Scenarios: Frames of Possibilities and Plausibilities

Scenarios: Frames of Possibilities and Plausibilities

Key Terms

  • Scenarios
  • Scenario Planning
  • Futures
  • Intuitive Logics method
  • Shell
  • GBN
  • Oxford Scenarios Program
  • Predetermined Elements
  • Critical Uncertainty
  • Weak Signals
  • SRI International (Stanford Research Institute)
  • RAND Corporation
  • Hudson Institute
  • DNI US MoD
  • UK MoD
  • Scenario Quadrant
  • Multiple Scenarios
  • Bounded Rationality
  • Cognitive Biases
  • Frames
  • Availability Bias
  • Overconfidence
  • Anchoring
  • Volatile, Uncertain, Complex, and Ambiguous (VUCA)

Key Concepts

Source: UNDP FORESIGHT: THE MANUAL Page 11

Black swans

Rare and discontinuous events that are unprecedented, unexpected and have major effects. They are often inappropriately rationalised after the fact with the benefit of hindsight, but this tendency to see coherence can obscure future threats.

Cognitive bias

A pattern of deviation in judgment that influences the way information is received, processed, retained or called. Cognitive biases influence how inferences, judgements and predictions are drawn.

Cognitive dissonance

The mental stress or discomfort one experiences when confronted with new information or views that contradicts existing values or beliefs. Because humans strive for internal consistency, individuals tend to reduce cognitive dissonance by denying or devaluing new information and views, or rationalising their own values and beliefs.

Complexity

Complex systems are non-linear and diverse networks made up of multiple interconnected elements. Cause and effect relationships within the system are not easily discernable or predictable. Historical extrapolation is futile for predicting emergence (new patterns and behaviours) in complex systems.

Cross-‐cutting issues

Issues or challenges that affect more than a single interest area, institution or stakeholder, and that need to be addressed from all points of view. A Whole-of-Government or Networked approach is useful for addressing cross-cutting issues.

Design thinking

An end-user centred approach to problem-solving that places the final experience at the heart of developing solutions. Following an iterative approach, the rapid prototyping component of design thinking allows for quick adaptation in uncertain environments and continual improvement.

Experimentation and prototyping

Experimentation is a process that seeks to test and validate competing hypotheses. Prototyping refers to creating models or sketches to test ideas and spot problems. Experimentation and prototyping are effective ways to navigate and test hypotheses and ideas in complex or rapidly changing environments.

Interdependence

A relationship of mutual reliance between two or more factors within a system such that changes in one area affect the other(s). 

Path dependency

Describes the inclination to stick to past practice despite the availability of newer, more efficient practices as a result of cognitive biases such as risk aversion, or concerns over sunk costs. Designing contingency plans with ample space for flexibility can reduce the constraints of path dependency.

Resilience

A system’s ability to cope with and recover from shocks or disruptions, either by returning to the status quo or by transforming itself to adapt to the new reality. Resilient systems view change as inevitable and failure as opportunities to learn from. Social cohesion, trust in government and national pride can be indicators of resilience.

Retrospective coherence

The act of assigning coherence in hindsight in order to make sense of what is happening. Practicing retrospective coherence presents the danger of making decisions for the future based on the lessons of history that may not apply in similar situations.

Signposts

Milestone markers between a given future and the present day that aid visualisation by breaking up the path to the future into manageable blocks of time. They can help to gauge the extent to which a particular scenario has materialised, and can be events, thresholds or trends and patterns.

Systems thinking

An analytical problem solving approach that looks at a system as a whole rather than in isolation, and that considers the interactions between various elements. The big-picture overview helps decision makers see linkages across different sections within the system and can foster collaboration and shared understanding within an organisation. Systems thinking also helps policymakers identify cause-effect relationships and how they might manifest in the larger system.

Unknown unknowns

Issues and situations in organisations that have yet to surface and which are blind spots for planners who are unaware that they do not know about them.

Whole-‐of-‐Government (WG)

A ‘joined-up’ or networked approach to governance that represents a shift from vertical to horizontal decision-making, and which is built on inter-agency collaboration and collective problem-solving. Whole-of-government involves a process of identifying, analysing and managing wide-ranging and cross-cutting issues.

Wicked problems

Large and intractable issues and challenges that have no immediate or obvious solutions and whose causes and influencing factors are not easily determined. Wicked problems are characterised by many agents interacting with each other in often mystifying ways, and involve multiple stakeholders operating with different perspectives and goals. 

Purpose of Scenarios

Source: Does the intuitive logics method – and its recent enhancements – produce “effective” scenarios?

Van der Heijden [15] argues that there is a confusing assortment of reasons as to why one should engage in scenarios. He advocates the importance of clearly identifying the purpose of undertaking scenario work — in order to make the appropriate selection of scenario methodology. Van der Heijden argues that “purpose” can be divided along two dimensions; the first dimension is to establish the extent of the scenario work i.e. whether the scenario work is to be a one-off project, or part of on an on-going scenario-based planning process. The second dimension is that of the primary aim of the scenario work, this being either to raise questions, or to answer them — and thus aid decision making.

The combination of these two dimensions results in four purposes of scenario work, namely:

• Sense-making: a one-off ‘exploratory question-raising scenario project’;
• Developing strategy: a one-off ‘decision-making scenario project’;
• Anticipation: an ‘on-going exploratory scenario activity’; and
• Action-based organizational learning: an ‘on-going decision-making activity’.

Van der Heijden continues by suggesting that these four purposes represent a hierarchy of interconnected aims serving the ultimate goal of “strategic success” in which organizational learning is the “overarching broad organisational skill” achieved when the scenario work is an on-going decision-making activity [15, page 162].

Benefits of Scenarios

Source: Does the intuitive logics method – and its recent enhancements – produce “effective” scenarios?

The (mainly practitioner-based) literature contains many testimonials as to the use and organizational benefits of scenarios, which we group under the following headings:

3.1. Enhanced perception


Scenario techniques reportedly enhance corporate and individual perception as they provide a framework for managers to understand and evaluate trends and events as they happen [16], and managers involved in scenario exercises supposedly become better observers of the business environment, more attuned to discerning changes [17]. Porter [18] suggests that scenarios help managers to make explicit their implicit assumptions about the future, and to think beyond the confines of conventional wisdom. This, combined with the fact that scenarios often challenge conventional wisdom and complacency by shifting the “perceptual anchors” from which people view the future, reduces the likelihood of managers and organizations making big mistakes in the future and/or of being caught unaware [19,20].


3.2. A structure for dealing with uncertainty


Scenarios provide a structure for thinking aimed at attacking complexity by allowing managers to deal more openly and explicitly with acknowledged uncertainty [21,16], to arrive at a deeper understanding of what is significant, and to identify what needs to be dealt with – and what is transient and can be ignored [11,22]. Bunn and Salo [23] suggest that, by emphasizing that there are a range of possible futures rather than a single-point future, scenarios reduce the bias for underestimating uncertainties. This is echoed by Docherty and McKiernan [24] who state that “the greatest contribution of scenario planning lies in its active engagement of actors in its process and its power to enable them to think about complexity and uncertainty in external contexts, and then how they might shape the external environment to their own strategic ends” (p. 10).


3.3. Integration of corporate planning functions


Scenario techniques provide a good middle ground between relying on informal and intuitive techniques, and being bound by the methodological constraints of more formal, quantitative techniques. As a result, a greater variety of information and wider company participation can be incorporated into the forecasting and planning process when scenario planning is used [16]. Other authors [25,26] add that scenarios are also able to combine topical intelligence and structure seemingly disparate environmental factors into a useful framework for decision making in a way that no other planning models can.


