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Bank Management

About, members, publications, projects

About the programme

The problem of managing banks has become a very complex one not least since credit crises of a magnitude large enough to threaten a bank’s survival appear at fairly large intervals (10-15 years). In the meantime managers and personnel alike have ample time to forget what it was like to manage in the last crisis. We should remember that seven of the ten largest bankruptcies in the world during the first ten years of this century (in terms of assets) were financial institutions, and that Kaupthing (the Icelandic bank) was a larger bankruptcy than Enron. Much research into bank management is required. Increasing the reserves by a per cent point or two is not enough.

This program was initiated in 2008 and is a broadly applied investigation of banks and the financial sector with a management perspective. Originally the topic was the qualities of credit assessment by banks assuming that when a bank evaluates an application by a company many dimensions go into a final judgement of the creditworthiness of the customer. Even if the simple version in terms of interest rate and risk is used in common parlance about credits assessment we know that it is a much more complex process than just applying a model (full of assumptions and fed by historical data). Furthermore, we now know that economic growth is driven by innovation (McCloskey, 2011) and that most innovations are, and have been, financed by credit. One should have the greatest respect for the stock market, but realize that the vast majority of the financing of industry in the Western world is done by credit. It is the banks that chose to grant credits to the good innovation projects.

But as we were getting ready to start our program the Crisis happened. The banks in Iceland we had approached for interviews did not want to talk to us any more. The presumptions on which our studies were based seemed no longer valid. Very large banks went bankrupt on very short notice. Lehman Brothers discovered that they had a need for write down of assets from one week to the next of 55 billion USD (Financial Crisis Inquiry Report, 2011). Top management of banks are supposed to manage for the good of the organization (or at least for the good of the share holders). Something was obviously wrong with bank management. Our plan was to focus on Swedish banks with some outlooks toward other countries (like Iceland), but now our study had to go global to catch the managerial fashions and financial shocks that have played such a large role in our lives lately.

To show how our understanding of banks develops as our studies progress we have divided the text on this web page into several subsections that we intend to update as we go along. So far we have conducted interviews and document studies in all the major Swedish banks and some savings banks, including a number of interviews in the British branches of Handelsbanken. We have also established cooperation with several researchers in Sweden and abroad.


Professor Emeritus Sten Jönsson (program director)

Professor Airi Rovio Johansson
Professor Gudrun Baldvinsdottir
Professor Gunnar Wahlström
Associate Professor Jan Marton
Associate Professor Claes Ohlsson
PhD Asgeir Torfason
PhD Roy Liff
PhD Mikael Wickelgren
PhD Emilie Reinhold

Associated members

Professor Rolf Wolff
Professor Ashok Thampy
Deirdre Nansen McCloskey
Anette Mikes
Einar Häckner
Eva Johansson
Mikael Cäker
Anna Linda Musacchio Adorisio
Elena Raviola


Articles, books, book chapters, reports


Jönsson, Sten (2014) The appropriate banker and the need for ontological re-positioning. Scandinavian Journal of Management, 30 s. 372-381.

Wahlström, Gunnar (2013) Bank Risk Measurement: A Critical Evaluation at a European Bank. Accounting and Finance Research, 2(3): 24-36.

Kokk, Gary & Sten Jönsson (2013). Visual research methods and the importance of analytical spaces. Management and Organizational History 8(2): 174-184.

Wahlström, Gunnar (2012) Views from the regulated: financial analysts and insider information. International Journal of Managerial and Financial Accounting, 4 (3) s. 272-290.


Wahlström, G., Johansson, E., Mjölnevik A-C. & Torfason, A. B. (red.) (2015) Kassaflödet i en bank rapporteras olämpligt idag! Ett förslag till förändring. Göteborg: BAS.

Book chapters

Jönsson, Sten (2014) Entrepreneurship and the use of judgement. I Bourmistrov, A. & Olson, O., (eds), Accounting Management Control and Institutional Development. Oslo: Cappelen, s. 231–245.

Jönsson, Sten (2013) Market making. In: Fallan, Lars & Nyland, Kari (red.) Perspektiver på økonomistyrning. Bergen: Fakbokforlaget, s. 15-31.

Jönsson, Sten (2013) Swedish research on organisations and management. In: Sandberg, Åke (ed.) Nordic lights. Work, management and welfare in Scandinavia. Stockholm: SNS Förlag, pp. 487-507.

Jönsson, Sten (2013) Accounting and Business Economics traditions in Sweden: A Pragmatic View. In Bondi, Yuri & Zambon, Stefano (eds). Accounting and Business Economics – Insights from National Traditions. New York: Routledge, p. 186 – 202.

