Banks, knowledge and crisis: a case of knowledge and learning failure

Purpose – Regulators such as Turner have identified excessive securitization, high leverage, extensive market trading and a bonus culture, as being major factors in bringing about the bank centred financial crisis of 2007-2009. Whilst it is inevitable that banks adopt procyclical business strategies, not all banks took excessive risks and subsequently had to be rescued by taxpayers. The paper examines the extent to which individual bank outcomes can be attributed to systematic differences in banking knowledge concerning the primary risks and value drivers of their organisations by bank board directors and top management. Design/methodology/approach – The paper reviews a wide range of theoretical, historical and empirical literatures on banking models and detailed case analyses of failing and non-failing banks. A framework for understanding the role and application of knowledge in banking is developed which suggests how banks, despite their pro-cyclical business strategies, are able to institutionalise learning and actively create new knowledge through time to improve bank organisation, intermediation and risk management. Findings – The paper finds that a lack of basic knowledge of banking risks and value drivers by the boards and senior managers of the failing banks were implicated in the banking crisis. These knowledge problems concerned banks' understanding of their organisation, intermediation and risk management in an active market setting characterised by rapid economic and organisational change. Thus, the failing banks ignored or were unaware of this knowledge and hence experienced acute difficulties with learning the new knowledge needed to address the new problems thrown-up by the financial crisis. Practical implications – The analysis suggests that addressing this knowledge gap via the institutionalisation of banking knowledge ought to constitute an important element of any sustainable solution to the problems currently being experienced by the banking sector. By ensuring greater bank learning, knowledge creation, and knowledge use, governments and regulators could help reduce individual bank risk and the likelihood of future crisis. Originality/value – In contrast to the claims made by some politicians and banking insiders, the analysis indicates that the banking crisis and its severity were neither unpredictable nor unavoidable since some banks, by institutionalising banking knowledge and history of past crises, successfully avoided the pitfalls experienced by the failing banks

Multidimensional Epistasis and the Advantage of Sex

Kondrashov and Kondrashov (2001) suggest that there is usually a disadvantage for sex in systems with multidimensional epistasis. They define systems of 'unidimensional epistasis' to be those where the fitness of a genotype is a function of the number of mutations it carries, and in contrast describe a system where the fitness of a genotype is a function of the numbers of mutations in two (or more) disjoint subsets of loci creating 'multidimensional epistasis'. In an example landscape an asexual population evolves fit genotypes about twice as fast as a sexual one. Here we examine other landscapes with multidimensional epistasis and find cases where an asexual population evolves fit genotypes 20 and 180 times slower than a sexual population

Robust particle outline extraction and its application to digital on-line holography

Peer reviewedPostprin

Fluctuations and Relationships of Selected Physiochemical Parameters in Dardanelle Reservoir, Arkansas, 1975-1982

Annual and seasonal fluctuations and relationships are described for discharge, turbidity, chloride, total hardness, conductivity and suspended solids over an eight-year period in Dardanelle Reservoir. The parameters fluctuated rather widely primarily in response to seasonal patterns of rainfall. Chloride and conductivity were related and generally fluctuated together as did turbidity and suspended solids. Hardness appeared to vary independently of the others prior to 1979 then varied more closely with chloride after March 1979. Inherent differences between the Illinois Bayou arm and the main Arkansas River sections complicated the precise identification of any overall impact of power plant operation. No significant long term changes were seen, but chloride declined gradually whereas hardness and conductivity increased slightly. Suspended solids exhibited a significant rise in 1982

Construction and Operation of a Two-place Diver's Sled

Fisheries gear researchers have employed scuba diver-operated sleds to evaluate towed fishing systems since the early 1950's. One of the earliest sled designs was a converted Stokes litter in which two divers sat tandem with the forward diver operating the diving controls (Sand, 1956). The litter was relatively easy to maneuver and provided a comfortable platform for observing operational fishing gear. However, the use of underwater photographic equipment to document gear performance was difficult due to the limited mobility of the observer-cameraman

Should Marketing Managers Be Concerned about Attitudes towards Marketing and Consumerism in New Zealand: A Longitudinal View

New Zealand has gone through a radical metamorphosis since free market economics were introduced in the mid-1980s. Marketing managers are particularly interested in the views of consumers about issues dealing with marketing activities. Negative views could signal consumer backlash against free market activities. This study examines the views of consumers from 1986 to 2001 on a range of issues dealing with marketing and consumerism. The results clearly show that consumers are less negative about marketing and consumerism issues since 1986. It seems likely that New Zealand has evolved in terms of the consumerism life cycle over the last 15 years. Marketing managers should continue to remain proactive in their responses to consumer discontents. Implications for New Zealand and for other countries are addressed

Phytoplankton Community Structure in Dardanelle Reservoir, Arkansas, 1975-1982

Phytoplankton data were collected with standard equipment and procedures over an eight-year period (1975-1982) in Dardanelle Reservoir, Arkansas. Community abundance and diversity at the genus level are described. Sixty-five genera representing 35 families and five divisions were identified. Total phytoplankton abundance and diversity were quite uniform among the stations but fluctuated considerably with time. These fluctuations did not correspond clearly with season. Dominant taxa were seasonal, though, with diatoms being usually dominant in January, April and October, and blue-greens dominant in July. The phytoplankton community structure has not been significantly altered by the operation of ANO Unit I