Banking in a theory of the business cycle: a model and critique of the Basle Accord on risk-based capital requirements for banks

This paper presents a theoretical framework for understanding the investment decisions and financing decisions of financial and non-financial enterprises over the business cycle. At the core of this theoretical framework is an agency problem between relatively more risk averse depositor/bondholders and relatively less risk averse stockholders. The solution to this agency problem is a corporate governance system that takes the form of an up-front contract that directs managers to make portfolio/investment decisions in the interest of their stockholders, and financing decisions in the interest of their depositor/bondholders. This enables depositor/bondholders to offset any risk shifting portfolio/investment decisions made on behalf of the shareholders thereby mitigating the moral hazard problem among debtors and creditors. The Basle Accord on risk-based capital requirements for depository institutions is one particular regulatory application of this more general theoretical framework. The paper concludes with a comparison between the Basle Accord and the 100% reserve or narrow banking proposal as the means of achieving a risk-free medium of exchange and a financial system that facilitates the optimal transfer of resources from savers to investors consistent with society’s aversion towards risk.     

New Governance,Old Norms,and the Potential for Corporate Governance Reform

While the new governance approach to corporate governance offers intriguing ideas about participatory governance, it cannot evade the effects of economic self‐interest. This article addresses three nested concerns relating to the potential of new governance in the corporate context, using three specific examples that illustrate the challenges. The first case illustrates that new governance principles cannot be easily integrated with models of corporate governance that rest on the logic of shareholder primary. The second case study offers an example of a new governance type corporation, but illustrates that new governance faces thorny internal structural challenges, given economic incentives and power imbalance. The third example illustrates that even without these normative and structural problems, new governance would face issues arising out of current strategies employed by corporate decision makers to hedge their own personal risk through equity swaps and other derivatives products, which in turn create new incentives for shirking their responsibilities.     

“软法”与“软组织”——对巴塞尔银行监管体制的再认识

巴塞尔委员会通过发布一系列软法性质的巴塞尔协议推动各国金融监管机构的合作，在促进各国监管规则的协调方面发挥了巨大作用。相较于传统国际法中的以政府间国际组织和条约为中心的运作模式，巴塞尔监管体制的运作方式是比较独特的。一方面，巴塞尔委员会取得的成就与其软组织性有很大关系；另一方面，巴塞尔委员会的软组织性与寡头俱乐部的实质又决定了它在国际金融监管领域所能发挥的作用有很大局限性。     

Accountability, New Public Management, and the Problems of the Child Support Agency

This paper seeks to evaluate the accountability of Next Steps Agencies through the medium of a case study of the Child Support Agency (CSA). The CSA was widely considered to offer a substandard service to its customers. It was the subject of multiple reports by the House of Commons Social Services Select Committee, the Select Committee on the Parliamentary Commissioner, and the Public Accounts Committee. In addition, these committees had at their disposal internal reports from an adjudicator and the Child Support commissioner. The interlock between internal and external machinery for accountability is also considered.     

Efficient compensation for employees' inventions

We analyze a legal reform concerning employees' inventions in Germany. Using a simple principal-agent model, we derive a unique efficient payment scheme: a bonus which is contingent on the project value. We demonstrate that the old German law creates inefficient incentives even if litigation cost is zero. However, the new law (concerning university employees) and the pending reform proposal (concerning other employees) also fail to implement first-best incentives. With suboptimal incentives to spend effort on inventions, the government's goal, an increase in the number of patents, is likely to be missed. A part of this research was done while I enjoyed the hospitality of the University of California in Santa Barbara (Economics Department) and Berkeley (Law School). Financial aid by the Thyssen Stiftung is gratefully acknowledged. classification K 12 . J 33 . C 72     

The Department of Health and Human Services issues proposed regulations on physician incentive payments by hospitals

Hospitals tempted to operate their own physician incentive plans are reminded that, under OBRA 1986, they are precluded from paying physician incentives of any kind to reduce or limit Medicare or Medicaid covered services. In light of the proposed regulations and the guidance of the preamble, hospitals should review their incentive plans to determine whether physicians providing direct patient care are receiving prohibited payments. Further, supervising physicians who are receiving incentives for certain hospital departments may not influence direct care over patients served by those departments, even through other physicians. Some risk may also exist if incentives are based on a formula that considers patients of the supervising physician's medical group. Finally, it may be useful to develop a utilization and quality of care review program specifically designed to assure that patient undertreatment does not occur as a result of any supervising physician incentive program.     

