‘Economies of Scale in UK Building Societies: A Reappraisal Using

an Entry/Exit Model’’, Journal of Banking and Finance, 26, 2365–2382.

Drehmann, M., C Goodhart and M Krueger (2002), ‘‘The Challenges Facing Currency Usage: Willthe Traditional Transaction Medium be Able to Resist Competition from the New Technologies?’’,

Economics Policy, 34(Apr), 193–227.

Dreze, J and A Sen (1995), Economic Development and Social Opportunities, New Dehli: Oxford

Economic Press

Dunbar, N (2000), Inventing Money – The Story of Long-Term Capital Management and the Legends

Behind It, Chichester, UK: John Wiley & Sons.

Earle, J and S Estrin (2001), ‘‘Privatization and the Structure of Enterprise Ownership’’, in

B Granville and P Oppenheimer (eds), Russia’s Post Communist Economy, Oxford: Oxford

Uni-versity Press

Easterbrook, F.H (1997), ‘‘International Corporate Differences: Markets or Laws’’, Journal of Applied

Corporate Finance, 9, 23–29.

Eaton, J and M Gersovitz (1979), ‘‘LDC Participation in International Financial Markets: Debt and

Reserves’’, Journal of Development Economics, 7, 3–21.

Eaton, J and M Gersovitz (1981a), ‘‘Debt With Potential Repudiation: Theoretical and Empirical

Analysis’’, Review of Economic Studies, 48, 289–309.

Eaton, J and M Gersovitz (1981b), ‘‘Poor Country Borrowing in Private Financial Markets and the

Repudiation Issue’’, Princeton Studies in International Finance, 47, June.

Eaton, J., M Gersovitz and J.E Stiglitz (1986), ‘‘The Pure Theory of Country Risk’’, European

Economic Review, 30, 481–513.

The Economist (1988), ‘‘French Bank Deregulation: Telling Tales from the Wrong Bank’’, 24

September, 122–125

The Economist (1992), ‘‘Wish You Hadn’t Asked?’’, 8 August, 77–78.

The Economist (1993a), ‘‘New Rules For Banks: Keep Them Minimal’’, 8 May, 20–21.

The Economist (1993b), ‘‘The Sum, Not The Parts’’, 11 December, 97–98.

The Economist (1994a), ‘‘Japanese Banks Tough on the Tax Payer’’, 26 February, 96–97.

The Economist (1994b), ‘‘American Banking Regulation: Four Into One Can Go’’, 5 March, 104–107 The Economist (1994c), ‘‘Indigestion Strikes Europe’’, 12 March, 38–39.

The Economist (1995a), ‘‘Please, Governor, Can you Spare a Billion?’’, 25 March, 79–81.

The Economist (1995b), ‘‘Other People’s Money, A Survey of Wall Street’’, 15 April.

The Economist (1999a), ‘‘Loud and Clear’’, 23 January, 80–81.

The Economist (1999b), ‘‘Frozen Liabilities’’, 27 February, 91.

The Economist (2000a), ‘‘Mr Tanigaki’s Augean Stables’’, 4 March, 110.

The Economist (2000b), ‘‘A Survey of On-line Finance’’, 1 May, 43.

The Economist (2000c), ‘‘E-money Revisited’’, 22 July, 106.

The Economist (2000d), ‘‘Japanese Insurers-Endgame’’, 2 September, 98.

The Economist (2003a), ‘‘As Good as it Gets’’, 5 December, 67–68.

The Economist (2003b), ‘‘Special Report – Bank Lending’’, 16 August, 61–63.

Edgeworth, F.Y (1888), ‘‘The Mathematical Theory of Banking’’, Journal of the Royal Statistical Society,

51, 113–127.

Eichengreen, B and P.H Lindert (eds) (1989), The International Debt Crisis in Historical Perspective,

Cambridge, MA: MIT Press

Eichengreen, B and R Portes (1986), ‘‘The Anatomy of Financial Crises’’, Centre For EconomicPolicy Research, Discussion Paper Series No 130

Eichengreen, B and R Portes (1988a), ‘‘Foreign Lending in the Interwar Years: The Bondholders’Perspective’’, Centre For Economic Policy Research, Discussion Paper Series No 273

Eichgreen, B and R Portes (1988b), ‘‘Settling Defaults in the Era of Bond Finance’’, Centre ForEconomic Policy Research, Discussion Paper Series No 272

Eichgreen, B and R Portes (1989), ‘‘Dealing With Debt: The 1930s and the 1980s’’, Centre ForEconomic Policy Research, Discussion Paper Series No 300

El-Hawary, D., W Grais and Z Iqbal (2004), ‘‘Regulating Islamic Financial Institutions: The Nature

of the Regulated’’, World Bank Policy Research Working Paper No 3227, March

Ellis, D.M and M.J Flannery (1992), ‘‘Does the Debt Market Assess Large Banks’ Risk? Time Series

Evidence from Money Centre CDs’’, Journal of Economics, 30, 3.

Ely, B (2000), ‘‘Calling Time on Fannie and Freddie’’, Financial Regulator, 5(1), 30–33.

Ely, D and M Song (2000), ‘‘Acquisition Activity of Large Depository Institutions in the 1990s: An

Empirical Analysis of Motives’’, The Quarterly Review of Economics and Finance, 40, 467–484.

Ely, D and N Varaiya (1996), ‘‘Opportunity Costs Incurred by the RTC in Cleaning up S and L

Insolvencies’’, Quarterly Review of Economics and Finance, 36(3), 291–310.

Emerson, M., M Aujean, M Catinal, P Goybet and A Jacquemin (1989), The Economics of 1992:

The EC Commission’s Assessment of the Economic Effects of Completing the Internal Market, Oxford:

Oxford University Press

Endlich, L (1999), Goldman Sachs: The Culture of Success, London: Little Brown and Company.

Engelen, K (2001), ‘‘Eichel’s Shock to the System’’, The Financial Regulator, 5(4), 38–42.

Englund, P (1999), ‘‘The Swedish Banking Crisis: Roots and Consequences’’, Oxford Review of

Economic Policy, 15, 3.