3.4. A communications tool


According to Allen [21], the communications qualities of scenarios are overwhelming as they provide a rational and non-threatening framework for discussion, even with those outside of the organization [27]. Durance and Godet [28] state that scenarios are also an effective means of rallying employees and communicating strategy across the organization. Bezhold [29] suggests that the scenarios can be used as a marketing and educational campaign throughout the organization. Ringland [25] adds that, by sharing its scenarios with the outside world, an organization can provide the context for dialog with its stakeholders — enabling it to influence its external environment. An added benefit [30] is that the collegiality which usually emerges in a scenario planning exercise does not evaporate once the scenario exercise is complete. Van der Heijden [15,31] reports that Royal Dutch Shell’s scenarios emerged as a powerful management tool by which senior management was able to influence decision-making at all levels throughout the organization, without becoming directly involved in the process or minutiae of the subsequent, scenario-based, evaluation of decisions. This was achieved by making the scenarios the context for key strategic decisions — thus uniting the geographically dispersed, disparate, and decentralized business units in developing a common strategy [28].


3.5. Organizational learning


Although scenario planning was initially understood as a tool for “thinking the unthinkable” [32], a body of literature has subsequently developed around the value of scenarios in terms of individual and organizational learning [11]. This is because scenario exercises ostensibly provide a politically-safe team learning environment and a rich learning process that stimulates creativity [11,15,33–37]. As models of future business environments, scenarios provide a vehicle for pseudo-experimentation in terms of formulating strategic options and then examining the consequences of these options in a range of future environments [15,30,31,38]. By having to articulate their assumptions in a scenario exercise, managers can identify inconsistencies in their own thinking and that of their colleagues in a non-threatening environment [25,37]. At the same time, the necessity in scenario work to undertake detailed analysis of environmental driving forces and their causal relationships, forces individuals to examine their perceptions, stretch their mental models and to develop a shared view of uncertainty [15,31]. All of the foregoing leads to an increased confidence in decision-making [16] and moves the organization towards becoming, what has been termed, a “learning organization” [15].

Based upon our consideration of the above purposes and benefits of the use of scenario methods, we distil from the literature three main objectives of the application of scenario approaches, as follows:


1) Enhancing understanding: of the causal processes, connections and logical sequences underlying events — thus uncovering how a future state of the world may unfold;


2) Challenging conventional thinking: to reframe perceptions and change the mindsets of those within organizations; and


3) Improving decision making: to inform strategy development.

Support for this conclusion also comes from the work of Varum and Melo who, after undertaking a comprehensive bibliometric analysis of the literature on scenario planning, argued that there is a consensus in the literature on three benefits of using scenarios, namely an “improvement of the learning process, improvement of the decision-making process, and identification of new issues and problems” [2, page.362].


Our three objectives are interlinked in that: firstly, understanding the connections, causal processes and logical sequences which determine how events may unfold to create different futures, will challenge conventional thinking and will also prove of benefit in improving organizational decision making and strategy; secondly, challenging conventional thinking, reframing perceptions and changing mind-sets should result in collective organizational learning; and, thirdly, collective organization learning should enhance organizational decision making and strategy — which in turn should enhance collective organizational learning.

Types of Scenarios

Source: An uncertain future, deep uncertainty, scenarios, robustness and adaptation: How do they fit together?

  • Predictive
    • Trend
    • Whatif
  • Explorative
    • Framed
    • Unframed
  • Normative
    • Preserving
    • Transformational

Types of Uncertainty

Source: Nine lives of uncertainty in decision-making: strategies for dealing with uncertainty in environmental governance

Source: A Scenario-based Approach to Strategic Planning – Integrating Planning and Process Perspective of Strategy

Multiple Frames of Changes in Contextual Environment on the Transcational Environment

Source: Using Scenario Planning to Reshape Strategy

Source: Multiple Scenario Development: Its Conceptual and Behavioral Foundation

Source: Multiple Scenario Development: Its Conceptual and Behavioral Foundation

Source: Multiple Scenario Development: Its Conceptual and Behavioral Foundation

Institutions and Methods of Scenario Planning

  • Shell/GBN Intuitive Logics Method
  • Oxford Scenario Planning Approach
  • La Prospective / M Godet
  • Rand Corporation
  • SRI International
  • GBN/Monitor/Deloitte/Center for Long View/Market Sensing and Scenario Planning

Source: Plausibility and probability in scenario planning

Source: The current state of scenario development: an overview of techniques

Research Journals and Authors on Scenario Planning

Source: SCENARIOS IN BUSINESS AND MANAGEMENT: THE CURRENT STOCK AND RESEARCH OPPORTUNITIES

Source: SCENARIOS IN BUSINESS AND MANAGEMENT: THE CURRENT STOCK AND RESEARCH OPPORTUNITIES

Source: SCENARIOS IN BUSINESS AND MANAGEMENT: THE CURRENT STOCK AND RESEARCH OPPORTUNITIES

Source: SCENARIOS IN BUSINESS AND MANAGEMENT: THE CURRENT STOCK AND RESEARCH OPPORTUNITIES

Scenarios Application

  • Business
  • Non Profit Org
  • Philanthropic
  • Public Sector
  • Arts and Culture
  • Governance
  • National Security
  • Transnational Issues

My Related Posts

Shell Oil’s Scenarios: Strategic Foresight and Scenario Planning for the Future

Water | Food | Energy | Nexus: Mega Trends and Scenarios for the Future

Global Trends, Scenarios, and Futures: For Foresight and Strategic Management

On Anticipation: Going Beyond Forecasts and Scenarios

Art of Long View: Future, Uncertainty and Scenario Planning

Narrative, Rhetoric and Possible Worlds

What are Problem Structuring Methods?

Drama Theory: Acting Strategically

Frames in Interaction

Frames, Communication, and Public Policymaking

Frames, Framing and Reframing

Dialogs and Dialectics

Strategy | Strategic Management | Strategic Planning | Strategic Thinking

Key Sources of Research:

Augmenting the intuitive logics scenario planning method for a more comprehensive analysis of causation

James Derbyshire a,∗, George Wright b

a Centre for Enterprise and Economic Development Research, Middlesex University, UK 

b Strathclyde Business School, University of Strathclyde, UK

International Journal of Forecasting 33 (2017) 254–266

Does the intuitive logics method – and its recent enhancements – produce “effective” scenarios?

GeorgeWrighta

RonBradfieldb

GeorgeCairnsca

Warwick Business School, Scarman Road, Coventry, CV4 7AL, UK

bStrathclyde Business School, Abu Dhabi, United Arab Emirates

cSchool of Management, RMIT University, Melbourne, VIC 3000, Australia

Received 30 August 2012, Accepted 2 September 2012, Available online 29 September 2012.

Technological Forecasting and Social Change
Volume 80, Issue 4, May 2013, Pages 631-642

The origins and evolution of scenario techniques in long range business planning

RonBradfielda

GeorgeWrightb1

GeorgeBurta2

GeorgeCairnsb3

KeesVan Der Heijdena4

aUniversity of Strathclyde, Graduate School of Business, 199 Cathedral Street, Glasgow G4 0QU, UK

bUniversity of Durham, Durham Business School, Mill Hill Lane, Durham DH1 3LB, UK

Available online 24 May 2005.

