This dissertation aims to contribute to the emerging field of automated behavioural profiling tools/technology (AMLPT) as applied to anti-money laundering (AML) and fraud detection. We research the effectiveness of the use of profiling technology within the context of compliance Organisations located in large and mediumsized retail and commercial banks within the City of London. The phenomena of profiling and money laundering are quite complex. Subsequently, their study encompasses several academic disciplines: language use, artificial intelligence, categorisation, and the managerial domains of organisational behaviour, networking, and innovation. Using an interpretivist approach, we examine the AMLPT artefact's effectiveness through the use of Rogers' Diffusion of Innovation (Dol) theory, utilising a pluralist methodology that encompasses two case studies for contextual understanding of the domain and survey-based field work. In furthering our understanding of innovation within organisations, we utilise Organisational Effectiveness (OE) theory to provide an analytical framework for the fieldwork and measurement methodology. The proliferation of AMLPT raises a variety of issues arguably more important than market share and technical functionality, particularly such issues as data privacy and the potential for the egregious use of personal or proprietary information (Schwartau 1994; Jennings and Fena 2000; Lyon 2003). Furthermore, what was once perceived as "normal" identity management, data security and data privacy practice may no longer be acceptable in the application of next generation AMLPT in risk-aversive, highly sensitive global financial contexts. Moreover, are the cost and Organisational demands inherent in deploying AMLPT proportionate to the desired result (Bisantz and Ockerman 2002; Vavpotic and Bajec 2009). In understanding the effectiveness of AMLPT, we look beyond the traditional methods of information systems evaluation, and draw on other IS reference disciplines such as IS success and user competence, along with a variety of Organisational effectiveness measures, and their applicability in further defining effectiveness through measures of innovativeness. Critically, we look to examine innovation in an Organisational context, rather than the more traditional domain of individual innovation, the core construct of Rogers' original (1962) work on diffusion.

This thesis consists of three substantive essays on bank efficiency, each constituting a separate chapter. The first essay (Chapter 2) considers banks' functional diversification and its effects on their operating performance. The study classifies banking institutions into financial conglomerates and specialised banks based on their financial characteristics and employs the non-parametric Data Envelopment Analysis (DEA) method to derive their cost and profit efficiencies. The empirical analysis covers banking institutions operating in the ten EU accession countries between 2001 and 2003. The findings suggest that diversification does not improve either cost or profit efficiencies of the sampled banks and are congruent with growing empirical evidence of a "diversification discount" in the financial sector. The second essay (Chapter 3) offers an alternative approach for valid inference in the two-stage DEA framework based on a double bootstrap method. Acknowledging the computational burden associated with double bootstrap procedures, it also provides an algorithm based on deterministic stopping rules, which is less computationally demanding. Monte Carlo evidence indicates that the suggested double bootstrap confidence interval estimators offer a considerable improvement over their single bootstrap counterparts in terms of coverage rates. Moreover, there is also evidence that convergence of the confidence intervals towards their nominal significance levels is non-monotonic. The final essay (Chapter 4) examines the relationship between efficiency changes and stock market reaction to bank merger announcements in Europe and the US over 1997-2003. Changes in cost and profit efficiencies are calculated using the non-parametric DEA method one year prior and three years following the merger announcement. The findings suggest that the stock markets are able to identify efficiency enhancing mergers upon their announcement. Evidence also indicates that it is the profit rather than the cost efficiency measure that is more closely related to what market participants use to forecast post merger performance of the consolidated banks.