Eppendorfer, C., R Beckman and M Neimke (2002), Market Access Strategies for EU Banking Sector,

Berlin: Institut fur Europaische Politik Can be downloaded from www.zew.de/erfstudyresults

Espahbodi, P (1991), ‘‘Identification of Problem Banks and Binary Choice Models’’, Journal of Banking

and Finance, 15, 53–71.

Esty, B., B Narasimham and P Tufano (1999), ‘‘Interest Rate Exposure and Bank Mergers’’, Journal

of Banking and Finance, 23, 255–285.

Evanoff, D.D and D.L Fortier (1988), ‘‘Re-evaluation of the Structure–Conduct–Performance

Paradigm in Banking’’, Journal of Financial Services Research, 1(3), 375–390.

Evanoff, D.D and P.R Israilevich (1991), ‘‘Productive Efficiency in Banking’’, Economic Perspectives,

15(4), 11–32.

Evans, H (2000), ‘‘Plumbers and Architects: A Supervisory Perspective on International tecture’’, Financial Services Authority Occasional Paper, January Available on FSA website:www.fsa.gov.uk

Archi-Evenett, S.J (2003), ‘‘The Cross Borders and Acquisitions Wave of the Late 1990s’’, National Bureau

of Economic Research Working Paper No 9655 Available from www.nber.org/papers/w9655

Fama, E.F (1970), ‘‘Efficient Capital Markets: A Review of Theory and Empirical Work’’, Journal of

Finance, 25, 383–417.

Fama, E.F (1980), ‘‘Banking in the Theory of Finance’’, Journal of Monetary Economics, 6, 39–57 Fama, E.F (1985), ‘‘What’s Different about Banks?’’, Journal of Monetary Economics, 15, 29–39.

Fama, E.F (1991), ‘‘Efficient Capital Markets II’’, Journal of Finance, 46(5), 1575–1617.

Farrant, R (2000), ‘‘Cruickshank Three Months On’’, The Financial Regulator, 5(2), 41–43.

Farrell, M (1957), ‘‘The Measurement of Productive Efficiency’’, Journal of the Royal Statistical Society,

Series A, 120(3), 253–291.

Federal Deposit Insurance Corporation (1997), History of the Eighties – Lessons for the Future:

An Examination of the Banking Crises of the Early 1980s and 1990s Available on-line at:

http://www.fdic.gov/bank/historical/history/index.html

Federal Deposit Insurance Corporation (1998), Managing the Crisis: The FDIC and RTC Experience.

Available from the FDIC website: http://www.fdic.gov/bank/historical/managing/contents.pdf

Federal Reserve (1993), ‘‘Interstate Banking: A Status Report’’, Federal Reserve Bulletin, 79(12),

1075–1089

Federal Reserve Bank of Chicago (1980), ‘‘The Depository Institutions Deregulation and Monetary

Control Act of 1980: Landmark Financial Legislation for the Eighties’’, Economic Perspectives,

Federal Reserve Bank of Chicago, Sept/Oct, 3–23.

Federal Reserve Bank of New York (1987), ‘‘Capital Requirements of Commercial and Investment

Banks: Contrasts in Regulation’’, Federal Reserve Bank of New York Quarterly Review, Autumn,

Financial Services Authority (2000), ‘‘A New Regulator for the New Millennium’’, January,http://www.fsa.gov.uk/

Financial Services Authority (2002), ‘‘Investment Research: Conflicts and other Issues’’, FSADiscussion Paper No 15, http://www.fsa.gov.uk/

Financial Services Authority (2003), ‘‘Investment Research: Conflicts and other Issues’’, FSAConsultation Paper No 171, http://www.fsa.gov.uk/

Financial Stability Forum (2001), ‘‘Report of the Multidisciplinary Working Group on EnhancedExposure’’, available at www.fsforum.org – click on publications

Financial Times (2000), ‘‘Life on the Net-Banking’’, 5 September.

Fingleton, E (1994), ‘‘Nomura Aims To Please’’, Institutional Investor, October, 99–102.

Fisher, A (1987), ‘‘Banks Facing up to Foreign Competition’’, The Banker, January.

Fisher, I (1932), Booms and Depressions, New York: Adelphi.

Fisher, I (1933), ‘‘Debt Deflation Theory of the Great Depression’’, Econometrica, 337–357 Fisk, C and F Rimlinger (1979), ‘‘Non-Parametric Estimates of LDC Repayment Prospects’’, Journal

of Finance, 34(2), 429–438.

Fitch Ratings (2003), Global Credit Derivatives: Risk Management or Risk?, London: Fitch Ratings Flannery, M.J (1982), ‘‘Retail Bank Deposits as Quasi-Fixed Factors of Production’’, American

Economic Review, 72(Jun), 527–536.

Flood, M.D (1992), ‘‘Two Faces of Financial Innovation’’, Federal Reserve Bank of St Louis Review,

74(5), 3–17.

Flood, R.D and P.M Garber (1994), Speculative Bubbles, Speculative Attacks, and Policy Switching,

Cambridge, MA: MIT Press

Focarelli, D., F Panetta and C Salleo (2002), ‘‘Why Do Banks Merge?’’, Journal of Money, Credit and

Banking, 34(4), 1047–1066.

Folkerts Landau, D and A Steinherr (1994), ‘‘The Wild Beast of Derivatives: To be Chained up,

Fenced in or Tamed?’’, in R O’Brien (ed.), Finance and the International Economy, Vol 8, Oxford:

Oxford University Press, pp 8–27

Fordyce, J.E and M.L Nickerson (1991), ‘‘An Overview of Legal Developments in the Banking and

Financial Services Industry in Canada’’, The International Lawyer, 25(2), 351–369.

Francis, J (2000), ‘‘The Bahamas Perspective’’, The Financial Regulator, 4(4), 27–33.

Frank, C.R and W.R Cline (1971), ‘‘Measurement of Debt Servicing Capacity: An Application of

Discriminant Analysis’’, Journal of International Economics, 1, 327–344.

Frankel, A.B and J.D Montgomery (1991), ‘‘Financial Structure, An International Perspective’’,

Brookings Papers on Economic Activity, 1, 257–310.