Kokk, Gary, Jönsson, Sten and Rovio-Johansson, Airi (2012)
Multi-framing as a tool in top management teams. In Stefan Tengblad, (Ed.) (2012) The Work of Managers. Towards a Practice Theory of Management, pp. 87-101. Oxford: Oxford University Press.

Torfason, Asgeir B., Lundkvist, Gustav och Polesie, Thomas (2011) Att värdera en byggnad. I Broniewics, Ewa & Polesie, Thomas (red.) Våra villkor i verkligheten - den beskrivande ekonomin. s. 133-142. Göteborg: Bokförlaget BAS.



  • The basic banking problem

    Banks are particular among commercial organizations in that they perform by using other people’s money to promote growth and prosperity in surrounding organizations. They perform well by being good at judging the credit worthiness of others and taking appropriate risks in their lending.

    If they perform well banks’ environment grow, if banks environment declines banks find themselves in jeopardy. If a bank loses the trust of depositors and/or lenders its survival is questionable. Trust is a banks core capital. Since it is the nature of banks to manage large volumes of capital they have difficulties to earn a competitive return on investment for shareholders. There have been two counter measures: increasing leverage (increase debt in order to earn more per unit of equity), and increase capital turnover (by carrying out several “deals” with the same amount of capital during a period one can increase the overall return on capital, i.e., through trading). In both cases the bank’s risk increases. This drive toward higher risk taking is what the different Basel agreements seek to regulate.

    Most innovations in the world have been financed by credit. Equity is necessary but it constitutes a miniscule part of the financing of operations in most companies. The leverage effect of credits can be illustrated by the following relation between the return on equity and degree of debt:

    R(E) = R(T) + [(R(T) – R(D)] x D/E

    R(E)= Return on Equity
    R(T) = Return on Total Capital
    R(D) = Interest on Debt
    D = Debt
    E = Equity

    An increased proportion of debt will have a multiplying effect on the return on equity provided that the return on total capital is larger than the interest on debt. The multiplying effect goes both ways – a negative number in the parenthesis will, of course be multiplied by the debt/equity ratio. A bank that is judging a customer’s credit worthiness will have to watch that ratio, the company’s ability to uphold a positive sign in the parenthesis (and a thousand other factors that might influence outcomes) is a measure of its capacity to pay. Basically the customer has two ways of managing operations to improve its earning capacity (R(T)); increase the margin (sales – cost) or increase the rate of capital turnover. The “DuPont-formula” summarizes this:

    R(T) = (Sales – cost)/sales x Sales/T

    It can increase the difference between revenue and cost, and it can try to increase the capital turnover (Sales/T). Again the latter part has a multiplicative effect. If the company has a return of 10 % and a capital turnover of 1 it can, obviously, double its return by increasing turnover to 2. This can be done by reducing the amount of capital tied in operations. Banks will be interested in what companies are doing on that front. It follows that the banker in charge of assessing the estimates included in an application for a company loan has to be well informed about a lot of things. Failure in this respect will result in credit loss – the only cost factor that can increase rapidly and surprisingly in a bank. (The other threatening factor is when there is a run on the bank (loss of trust)).

    The problem with modern bank management is that banks have more or less abandoned their core activity (credit management) and entered other areas of business, often with a promise of higher returns. This has been made possible/necessary by a series of de-regulation steps taken by authorities over the last 30 years, and by the adoption of the new mathematics of risk that has conquered the world over an even shorter period. This has made securitization possible, which has enlarged the investment banking opportunities, and it has made it profitable to trade in securities in the bank’s own portfolio. This development has forced surrounding actors to pay more attention to the same kind of formulas as the ones given above but applied to banks and other financial institutions. A by product of deregulation has been that it is difficult to distinguish between banks and other kinds of financial institutions. Banks have to conduct themselves strategically in several shifting markets. In order to prosper banks have resorted to increasing the debt/equity ration, with the related multiplier effects. A further consequence of de-regulation is that the likelihood of “bubbles” has increased. Somebody has likened earlier regulation in the bank sector to the compartmentalization of an oil tanker that keeps it stable even in rough sea. De-regulation has taken away the compartments and the oil cargo can now flow back and forth inside the ship making it more prone to capsize in rough seas.

    The consequence of strategic action during the period of de-regulation has been a consolidation of the bank sector resulting in a small number of very big banks with global operations (too big to fail) and a reduced number of local banks of the savings bank type. There has been a tremendous import of technology that allows centralization of many bank functions and the turning of branches into “sales offices” where financial “products” are sold to customers who used to save on accounts before but are now looked upon as “investors”.