Politicization,banking experience and risk in savings banks

During the global financial crisis, criticism of the politicization and lack of professionalization of the savings banks has taken a central position in the political debate. The aim of this article is to analyze if the political presence of governing bodies in Spanish savings banks has been reflected in their various risk-taking behaviors before and during the financial crisis. We will also analyze whether the influence of the chairman’s banking experience matters. The results do not provide evidence that the composition of the boards of savings bank, or even their politicization, have played a role. However we show that savings banks run by a chairman with previous banking experience are likely to be significantly more solvent and less volatile.     

National health policy: Efficiency-equity synchretism

A new emphasis in national health policy to encourage efficiency has been born in an environment of slower economic growth and an aging population. The increased reliance on market incentives to reduce health care costs does not signal the abandonment of equity as a social objective. To the contrary, the new emphasis on efficiency is intended to provide more and better health care through the generation of savings from the use of management systems to improve productivity. Market incentives and new management systems to increase efficiency are not the antithesis of equity but tools to provide better health care to the poor and to the elderly in an environment of fiscal constraints.     

Sharing the Fruit of Labor: Flexible Application of Justice Principles in an Ultimatum Game with Joint-Production

Individuals often need to negotiate how to distribute jointly produced goods—equally (e.g., 50:50) or equitably (e.g., proportionally to their contributions). We examined whether people have stable preferences, or whether they switch between equality and equity in different situations. Pairs of anonymous participants first produced a common pie, and then distributed it in an ultimatum game. Results suggest that individuals apply different justice principles depending on their contribution. When they produced less than 50%, proposers divided the pie equally. However, when they produced more than 50%, their offers fell between equality and equity. Responders’ ratings of fairness and satisfaction varied similarly; with low production, equality was preferred, whereas with high production, equity was preferred. Nevertheless, equal and equitable offers were generally accepted, and only outright unfair offers were rejected. This suggests that individuals are relatively flexible about which justice principle should be applied, but punish proposers whose offers violate both principles.     

The Self-Relevant Implications of Distribution Rules: When Self-Esteem and Acceptance Are Influenced by Violations of the Equity Rule

Based on the assumption that distribution rules may have similarities to procedures, the present research examined the extent to which a violation of the equity rule can influence feelings of self-esteem and acceptance as a function of people's social value orientation (i.e., prosocial vs. proself orientation) and attributional explanation (internal vs. external). In a scenario study, participants imagined that they received a similar financial reward as their task partner, but this partner, however, put less effort into the task (i.e., violation of the equity rule). Results showed that this unfair outcome negatively influenced people's feelings of self-esteem and acceptance, but only among those with a proself orientation and when an internal explanation was given for differences in input.     

Neurocognitive Disorders in DSM-V: Forensic Perspective

Although determination of diagnosis of cognitive impairments constitutes one of the core objectives of forensic neuropsychological assessment, the diagnostic criteria for cognitive disorders provided by the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV-TR, American Psychiatric Association 2000) have been of low internal and external validity and limited utility. This paper reviews the evolution of diagnosis of cognitive disorders from current DSM-IV-TR to the proposed DSM-V (American Psychiatric Association 2010). The conceptual framework is tracked, along with the body of literature associated with the DSM-V proposal on Minor and Major Neurocognitive Disorders. The quality of evidence for internal and external validity is reviewed, as well as the fairness and utility of newly proposed diagnoses from both clinical and forensic perspectives. Significant conceptual, evidentiary, psychometric, assessment, and practical questions are raised related to the new classification, and recommendations are offered for improvement to the proposal of the DSM-V Work Group on Neurocognitive Disorders.     