Futures
Volume 37, Issue 8, October 2005, Pages 795-812

How plausibility-based scenario practices are grappling with complexity to appreciate and address 21st century challenges

AngelaWilkinsona

RolandKupersbc

DianaMangalagiude

aFutures Programme, Smith School of Enterprise and the Environment, Oxford University, Hayes House, 75 George Street, Oxford OX1 2BQ, UK

bTHNK, Haarlemmerweg 8a, 1014 BE Amsterdam, The Netherlands

cSmith School of Enterprise and the Environment, Oxford University, UK

dReims Management School, Reims, France

eSmith School of Enterprise and the Environment, Oxford University, Hayes House, 75 George Street, Oxford OX1 2BQ, UK

Received 19 December 2011, Revised 28 September 2012, Accepted 1 October 2012, Available online 27 December 2012.

Technological Forecasting and Social Change
Volume 80, Issue 4, May 2013, Pages 699-710

Scenarios and early warnings as dynamic capabilities to frame managerial attention

RafaelRamírezac

RikuÖstermanb

DanielGrönquistc

aSaïd Business School, University of Oxford, Park End Street, Oxford, OX1 1HP, UK

bItäpaja Ltd., Urakkatie 10-12 A 2, 00680 Helsinki, Finland

cNormannPartners AB, Engelbrektsgatan 9-11, SE-114 32 Stockholm, Sweden

Received 4 November 2011, Revised 21 October 2012, Accepted 24 October 2012, Available online 19 November 2012.

Technological Forecasting and Social Change
Volume 80, Issue 4, May 2013, Pages 825-838

Rethinking the 2 × 2 scenario method: Grid or frames?

RafaelRamireza1

AngelaWilkinsonab1

aSaid Business School, Oxford, UK

bSmith School of Enterprise and Environment, Oxford, UK

Received 19 March 2013, Revised 9 October 2013, Accepted 17 October 2013, Available online 22 November 2013.

Technological Forecasting and Social Change
Volume 86, July 2014, Pages 254-264

Integrating organizational networks, weak signals, strategic radars and scenario planning

Paul J.H.Schoemaker

George S.Day

Scott A.Snyder

Wharton School, University of Pennsylvania, Philadelphia, PA, USA

Received 18 December 2011, Revised 7 October 2012, Accepted 9 October 2012, Available online 20 December 2012.

Technological Forecasting and Social Change
Volume 80, Issue 4, May 2013, Pages 815-824

Extensional versus intuitive reasoning: the conjunctive fallacy in probability judgment.

Tversky, A., & Kahneman, D. (1983).

Psychological Review, 90, 293–315.

Scenarios and Forecasting: Two Perspectives

KeesVan Der Heijden

Received 1 December 1998, Accepted 1 January 1999, Available online 6 October 2000.

Technological Forecasting and Social Change
Volume 65, Issue 1, September 2000, Pages 31-36

Directions in scenario planning literature – A review of the past decades

Celeste Amorim

VarumCarlaMelo

Department of Economics, Management and Industrial Engineering, University of Aveiro, Campus Universitário de Santiago, 3810-193 Aveiro, Portugal

Available online 18 November 2009.

Futures
Volume 42, Issue 4, May 2010, Pages 355-369

Decision making and planning under low levels of predictability: Enhancing the scenario method

GeorgeWrighta

PaulGoodwinb1

aDurham Business School, University of Durham, Mill Hill lane, Durham City, DH1 3lB, United Kingdom

bSchool of Management, University of Bath, Bath, BA2 7AY, United Kingdom

Available online 5 June 2009.

International Journal of Forecasting
Volume 25, Issue 4, October–December 2009, Pages 813-825

Living in the Futures

Harvard Business Review May 2013

https://hbr.org/2013/05/living-in-the-futures

Strategic reframing : the Oxford scenario planning approach

Rafael RamírezAngela Wilkinson

Oxford, UK : Oxford University Press, 2016.

Strategic Foresight Primer

Angela Wilkinson

Evolving practices in environmental scenarios: a new scenario typology

Angela Wilkinson and Esther Eidinow

James Martin Institute, Said Business School, University of Oxford, Park End Street, Oxford OX1 1HP, UK

Received 10 March 2008
Accepted for publication 20 August 2008 Published 15 December 2008
Online at stacks.iop.org/ERL/3/045017

2008 Environ. Res. Lett. 045017

https://iopscience.iop.org/article/10.1088/1748-9326/3/4/045017/pdf

HOW SCENARIOS BECAME CORPORATE STRATEGIES: ALTERNATIVE FUTURES AND UNCERTAINTY
IN STRATEGIC MANAGEMENT

Bretton Fosbrook

A Dissertation submitted to
The Faculty of Graduate Studies
in
Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy

Graduate Program in Science and Technology Studies York University
Toronto, Ontario

December 2017

Uncertainty, Decision Science, and Policy Making: A Manifesto for a Research Agenda.

David Tucket, Antoine Mandel, Diana Mangalagiu, Allen Abramson, Jochen Hinkel, et al..

Critical Review: A Journal of Politics and Society, Taylor and Francis 2015, 27 (2), pp.213 – 242.

10.1080/08913811.2015.1037078 . hal-02057279

Scenarios Practices: In Search of Theory

Angela Wilkinson University of Oxford UK

Journal of Futures Studies, February 2009, 13(3): 107 – 114

Towards a relational concept of uncertainty: Incorporating the human dimension

Brugnach, M.1; A. Dewulf 2; C. Pahl-Wostl 1 and T. Taillieu 3

1. Universität Osnabrück, Germany
2. Wageningen University, The Netherlands
3. Katholieke Universiteit Leuven, Belgium
Contact author: Marcela Brugnach, mbrugnac@usf.uos.de

Ambiguity: the challenge of knowing and deciding together

M. Brugnach a,*, H. Ingram b,c

a Faculty of Engineering Technology, University of Twente, The Netherlands 

b Southwest Center, University of Arizona, United States
c School of Social Ecology, University of California Irvine, United States

environmental science & policy 15 (2012) 60–71

Toward a relational concept of uncertainty: about knowing too little, knowing too differently, and accepting not to know. 

Brugnach, M., A. Dewulf, C. Pahl-Wostl, and T. Taillieu.

2008.

Ecology and Society13(2): 30. [online]

URL: http://www.ecologyandsociety.org/vol13/iss2/art30/

http://www.ecologyandsociety.org/vol13/iss2/art30/

Policy Analysis: A Systematic Approach to Supporting Policymaking in the Public Sector

WARREN E. WALKERa,b,*
a RAND Europe, Leiden, Netherlands
b Delft University of Technology, Delft, Netherlands

JOURNAL OF MULTI-CRITERIA DECISION ANALYSIS

 JMultiCritDecisAnal9: 11–27 (2000)

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.201.3202&rep=rep1&type=pdf

Integrated management of natural resources: dealing with ambiguous issues, multiple actors and diverging frames

A. Dewulf*, M. Craps*, R. Bouwen*, T. Taillieu* and C. Pahl-Wostl**

*Center for Organizational and Personnel Psychology, Katholieke Universiteit Leuven, Tiensestraat 102, 3000 Leuven, Belgium (E-mail: art.dewulf@psy.kuleuven.ac.be, marc.craps@psy.kuleuven.ac.be,rene.bouwen@psy.kuleuven.ac.be, tharsi.taillieu@psy.kuleuven.ac.be)
**Institute of Environmental Systems Research, University of Osnabru ̈ck, Albrechtstrasse 28, Osnabru ̈ck, Germany (E-mail: pahl@usf.uni-osnabrueck.de)

More is not always better: Coping with ambiguity in natural resources management

M. Brugnach a, b, *, A. Dewulf c, H.J. Henriksen d, P. van der Keur d

a Faculty of Engineering Technology, University of Twente, The Netherlands
b Institute for Environmental Systems Research, University of Osnabrück, Germany c Public Administration and Policy Group, Wageningen University, The Netherlands d Geological Survey of Denmark and Greenland, Denmark

Journal of Environmental Management xxx (2010) 1e7

ORGANIZATIONAL CHANGE AND MANAGERIAL SENSEMAKING: WORKING THROUGH PARADOX

LOTTE S. LU ̈ SCHER Clavis Consultancy

MARIANNE W. LEWIS University of Cincinnati

Academy of Management Journal 2008, Vol. 51, No. 2, 221–240.