This thesis is made up of three stand-alone research papers on the UK commercial banking. The first paper investigates how changes in the macroeconomic conditions, companies' liquidity position, and the financial market indicators affect corporate credit risk over different business cycles. The novelty of this study is that it uses a " total risk" model. The study employs a panel of 130 companies from fifteen industries which were listed on the London Stock Exchange for a period of 26 years. We use a logit estimation technique to conduct the empirical analysis. We find that the liquidity position of both high and low capital intensive companies is the key determinant in influencing credit risk especially when real GDP is in decline. Adverse changes in macroeconomic variables (e.g. inflation and interest rates) can also influence default risk in the long run. On the other hand, financial market variables provide mixed result. We also find that an increase in real GDP reduces the probability of default risk. The second paper examines the effect of changes in macroeconomic conditions, banks' specific, and financial market variables on UK banks' stock returns over the business cycle 1988-1997. A sample of 27 commercial banks (e.g. local and foreign) listed on the London Stock Exchange for a period of ten years was selected. We use a Generalised Method of Moments (GMM) estimation technique with a balanced panel data set to carry out our empirical analysis. This study also employs a " total risk " model, hence, an innovation over previous studies in this area. We find a positive unit change in banks' profitability (NPBT) variable increases local banks' stock returns by 9.7%, and the foreign banks by 12.6%. Meanwhile, a positive unit change in the portfolio risk for both local and foreign banks increase stock returns approximately by 0.01%. Likewise, a positive unit change in macroeconomic variables (e.g. inflation and interest rates) adversely affect the local and foreign banks' stock return. The financial market variable PE increases returns for the local banks by almost 1%. We also find that a positive unit change in real GDP accelerates banks' stock return by 1 %. The third research study concentrates on the risk-based capital (RBC) standards on the UK commercial banks capital-asset ratio and portfolio risk. A sample of 41 banks (e.g. local and foreign) operating in the UK was selected. The data set covers a period often years from 1988-1997. We use a GMM simultaneous equation model to estimate our empirical analysis. From our regression result, we compute an elasticity response of the independent variables on capital-asset ratio and portfolio risk. We find that a positive unit change by the size (e.g total assets), bank holding company (BHC), change in risk (APRISK), net profit after tax (NPAT), and taxation/income (TAXIN) variables decelerate changes in capita-asset ratio. A positive unit change in gearing (GER) variable accelerates changes in capital-asset ratio by 0.80%. On the other hand, a positive unit change by size, bank holding company (BHC), change in capital (ACAP), and non performing loans/total assets (NPLASS) variables decelerates portfolio risk. Gearing (GER) variable also accelerates portfolio risk by 14.76%. We conclude that the implementation of the RBC standards by the UK regulatory agency has been effective in achieving the aim of the Basle Accord in increasing capital and reduce portfolio risk.

Even though it is generally recognised that new firms encounter difficulty in obtaining loans from banks, little research is devoted to the factors which influence bank lending between 2004 and 2007. More precisely, this study attempts to fill a gap in the research of bank lending practices and behaviour of bank loan officers. This research study contributes to the body of literature in the field of lending between banks and SMEs. More specifically, the study compares the lending practices between British and German retail banks. A qualitative approach was employed as a research design because the study related to lending practice and risk within the context of a social setting. It is worth mentioning that whilst the empirical findings in this study predated the credit crunch, the areas discussed was about how banks managed risk and the ambiguous nature of external pressures affecting their lending practices both in the UK and Germany. There is no doubt that after the biggest banking crisis in history, academic researchers and regulatory institutions will inevitably ask questions about how banks behaved during this period. The upshot of recent academic research is compelling and suggests that the regulatory institutions and politicians knew little about the activities of banks particularly in the UK. The findings in this research also reveal that whilst German banks steer towards the Anglo Saxon banking model (shareholder approach); they struggle to shake off their embedded culture and values, oriented towards the goodness of communities (stakeholder approach). The findings also show that British retail banks continue to lend by distance and SMEs continue to believe that banks in Britain orientate their strategies towards large multinational firms.