Equity, international trade and climate policy

The literature of welfare-maximising greenhouse gas emission reduction strategies pays remarkably little attention to equity. This paper introduces various ways to consider efficiency and equity simultaneously. Lower (higher) discount rates lead to higher (lower) emission reduction. Higher (lower) inequity aversion leads to higher (lower) emission abatement, unless one also considers the negative effects of OECD emission reduction on the exports of developing countries; in that case, the effect of inequity aversion is ambiguous. In the absence of international co-operation, higher (lower) risk aversion leads to lower (higher) emission abatement. With international co-operation, the effect of risk aversion is ambiguous because the higher risk aversion gives more weight to poorer regions and poorer generations. We analyse four ways to introduce compassion in a non-cooperative setting. If observed development aid is a guide, international altruism is small and has little impact on optimal emission control. If countries act as if they 'feel' but not 'physically experience' the climate impact of the most vulnerable country, optimal emission reduction increases, but not substantially so. However, if countries actually have to pay for the damage done, they would prefer to reduce their emissions to much lower levels. Finally, if countries pay as much for emission reduction as other countries suffer from climate change, (that is, if climate policy restores the income distribution to what it would have been without climate change), emissions are rapidly cut to very low levels.     

Constructing the License to Operate: Internal Factors and Their Influence on Corporate Environmental Decisions

Voluntary programs intended to improve corporate environmental practices have proliferated in recent years. Why some businesses choose to participate in such voluntary programs, while others do not, remains an open question. Recent work suggests that companies' environmental practices, including their decisions to participate in voluntary programs, are shaped by a license to operate comprised of social, regulatory, and economic pressures. Although these external factors do matter, by themselves they only partially explain business decision making, since facilities subject to similar external factors often behave differently. In this article, we draw from organizational theory to explain why we would expect a company's license to operate to be ultimately constructed by internal factors, such as managerial incentives, organizational culture, and organizational identity, as these shape both interpretations of the external pressures and organizational responses to them. Using qualitative data from an exploratory study of matched facilities that reached different decisions about participating in a prominent voluntary environmental program, we then report evidence indicative of the role of these internal factors in shaping facilities' environmental decisions. Finally, we offer suggestions for future research that could further develop understanding of how internal organizational characteristics influence environmental management decisions, including those concerning participation in voluntary programs.     

国际金融危机背景下我国的金融监管法律应对

在当前国际金融危机逐步加深的背景下,金融风险对金融监管有制度性需求,而减低机制性金融风险关键在于以法治促进金融体制和金融运行机制的改革与完善。我国金融监管法律制度还存在法律规则的供给机制混乱、供给理念滞后、制定主体多元且规则质量差、效率不高等诸多缺陷。借鉴英美等金融发达国家的监管经验与教训,以及欧盟等区域性合作组织的成功实践,按照巴塞尔银行监管委员会所倡导的金融监管理念,我们理应从金融监管法律的创制、具体处置措施的完善和金融监管立法的国际化三个层面有所作为。     

‘From weird to wired’: MPs,the internet and representative politics in the UK

On 14 May 2002, the House of Commons voted on proposals put forward by the Modernisation Select Committee for reform of the departmental select committee system. This article examines the origins of those proposals, and the outcome of the vote, focusing on one particular proposal to create a Committee of Nomination to place MPs onto select committees. This raises questions regarding two competing academic approaches to explaining parliamentary reform, the ‘attitudinal’ approach and the ‘contextual’ approach, and concludes that, of the two, the ‘contextual’ approach is better placed to explain the failure to create a Committee of Nomination.     

Global Banks as Global Sustainability Regulators?: The Equator Principles

Banks might now seem odd candidates for the role of global sustainability regulator. Nonetheless, in limited areas of their operation, where global banks kept risk on their balance sheets and were financially exposed to many types of risk often otherwise treated as “externalities,” banks began to enact policies to encourage what they construe as “sustainable” banking. A small number of these banks have started to extend these principles of responsible action more broadly, across many of their business lines, as conditions of lending to their corporate clients. To this extent, it is possible to talk about (some) global banks as global sustainability regulators. The “law of unintended consequences” as used in the legal literature almost always refers to the unintended negative consequences of a regulation or policy. In this article, however, we discuss a potentially positive unintended consequence of the deregulatory and privatization trend of the 1980s and 1990s that was fueled by neoliberal political commitments: some private banks have taken a leadership role in regulating development. Specifically, these banks are enacting policies that attempt to mitigate the potentially negative social and environmental consequences of infrastructure development in politically unstable or environmentally fragile landscapes. The vehicle for doing this is a voluntary agreement called the Equator Principles (EPs). The article describes and analyzes the EPs and reports the initial results from an interview‐based study of the various EPs stakeholders, including bankers, government officials, lawyers, consultants, and critics from nongovernmental organizations. We address—from the perspective of these stakeholders—such questions as why the participating banks decided to join the EPs, what effects, if any, the EPs are having on development practice, and whether the EPs will ultimately prove to be more than a public relations exercise.     