Frankel, A.B and P.B Morgan (1992), ‘‘Deregulation and Competition in Japanese Banking’’, Federal

Reserve Bulletin, 78(8), 579–593.

Freedman, C (2000), ‘‘Monetary Implementation: Past, Present, and Future – Will Electronic Money

Lead to the Eventual Demise of Central Banking?’’, International Finance, 3(2), 211–227.

Freedman, R.D and J Vohr (1991a), ‘‘American Express’’, Case Series in Finance and Economics,C49, New York University Salomon Center, Leonard N Stern School of Business

Freedman, R.D and J Vohr (1991b), ‘‘Goldman Sachs/Lehman Brothers’’, Case Series in Financeand Economics, C50, New York University Salomon Center, Leonard N Stern School of Business.Freeman, D.G (2002), ‘‘Did State Bank Branching Deregulation Produce Large Growth Effects?’’,

Economic Letters, 75, 383–389.

Friedman, B (1999), ‘‘The Future of Monetary Policy: The Central Bank as an Army with only a

Signal Corps’’, International Finance, 2(3), 321–338.

Friedman, M and A Schwartz (1963), A Monetary History of the United States, 1867–1960, Princeton,

NJ: Princeton University Press

Friedman, M and A.J Schwartz (1986), ‘‘Has Government any Role in Money?’’, Journal of Monetary

Economics, 17, 37–62.

Fry, M (1995), Money, Interest and Banking in Economic Development, 2nd edn, Baltimore, MD: Johns

Hopkins University Press

Fu, X (2004), ‘‘Competition and Efficiency in Chinese Banking’’, PhD Thesis, Cass Business School,City University, London

Furfine, C.H (1999), ‘‘Interbank Exposures: Quantifying the Risk of Contagion’’, BIS WorkingPapers, June

Furst, K., W Lang and D Nolle (2000), ‘‘Who Offers Internet Banking’’, Quarterly Journal – Office of

the Comptroller of Currency, 19(1), 1–22.

Gallo, J., V Apilado and J Kolari (1996), ‘‘Commercial Bank Mutual Fund Activities: Implications

for Bank Risk and Profitability’’, Journal of Banking and Finance, 20(7), 1775–1791.

Gates, B (1995), The Road Ahead, New York: Viking.

Gennotte, G and D Pyle (1991), ‘‘Capital Controls and Bank Risk’’, Journal of Banking and Finance,

15(4/5), 805–824.

Gerber, P (1998), ‘‘Derivatives in International Capital Flows’’, Working Papers No 6623, ington: National Bureau of Economic Research

Wash-Germany, J.D and J.E Morton (1985), ‘‘Financial Innovation and Deregulation in Foreign Industrial

Countries’’, Federal Reserve Bulletin, 7(10), 743–753.

Ghosh, A., T Lane, M Schulze-Ghattas, A Bul´ır, J Hamann and A Mourmouras (2002), Supported Programs in Capital Account Crises’’, IMF Occasional Paper No 210, February,Washington: International Monetary Fund

‘‘IMF-Gilbert, E.W and W.L Scott (2001), ‘‘The Financial Modernisation Act: New Perspectives for the

Finance Curriculum’’, Financial Services Review, 10, 197–208.

Gilbert, R.A (1984), ‘‘Bank Market Structure and Competition: A Survey’’, Journal of Money, Credit

and Banking, 4, 21–36.

Gilbert, R.A (1991), ‘‘Do Bank Holding Companies Act as Sources of Strength for Their Bank

Subsidiaries?’’, Federal Reserve Bank of St Louis Review, 73(1), 3–18.

Gilligan, T and M Smirlock (1984), ‘‘An Empirical Study of the Joint Production of Scale Economies

in Commercial Banking’’, Journal of Banking and Finance, 8, 67–78.

Goldberg, L.G and G.A Hanweck (1991), ‘‘The Growth of the World’s 300 Largest Banking

Organizations by Country’’, Journal of Banking and Finance, 15, 207–223.

Goldberg, L.G and A Rai (1996), ‘‘The Structure–Performance Relationship for European Banking’’,

Journal of Banking and Finance, 20, 745–771.

Goldman Sachs (2000/01/02/03), Annual Report for various years Available on-line/in pdf format

from www.gs.com

Goldstein, M (1998), The Asian Financial Crisis: Causes, Cures, and Systemic Implications, Washington:

Institute for International Economics, 55, June

Goodard, J.A., P Molyneux and J.O.S Wilson (2001), European Banking: Efficiency, Technology and

Growth, Chichester, UK: John Wiley & Sons.

Goodhart, C.A.E (1974), Money, Information and Uncertainty, London: Macmillan.

Goodhart, C.A.E (1988), The Evolution of Central Banks, Cambridge, MA: MIT Press.

Goodhart, C.A.E (1996), ‘‘Some Regulatory Concerns’’, Schweizerische Zeitschrift fur Volkswirtschaft

und Statistik/Swiss Journal of Economics and Statistics, 132(4/2), 613–635.

Goodhart, C.A.E (2000), ‘‘Can Central Banking Survive the IT Revolution?’’, International Finance,

3(2), 189–210.

Goodhart, C.A.E and H Huang (2000), ‘‘A Simple Model of an International Lender of Last Resort’’,

Economic Notes by Banca Monte dei Paschi di Siena, SpA, 29(1–2000), 1–11.

Goodhart, C.A.E and D Schoenmaker (1995), ‘‘Should the Functions of Monetary Policy and

Banking Supervision be Separated?’’, Oxford Economic Papers, 47, 539–560.

Gordon, J and P Gupta (2003), ‘‘Understanding India’s Services Revolution’’, paper prepared for

IMF-NCAER Conference, A Tale of Two Giants: India’s and China’s Experience with Reform, New

Delhi, 14–16 November

Gorton, G (1988), ‘‘Banking Panics and Business Cycles’’, Oxford Economic Papers, 40, 751–781.

Goryunov, Y (2001), ‘‘The Russian Banking Sector in 2000’’, BIS Papers No 4, 123–127

Gowland, D.H (1991), ‘‘Financial Innovation in Theory and Practice’’, in C.J Green and D.T

Llewellyn (eds), Surveys in Monetary Economics, Vol 2, Oxford: Basil Blackwell, pp 79–115 Gowland, P (1994), The Economics of Modern Banking, Aldershot: Edward Elgar.