Sustainable Development: Mapping Different Approaches

Bill Hopwood, Mary Mellor, Geoff O’Brien Sustainable Cities Research Institute
6 North Street East,
University of Northumbria,

Newcastle on Tyne, NE1 8ST
Tel: 0191 227-3500 Fax: 0191 227-3066

E-mails:
Bill Hopwood: william.hopwood@unn.ac.uk

Sustainable Development, 13. pp. 38-52. ISSN 0968-0802

Published by: Wiley-Blackwell
URL: http://dx.doi.org/10.1002/sd.244 <http://dx.doi.org/10.1002/sd.244&gt;

Click to access Mapping_Sustainable_Development.pdf

The Environmental Goffman: Toward an Environmental Sociology of Everyday Life

BRADLEY H. BREWSTER

Gaylord Nelson Institute of Environmental Studies, University of Wisconsin, Madison, Wisconsin, USA

MICHAEL MAYERFELD BELL

Department of Community & Environmental Sociology, University of Wisconsin, Madison, Wisconsin, USA

Society and Natural Resources, 23:45–57 Copyright # 2010 Taylor & Francis Group, LLC ISSN: 0894-1920 print=1521-0723 online
DOI: 10.1080/08941920802653505

An uncertain future, deep uncertainty, scenarios, robustness and adaptation: How do they fit together?

H.R. Maier a, *, J.H.A. Guillaume b, H. van Delden a, c, G.A. Riddell a, M. Haasnoot d, e, J.H. Kwakkel e

a School of Civil, Environmental and Mining Engineering, The University of Adelaide, Adelaide SA 5005, Australia b Water & Development Research Group (WDRG), Aalto University, Tietotie 1E, Espoo 02150, Finland
c Research Institute for Knowledge Systems, Hertogsingel 11B, 6211 NC Maastricht, The Netherlands
d Deltares, Fresh Water Department, Delft, The Netherlands

e Delft University of Technology, Faculty of Technology Policy and Management, Delft, The Netherlands

Environmental Modelling & Software

http://dx.doi.org/10.1016/j.envsoft.2016.03.014

https://ojs.unbc.ca/index.php/design/article/viewFile/1723/1324

Towards a user’s guide to scenarios – a report on scenario types and scenario techniques

Lena Borjeson1, Mattias Hojer1, Karl-Henrik Dreborg1,3, Tomas Ekvall2, Goran Finnveden1,3

Environmental strategies research – fms, Department of Urban studies, Royal Institute of Technology, Stockholm

Department of Energy and Environment, Chalmers University of Technology, Gothenburg.

Swedish Defence Research Agency (FOI), Stockholm

https://www.osti.gov/etdeweb/servlets/purl/20688312

The current state of scenario development: an overview of techniques

Peter Bishop, Andy Hines and Terry Collins

foresight, Vol. 9 Iss: 1 pp. 5 – 25 2007

Identification and classification of uncertainties in the application of environmental models

J.J. Warmink a, *, J.A.E.B. Janssen a, b, M.J. Booij a, M.S. Krol a

a Department of Water Engineering and Management, Faculty of Engineering Technology, University of Twente, P.O. Box 217, 7500 AE Enschede, the Netherlands b Waterboard Rijn and IJssel, P.O. Box 148, 7000 AC Doetinchem, the Netherlands

Environmental Modelling & Software 25 (2010) 1518e1527

Wicked Problems: Implications for Public Policy and Management

Brian W. Head1 and John Alford2,3

Administration & Society 2015, Vol. 47(6) 711–739

DOI: 10.1177/0095399713481601

ORGANIZATIONS AS RHETORIC: KNOWLEDGE-INTENSIVE FIRMS AND THE STRUGGLE WITH AMBIGUITY

MATSALVESSON Universityof Gothenburg

Journal of Management Studies: 30:6 November 1993 0022-2380

https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1467-6486.1993.tb00476.x

Forty years of wicked problems literature: forging closer links to policy studies,

Brian W. Head (2019)

Policy and Society, 38:2, 180-197, DOI: 10.1080/14494035.2018.1488797

https://doi.org/10.1080/14494035.2018.1488797

Uncovering the origin of ambiguity in nature-inclusive flood infrastructure projects

Ronald E. van den Hoek 1Marcela Brugnach 1Jan P. M. Mulder 1,2 and Arjen Y. Hoekstra 1

Ecology and Society 19(2): 51. http://dx.doi.org/10.5751/ES-06416-190251

Coping with Complexity, Uncertainty and Ambiguity in Risk Governance: A Synthesis

Ortwin Renn, Andreas Klinke, Marjolein van Asselt

AMBIO (2011) 40:231–246
DOI 10.1007/s13280-010-0134-0

Risk frames and multiple ways of knowing: Coping with ambiguity in oil spill risk governance in the Norwegian Barents Sea

Tuuli Parviainena,⁎, Annukka Lehikoinenb, Sakari Kuikkaa, P.ivi Haapasaaria

a University of Helsinki, Finland, Ecosystems and Environment Research Programme, Faculty of Biological and Environmental Sciences, P.O Box 65, Viikinkaari 1, FI-

00014 Helsinki Finland

b University of Helsinki, Finland, Ecosystems and Environment Research Programme, Faculty of Biological and Environmental Sciences, Kotka Maritime Research Center,

Keskuskatu 10, FI-48100 Kotka, Finland

https://doi.org/10.1016/j.envsci.2019.04.009

Environmental Science & Policy

Volume 98, August 2019, Pages 95-111

https://www.sciencedirect.com/science/article/pii/S146290111930022X

Nine lives of uncertainty in decision-making: strategies for dealing with uncertainty in environmental governance

Art Dewulf and Robbert Biesbroek

Public Administration and Policy group, Wageningen University and Research, Netherlands

POLICY AND SOCIETY
2018, VOL. 37, NO. 4, 441–458 https://doi.org/10.1080/14494035.2018.1504484

https://www.tandfonline.com/doi/pdf/10.1080/14494035.2018.1504484

Coping with Uncertainty in River Management: Challenges and Ways Forward

J. J. Warmink1 & M. Brugnach1 & J. Vinke-de Kruijf2 & R. M. J. Schielen1,3 & D. C. M. Augustijn1

Received: 1 March 2017 / Accepted: 21 June 2017 /

Water Resour Manage (2017) 31:4587–4600 DOI 10.1007/s11269-017-1767-6

The Implications of Complexity for Integrated Resources Management

C. Pahl-Wostl

Institute of Environmental Systems Research, University of Osnabrück, Germany

Click to access Keynote_Pahl.pdf

A relational approach to deal with ambiguity in multi-actor governance for sustainability

M. Craps1 & M. F. Brugnach2

1Centre for Economics and Corporate Sustainability,
KU Leuven, Belgium
2Faculty of Engineering Technology, University of Twente, The Netherlands

WIT Transactions on Ecology and The Environment, Vol 199, © 2015 WIT Press www.witpress.com, ISSN 1743-3541 (on-line)
doi:10.2495/RAV150201

Futures Studies: Theories and Methods

Sohail Inayatullah

https://www.bbvaopenmind.com/en/articles/futures-studies-theories-and-methods/

Scenario thinking and usage among development actors

William Robert Avis

University of Birmingham 18 October 2017

Methods of Future and Scenario Analysis

Overview, assessment, and selection criteria

Hannah Kosow Robert Gaßner

DIE Research Project “Development Policy: Questions for the Future”

Bonn 2008

German Development Institute

SCENARIO PLANNING FOR STRATEGIC REGIONAL TRANSPORTATION PLANNING

Christopher Zegras1, Joseph Sussman2, Christopher Conklin3 Forthcoming (March 2004) in

ASCE Journal of Urban Planning and Development

How Scenario Planning Influences Strategic Decisions

A recent study sheds light on how the use of scenario planning affects executives’ strategic choices.