    We can discern on what type of operations banks earn their revenues in their annual reports, but we have difficulties understanding whether their assets have been valued properly. This is so because accounting rules have been changed to allow market valuations of those assets. Market values are unproblematic in situations where markets function well – because then the prices are real prices – but as markets for most financial products generated by the securitization do not function properly with erratic prices banks are allowed to use models for pricing purposes (and explain how they have done that). This kind of fictitious accounting will generate surprises when write-downs of large amounts become unavoidable (much like credit losses).

    Against this short background it seems in place to warn bank managers that it takes a long time to build trust, but almost no time to destroy it.


  • The Crisis

    There is already a large literature on the financial crisis that broke with the demise of Lehman Brothers in 2008. The explanations to why the crisis took the path that it did are many. For this program it seems natural to lean towards the reasoning presented by scholars in the Economic Sociology tradition. Fundamental to this research orientation is that it does not rely on narrow assumptions concerning human rationality (see Lounsbury & Hirsch, 2010).

    At the core of the crisis was the sub-prime “meltdown”; very large volumes of financial derivatives based in house mortgages, that, after 2003, were of low credit worthiness. Ever since the days of Lyndon Johnson’s Great Society US politicians favour the home owner as the model of a good citizen. State-related agencies were set up to make it easier to mobilize private sector investors to invest in MBS (mortgage-based securities) already in the 1970s. Deregulation made this market attractive to financial sector actors because the volumes were so large. The new rules of the game allowed large banks and ‘shadow banking’ actors entry. In time large sums of capital flowed to the US market because of the low interest rate. The MBS and related derivatives offered good return and insurance against default.

    The subprime bubble could develop because mortgage takers who did not have income could refinance their loans on the basis of increasing property values and in that way the “market” could continue to grow after 2003 when the “ordinary” market seemed to dry up. The continued growth was artificial in the sense that the quality of the underlying loans deteriorated sharply. This coincides with the big banks taking a dominating position. Fliegstein & Goldstein (2010) report that in 2007 the10 largest conduit banks (banks that packaged mortgages into MBS) had 71 % of the market. The concentration happened through acquisitions (made possible by deregulation); of the 10 largest issuers of sub-prime MBS in 2005 8 are out of business or taken over today.

    The problem with the securitization of the mortgages was that when credit losses came and firms in the business started to go under investors could not find out where the losses had occurred. The fear of “hidden losses” started the panic (Swedberg, 2010). When the Lehman Brothers crisis broke traders surveyed by Taylor (2008) still thought that it was a liquidity problem (although it obviously was a solvency problem – assets had been over valued creating a false solvency).

    Myths have prospered in the flow of explanations to the crisis. One such myth is that there was an asymmetry in information between seller and buyer of MBS and that perverse incentives made pushed the sale of risky assets. However MBS require a prospectus to be filed with the SEC and it contains detailed information on the credit worthiness of the mortgage takers included in the package. Another myth is that neither issuer nor conduits (the banks that did the packaging) held on to the bonds (MBS). Not true! Between 2002 and 2007 conduits increased their MBS holdings by 400 %. Why so many banks held on to such risky assets remains to be explained. A third problematic issue is the interaction between MBS issuers and the rating institutes (rating shopping). Rating institutes live off of the fees they receive for rating issues, and issuers have been said to take their business to the institute with the best rating. This, say Fliegstein & Goldstein, (p. 59) is not a good enough explanation since the same procedure has been in place for many years.

  • Theoretical concerns

    The literature on various aspects of the recent (and current) financial crisis has been growing very rapidly. The number of new books is remarkable. It is difficult to keep abreast of this dynamic field especially since there seems to be agreement among many authors about the need for theoretical repositioning of research concerning the financial sector and its actors.

    Even if our research program initially was oriented toward credit assessment issues in banks the crisis has not left us untouched. We are concerned that so many very big banks have gone under during this crisis. This is a clear sign of managerial failure. The basic features of good bank management need to be reformulated. Trust and confidence have been demonstrated to be important parts of banks’ capital. Management by models based in unrealistic assumptions about the world need to be questioned, as well as the rhetoric of future oriented valuation of based in old and unreliable data. We have found in interviews that managers responsible for the bank’s funding (on the interbank market) point to the need to deal with rumours when judging other banks’ credit worthiness, not because they are true or false, but because they have effects on real world actors. The idea of facts as the solid fundament of scientific inquiry is problematic. One could say that it is a fact that there is a rumour out there about more hidden losses in Lehman Brothers, but this does not accomplish much. The banker needs to manage in a world of rumours and to have reasoned, good arguments for her/his recommendations. This kind of “soft data” deliberation needs to be theorized. This subsection of our program will probably be dominated by reviews of literature, but will also post some of our theoretical papers.