Granville, B and P Oppenheimer (eds) (2001), Russia’s Post Communist Economy, Oxford: Oxford

University Press

Gray, S and J Place (1999), Financial Derivatives, Bank of England, Centre for Central Banking

Studies, Handbooks in Central Banking, No 17

Greenbaum, S (1967), ‘‘Competition and Efficiency in the Banking System – Empirical Research

and its Policy Implications’’, Journal of Political Economy, 75, 461–481.

Greenspan, A (1994), ‘‘Optimal Bank Supervision in a Changing World’’, in Federal Reserve Bank of

Chicago, Conference Proceedings on The Declining Role of Banking, 30th Annual Conference on Bank

Structure and Competition, May, pp 1–8

Griffiths, B (1970), ‘‘Competition in Banking’’, Hobart Paper No 5, London: Institute of EconomicAffairs

Grigorian, D and V Manole (2002), ‘‘Determinants of Commercial Banks in Transitions: AnApplication of Data Envelope Analysis’’, World Bank Policy Research Working Paper No 2850,June

Gros, D and A Steinherr (2004), Economic Transition in Central and Eastern Europe, Cambridge:

Cambridge University Press

Group of 10 (2001), Report on Consolidation in the Financial Sector, Basel: Bank for International

Settlements Available from www.bis.org/publ/

Group of 30 (1993), Derivatives: Practices and Principles – Special Report by the Global Derivatives Study

Group, Washington: Group of 30.

Group of 30 (1994), Derivatives: Practices and Principles: Follow Up Surveys of Industry Practice,

Washington: Group of 30

Gual, J and D Neven (1992), ‘‘Deregulation of the European Banking Industry (1980–1991)’’,Centre for Economic Policy Research, Discussion Paper No 703

Gup, B.E and J.R Walter (1991), ‘‘Profitable Large Banks: the Key to Their Success’’, in D Chew

(ed.), New Developments in Commercial Banking, Oxford: Basil Blackwell, pp 37–42.

Gurley, J.G and E.S Shaw (1956), ‘‘Financial Intermediaries and the Savings–Investment Process’’,

Journal of Finance, 11, 257–276.

Guttentag, J and R Herring (1983), ‘‘The Lender of Last Resort Function in an InternationalContext’’, Essays in International Finance No 151, International Finance Section, Department ofEconomics, Princeton University

Guttentag, J and R Herring (1986), ‘‘Disaster Myopia in International Banking’’, Essays in national Finance No 164, International Finance Section, Department of Economics, PrincetonUniversity

Inter-Hadlock, C., J Houston and M Ryngaert (1999), ‘‘The Role of Managerial Incentives in Bank

Acquisitions’’, Journal of Banking and Finance, 23, 221–241.

Haldane, A., G Irwin and V Saporta (2004), ‘‘Bail Out or Work Out? Theoretical Considerations’’,

The Economic Journal, 114(March), C130–C148.

Hall, M.J.B (1985), ‘‘UK Banking Supervision and the Johnson Matthey Affair’’, LoughboroughUniversity Banking Centre, Research Paper Series No 8, May.

Hall, M.J.B (1993), Banking Regulation and Supervision, Aldershot: Edward Elgar.

Hannan, T.H (1979), ‘‘The Theory of Limit Pricing: Some Applications to the Banking Industry’’,

Journal of Banking and Finance, 3, 221–234.

Hannan, T.H (1991a), ‘‘Foundations of the Structure–Conduct–Performance Paradigm in Banking’’,

Journal of Money, Credit and Banking, 23(1), 68–84.

Hannan, T.H (1991b), ‘‘The Bank Commercial Loan Markets and the Role of Market Structure:

Evidence from Surveys of Commercial Lending’’, Journal of Banking and Finance, 15, 133–149.

Hao, J., W.C Hunter and W.K Yang (2001), ‘‘Deregulation and Efficiency: the Case of Private

Korean Banks’’, Journal of Economics and Business, 53, 237–254.

Hardwick, P (1989), ‘‘Economies of Scale in Building Societies’’, Applied Economics, 21, 1291–1304.

Hardwick, P (1990), ‘‘Multi-Product Cost Attributes: A Study of UK Building Societies’’, Oxford

Economic Papers, 42, 446–461.

Hardy, D and E Patti (2001), ‘‘Bank Reform and Bank Efficiency in Pakistan’’, IMF Working PaperWP/01/138

Hassan, T (2002), ‘‘Islamic Banking in Pakistan’’, The Financial Regulator, 7(2), 70–74.

Hausman, J (1978), ‘‘Specification Tests in Econometrics’’, Econometrica, 46(6), 1251–1271.

Hawke, J (2001), ‘‘Internet Banking: Challenges for Banks and Regulators’’, Financial Regulator, 6(1),

16–19

Haynes, M and S Thompson (1997), ‘‘The Productivity Effects of Bank Mergers: Evidence from UKBuilding Societies’’, Mimeo

Heffernan, S.A (1986a), ‘‘Determinants of Optimal Foreign Leverage Ratios in Developing

Coun-tries’’, Journal of Banking and Finance, 3(Suppl.), 97–115.

Heffernan, S.A (1986b), Sovereign Risk Analysis, London: Unwin Hyman.

Heffernan, S.A (1992), ‘‘A Competition of Interest Equivalences for Non-Price Features of Bank

Products’’, Journal of Money, Credit and Banking, 24(May), 162–172.

Heffernan, S.A (1993), ‘‘Competition in British Retail Banking’’, Journal of Financial Services Research,

7(3), 309–332.

Heffernan, S.A (1994), ‘‘Competition in the Canadian Personal Finance Sector’’, International Journal

of the Economics of Business, 1(3), 323–342.

Heffernan, S.A (1996), Modern Banking in Theory and Practice, London: John Wiley & Sons.

Heffernan, S.A (2001), ‘‘Japan: A Case for Financial Reform and Monetary Stimulus’’, Annual Survey

of Supervisory Developments, London: Central Banking Publications.