Shardul Phadnis, Chris Caplice, and Yossi Sheffi

May 27, 2016 MIT Sloan Management Review

https://sloanreview.mit.edu/article/how-scenario-planning-influences-strategic-decisions/

How to Make Sense of Weak Signals

There’s no sense in denying it: interpreting weak signals into useful decision making takes time and focus. These three stages can help you see the periphery—and act on it—much more clearly.

Paul J.H. Schoemaker and George S. Day

April 01, 2009

https://sloanreview.mit.edu/article/how-to-make-sense-of-weak-signals/

A Review of Scenario Planning Literature

T Chermack et al

Using Scenario Planning to Reshape Strategy

Rather than trying to predict the future, organizations need to strengthen their abilities to cope with uncertainty. A new approach to scenario planning can help companies reframe their long-term strategies by developing several plausible scenarios.

Rafael Ramírez, Steve Churchhouse, Alejandra Palermo, and Jonas Hoffmann

June 13, 2017

Sloan Management Review

https://sloanreview.mit.edu/article/using-scenario-planning-to-reshape-strategy/

Scenario Planning: A Tool for Strategic Thinking

Paul J.H. Schoemaker

SLOAN MANAGEMENT REVIEW/WINTER 1995

Chapter 10
The Learning Dimension of Adaptive Capacity: Untangling the Multi-level Connections

Alan Diduck

Adaptive Capacity and Environmental Governance

Derek Armitage l Ryan Plummer Editors

Using Trends and Scenarios as Tools for Strategy Development

Shaping the Future of Your Enterprise

by Ulf Pillkahn

ISBN 978-3-89578-304-3

Risk frames and multiple ways of knowing: Coping with ambiguity in oil spill risk governance in the Norwegian Barents Sea

Tuuli Parviainena,⁎, Annukka Lehikoinenb, Sakari Kuikkaa, P.ivi Haapasaaria

a University of Helsinki, Finland, Ecosystems and Environment Research Programme, Faculty of Biological and Environmental Sciences, P.O Box 65, Viikinkaari 1, FI-00014 Helsinki Finland

b University of Helsinki, Finland, Ecosystems and Environment Research Programme, Faculty of Biological and Environmental Sciences, Kotka Maritime Research Center, Keskuskatu 10, FI-48100 Kotka, Finland

Environmental Science and Policy 98 (2019) 95–111

How Issues Get Framed and Reframed When Different Communities Meet: A Multi-level Analysis of a Collaborative Soil Conservation Initiative in the Ecuadorian Andes

ART DEWULF1*, MARC CRAPS1 and GERD DERCON2

1Centre for Organizational and Personnel Psychology, Katholieke Universiteit, Leuven, Belgium

2International Institute of Tropical Agriculture (IITA), Ibidan, Nigeria

Journal of Community & Applied Social Psychology

J. Community Appl. Soc. Psychol., 14: 177–192 (2004)

Defining Uncertainty

A Conceptual Basis for Uncertainty Management in Model-Based Decision Support

W.E. WALKER1, P. HARREMO€EES2, J. ROTMANS3, J.P. VAN DER SLUIJS5, M.B.A. VAN ASSELT4, P. JANSSEN6 AND M.P. KRAYER VON KRAUSS2

1Faculty of Technology, Policy and Management, Delft University of Technology, The Netherlands,

2Environment & Resources DTU, Technical University of Denmark, Denmark,

3International Centre for Integrative Studies (ICIS), Maastricht University, The Netherlands,

4Faculty of Arts and Culture, Maastricht University, The Netherlands,

5Copernicus Institute for Sustainable Development and Innovations, Utrecht University, The Netherlands, and

6Netherlands Environmental Assessment Agency, National Institute of Public Health and the Environment (RIVM), The Netherlands

Integrated Assessment

2003, Vol. 00, No. 0, pp. 000–000

1389-5176/03/0000-000

A Structured Approach to Strategic Decisions

Reducing errors in judgment requires a disciplined process.

Daniel Kahneman, Dan Lovallo, and Olivier Sibony

MIT Sloan Management Review

March 04, 2019

https://sloanreview.mit.edu/article/a-structured-approach-to-strategic-decisions/

A move toward scenario analysis

William R.Huss

Chronotopes of foresight: Models of time‐space in probabilistic, possibilistic and constructivist futures

Ilkka Tuomi

1Meaning Processing Ltd, Helsinki, Finland

2Stellenbosch Institute for Advanced Study (STIAS), Wallenberg Research Centre at Stellenbosch University, Stellenbosch, South Africa

Received:21November2018 |  Revised:15January2019 |  Accepted:15January2019

DOI: 10.1002/ffo2.11

https://onlinelibrary.wiley.com/doi/full/10.1002/ffo2.11

A Scenario-based Approach to Strategic Planning
– Integrating Planning and Process Perspective of Strategy

Prof. Dr. Torsten Wulf, Philip Meißner and Dr. Stephan Stubner

2010

Click to access ap-no-6-scenario-based-approach-to-strategic-planning.pdf

The 4 Whys of Scenario Thinking

M Brain

About the Kearney-Oxford Scenarios Programme

AT Kearney

https://www.kearney.com/web/atkearney-oxford-scenarios-programme/scenarios-programme

Scenarios in the strategy process: a framework of affordances and constraints

Victor Tiberius

Tiberius European Journal of Futures Research (2019) 7:7 https://doi.org/10.1186/s40309-019-0160-5

Objectivity and a comparison of methodological scenario approaches for climate change research

Elisabeth A. Lloyd · Vanessa J. Schweizer

Synthese (2014) 191:2049–2088 DOI 10.1007/s11229-013-0353-6

https://link.springer.com/article/10.1007/s11229-013-0353-6

Cross-impact balances:
A system-theoretical approach to cross-impact analysis

Wolfgang Weimer-Jehle T,1
University of Stuttgart, Institute for Social Sciences V, Research Unit Risk and Sustainability, Seidenstr. 36,

70174 Stuttgart, Germany

Technological Forecasting & Social Change 73 (2006) 334–361

ScenarioWizard 4.3. Constructing Consistent Scenarios Using Cross-Impact Balance Analysis.

Manual.

Wolfgang Weimer-Jehle

https://docplayer.net/81069764-Scenariowizard-4-3-constructing-consistent-scenarios-using-cross-impact-balance-analysis-manual-wolfgang-weimer-jehle.html

Improving environmental change research with systematic techniques for qualitative scenarios

Vanessa Jine Schweizer and Elmar Kriegler

2012 Environ. Res. Lett. 044011

https://iopscience.iop.org/article/10.1088/1748-9326/7/4/044011/meta

Systematic construction of global socioeconomic pathways using internally consistent element combinations

DOI:10.1007/s10584-013-0908-z

Vanessa Jine Schweizer

Brian C. O’Neill

The current state of scenario development: An overview of techniques

DOI:10.1108/14636680710727516

Peter Bishop

Andy Hines

Terry Collins

https://www.researchgate.net/publication/228623754_The_current_state_of_scenario_development_An_overview_of_techniques

Should Probabilities Be Used with Scenarios?