  • Accounting issues

    As the character of international banking has changed due to de-regulation over the last couple of decades the regulation of good accounting practice has been unable to keep up.

    Standards designed on assumptions about the possibility to achieve comparability of measures of many financial dimensions for companies in widely different contexts have rendered accounting information less useful for the traditional task of monitoring the efficient use of resources – especially for banks. We have focused on two issues; cash flow accounting and “mark-to-market” where it is virtually impossible to claim any kind of improvement, but easy to point out disadvantages due to the fact that markets do not behave in the way economic theories assume. This is a rather harsh statement, but we think it is fair to require economics to be subject to the same standards of scientific quality as other social sciences. It is not acceptable to build theoretical deductions (using mathematical models) on assumptions that clearly have no basis in real conditions. It is, further, unacceptable to demand that the real world should be re-designed to better match those unrealistic assumptions.

    What has happened up to the current crisis, which is by no means over yet, is a demonstration of the arrogance of imposing models based in unreal assumptions on the social systems of the world, models that very few actors understand and developed by experts on models with little understanding of these social systems (“rocket scientists”).

    Cash flow

    Cash flow statement has been a subject for a considerable debate, especially for banks. In spite of hard resistance from banks in the 1980s, the standard setting body FASB refused to make any exceptions for banks. The result has been that banks, including the Swedish ones, produce a meaningless cash flow statement. Today the Swedish banks are obliged to do this by regulation from The Swedish Financial Supervisory Authority.

    In comparison to other types of companies, a bank earns their money in a completely different way. When a bank takes a loan it is accounted as a debt. Then, when the bank lend out the debt it become an asset in the balance sheet. The point being made here is that banks earn money on the balance sheet. Flows and activities in the balance sheet are crucial to make any judgment of how profitable the bank is.

    The project aims to develop a new kind of cash flow statement by emphasizing activities manifested by the transaction. A transaction is a strong evidence of a value as the “cash” is in the bank. More in detail we work with a cash flow statement that is rooted in the balance sheet and mirror two grounded activities in a bank, investment and financing. To fulfill regulations by the SFSA the operative cash flow can be accounted as net amount.

    Making sense of cash flow statements in banks.
    - Inconsistency and disconnect between actual flow and accounted flow

    Asgeir B. Torfason is a PhD student and his research investigates financial accounting and cash flow in banks. This is his thesis project.

    Banking is about flow of money and maturity transformation involving liquidity risk. The purpose of cash flow statements is reporting of cash receipts and cash payments. In banks this report is problematic because cash is the banks product.

    The aim of the thesis is to find how banks analyze and measure their flow of cash. In order to get similar information about banks financial strength, operational performance, funding and liquidity as the cash flow report in normal firms provides.
    The thesis results are expected to provide help with making sense of the negative cash flow that has been reported in Nordic banks during the last decade. Hopefully it will be possible to illustrate a better picture of banks financial situation by using direct connection between the actual money flows, or payments transactions, and the accounting of these cash flows.

    How does a bank judge another bank?

    In normal times listed banks in Sweden have business relations with let say a hundred banks. In crises the list decreases to just a handful. The question to be answered is how a bank in a financial crisis qualifies to be of enough interest to make business with?

    Banks are for liquidity purposes dependent on loans on the interbank market. Today we do not know much of how a bank judges another bank. This project gives an answer on the question of how bank judge another bank. The aspect of trust and long businesses relations have probably an important function when a bank should judge if they should lend to another bank.

    Fair value accounting

    The saving and loan crisis in the US in the 1980s had a major impact on FASBs in their shift to fair value in accounting. One argument was that if fair value had been used by banks users would have received adequate information earlier. With fair value accounting it is assumed that values continuously adjust to market reactions. Regardless if this is true or not, fair value is here to stay for any foreseeable future in spite of heavy resistance especially amongst banks. In comparison to banks around the worlds European bank have been especially reluctant to fair value accounting.