This thesis analyses alternative models for the provision of micro-credit, with a particular focus on the role of solidarity. It produces a critique of the lending model developed by the Grameen Bank and copied in many parts of the world. The critique focuses on the claim that such schemes are well suited for delivering micro-credit in a sustainable, ie self-financing manner. I argue group solidarity is not an essential component of successful micro-credit schemes, and that lending to individuals can be at least as efficient. I argue that solidarity groups do not perform economic exchange on the basis of ad hoc contracts, as existing literature implies. Rather, solidarity groups are institutions; as such, they are costly. Groups, therefore, require resource input from their members as well as regulations. These findings are shown to be relevant both for informal rotating savings and credit associations (ROSCAs) and solidarity groups of formal micro-lenders. A case study of a South African, Grameen-type lender illustrates that the staff- intensive group interaction implies a cost structure that cannot be supported by the interest income from its micro-credit portfolio. A second case study of a microlender giving credit to individuals finds that sustainability has been achieved with innovative lending technology. Self-selection and cost-saving measures are shown to be effective. The importance of innovation, finding its expression in reduced unit costs rather than enhanced solidarity, leads to a particular perspective on micro-finance: rather than viewing micro-finance as an issue for donor-funded, isolated development projects, micro-finance is seen as part of the financial system. The thesis concludes by pointing out that these findings may be relevant in other fields of development practice. Participatory project design involves costs, not only in micro-credit. However, such costs depend on the specific social environment and may well be justified if they contribute to desirable social processes which are not adequately captured by criteria of self-sustainability.

Mainstreaming inclusive violence prevention is a policy option that has been under-studied. As a strategy, mainstreaming responds to the transversal nature of violence both in its multi-dimensionality and multi-causality, and ultimately highlights violence’s intrinsic links to development. It also acknowledges the strong gender dimensions at play in the manifestation and reproduction of violence. Building upon this understanding and developing a framework for it, this research examines opportunities and constraints for mainstreaming inclusive violence prevention in the agendas of Multilateral Development Banks (MDBs) in Latin America and the Caribbean (LAC). For the past three decades, citizens in LAC have suffered from pandemic levels of violence, which has proved extremely complex and difficult to tackle. Governments in LAC have called for support from two of the largest MDBs in the region, the Inter-American Development Bank and the World Bank. Both have responded, yet slowly and timidly. This research asks three main questions: Why has violence prevention remained marginalised in MDBs’ agendas despite its socio-economic multiplier effects on development? What are the opportunities and constraints to mainstream inclusive violence prevention in MDBs’ agenda? How do national counterparts perceive the potential for mainstreaming inclusive violence prevention and the relevance of MDBs in this regard? The research uses a qualitative methodology, including more than 150 in-depth interviews with MDBs’ staff, shareholders, counterparts, and key informants, and a case study in Colombia. Building on three conceptual bodies of literature related to priority-setting, mainstreaming and donor-recipient aid relations, the research uses cognitive frame, actor power, operational knowledge and organisational treatment as keys to explore the research questions. The findings show that multiple constraints exist, such as competing cognitive frames, contradictory incentives for staff, leadership turnover and lack of in-house expertise, and scattered efforts to develop operational knowledge. Yet opportunities also exist, including an increasing internal space for dialogue, particularly in some sectors, and interest and demand from countries. The main contribution of this thesis is to develop a framework to disentangle factors at play in the emergence and institutionalisation of new, complex, transversal issues that could be usefully adapted to other contexts and topics.

This thesis is composed of three empirical chapters each of which examines separate segments of Turkish banking system from different perspectives. First empirical chapter investigates regional loan distribution of development banks. The findings in this chapter suggest that political connection has played a significant role in development lending. There is also geographical bias which leads to higher volumes of loans in the regions close to the capital city. Second empirical chapter examines Islamic banks and compares them with conventional banks in terms of profitability and competition grounds. The results reveal that Islamic banks earn more returns with respect to conventional banks. The results also suggest that the regulatory changes of the last decade improve market power of these banks. The last empirical chapter investigates micro structure of Repo and Reverse Repo Market of Turkey in which only commercial banks can transact. This chapter initially presents the network topologies of this market that helps one to understand the characteristics of complex network in this market. This chapter then computes a connectivity measure and investigates the drivers of connectivity out of domestic and external factors. Although results provide very rich insights, external factors dominate the behaviour of network in this market.