Heffernan, S.A (2002), ‘‘How do UK Financial Institutions Really Price their Banking Products?’’,

Journal of Banking and Finance, 26, 1997–2006.

Heffernan, S.A (2003), ‘‘The Causes of Bank Failures’’, in Mullineux and Murinde, op cit.

Heggestad, A.A (1979), ‘‘A Survey of Studies on Banking Competition and Performance; Market

Structure, Competition, and Performance’’, in F.R Edwards (ed.), Issues in Financial Regulation,

Maidenhead: McGraw Hill, pp 449–490

Heggestad, A.A and J.J Mingo (1976), ‘‘Prices, Nonprices, and Concentration in Commercial

Banking’’, Journal of Money, Credit and Banking, 8, 107–117.

Heggestad, A.A and J.J Mingo (1977), ‘‘The Competitive Condition of U.S Banking Markets and

the Impact of Structural Reform’’, Journal of Finance, 32(3), 649–661.

Heinemann, F and M Jopp (2002), The Benefits of a Working European Retail Market for EU

Financial Services, Berlin: Institut fur Europaische Politik Can be downloaded from www.zew.de/

erfstudyresults/

Hermes, N and R Lensick (eds) (2000), Financial System Development in Transition Economies, Special

Issue, Journal of Banking and Finance, 24(4), 507–524.

Herring, R (1984), ‘‘Continental Illinois’’, Case Series in Finance and Economics, C41, New YorkUniversity Salomon Center, Leonard N Stern School of Business

Hertig, G and R Lee (2003), ‘‘Four Predictions about the Future of EU Securities Regulation’’,

Journal of Corporate Law Studies, 3(2), 150–165.

Hey, J.D (1989), ‘‘Introduction: Recent Developments in Microeconomics’’, in Recent Issues in

Microeconomics, London: Macmillan.

Hill, G (1975), Why 67 Insured Banks Failed, 1960–74, Washington: Federal Deposit Insurance

Corporation

Hirtle, B (1991), ‘‘The Factors Affecting the Competitiveness of Internationally Active Financial

Insitutions’’, Federal Reserve Bank of New York Quarterly Review, Spring, 38–51.

Hoggarth, G and F Soussa (2001), ‘‘Crisis Management, Lender of Last Resort, and the ChangingNature of the Banking Industry’’, in R Brealey, A Clark, C Goodhart, J Healey, D Llewellyn,

C Shu, P Sinclair and F Soussa (eds), Financial Stability and Central Banks, London: Routledge Hoggarth, G., J Reidhill and P Sinclair (2003), ‘‘Resolution of Banking Crises: A Review’’, Bank of

England Financial Stability Review, 15(December), 109–123.

Honohan, P and D Klingebiel (2003), ‘‘The Fiscal Cost Implications of an Accommodating

Approach to Banking Crises’’, Journal of Banking and Finance, 27, 1539–1560.

Hoshi, T and A Kashyap (1999), ‘‘The Japanese Financial Crisis: Where Did It Come From andHow Will It End?’’, National Bureau of Economic Research, Working Paper 7250, July Availablefrom http://www.nber.org/papers/w7250

Hoti, S and M McAleer (2003), ‘‘An Empirical Assessment of Country Risk Ratings and Associated’’,Mimeo, Department of Economics, University of Western Australia, June

Houston, J and M Ryngaert (1994), ‘‘The Overall Gains from Large Bank Mergers’’, Journal of

Banking and Finance, 18, 1155–1176.

Hovaguimian, C (2003), ‘‘The Catalytic Effect of IMF Lending: A Critical Review’’, Financial Stability

Review, Bank of England, December, pp 160–169.

Howells, P and K Bain (1998), The Economics of Money, Banking and Finance, A European Text,

Harlow, UK: Pearson Education

Howells, P and K Bain (2000), Financial Markets and Institutions, 3d edn, Harlow, UK: Financial

Times/Prentice Hall, Pearson Education

He, Q and H.P Gray (2001), ‘‘Multinational Banking and Economic Development: A Case Study’’,

Journal of Asian Economics, 12, 233–243.

Humphrey, D.B (1987), ‘‘Cost Dispersion and the Measurement of Economies in Banking’’, Federal

Reserve Bank of Richmond Economic Review, May/June.

Humphrey, D (1992), ‘‘Flow Versus Stock Indicators in Bank Output: Effects on Productivity and

Scale Economy Measurement’’, Journal of Financial Services Research, 6, 115–135.

Hunter, W.C and S.G Timme (1986), ‘‘Technical Change, Organisational Form, and the Structure

of Bank Production’’, Journal of Money, Credit and Banking, 18, 2–66.

Hunter, W.C., S.G Timme and W.K Yang (1990), ‘‘An Examination of Cost Subadditivity and

Multiproduct Production in Large US Commercial Banks’’, Journal of Money, Credit and Banking,

22, 504–525.

Hwang, D.-Y., C.F Lee and K.T Liaw (1997), ‘‘Forecasting Bank Failures and Deposit Insurance

Premium’’, International Review of Economics and Finance, 6(3), 317–334.

International Financing Review (2000), Review of the Year, London: Thomson Financial.

International Monetary Fund (2002), ‘‘IMF-Supported Programs in Capital Account Crises’’, sional Paper No 210

Occa-International Monetary Fund (2003), ‘‘IMF Reviews the Experience with the Financial SectorAssessment Programme and Reaches Conclusions on Issues Going Forward’’, available from www.imf.org

Iqbal, Z and A Mirakhor (2002), ‘‘Development of Islamic Financial Institutions and Challenges

Ahead’’, in S Archer and R Karim (eds), Islamic, Growth and Innovation, London: Euromoney.

Ischenko, D and S Samuels (2001), ‘‘Time to Catch Up – Basel II – Modern Capital for ModernBanks’’, Industry Report, London: SchroderSalmonSmithBarney

Ischenko, D and S Samuels (2002), ‘‘Basel II – Winners and Losers’’, Financial Regulator, 6(4), 6–7.

Isik, L and M.K Hassan (2002), ‘‘Technical Scale and Allocative Efficiencies of Turkish Banking

Industry’’, Journal of Banking and Finance, 26, 719–766.