    We believe that the dimension of accountability is not emphasized enough in the fair value debate. For management to take responsibility there is a need of a transaction. If a transaction has not occurred by management it is problematic to take responsibility. In the case of fair value accounting, management is forced to incorporate values from the market which is based on transaction done by other than management. As an example the profit is turned into a reflexion of how actors outside the bank has acted. Obviously problem of accountability is then created as management and ultimately the board of directors is responsible for stated numbers as profit in financial accounting. Beside the accountability dimension we aim to answer how actors regain their trust of fair values after a crisis.

  • Regulation

    Regulations affecting companies and banks have in recent decades, within the EU and internationally, been focusing on regulatory harmonization. The purpose with this harmonization is to achieve comparability and equal opportunities between companies.

    This, however, bears the risk of theorizing the practical reality too much and, by this, designing the accounting standards to be theoretical tools which allow comparison between different companies instead of constituting a sound practice. Among other things, the definitions used to explain concepts risk giving rise to a “tunnel vision” where things are overlooked because they are not covered by the rule’s criteria. This may affect users, as well as those responsible of the audit and the surveillance in i.e. banks.

    While the framework is based on fact, the existence of a robust norm system seems to be taken for granted. A circumstance illustrated by the fact that either auditors or the supervisory body in several cases not notice what was going on until the disaster was a fact. It is important to emphasize that successful regulation requires not only forceful rules but also management’s standards. Another condition is that the remedies set up, to stop abuses before the situation (in the worst case) has developed into a scandal or a financial crisis, is structured in such a way that they provide an effective control and enforcement system. The question is, by this, whether the design of better rules is the solution to the deficiencies observed among financial companies during the recent financial crisis.

    One central feature in any social system is its regulation through norms and standards – the field of professional experts whom we trust because they base their professional judgment in scientific truths. A short review of the history of regulation in a small country like Sweden and an account of how regulation has been caught up in strong global lobby-structures give reason to doubt whether better regulation is possible and/or desirable.

  • Why are savings banks more efficient?

    In study after study researchers find that savings banks are more efficient managers of peoples savings and allocators of deposits to innovative projects that foster economic growth than the big shareholder owned commercial banks. There are many reasons for this:

    Firstly there has been a rhetoric of shareholder value that has taught us that the share holders choose the members of the board of directors to govern the organization to their best interest. The board in turn selects the CEO and manages the company. Already in the 1930ies it was shown that owners no longer have any significant influence on the management of big companies (Bearle & Means, 1932). The complex organizations of banks in our days have not made it easier to assert influence from the board. Not even CEOs seem to have been aware of what was going on in their own organizations (American Inquiry, 2011, Irish, Icelandic, ). Savings banks have the advantage of not having any uninformed owners to discipline them – they have no owners – but are instead disciplined by the fact that they may lose their clients if they mismanage.

    Secondly, savings banks are most often limited to grant credit in an area they are well informed about. They do better credit assessments, which is the primary tool for risk management. The big global banks have, in many cases introduced standardised forms and automatic decisions, which disconnect the banker from the client. This may work fine with stable trends and bubbles (house prices will continue to rise, not least because of generous credit conditions), but will generate leveraged disasters in crises.

    Thirdly, savings banks have a different view of equity (no owners, remember!). While the big global banks see great profit opportunities in increasing the leverage (decreasing the proportion of equity in relation to debt) – which reduces the bank’s resilience should a downturn come – savings banks tend to grow with the success of the societies they serve – it is in their interest to take an interest in the continued success of their clients. The big banks will develop new "products" to sell in branches that look more and more like sales outlets.

    Lending in independent banks

    This study illustrates how standardization is enacted in a local practice. By using the translation theory this study describes how Basel 2 is implemented in small Swedish saving banks. It is shown that those parts of Basel 2 confirming the existing values of the saving banks are enacted in the form of "plan of action". This applies e.g., capital requirements that confirm the savings banks’ solidity goal from their self-financing which is required as an effect from lack of owners. Basel 2's requirements for a skilled and informed board give legitimacy to banks management group to initiate education and briefings, and continue to strengthen the board's ability to make decisions. The positive attitude of Basel II towards quantitative risk measurement is in opposition to the saving banks' tradition of (within their limited activity area) having access to and use of local, qualitative data. Therefore, no "images of action" arise and thereby no translation occurs. The enactment of regulation is governed from how it confirms or questions prevailing institutional values. Both institution and translation are connected with change. However, the concept of change is so encompassing that more of a developed compartmentalization of description of various types can contribute to both the translation theory and the institutional theory.

