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Monsoon Paper Dragons: Transparency, Accountability, Risk, and Compliance in Banking Regulation and Practice
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2020 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation explores the overall research question of how transparency- and accountability-driven post-crisis financial regulations within the European Union (EU) have influenced risk control and compliance in banks. The dissertation consists of five substantive chapters: an introductory synthesis; a published law journal article; two published book chapters, one of which is an extensive literature review; and one working paper that has previously been presented at multiple international conferences and is currently under review with a European journal in the field of accounting. In answering the call of the main research question, the dissertation adopts an interdisciplinary analytical framework that combines perspectives from law and the social sciences in the context of empirical material from Scandinavia and the EU. The analysis within the four individual papers and the introductory synthesis chapter follow a qualitative research design. They provide several complementary theoretical and empirical contributions to current research, the most important of which are summarized as follows: Theoretically, an adapted framework that harnesses theories of regulation, institutional theory, principal–agent theory, and legal positivism is used to analyze and explain practice and regulatory developments in the Swedish and international banking sector over a pre- and post- 2008 financial crisis period. Additionally, the concepts of transparency and accountability are explored over a similar period in the context of the regulation-practice nexus of banking in Sweden and the EU. Empirically, this work contributes to current understandings and analysis of specific EU and Swedish regulatory instruments, as well as their impact at the firm and intra-firm level. Moreover, the identified conceptual framework of transparency and accountability is applied at the level of markets and regulations, as well as at the intra-firm level by tracing the influence of post-crisis EU regulation on the risk-control and compliance function within a large listed bank in Sweden that has a strong European presence. Collectively, this analysis offers relevant insights into the tensions between the aims and understandings encompassed within prudential regulation on one hand and organizational understandings and approaches towards risk control and compliance on the other hand. Identifying that there are few, if any, studies that address the interplay between regulatory developments and their impact on the internal processes, management, and control of banks, this dissertation offers an analysis of how transparency and accountability can surface and be operationalized within the regulation-practice nexus of banking. Specifically, it illustrates how regulatory impact can be traced further along the dimensions of transparency and accountability at the inter- and intra-firm levels, as well as at the level of financial markets and regulatory instruments in banking.

Place, publisher, year, edition, pages
Uppsala: Department of Business Studies , 2020. , p. 176
Series
Doctoral thesis / Företagsekonomiska institutionen, Uppsala universitet, ISSN 1103-8454 ; 201
Keywords [en]
Accountability, Banking, Compliance, Financial Regulation, Risk Control, Transparency
National Category
Economics and Business
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:uu:diva-404238ISBN: 978-91-506-2807-4 (print)OAI: oai:DiVA.org:uu-404238DiVA, id: diva2:1393338
Public defence
2020-04-02, Lecture Hall 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, 13:15 (English)
Opponent
Supervisors
Available from: 2020-03-11 Created: 2020-02-15 Last updated: 2020-03-17
List of papers
1. Accounting for Risks in Banks: The Link Between Prudential Regulation and Accounting in Banks
Open this publication in new window or tab >>Accounting for Risks in Banks: The Link Between Prudential Regulation and Accounting in Banks
2015 (English)In: European Company Law, ISSN 1572-4999, E-ISSN 1875-6530, Vol. 12, no 2, p. 89-96Article in journal (Refereed) Published
Place, publisher, year, edition, pages
The Netherlands: Kluwer Law International, 2015
Keywords
accounting, prudential regulation, financial markets, financial institutions, banking regulation, economic stability, risk management
National Category
Business Administration Law and Society
Research subject
Business Studies; Economics
Identifiers
urn:nbn:se:uu:diva-248872 (URN)
Available from: 2015-04-08 Created: 2015-04-08 Last updated: 2020-02-17Bibliographically approved
2. Accounting and control in banks: A literature review
Open this publication in new window or tab >>Accounting and control in banks: A literature review
Show others...
2017 (English)In: Bank Regulation: Effects on Strategy, Financial Accounting, and Management Control / [ed] Anna-Karin Stockenstrand, Fredrik Nilsson, New York: Routledge, 2017, 1, p. 15-63Chapter in book (Other academic)
Abstract [en]

This chapter addresses the gap by identifying and analyzing present knowledge on accounting and control in banks, examines how this research has developed over the time period studied, and proposes some possible avenues for future research. It analyzes the literature studied by applying the reasoning contained in the Fredrik Nilsson and Anna-Karin Stockenstrand framework. The framework supports an empirical categorization of studies using a top-down perspective of banks from regulation, to governance, to financial reporting, and to internal aspects of banks. The Financial and Accounting Regulation category address several issues affecting accounting and control in the banking sector. E. Bengtsson identifies increased political influences on international accounting standard-setting as well as International Accounting Standards Board governance and accountability structures following the 2007 crisis. The financial reporting and disclosure literature addresses issues surrounding risk assessment, investor decision-usefulness, valuation, and governance. The literature on bank visibility addresses bank architecture as well as bank profits and their influence on legitimacy.