Ito, T., K Takuma and H Uchibori (1998), ‘‘The Impact of the Big Bang on the Japanese FinancialSystem’’, Fuji Research Paper No 9, Tokyo: Fuji Institute Research Corporation

Jackson, W.E (1992), ‘‘The Price–Concentration Relationship in Banking: A Comment’’, Review of

Economics and Statistics, 74, 291–299; also ‘‘Reply’’ by Berger and Hannan, 373–376.

Jagtiani, J., A Saunders and G Udell (1993), ‘‘Bank Off-Balance Sheet Financial Innovations’’, NewYork University Salomon Center (Stern School of Business), Working Paper S-93-50

James, C (1991), ‘‘The Losses Realised in Bank Failures’’, Journal of Finance, Sept, 1223–1242.

Jayaratne, J and P.E Strahan (1997), ‘‘The Benefits of Branching Deregulation’’, Economic Policy

Review – Federal Reserve Bank of New York, 3(4), 13–39.

Jayaratne, J and P.E Strahan (2002), ‘‘The Finance–Growth Nexus: Evidence from Bank Branch

Deregulation’’, Quarterly Journal of Economics, 111, 639–670.

Jiang, C (ed.) (2001), The Banking Industry in China, 2001, Beijing: China Financial Publishing

House

John, K., T.A John and L.W Senbet (1991), ‘‘Risk Shifting Incentives of Depository Institutions: A

New Perspective on Federal Deposit Insurance Reform’’, Journal of Banking and Finance, 15(4/5),

895–916

Jorion, P (1997), Value at Risk, New York: Irwin.

Jorion, P and N Taleb (1997), ‘‘The Jorion–Taleb Debate’’, Derivatives Strategy, available from

www.derivativesstrategy.com

JP Morgan (1994), Riskmetrics – Technical Document, 2nd edn, November, New York: JP Morgan.

Kahn, C., G Pennachi and B Sopranzetti (2000), ‘‘Bank Consolidation and Consumer Loan InterestRates’’, Wharton Financial Institutions Center WP 01–14

Kane, E.J (1984), ‘‘Technology and Regulatory Forces in the Developing Fusion of Financial Services

Competition’’, Journal of Finance, 39(3), 759–772.

Kane, E.J (1985), The Gathering Crisis in Federal Deposit Insurance, Cambridge, MA: MIT Press.

Kane, E.J and M.T Yu (1994), ‘‘How Much Did Capital Forbearance Add to the Tab for the FSLIC

Mess?’’, in Federal Reserve Bank of Chicago, Conference Proceedings on The Declining Role of Banking,

30th Annual Conference on Bank Structure and Competition, May

Karim, R.A (2004), ‘‘Islamic Banking’’, The Financial Regulator, 9(1), 44–48.

Kaufman, G (1984), ‘‘Measuring and Managing Interest Rate Risk, A Primer’’, Federal Reserve Bank

of Chicago, Economic Perspectives, pp 16–19

Kaufman, G (1985), ‘‘Implications of Large Bank Problems and Insolvencies for the Banking Systemand Economic Policy, Federal Reserve Bank of Chicago, Staff Memoranda, 85-3

Kaufman, G (1988), ‘‘Securities Activities of Commercial Banks: Recent Changes in the Economic

and Legal Environments’’, Midland Corporate Finance Journal, 5(4), 14–21.

Kaufman, G (ed.) (1992), Banking Structures in Major Countries, The Netherlands: Kluwer Academic

Publishers

Kaufman, G (1994), ‘‘Bank Contagion: A Review of the Theory and Evidence’’, Journal of Financial

Services Research, 123–150.

Kaufman, G (2002), ‘‘Too Big to Fail in US Banking: Quo Vadis?’’, Quarterly Review of Economics

and Finance, Summer, 423–436.

Kay, J (1991), ‘‘Economics and Business’’, The Economic Journal, 101(Jan), 57–73.

Kay, J (1993a), Foundations of Corporate Success, New York: Oxford University Press.

Kay, J (1993b), ‘‘The Structure of Strategy’’, Business Strategy Review, 4(2), 17–37.

Kay, J and J Vickers (1988), ‘‘Regulatory Reform in Britain’’, Economic Policy, 7(Oct), 286–351.

Keeley, M.C (1990), ‘‘Deposit Insurance, Risk, and Market Power in Banking’’, American Economic

Review, 80(5), 1183–1200.

Kendall, S.B and M.E Levonian (1991), ‘‘A Simple Approach to Better Deposit Insurance Pricing’’,

Journal of Banking and Finance, 15(4/5), 999–1018.

Keynes, J.M (1930), Treatise on Money, London: Macmillan.

Khan, M.S (1987), ‘‘Islamic Interest-Free Banking: A Theoretical Analysis’’, in S Khan and

A Mirakhor (eds), Theoretical Studies in Islamic Banking and Finance, Houston: The Institute

for Research and Islamic Studies, pp 15–35

Khan, M.S and A Mirakhor (1987), ‘‘The Framework and Practice of Islamic Banking’’, in S Khan

and A Mirakhor (eds), Theoretical Studies in Islamic Banking and Finance, Houston: The Institute

for Research and Islamic Studies, pp 1–14

Kim, H.Y (1987), ‘‘Economies of Scale in Multi Product Firms: an Empirical Analysis’’, Economica,

54, 185–206.

Kim, M (1986), ‘‘Banking Technology and the Existence of a Consistent Output Aggregate’’, Journal

of Economics, 18, 181–195.

Kindleberger, C.P (1978), ‘‘The Debt Situation of Developing Countries in Historical Perspective’’,

in S.H Goodman (ed.), Financing and Risk in Developing Countries, London: Praeger.

Kindleberger, C.P (1978, 2000), Manias, Panics and Crises, New York: John Wiley & Sons [the fourth

edition, referred to in this book, was published in 2000]

Kindleberger, C.P (1984), A Financial History of Western Europe, London: George Allen and Unwin

Publishers Ltd

Kindleberger, C.P (1993), A Financial History of Western Europe, 2nd edn, Oxford: Oxford University

Press

Kindleberger, C.P and J.P Laffargue (eds) (1982), Finanical Crisis: Theory History and Policy, New

York: Cambridge University Press

King, K.K and J.M O’Brien (1991), ‘‘Market Based Risk Adjusted Examination Schedules for

Depository Institutions’’, Journal of Banking and Finance, 15(4/5), 955–974.

