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Hard Information on Demand? How Institutional Demands Influence Banking
Uppsala universitet, Humanistisk-samhällsvetenskapliga vetenskapsområdet, Samhällsvetenskapliga fakulteten, Företagsekonomiska institutionen.ORCID-id: 0000-0002-4536-0259
2022 (Engelska)Manuskript (preprint) (Övrigt vetenskapligt)
Abstract [en]

This study explores how institutional demands influence banking, with a focus on the implementation of a regulatory initiative named KRITA, where the regulator (the Swedish Riksbank) requires more granular credit information from banks. This is a mirror of the ECB regulation called AnaCredit. The study departs from an institutional perspective (DiMaggio and Powell, 1983) and applies insights toaccounting information to understand how institutional demands of ‘hard’ [digitisable] credit information influence banking. To better understand how KRITA influences banking, a leading bankwith an autonomous branch office network, recognised for low credit losses and excellence in credit assessment, was selected as a case bank. The study builds on interviews with bank personnel,representatives of the Swedish Bankers’ Association, regulators and industry experts, together with retrieved documentation of the institutional demands that has been formed during negotiations between the banks and the regulator in order to enforce the implementation of the KRITA regulation.The study shows that banks responded to the regulatory initiative before it was adopted. The KRITA regulation demands reporting of credit information that needs to be digitisable. Specifically, the regulatory initiative directs more attention to digitisable hard information and no attention to nondigitisable soft information. As a result of the uncertainties, tensions arise between the regulator and the regulated.The study also demonstrates the importance of qualitative information and tacit knowledge for the regulated bank, and the regulatory framework omits important credit information. Moreover, the study demonstrates that the KRITA regulation is a game changer of reporting for the bank, and a central effect of the KRITA regulation is that it forces banks to make IT-investments in order to be able to comply with the regulation when it come into effect. The study contributes to literature on institutional demands (DiMaggio and Powell, 1983; Elliot and Cäker, 2017).The study is a unique case of the KRITA regulation and how KRITA influences banks. In addition to other studies on how institutional demands, i.e. bank regulations, influence organisations and accounting practices (Crawford, 2017; Überbacher and Scherer, 2020), this study shows that even a regulatory initiative such as KRITA influences the bank, even prior to the regulation being adopted and coming into effect

Ort, förlag, år, upplaga, sidor
2022. , s. 34
Nyckelord [en]
Banking, Institutional demands, Regulatory initiative, Credit assessment, Hard information, Soft information, Regulation
Nationell ämneskategori
Företagsekonomi
Identifikatorer
URN: urn:nbn:se:uu:diva-466048OAI: oai:DiVA.org:uu-466048DiVA, id: diva2:1631380
Tillgänglig från: 2022-01-24 Skapad: 2022-01-24 Senast uppdaterad: 2022-01-31
Ingår i avhandling
1. On Institutional Demands in Banking and the Exchange of Hard and Soft Accounting Information
Öppna denna publikation i ny flik eller fönster >>On Institutional Demands in Banking and the Exchange of Hard and Soft Accounting Information
2022 (Engelska)Doktorsavhandling, sammanläggning (Övrigt vetenskapligt)
Abstract [en]

The overarching purpose of the thesis is to explore how institutional demands influence banks, which has been a core issue in banking research. This has become even more critical since the financial crisis of 2007–2009. By conducting a qualitative study and paying attention to the exchange of different forms of hard and soft accounting information, the thesis expands the current knowledge on how institutional demands influence highly regulated organisations, such as banks, which can face sanctions if they are not compliant when potential regulations enter into force.

The thesis contributes to literature on institutional demands, as the thesis shows that even financial regulatory initiatives influence banks. Accordingly, the potential regulations can create tensions between banks and regulators. Here, the increased dependency on information technology (IT), which must be developed, is central. This is demonstrated by studying regulations and the formation of regulatory initiatives, including MiFID II, KRITA and financial robo-advising.

The thesis includes four individual studies and puts them in a larger context, and it relates them to each other to increase our knowledge. Study I, which contributes to knowledge on how exchanges between firms and banks take place. It demonstrates that the exchange is more complex than previous literature suggests, and that the exchange differs depending on what financial services are considered. Studies II–IV then add knowledge on how institutional demands, manifested by regulations and regulatory initiatives, influence banks. These studies also reflect on the importance of qualitative information when adopting new financial regulations and when regulating certain bank services, primarily those services that rely on softer forms of accounting information.

Specifically, Study IV demonstrates how financial robo-advising comes into being and influences financial intermediaries, including FinTech companies, such as modern banks, by focusing on the regulatory discourse and the regulators’ definition of financial robo-advising.

Furthermore, the thesis contributes to the literature on hard and soft accounting information, in the sense that there are a number of different definitions that, to some extent, can be paradoxical. The study demonstrates how the definition that is used in our attempt to capture accounting information also influences the result. This touches on the value that we attempt to measure and the core of what is considered as accounting information.

Finally, the thesis demonstrates that regulators tend to rely more on information, such as numbers and quantitative information, instead of more context dependent information, such as qualitative information. Thus, the demanded accounting information influences and materialises, to some extent, what banks become. This means that the demand from regulators influences these regulated firms, which, in turn, adapt to the demands and develop their infrastructure accordingly. Thus, the IT-infrastructure becomes a part of our physical reality – i.e. the ideas and demands of regulators become transformed by the regulated into the physical information systems, manifested by e.g. financial robo-advisors.  

Ort, förlag, år, upplaga, sidor
Uppsala: Uppsala universitet, 2022. s. 114
Serie
Doctoral thesis / Företagsekonomiska institutionen, Uppsala universitet, ISSN 1103-8454 ; 212
Nyckelord
Banking, Institutional demands, Regulatory initiatives, Exchange, Accounting information, Hard information, Soft information, Financial regulation, KRITA, MiFID II, Financial robo-advising, Transactions, Relationship, Firms, Digitalisation, Tension
Nationell ämneskategori
Företagsekonomi
Forskningsämne
Företagsekonomi
Identifikatorer
urn:nbn:se:uu:diva-466051 (URN)978-91-506-2925-5 (ISBN)
Disputation
2022-04-08, Hörsal 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, 10:15 (Engelska)
Opponent
Handledare
Tillgänglig från: 2022-02-22 Skapad: 2022-01-31 Senast uppdaterad: 2022-02-22

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