Stephen M. Millett Futuring Associates LLC USA

Plausibility and probability in scenario planning

DOI:10.1108/FS-08-2012-0061

Rafael Ramirez

Cynthia Selin

https://www.researchgate.net/publication/263366784_Plausibility_and_probability_in_scenario_planning

Click to access ACCEPTED_Plausibility_and_Probability_in_Scenario_Planning_March_24_2013.pdf

Scenario development without probabilities — focusing on the most important scenario

Volker Grienitz & Michael Hausicke & André-Marcel Schmidt

Eur J Futures Res (2014) 15:27

DOI 10.1007/s40309-013-0027-0

Foundations of Scenario Planning: The Story of Pierre Wack

By Thomas J Chermack

2017

ROLE OF SCENARIO PLANNING AND PROBABILITIES
IN ECONOMIC DECISION PROBLEMS – LITERATURE REVIEW AND NEW CONCLUSIONS

Helena GASPARS-WIELOCH page1image38230256*

Department of Operations Research, Faculty of Informatics and Electronic Economy, Poznan University of Economics and Business, Al. Niepodleglosci 10, 61-875, Poznań, Poland

*E-mail: helena.gaspars@ue.poznan.pl

https://doi.org/10.3846/cibmee.2019.011

http://cibmee.vgtu.lt/index.php/verslas/2019/paper/viewFile/422/123

Overcoming obstacles to effective scenario planning

McKinsey on Finance Number 55, Summer 2015

https://www.mckinsey.com/~/media/McKinsey/dotcom/client_service/Corporate%20Finance/MoF/Issue%2055/MoF55_Overcoming_obstacles_to_effective_scenario_planning.ashx

Increasing the effectiveness of participatory scenario development through codesign

Marissa F. McBride 1Kathleen F. Lambert 2Emily S. Huff 3Kathleen A. Theoharides 4Patrick Field 5 and Jonathan R. Thompson 1

1Harvard Forest, Harvard University, Petersham, Massachusetts, 2Harvard Forest, Harvard University and Science Policy Exchange, Petersham, Massachusetts, 3Michigan State University, Department of Forestry, East Lansing, Michigan, 4Climate and Global Warming Solutions, Executive Office of Energy and Environmental Affairs, Boston, Massachusetts, 5Consensus Building Institute, Cambridge, Massachusetts

 E&S HOME > VOL. 22, NO. 3 > Art. 16

https://www.ecologyandsociety.org/vol22/iss3/art16/

Scenarios in business and management: The current stock and research opportunities

Victor Tiberius a,⁎, Caroline Siglow a, Javier Sendra-García b

a University of Potsdam, Faculty of Economics and Social Sciences, Potsdam, Germany

b Universidad Complutense de Madrid, Madrid, Spain

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7467075/

Plotting Your Scenarios

Jay Ogilvy and Peter Schwartz

GBN

PROBABILISTIC APPROACHES: SCENARIO ANALYSIS, DECISION TREES AND SIMULATIONS

Click to access probabilistic.pdf

Navigating Uncertain Times
A Scenario Planning Toolkit for the Arts & Culture Sector

Literature Review

Multiple Scenario Development: Its Conceptual and Behavioral Foundation

DOI:10.1002/smj.4250140304

Paul Schoemaker

https://www.researchgate.net/publication/220041993_Multiple_Scenario_Development_Its_Conceptual_and_Behavioral_Foundation

FORESIGHT: THE MANUAL

UNDP

UNDP Global Centre for Public Service Excellence (GCPSE) 

Foresight as a Strategic Long-Term Planning Tool for Developing Countries

UNDP

UNDP Global Centre for Public Service Excellence (GCPSE) 

https://www.undp.org/publications/foresight-strategic-long-term-planning-tool-developing-countries

Plausibility indications in future scenarios

Wiek, A., Withycombe Keeler, L., Schweizer, V. and Lang, D.J. (2013)

Int. J. Foresight and Innovation Policy, Vol. 9, Nos. 2/3/4, 2013

Plausibility and probability in scenario planning

Rafael Ramirez and Cynthia Selin

Foresight · March 2014

DOI: 10.1108/FS-08-2012-0061

Integrating organizational networks, weak signals, strategic radars and scenario planning

Paul J.H. Schoemaker ⁎, George S. Day, Scott A. Snyder Wharton School, University of Pennsylvania, Philadelphia, PA, USA

Technological Forecasting & Social Change 80 (2013) 815–824

The current state of scenario development: an overview of techniques

Peter Bishop, Andy Hines and Terry Collins

Foresight · February 2007

DOI: 10.1108/14636680710727516

Chronotopes of foresight: Models of time‐space in probabilistic, possibilistic and constructivist futures

Ilkka Tuomi1,2

Futures Foresight Sci. 2019;1:e11.
https://doi.org/10.1002/ffo2.11

Using Trends and Scenarios as Tools for Strategy Development

Shaping the Future of Your Enterprise

by Ulf Pillkahn

Book

An Analysis and Categorization of Scenario Planning Scholarship from 1995-2016

Thomas J. Chermack Colorado State University USA

DOI:10.6531/JFS.201806.22(4).0004

Journal of Futures Studies, June 2018, 22(4): 45–60

https://jfsdigital.org/articles-and-essays/2018-2/vol-22-no-4-june-2018/an-analysis-and-categorization-of-scenario-planning-scholarship-from-1995-2016/

A review of scenario planning

https://www.semanticscholar.org/paper/A-review-of-scenario-planning-Amer-Daim/ad450aaf200096756634e84549da77c20963ae6a

Scenario analysis to support decision making in addressing wicked problems: pitfalls and potential

Innovation, Dynamic Capabilities and Leadership

Paul J.H. Schoemaker, Sohvi Leih, David J. Teece March 23, 2018

Scenario planning with a sociological eye: Augmenting the intuitive logics approach to understanding the Future of Scotland and the UK

Professor R. Bradley MacKay a,⁎, Dr. Veselina Stoyanova b

a The Gateway, North Haugh, School of Management, University of St Andrews, St Andrews, Scotland KY16 9RJ, UK

b Strathclyde Business School, University of Strathclyde, 199 Cathedral Street, Glasgow, Scotland G4 0QU, UK

Technological Forecasting & Social Change 124 (2017) 88–100

https://www.sciencedirect.com/science/article/pii/S0040162516302451

Scenarios in business and management: The current stock and research opportunities

Victor Tiberius a,⁎, Caroline Siglow a, Javier Sendra-García b 

University of Potsdam, Faculty of Economics and Social Sciences, Potsdam, Germany

Universidad Complutense de Madrid, Madrid, Spain

Journal of Business Research 121 (2020) 235–242

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7467075/

How plausibility-based scenario practices are grappling with complexity to appreciate and address 21st century challenges

AngelaWilkinsona

RolandKupersbc

DianaMangalagiude

aFutures Programme, Smith School of Enterprise and the Environment, Oxford University, Hayes House, 75 George Street, Oxford OX1 2BQ, UK

bTHNK, Haarlemmerweg 8a, 1014 BE Amsterdam, The Netherlands

cSmith School of Enterprise and the Environment, Oxford University, UK

dReims Management School, Reims, France

eSmith School of Enterprise and the Environment, Oxford University, Hayes House, 75 George Street, Oxford OX1 2BQ, UK

Technological Forecasting and Social Change

Volume 80, Issue 4, May 2013, Pages 699-710

Special Issue: Scenario Method: Current developments in theory and practice

Edited by George Wright, George Cairns, Ron Bradfield

Volume 80, Issue 4, 

Pages 561-838 (May 2013)

https://www.sciencedirect.com/science/article/abs/pii/S0040162512002971

Scenario methodology: New developments in theory and practice Introduction to the Special Issue