King, M (1999), ‘‘Challenges for Monetary Policy: New and Old’’, in New Challenges for Monetary

Policy, Symposium Proceedings, Kansas City: Federal Reserve Bank, pp 11–57.

Kiyotaki, N and J Moore (1997), ‘‘Credit Cycles’’, Journal of Political Economy, 105(2), 211–249.

Klein, B (1974), ‘‘Competitive Interest Payments on Bank Deposits and the Long Run Demand For

Money’’, American Economic Review, 64(6), 931–949.

Klein, M.A (1971), ‘‘A Theory of the Banking Firm’’, Journal of Money, Credit and Banking, 3,

205–218

Klein, M.A and N.B Murphy (1971), ‘‘The Pricing of Bank Deposits: A Theoretical and Empirical

Analysis’’, Journal of Financial and Quantitative Analysis, 6, 747–761.

Koskenkyl¨a, H (1994), ‘‘The Nordic Banking Crisis’’, Bank of Finland Quarterly Bulletin, 8/94.

Koskenkyl¨a, H (2000), ‘‘The Nordic Countries’ Banking Crises and Lessons Learned’’, Bank ofFinland Working Paper 6/00

Krueger, A (2002), A New Approach to Sovereign Debt Rescheduling, Washington: IMF.

Krugman, P (1994), ‘‘The Myth of Asia’s Miracle’’, Foreign Affairs, 73(6), 62–78.

Krugman, P (1999), ‘‘Balance Sheets, the Transfer Problem and Financial Crises’’, Mimeo, MIT.Kupiec, P (1995), ‘‘Techniques for Verifying the Accuracy of Risk Management Measurement

Models’’, Journal of Derivatives, 3, 73–84.

Kupiec, P and J O’Brien (1997), ‘‘The Pre-Commitment Approach: Using Incentives to set MarketRisk Capital Requirements’’, Washington: Board of Governors of the Federal Reserve System,1997-14

Kwast, M and S Passmore (1998), ‘‘The Subsidy Provided by the Federal Safety Net: Theory,

Measurement, and Containment’’, in Conference Proceedings on Bank Structure and Competition,

Chicago: Federal Reserve Bank of Chicago

Lamfalussy, A (2000), Financial Crises in Emerging Markets, London: Yale University Press.

Lannoo, K (2002), ‘‘The Structure of Financial Market Supervision in the EU and the Required

Adaptions in View of Market Integration’’, Background Paper for F Heinemann and M Jopp, The

Benefits of a Working European Retail Market for EU Financial Services, Berlin: Institut fur Europaische

Politik Can be downloaded from www.zew.de/erfstudyresults/

La Porta, R., F Lopez-de-Silanes, A Shleifer and R.W Vishny (1997), ‘‘Legal Determinants of

External Finance’’, Journal of Finance, 52, 1131–1150.

Lascelles, D (2001), ‘‘Waking up to the FSA: How the City Views its New Regulator’’, London:Centre for the Study of Financial Innovation, May

Lawrence, C (1989), ‘‘Banking Costs, Generalised Functional Forms, and Estimation of Economies

of Scale and Scope’’, Journal of Money, Credit and Banking, 21, 368–379.

Leach, J.A., W.J McDonough, D.W Mullins and B Quinn (1993), Global Derivatives: Public Sector

Responses, Washington: Group of Thirty, Occasional Paper 44.

Leland, H and D Pyle (1977), ‘‘Information Asymmetries, Financial Structures and Financial

Intermediaries’’, Journal of Finance, 32, 511–513.

Lewis, M.K (1991), ‘‘Theory and Practice of the Banking Firm’’, in C Green and D Llewellyn (eds),

Surveys in Monetary Economics, Vol 2, Oxford: Basil Blackwell, pp 116–159.

Lindgren, C.-J., T.J.T Balino, C Enoch, A.-M Gulde, M Quintyn and L Teo (1999), Financial

Sector Crisis: Lessons from Asia, Washington: International Monetary Fund.

Llewellyn, D.T (1985), ‘‘The Evolution of the British Financial System’’, Gilbart Lectures on Banking,

London: The Institute of Bankers

Llewellyn, D.T (1991), ‘‘Structural Change in the British Financial System’’, in C Green and

D Llewellyn (eds), Surveys in Monetary Economics, Vol 2, Oxford: Basil Blackwell, pp 210–259.

Llewellyn, D.T (1992), ‘‘Competition, Diversification, and Structural Change in the British Financial

System’’, in G.G Kaufman (ed.), Banking Structures in Major Countries, Dordrecht: Kluwer Academic

Publishers, pp 429–468

Lloyd-Williams, D.M., P Molyneux and J Thornton (1991), ‘‘Competition and Contestability inthe Japanese Commercial Banking Market’’, Institute of European Finance, Research Papers inBanking and Finance No 16, Bangor: University of Wales

Logan, A (2000), ‘‘The Early 1990s Small Banks Crisis; Leading Indicators’’, Financial StabilityReview, December, London: The Bank of England, pp 130–145

Madalla, G (1988), Introduction to Econometrics, New York: Macmillan.

Manasse, P., N Roubini and P Schimmelpfennig (2003), ‘‘Predicting Sovereign Debt Crises’’, IMFWorking Paper WP/03/221

Marshall, A (1860/1961), Principles of Economics, New York: Macmillan.

Martin, D (1977), ‘‘Early Warning of Bank Failure: A Logit Regression Approach’’, Journal of Banking

and Finance, 15, 53–71.

Mathur, S and A Kenyon (1997), Creating Value: Shaping Tomorrow’s Business, Oxford: Butterworth

Heinemann

Matten, C (2000), Managing Bank Capital, Chichester, UK: John Wiley & Sons.

McFadden, D (1974), ‘‘The Measurement of Urban Travel Demand’’, Journal of Public Economics, 3,

McKinnon, R and H Pill (1996), ‘‘Credible Liberalizations and International Capital Flows: The

‘Overborrowing’ Syndrome’’, in I Takatoshi and A Krueger (eds), Financial Deregulation and

Integration in East Asia, Chicago: Chicago University Press.