  • Management control in banks

    Centralization vs. decentralization

    Contemporary development of business society provides strong arguments for both centralization and decentralization. In this study, we remove this simplifying assumption and elaborate on the research question of how centralizing and decentralizing processes can work simultaneously and interact. Management control, based in the four types of communication suggested by the levers of control, are shown to be able to support both centralizing and decentralizing processes in an organization and develop on how the centralizing processes enable decentralization through interaction between the levers of control. A key factor here is the redefinition of interactive controls as a capacity for bottom-up communication that is potentially driven by employees when considered needed.

    Report in preparation:
    The control package of SHB as a centralized decentralization

    A mixture of professions, different settings for incentives

    For the last twenty years bank have gone through great transitions. As an example greater bank have changed in terms of how and where money is earned. On top of this banks have to adjust themselves to continuously changes in regulating efforts that in turn have created new demands of information both to managers as well as supervisory authorities. In this project we will work in two steps. First we will show how earnings have changed for banks in the last forty years. The first step is intended to deliver proof for the question: what is going on in banks? To answer this question we intend to identify a raise of different professions due to regulating efforts as well as changes in earnings. Interestingly we have noticed in our other projects that career paths for professionals in banks are quite different. As an example risk measurement personnel have increased problems to make a career beyond basic measurement techniques. This indicates that risk measurement experts are an inward looking and isolated profession with little impact on banks future strategy and earnings.


    One of the concerns of the bank management project revolves around the role of communication and the centrality of language in the conceptualizing of banking realities, where language is seen as a constitutive part of such realities. The perspective used is that of language in action, language in use, in the everyday life activities of banking and bankers. Different forms of communication and different actors are included in the studies: employees, customers, investors and the community at large. The focus is on the different functions performed by communication and language and their strategic use for managerial purposes, where the reflections aim at unfolding the relationship between two, in a dynamic that is never ceased to be renewed. In the every day social scenes of the banking realities, in board rooms, at meetings, in the back-offices, at the tellers’ desks, at training facilities, in front of the coffee machine, the bank and the bankers continuously engage in a process of refining, tuning and revising the banking activities and the bank itself. It is this constant work of language and communication which is the focus of the studies comprised in this section, where spontaneous face-to-face conversations, elicited interviews, textual materials produced by the banks or by others and architectural artifacts are considered. Communication and language are analyzed using different but yet not mutually exclusive perspectives which center around an idea of language as a social activity crucial for the understanding of sense-making processes, of ideological structuring, of normative and cogent behaviors, common senses and collective memories.

    The construction of a finance crisis. A rhetorical discourse perspective study (Claes Ohlsson)

    This project is focused the ongoing finance crisis, which began in 2008, from mainly the perspectives of banks both also from other actors. The main aim of the study is to provide a description of how the contemporary crisis develops from the perspectives of especially the four major Swedish banks but also from the perspective of the media, official actors and also from individuals such as politicians and private consumers of finance products and services. The theoretical and methodological framework is based on theories of rhetoric and discourse analysis, where strategies of persuasion, ethical dimensions and organizational communication are in focus for analysis. The material for the project is to be collected from several sources and is mainly based on texts in a multimodal sense and their situational contexts. This includes official documents and webpages, media coverage, advertising as well as readers' comments on articles, in Internet forums and dialogues in different social media.

    A central interest is how the developing crisis is constructed as event(s) in the perspectives of different actors with differing agendas and societal functions. The study of how the crisis is developed in descriptions and stories is discussed with the help of the rhetorical discourse framework. This includes an analysis of how persuasion strategies are used by the actors and also an analysis of how categories of meaning and accounts for actions are used by the actors involved.

    Another interest of the study is how credit losses and also bank incentive programs are treated as connected subjects by the banks at hand and the other actors. The development over time of the crisis is an important aspect in this part of the project study. The time perspective and also the interplay between different actors are key elements in the framework of the project.

    The project provides empirical support for how the contemporary crisis is unfolded and described by the actors involved. The comparison of patterns of communication of the different actors will hopefully lead to a useful discussion on the rationales and value systems that play roles in the relations between banks and other actors.

  • Risk assessment and risk measurement

    It has been claimed that risk measurement will create regulatory capital that is much more aligned to the banks ‘real degree of risk, which will provide financial security and stability and lead to a more efficient banking system.

    The view is that risk measuring is required to exercise control and to make fact-based and defensible decisions. A disclosure of levels of risk would also be beneficial to investors/creditors. Measuring risk is the cornerstone of Basel II , the regulatory regime of the international banking system, resting on a deeply rooted belief in society that risk can be measured, controlled and managed. Numbers allow complex and abstract conditions to be summarized in a way that is easy to understand. Few people challenge the use of numbers, most people find figures reliable and if the majority of influential individuals are convinces that a numerical approach is superior to any other this approach will be uncritically accepted. It seems to be a general unwillingness in society to talk about risk as a product that is constructed, controlled and consumed by networks of people. The assumption is instead that it is possible to capture all relevant facts and circumstances through measurement technologies. The general perception is that numbers deliver the truth and, consequently, they provide a sense of security.