业主委员会机会主义行为制度分析

业主与业主委员会之间就维权问题经常产生矛盾．由于业主掌握的信息不充分和搭便车行为导致了内部监督的缺失,而正向激励不足的业主委员会本身就存在着发生道德风险的可能．再加上政府在有效监督制度供给上的严重不足使得业主的实际监督行为面临着过高的交易费用,加剧了业主委员会机会主义行为发生的风险。因此,必须提高政府的制度供给能力,完善内外部监督机制,推进业主委员会服务的市场化和职业化,从而降低监督制度的运行成本,增加有效监督行为的供给。     

THE POLITICS OF COURT STRUCTURE: The Addition of New Federal Judges, 1949–1978

This article analyzes the effects of party control of the Presidency and Congress, and timing during the President's term on the success of proposals to add new federal judges. Proposals for new judges are more likely to pass if the same party controls the Presidency and Congress than if different parties are in power, and proposals are more likely to pass during the first two years of the President's term than during the second two years. Party control exerts a stronger influence than timing. We also find that the variables interact to produce their influence—the only real chance of adding new judges occurs if the same party controls the Presidency and Congress, and the proposal comes early in the President's term. Under all other conditions, the probability of success is small.     

Stumbling toward equity: the role of government in kidney transplantation

In Mortal Peril, Professor Epstein is critical of the current, regulated system for organ donation and suggests that a market for organ tissue would better meet the needs of patients. In this response to Professor Epstein, Professor Laura Dooley and Dr. Robert Gaston pair their skills to attack Professor Epstein's analysis. As they have done on several other occasions, Professors Dooley and Gaston argue that the kidney donation and transplantation arena is fraught with racial inequity, and that Professor Epstein's proposal for a market in kidneys will exacerbate this inequity. The authors maintain that to prevent the poor from being excluded from transplants, the government plays a critical (if imperfect) role in the allocation of these scarce resources. Furthermore, government intervention is acceptable to correct past discrimination because there is scientific evidence that the disproportionate incidence of kidney failure in African Americans is related to the evolutionary pressures of slave trading and slavery. Professors Dooley and Gaston also defend their previous efforts to change the government system of allocation and characterize the government's willingness to adopt their recommendations as an appropriate response to scientific research rather than a governmental susceptibility to lobbying from special interest groups. Finally, the authors criticize Professor Epstein's argument that dialysis is a viable alternative to transplantation because there are significant differences in "quality of life, morbidity and survival." Professors Dooley and Gaston conclude that government intervention is necessary for maintaining the equity in kidney transplantation that a market system would not.     

Equity,equality, and need: A study of the patterns and outcomes associated with their use in intimate relationships

This study examined the extent to which specific justice principles (equity, equality, and need) are associated with different orientations within complex relationships. This contrasts with previous research that has focused on the extent to which justice principle use varies across relationships representing distinctly different goals. Forty-eight men and 60 women were randomly assigned to conditions of equity, equality, or need. Each was asked to describe a recent incident from their own relationship illustrating the principle to which they were assigned. Incidents were coded into one of three domains representing the multiple orientations of intimate relationships. Subjects in the need condition were more likely to describe incidents related to issues of nurturance or personal development, whereas subjects in equity and equality were more likely to describe incidents related to the allocation of responsibilities. Subjects in the equality condition rated their principles as a more desirable basis for decision making in intimate relationships than subjects in either equity or need. Regardless of the relationship domain, subjects in the equality as compared to the equity condition also reported more positive feelings about the decision and themselves as well as more positive and less negative feelings toward their partner.