Mendes, V and J Rebelo (2003), ‘‘Structure and Performance in the Portuguese Banking Industry in

the Nineties’’, Portuguese Economic Journal, 2, 53–68.

Mertens, A and G Urga (2001), ‘‘Efficiency, Scale and Scope Economies in the Ukrainian Banking

Sector in 1998’’, Emerging Markets Review, 2, 292–308.

Merton, R.C (1990), ‘‘The Financial System and Economic Performance’’, Journal of Financial Services

Research, 4(4), 263–300.

Mester, L (1987), ‘‘Efficient Production of Financial Services: Scale and Scope Economies’’, Federal

Reserve Bank of Philadelphia Business Review, 15–25(Jan/Feb), 83–86.

Meyer, P.A and H.W Pifer (1970), ‘‘Prediction of Bank Failures’’, The Journal of Finance, Sept,

853–868

Milbourn, T., T Boot and A Thakor (1999), ‘‘Megamergers and Expanded Scope: Theories of Bank

Size and Activity Diversity’’, Journal of Banking and Finance, 23, 195–214.

Miller, E.A (2001), ‘‘Yes! There are Limits to Arbitrage: Lessons from the Collapse of Long Term

Capital Management’’, The Journal of Social, Political and Economic Studies, 26(1), 321–328.

Milne, A (2003), ‘‘Basel Lite’’: Recommendations for the European Implementation of the New Basel

Accord, London: Centre for the Study of Financial Innovation.

Minsky, H.P (1977), ‘‘Theory of Systemic Fragility’’, in E.I Altman and A.W Sametz (eds), Financial

Crises: Institutions and Markets in a Fragile Environment, New York: John Wiley & Sons, pp 138–152.

Minsky, H.P (1982), ‘‘The Financial Instability Hypothesis: A Capitalist Process and the Behaviour

of the World Economy’’, in C.P Kindleberger and J.P Laffargue (eds), Financial Crisis: Theory,

History and Policy, New York: Cambridge University Press, pp 13–41.

Minsky, H.P (1986), Stabilizing and Unstable Economy, London/New Haven, CT: Yale University

Press

Mohan, R (2004), ‘‘Globalisation: The Role of Institution Building in the Financial Sector: The

Indian Case’’, Reserve Bank of India, Feb, 117–150.

Molyneux, P (2003), ‘‘Technical Change, Costs, and Profits, in European Banking’’, Working Paper03–21 for European Integration, Financial Institutions and Performance, Maastricht: UnitedNations University, Institute for New Technologies Available from http://ideas.repec.org/p/dgr/unutaf/eifc03-21.html

Molyneux, P and W Forbes (1995), ‘‘Market, Structure, and Performance in European Banking’’,

Applied Economics, 27, 155–159.

Molyneux, P., P Lloyd-Williams and J Thornton (1994), ‘‘European Banking: An Analysis of

Competitive Conditions’’, in J Revell (ed.), The Changing Face of European Banks and Securities

Markets, New York: St Martins Press.

Molyneux, P., Y Altunbas and E Gardener (1996), Efficiency in European Banking, Chichester, UK:

John Wiley & Sons

Monti, M (1972), ‘‘Deposit, Credit, and Interest Rate Determination under Alternative Bank

Objective Functions’’, in G.P Szego and K Snell (eds), Mathematical Methods in Investment and

Finance, Amsterdam: North Holland, pp 430–454.

Moody’s Investors Service (2001), ‘‘Culture or Accounting: What are the Real Constraints for IslamicFinance in a Riba-Based Global Economy?’’, Special Comment, January

Moran, T (2003), International Political Risk Management The Brave New World, Vol 2, Washington:

Nathan, A and E.H Neave (1989), ‘‘Competition and Contestability on Canada’s Financial System’’,

Canadian Journal of Economics, 22(3), 576–594.

Nathan, A and E.H Neave (1991), ‘‘Reply to Perrakis’’, Canadian Journal of Economics, 24, 733–735.

Nathan, L (1999), ‘‘Community Banks are Going on-Line’’, Communities and Banking – Federal

Reserve Bank of Boston, 27(Fall), 2–28.

Nelder, M (2003), ‘‘Competition Necessarily Tends to Produce Excess: The Experience of Free

Banking in Switzerland’’, German Economic Review, 4(3), 389–408.

Nellis, J (1999), Time to Re-think Privatization in Transition Economies?, International Finance

Corporation, Washington: World Bank

Nickell, P., S Perraudin and S Varotto (2000), ‘‘Stability of Ratings Transition’’, Journal of Banking

and Finance, 24, 203–247.

Niehans, J (1978), The Theory of Money, Baltimore: The Johns Hopkins University Press.

Nigh, D., K.R Cho and S Krishnan (1986), ‘‘The Role of Location Related Factors in US Banking

Involvement Abroad: An Empirical Examination’’, Journal of International Business Studies, 17(3),

OECD (1991), Bank Profitability and Statistical Supplement, Paris: OECD.

OECD (1992), Economies of Scale and Scope in the Financial Services Industry: A Review of the Recent

Literature, Paris: OECD.

Ofek, E and Richardson, M (2003), ‘‘DotCom Mania: The Rise and Fall of Internet Stock Prices’’

(with Eli Ofek), Journal of Finance, 58, 1113–1138.

O’Hara, M and W Shaw (1990), ‘‘Deposit Insurance and Wealth Effects: The Value of Being Too

Big to Fail’’, Journal of Finance, 45(5), 1587–1600.

O’Keefe, J (1990), ‘‘The Texas Banking Crisis: Causes and Consequences, 1980–1989’’, FDIC

Banking Review 3(3), 2–3.

Pandit, N., G Cook and G.M Swann (2001), ‘‘The Dynamics of Industrial Clustering in British

Financial Services’’, The Services Industries Journal, 21, 31–61.

Pantalone, C and M Platt (1987), ‘‘Predicting Commercial Bank Failure Since Deregulation’’, New

England Economic Review, Jul/Aug, 37–47.