Since the late 1980s, the Basel Committee has been intending to regulate the financial sector with a view to establish common regulatory standards for the banking industry through the Basel Capital Accords. Successive crises have uncovered several flaws in those directives that were remedied enacting tougher and more sophisticated mandates, particularly regarding the calculation of the Minimum Capital Requirements after the introduction of Value-at-Risk as the official measure to quantify market risks. However, Basel regulations have, in many respects, been incapable to forestall the adverse effects that market turmoil exerts on the banking system. The present thesis aims at analysing the MCR scheme employing the former Basel II and the current Basel III Capital Accords applying the VaR-based Internal Model Approach and the Standardised Approach through a variety of specifications in times of crisis using a sample of Emerging and Frontier stock markets. The findings detected structural glitches in the configuration of the Basel’s MCR formula, given the fact that both the SA and many inaccurate VaR models are allowed to compute MCR. Furthermore, there is clear evidence of the superiority of the Extreme Value Theory to calculate an adequate capital base during abrupt market swings. Basel regulations must act accordingly and reward the accuracy calibrating the extrinsic multiples and additional buffers in line with the behaviour of the models: the thesis underlines that, provided appropriate schemes had been applied, Basel II MCR would have prevented capital shortages in 2007-2008. The thesis also detects the presence of moral hazard and adverse incentives to utilise sharp models like EVT in Basel regulations and proposes a radical overhaul of the SA and a taylor-made evaluation of the parameters of the VaR-based IMA as a methodology to reward and entice the adoption of models that allow the correct estimation of market risk.

This thesis has three main objectives; first, it assesses and evaluates cost and profit efficiencies of the European Union banking system by employing the stochastic frontier analysis (SFA) over the period 2004-2010. It divides the EU region into four groups; the entire EU region, the old and the new EU countries as well as the GIIPS countries. Second, this study investigates the determinants of bank cost and profit inefficiencies with the focus mainly being on the role of banking risks and the world financial crisis (2007-2009) in affecting banking efficiency. Third, this thesis evaluates the impact of different variables on bank stock returns, with the emphasis on bank efficiency, risk and the world financial crisis, over the period 2004-2010. The empirical findings show that commercial banks in the EU improve their cost and profit efficiencies on average between 2004 and 2010. Also, banks in the old EU countries appear to be more cost efficient but less profit efficient compared to banks in the new EU countries. Interestingly, the empirical analysis concludes that overall insolvency, credit and liquidity risks have significant and positive effects on bank cost and profit inefficiencies during the world financial crisis, suggesting that banks that maintain less risk outperform their counterparts during crisis time. The world financial crisis appears to affect negatively both cost and profit efficiencies of EU banks; however, it has stronger negative effect on banks in the old EU member states than in the new EU countries. Finally, the results show that changes in cost and profit efficiencies along with capital and size variables appear to have a positive and significant influence on bank stock performance in the EU and that bank stock returns are significantly sensitive to market and interest rate risks.

Following the opening chapter, which surveys existing literature on the transparency of central bank communication, the remaining chapters each address a simple question to better understand central bank communication, and its effects on financial markets using the European Central Bank (ECB) as a case study. Specifically: o How informative is ECB communication. Chapter 2 provides a glossary that translates explicitly the qualitative information of ECB President monthly press conferences into an ordered scale. We show that the predictive ability of these statements is similar to market-based measures of monetary policy expectations. Moreover, we find that ECB words provide complementary information to macroeconomic variables. o Is it possible to measure objectively qualitative statements. Chapter 3 uses Alceste, textual-content analysis software, to categorize each ECB announcement. We find that these categories explain the volatility of financial market expectations of future monetary policy, but are not statistically helpful in predicting future policy actions. o Is the ECB transparent about its monetary policy framework. Chapter 4 proposes an indirect test of transparency. By looking at ECB explanations of its monetary policy decisions we identify new measures of euro area economic activity and price stability. Then, we use these macroeconomic variables to estimate an ECB-specific empirical reaction function, which better forecasts its future actions compared to standard Taylor-type rules. o Do financial intermediaries understand and believe ECB statements. The final chapter shows that innovations in market expectations about future monetary policy can be explained by unexpected ECB announcements. Hence, we conclude that even if the ECB is a relatively young multinational financial institution, it has already acquired a reputation for telling the truth. Moreover, in order to describe properly its monetary policy we need two dimensions: both the current policy rate and its planned future path.