George Wright a,⁎, George Cairns b, Ron Bradfield c

a Warwick Business School, Coventry, UK
b RMIT University, Melbourne, Australia
c Strathclyde Business School, Glasgow, UK

Technological Forecasting & Social Change xxx (2013) xxx–xxx

Scanning the Periphery

by 

HBR 2005

Scenario Planning Literature

Recent Articles

Bouhalleb, Arafet and Ali Smida, “Scenario Planning: An investigation of the construct and its measurements,” Wiley Online Library, February 9, 2018

Favato, Giampiero, “Embedding real options in scenario planning: A new methodological approach,” June 17, 2016

Gray, Jane, “Ofgem targets “flexible” scenario planning,” Network, October 12, 2016

Gray, Michael, “Scottish business scenario planning’ for independence over Brexit, minister confirms,” October 14, 2016

Hartung, Adam “The No. 1 Lesson from Hurricane Matthew and Brexit: Scenario Planning is Crucial,” October 7, 2016

Lang, Trudi, and Rafael Ramirez, “Building new social capital with scenario planning,” Technological Forecasting and Social Change, Science Direct, July 8, 2017

Phadnis, Shardul, “How Scenario Planning Influences Strategic Decisions,” MIT Sloan Management Review, Summer 2016

Powch, Andrew, “Overcoming Uncertainty with the Aid of Scenario Planning,” Industry Week, October 17, 2017

Raford, Noah, “Online foresight platforms: Evidence for their impact on scenario planning and strategic foresight,” Elsevier, August 2015

Ramírez, R., & Selin, C., “Plausibility and probability in scenario planning,” Foresight, 16(1), 54-74, March 4, 2014

Ramirez, Rafael, Sheve Churchhouse, Alejandra Palermo, and Jonas Hoffman, Using Scenario Planning to Reshape StrategyMIT Sloan Management Review, June 13, 2017

Ramirez, Rafael, “How scenario planning makes strategy more robust,” Oxford Answers, January 28, 2020

Schoemaker, PJH, Scenario planning: A Tool for Strategic Thinking, MIT Sloan Management Review, 1995

Schwarze, Margaret and Lauren J. Taylor, “Managing Uncertainty—Harnessing the Power of Scenario Planning,” The New England Journal of Medicine, July 20, 2017  

Wilkinson, A. and Kupers, R. “Living in the Futures,” Harvard Business Review, May 2013

Wilkinson, A. and Ramirez, R. “2010 Canaries in the Mind,” Journal of Future Studies

Books

Cairns, George and George Wright, Scenario Thinking: Preparing Your Organization for the Future in an Unpredictable World, Palgrave Macmillan, 2nd ed., 2018 

Harris, Jared D. and Michael J. Lenox, The Strategist’s Toolkit, Darden Business Publishing, 2013

Laudicina, Paul, World Out of Balance: Navigating Global Risks to Seize Competitive Advantage, McGraw Hill, 2005

Ramirez, Rafael and Angela Wilkinson, Strategic Reframing: The Oxford Scenario Planning Approach, Oxford University Press, May 24, 2016

Ramirez, Rafael, John W. Selsky and Kees van der Heijden, Business Planning for Turbulent Times: New Methods for Applying Scenarios, earthscan, 2010

Schwartz, Peter, The Art of the Long View: Planning for the Future in an Uncertain World, Crown Business Publishing, 1996

Van Der Heijden, Kees, Scenarios: The Art of Strategic Conversation, John Wiley and Sons Ltd., 2010

Wade, Woody, Scenario Planning: A Field Guide to the Future, John Wiley and Sons, Inc., 2012


Have question or additional suggestions? Please contact Terry Toland

Portfolio Planning Models for Corporate Strategic Planning

Portfolio Planning Models for Corporate Strategic Planning

Key Terms and Ideas

  • Business And Its Policy
  • Concept of Strategy
  • Strategic Management
  • Vision, Mission, Objectives And Goals
  • Environment Analysis And Diagnosis
  • Strategic Advantage Analysis
  • Corporate Strategy
  • Michael Porter’s Generic Strategies
  • Formulation Of Functional Strategy
  • Types Of Strategies
  • Diversification Strategies For Companies
  • Turnaround, Retrenchment Divestment, And Liquidation Strategies For Companies
  • TOWS Matrix Analysis
  • BCG Matrix
  • Ansoff’s Matrix
  • ADL Matrix
  • The General Electric Model
  • Porter’s Five Forces Model
  • Mckinsey’s 7’s Framework
  • Value Chain Concept Analysis
  • Business And Investment Level Strategy
  • Vertical Integration And Strategic Alliances
  • Acquisitions And Joint Ventures
  • Tailoring Strategy Analysis
  • Industrial Environment Analysis
  • Strategic Change Management
  • Strategies For Competing In Globlizing Markets
  • Corporate Culture and Leadership
  • Strategic Control System
  • Matching Structure And Control Analysis
  • Strategy implementation And Control
  • Business Process Reengineering And Benchmarking
  • TQM, Six Sigma
  • Management And Contemporary Strategic Issues

Analytical Methods for Startegic Planning and Analysis

Image Source: The Strategic Development Process

Strategic Choices and Decisions

  • Product Portfolio (SBU Level) – What products should we sell/make?
  • Business Portfolio (Corporate Level)- What Businesses should we be in?

Analytical methods for Corporate Portfolio Planning

  • GE/Mckinsey Nine Cell Matrix
  • BCG Growth Share Matrix
  • Shell/Directional Policy Matrix DPM
  • ADL Strategic Conditions Matrix
  • Ansoff Matrix
  • Hofer/Schendel Matrix
  • and many other variants

BCG Growth Share Matrix

Image Source: BCG Matrix: Portfolio Analysis in Corporate Strategy

Image Source: THE PRODUCT PORTFOLIO

Image Source: Group Map

GE/McKinsey Nine Cell Matrix

Image Source: GE MCKINSEY MATRIX

Image Source: PRODUCT STRATEGY TOOLS – GE/MCKINSEY PORTFOLIO MATRIX

Shell/Directional Policy Matrix

Image Source: PRODUCT AND PORTFOLIO ANALYSIS

ADL Matrix

Image Source: ADL Matrix (Portfolio Management)

Ansoff Matrix

Image Source: ANSOFF MATRIX

Hofer/Schendel Matrix

Image Source: PRODUCT AND PORTFOLIO ANALYSIS

My Related Posts

Strategy | Strategic Management | Strategic Planning | Strategic Thinking

The Origins and History of Management Consulting

Hierarchical Planning: Integration of Strategy, Planning, Scheduling, and Execution

Profiles in Operations Research

History of Operations Research

Shell Oil’s Scenarios: Strategic Foresight and Scenario Planning for the Future

Art of Long View: Future, Uncertainty and Scenario Planning

George Dantzig and History of Linear Programming

Key Sources of Research

Strategic planning : models and analytical techniques :

Dyson, Robert G.

Chichester, West Sussex, England ; New York : Wiley, c1990.

Strategic Portfolio Planning Systems.

In: Multinational Strategic Planning. Palgrave Macmillan, London.