    However, it may be claimed risk modeling is based on a fundamental misunderstanding of the properties of risk. It may be claimed quantification of risk has no justification. Under stable conditions, measured risk is regarded as manageable and controllable. If risk is synonymous with chaos, the risk is an unpredictable and random phenomenon. Under dramatically different circumstances, statistically derived information on historical information cannot be used since such information is derived from models that are unable to adequately capture extremes in values during crisis. Since these risks often arise unexpectedly they are difficult to control. Statistical models may fail since the data produced during crisis are often radically different from data generated during periods of stability. Risk management tools are insufficient for anticipating risk during troubled times.

    In the statistically deductive use of risk the assumptions are never discussed. And it is the threat to the assumptions that indicate the real risk! Yet due to unquestioned assumptions, some bank managers do not recognize the risk they are exposed to. Information provided by the risk measurement tools gets a fact-like status. This may cause an over-reliance on models and statistics – an over reliance that is a new form of risk. Managers may work under the illusion of safety, believing situations are under control.

    There is a need to search for an alternative paradigm since risk can only ever be imperfectly understood if reliance is placed exclusively on the classical conception. The assumptions underlying risk measurement procedures may be challenged. Discussions where quantitative as well as qualitative aspects are evaluated in decision making are essential for assessing risk. In short we argue in favor of risk assessment and against risk measurement.

    Thus it is essential to understand how bank managers perceive risk and how they assess risk. Not much is known today about bank managers' perceptions of risk. A number of researchers have called for empirically based studies on perceptions on risk in practice. We need to examine this by looking at practice and by asking users how bank managers perceive risk. We should ask what behavioral implications are associated with risk as a result of the Basel regulations.

  • Handelsbanken the second safest bank in the world

    We are, as researchers, facing an ethical dilemma since a significant part of the financing of our program comes from a foundation close to Handelsbanken at the same time as we are greatly impressed by its management and would like to highlight some of our observations as solutions for troubled banks to aim for. Fortunately Bloomberg has named the Handelsbanken the second safest bank in the world. Since we believe that a primary goal of banks should be to be safe (not to feed incentive systems by taking excessive risks) we feel obliged to go a little more in detail in explicating some commendable managerial processes developed at Handelsbanken. Yes we have been critical in our approach to our findings, and yes we have interviewed managers in many banks in many countries – we are still impressed. There will be several papers reporting on these findings.

  • Förbättring av pensionsfondernas förvaltning

    AP-fonderna förvaltar 1 000 miljarder kronor för att trygga pensionssystemets finansiella stabilitet över ekonomiska konjunkturer. För pensionärer och samhällsekonomin är det nödvändigt att pensionsfonderna har en stabil och god avkastning. AP-fonderna kritiseras för att de haft en ineffektiv förvaltning, men också för svårigheter att parera konjunktursvängningar. Detta har resulterat i att landets pensionärer de senaste åren fått se sina pensioner sänkta. Det finns goda skäl att närmare studera hur AP-fonderna gör prognoser om ekonomisk utveckling, riskbedömningar och fattar beslut om hur kapitalet skall fördelas på olika tillgångar. Vi gör med utgångspunkt i ekonomisk och psykologisk forskning om beslutsfattande (behavioral economics) studier av hur besluten om placeringar av pensionsfondmedel fattas och kan förbättras med tre empiriska undersökningar: 1. Kvasi-experiment om fondförvaltares prognosförmåga, 2. Fondförvaltares riskbedömningar av investeringsscenarios samt en, 3. Critical incidentbaserad intervjustudie om dag-för-dag-beslutsfattande. Projektets studier publiceras i internationella tidskrifter och avslutas med en sammanfattande svensk rapport kring förbättringar av pensionsfondernas förvaltning och en workshop för fondförvaltare och forskare.