Place, publisher, year, edition, pages
New York: Routledge, 2017 Edition: 1
Series
Routledge Studies in Accounting ; 19
Keywords
Accounting regulation, bank lending, corporate governance, fair value accounting, management control, stakeholders in banking, task control
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-312455 (URN)978-1-138-68050-0 (ISBN)978-1-315-56389-3 (ISBN)
Available from: 2017-01-09 Created: 2017-01-09 Last updated: 2020-02-15Bibliographically approved
3. Transparency and Accountability in the European Financial Sector: The Markets in Financial Instruments Directive (MiFID) and Beyond
Open this publication in new window or tab >>Transparency and Accountability in the European Financial Sector: The Markets in Financial Instruments Directive (MiFID) and Beyond
2017 (English)In: Bank Regulation: Effects on Strategy, Financial Accounting and Management Control / [ed] Anna-Karin Stockenstrand and Fredrik Nilsson, Routledge, 2017, 1, p. 104-129Chapter in book (Refereed)
Abstract [en]

This chapter structures the background of inquiry into transparency and accountability in the financial sector is substantiated through an explanation of the interdisciplinary links between banking regulation and practice. In terms of regulatory focus, market efficiency and prudence are two important concerns in the context of financial markets and participants. Regarding market efficiency, market liquidity and information availability are important issues for regulators to consider. In the context of financial markets, transparency may provide the individual merit of promoting market efficiency under certain conditions, although it is generally better understood as a tool for accountability. EU policymakers had long considered how best to enhance market efficiency, and in 1993, they formally adopted the Investment Services Directive of 1993. During the 1980s, regulators were also focused on capital adequacy and the organizational resilience of banks. An important area where regulatory focus on transparency and accountability has risen is the area of internal control and governance within financial institutions.

Place, publisher, year, edition, pages
Routledge, 2017 Edition: 1
Series
Routledge Studies in Accounting ; 19
National Category
Business Administration
Identifiers
urn:nbn:se:uu:diva-380093 (URN)978-1-315-56389-3 (ISBN)978-1-138-68050-0 (ISBN)
Available from: 2019-03-24 Created: 2019-03-24 Last updated: 2020-02-15Bibliographically approved
4. Transparency and Accountability Influences of Regulation on Risk Control: The Case of a Swedish Bank.
Open this publication in new window or tab >>Transparency and Accountability Influences of Regulation on Risk Control: The Case of a Swedish Bank.
2019 (English)Conference paper, Published paper (Other academic)
Abstract [en]

This qualitative in-depth case study explores the influence of financial regulation on risk controlwithin Banque de Montagne, a large listed bank in Sweden. Specifically, the purpose of this paper is toinvestigate the impact of the European Banking Authority´s Guidelines on Internal Governance (GL44), through Swedish Financial Regulation FFFS 2014:1, on the bank’s risk organization along thethree-lines-of-defense model of internal control. FFFS 2014:1 comprises the Swedish implementationof the GL 44, which required banks to reform risk control structures, processes, and roles through amandated split between the operational risk and Compliance functions of the risk organization withinthe bank. Through an analysis of 41 interviews, more than 2100 pages of internal and externaldocuments, and more than 200 hours of observations from 2015 – 2017, the research identifies therelevant changes to transparency and accountability mechanisms across the three lines of defensewithin the organization. The operationalization of these concepts through risk control mechanisms isan important consideration for both banks and regulators who rely on the three lines of defense modelas an industry-wide adoption for effective risk control. The findings suggests that whilst intra- andinter-organizational accountability mechanisms have strengthened under the changed organizationalstructure through the implementation of FFFS 2014:1, challenges to effective transparency remainand may have ambiguous consequences for both organizational and regulatory aims.

National Category
Social Sciences
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-404237 (URN)
Conference
The 25th Nordic Academy of Management Conference
Available from: 2020-02-15 Created: 2020-02-15 Last updated: 2020-02-17Bibliographically approved

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