    Medverkande forskare
    Sven Hemlin (projektansvarig)
    Magnus Jansson
    Carl-Christian Trönnberg

    Torsten Söderbergs Stiftelse, 2,6 mkr (stipendiemedel)


  • Cultural aspects

    In the last thirty years there has been a widespread global transformation of the banking sector leading to alternative and often-conflicting cultures within it. The aim of the studies comprised in this section is to conceptualize such changes using the variety of narratives offered by both insiders and outsiders such as academics, writers, film makers, journalists etc. The perspective adopted is that of a dialogic construction, where traces of different discourses coexists in a frame that resembles a rough palimpsest, rather than a polished narrative. The strive for the common sense construction of the financial world is very strong as witnessed by the amount of narratives produced and even more so after the 2008 crisis. Bankers and the public stage their stories in a continuous effort of representing themselves and making sense of the banking world which is viewed as a critical aspect in the understanding of how culture intertwines with economy.

  • Hur fattar banktjänstemannen sina beslut?

    Studier av hur beslutsfattande om krediter går till i banker

    I en intervju säger kreditchefen för Nordea i Skåne att varje kreditförlust på 1 miljon kr fordrar att banken lånar ut 100 miljoner för att täcka förlusten (Amir & Thaerpassand, 2009).

    Vi vill mot bakgrund av detta uttalande i det föreslagna forskningsprojektet undersöka hur enskilda banktjänstemän genomför kreditbedömningar för att utförligt kunna beskriva, förklara och därigenom bättre förstå hur bedömningarna av information i kreditärenden genomförs och på vilka grunder besluten fattas. Betydelsen av forskningsarbetet ligger i att kunna göra säkrare och bättre kreditbedömningar i banker. Detta kan minska riskerna för bankers kreditförluster, men kan också bidra till att bankkunden får en bättre bedömning av sin låneansökan. Projektet kommer också att på ett utförligare och djupare sätt än hittillsvarande forskning gjort belysa och förklara hur den enskilde banktjänstemannen tänker och resonerar vid de beslut han/hon fattar om att tillstyrka eller avslå lån genom användning av process-tracing teknik samt belysa skillnader mellan banker i detta avseende och i två länder (Sverige och Norge). Vår teoretiska utgångspunkt är tvärvetenskaplig genom att kombinera ekonomisk psykologi, företagsekonomi med inriktning mot bank management och ekonomisk vetenskap. Både psykologer och företagsekonomer medverkar i projektet.

    Huvudsyftet med forskningsprojektet är att en bättre förståelse för hur banktjänstemän tänker, resonerar och når fram till ett beslut i kreditgivning. Detta syfte har en betydelse för a) banker att göra mindre kreditförluster och gynna dess kunder, b) för den vetenskapliga kunskapen i psykologi och ekonomi om bankbedömningar som är understuderad. Mer specifikt avser projektet att åstadkomma två saker: a) kunskap och möjliga tillämpningar för banker om hur den enskilde tjänstemannens arbete med kreditbedömningar kan förbättras och b) en processmodell för kreditbedömningar och beslut.

    Projektet startade den 1 januari 2013 vid GRI och är finansierat av Tom Hedelius och Jan Wallanders Stiftelse.


    Sven Hemlin, professor

    Gudrun Baldvinsdottir, professor
    Magnus Jansson, fil. dr.

  • Konsekvenser för banker när nationell reglering blir internationell

    I finanskrisens kölvatten har det på senare år införts en rad internationella regleringar för banker, bland annat med nya krav på kapitaltäckning. I projektet Konsekvenser för banker när internationell reglering blir nationell, studeras vad som händer i banker när regleringen ska tillämpas. Till exempel har en rad nya yrkesgrupper tillkommit till följd av regleringen, till exempel modellerare. Ett syfte med studien är att ta reda på hur information från de nya professionerna används i bankerna. Ser man de nya instrumenten som tillgångar som kan utnyttjas för att förbättra verksamheten? Eller ses de som ett administrativt hinder att överkomma?

    En annan intressant aspekt är hur regleringarna påverkar centraliseringsprocesser inom banker. I decentraliserade banker fattas beslut om krediter av den enskilde handläggaren ute i bankens lokalkontor. Det personliga ansvaret hos kredithandläggaren prioriteras. Det ger ett möte med låntagaren ansikte mot ansikte. Regleringarna som införs kan ses som att centraliseringen förstärks, eftersom regleringen tolkas centralt. För till exempel riskmätning utformas modeller och data samlas in centralt. Paradoxalt kan reglering motverka decentraliserade kreditbeslut som traditionellt inneburit ett lägre risktagande.

    Projektet finansieras med en miljon kronor från Jan Wallanders och Tom Hedelius Stiftelse, samt Tore Browaldhs stiftelse och löper under ett och ett halvt år med start 2015.

Sidansvarig: Lise-Lotte Walter|Sidan uppdaterades: 2017-10-09

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