Channon D.F., Jalland M. (1978)

The Strategic Development Process

Robert G. Dyson, Jim Bryant, John Morecroft and Frances O’Brien

https://www.academia.edu/26231766/The_Strategic_Development_Process

Why you’ve got to put your portfolio on the move

July 22, 2020 |

McKinsey

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/why-youve-got-to-put-your-portfolio-on-the-move


The Corporate Portfolio

JANUARY 01, 1977 By Bruce Henderson


The Product Portfolio

JANUARY 01, 1970 By Bruce Henderson

https://www.bcg.com/publications/1970/strategy-the-product-portfolio


BCG Classics Revisited: The Growth Share Matrix

JUNE 04, 2014 

By Martin Reeves, Sandy Moose, and Thijs Venema

What Is the Growth Share Matrix?

BCG

https://www.bcg.com/en-us/about/our-history/growth-share-matrix

Enduring Ideas: The GE–McKinsey nine-box matrix

September 1, 2008 | Article

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/enduring-ideas-the-ge-and-mckinsey-nine-box-matrix

Enduring Ideas: Classic McKinsey frameworks that continue to inform management thinking

July 1, 2008 | Article

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/enduring-ideas-classic-mckinsey-frameworks-that-continue-to-inform-management-thinking

Corporate Portfolio Management:

Appraising Four Decades of Academic Research

by Michael Nippa, Ulrich Pidun, and Harald Rubner

Academy of Management Perspectives

Not dead yet: the rise, fall and persistence of the BCG Matrix

Problems and Perspectives in Management, Vol. 15, Iss. 1, pp. 19-34,

Dag Øivind Madsen

Date Written: March 27, 2017

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2954610

Product and portfolio analysis

An Empirical Comparison of Standardized Portfolio Models

Jerry Wind

Vijay Mahajan

https://www.researchgate.net/publication/260183736_An_Empirical_Comparison_of_Standardized_Portfolio_Models

Designing Product and Business Portfolio

Jerry Wind

Vijay Mahajan

https://www.researchgate.net/publication/260183490_Designing_Product_and_Business_Portfolio

https://hbr.org/1981/01/designing-product-and-business-portfolios

Effects of portfolio planning methods on decision making: experimental results

J. Scott Armstrong
University of Pennsylvania, armstrong@wharton.upenn.edu

Roderick J. Brodie
University of Auckland, r.brodie@auckland.ac.nz

Manage Beyond Portfolio Analysis

HBR 1984

https://hbr.org/1984/01/manage-beyond-portfolio-analysis

Comparison and Usage of the Boston Consulting- portfolio and the McKinsey-portfolio

Portfolio Analysis Models: A Review

Udo-Imeh, Philip T Edet, William E. Anani, Rajunor B.

Strategic Product Portfolio Management:

A Focus on the Bio-Pharmaceutical Sector and Roche

Strategic Analysis through the General Electric/McKinsey Matrix: An Application to the Italian Fashion Industry

BCG Matrix

GroupMap

https://www.groupmap.com/map-templates/bcg-matrix/

The directional policy matrix—tool for strategic planning

S.J.Q.RobinsonaR.E.HichensbD.P.Wade

Long Range Planning

1978

Corporate Strategy: Portfolio Models

Eli Segev

International Thomson Pub., 1995 – Business & Economics – 188 pages

Ansoff Matrix

Product Strategy Tools – GE/McKinsey Portfolio Matrix

http://pmoxon.blogspot.com/2011/09/product-strategy-tools-gemckinsey.html

Methods of strategic analysis and proposal method of measuring productivity of a company

Wasilij Rudnicki

SOME METHODOLOGICAL COMMENTS ON THE DIRECTIONAL POLICY MATRIX

PROFESSOR MALCOLM MCDONALD

Cranfield School of Management

Application of ADL Matrix in Developed Industrial Companies

  • October 2009

Samir Ži

Tonči Mikac

https://www.researchgate.net/publication/258518402_Application_of_ADL_Matrix_in_Developed_Industrial_Companies

THE LIFE-CYCLE APPROACH TO STRATEGIC PLANNING

Arnoldo C. Hax and Nicolas S. Majluf

WP #1493-83 October 1983

BCG Matrix: Portfolio Analysis in Corporate Strategy

ADL Matrix (Portfolio Management)

https://www.comindwork.com/weekly/2019-02-04/productivity/adl-matrix-portfolio-management

AN EMPIRICAL ANALYSIS OF THE BOSTON CONSULTING GROUP’S PORTFOLIO MODEL

Malcolm B. Coate

WORKING PAPER NO. 71

August 1982

PORTFOLIO ANALYSIS – A USEFUL MANAGEMENT TOOL

Samir Žic, Hari Hadžić, Milan Ikonić

The directional policy matrix — a new aid to corporate planning

Available online 19 June 2002.

Prepared by a Member of the Editorial Board from Material published by Shell International Petroleum Company Limited

https://www.sciencedirect.com/science/article/abs/pii/0377841X77900432

Strategic Management and Business Policy: For Managers and Consultant

by B Hiriyappa

GE McKinsey Matrix

Expert Program Management

Rise of Debt and Market Based Finance

Rise of Debt and Market Based Finance

It is also known as Non Bank finance or Shadow Banking.

The key difference between traditional banking and shadow banking is fragmented credit chains in the shadow banking.

Traditional Banking does

  • Maturity Transformation
  • Liquidity Transformation
  • Credit Transformation

While traditional banking has backstops

  • Deposit Insurance
  • Central bank

Shadow Banks are not regulated and do not have advantage of backstops.

Hence they are susceptible to systemic risk and runs.

Questions

  • What is Market based Finance?
  • How big is the market?
  • Institutions?
  • Instruments?
  • Who are the borrowers?
  • Who are the investors?
  • What are the risks in market based finance?
  • Role of Central Banks?
  • How to minimize risks?
  • Regulations? Macro Prudential policies?
  • How are banks involved in market based finance?
  • How are they connected to each other and others?

Key Terms

  • Market based Finance MBF
  • Non Bank Credit Intermediation NCBI
  • Shadow Banking
  • Financial Stability
  • Systemic Risk
  • Liquidity Risk
  • Broker Dealers
  • Non Bank Finance NBF
  • Balance Sheet Economics
  • Market Makers
  • Capital Markets
  • Money Markets
  • Money View
  • Money Flows
  • Network Dynamics
  • Regulatory Arbitrage
  • Credit Chains
  • Fragmented Credit Chains
  • Financial Supply Chains
  • Credit Chain Length
  • Growth of Debt

Growth and Size of Market based Finance

Image Source: BANK AND NONBANK LENDING OVER THE PAST 70 YEARS

Image Source: Shining a Light on Shadow Banking

Image Source: The Shadow Banking System in the United States: Recent Developments and Economic Role

Image Source: Shining a Light on Shadow Banking

Image Source: NON-BANK FINANCE: TRENDS AND CHALLENGES

Image Source: THE GROWTH OF NON-BANK FINANCE AND NEW MONETARY POLICY TOOLS 

Image Source: SHADOW BANKING AND MARKET BASED FINANCE

Structural Dynamics of Banking and Financial System

Changes prior to Global Financial Crisis

  • Rise of Debt
  • Rise of Market Based Finance
  • Increase in capital flows both domestic and cross border

Debt dynamics is related to assets side of balance sheet of financial intemediatory.

Market based Finance is related to liabilities side of balance sheet of Financial Intermediatory.

If the chains of financial intermediation are long, then both assets and liabilities of each participant are linked.

Intermediation results in increase of capital flows. From money markets to capital markets. From deposits to loans. From liabilities to assets. There is both pull and push of money flows in the financial system. Demand for capital and supply of capital. They both are linked by banks and non bank finance. Growth of debt is linked to growth of money markets and non bank finance.

Size of Nonfinancial Business and Household Credit

Image Source: FINANCIAL STABILITY REPORT – NOVEMBER 2020

In a future post I will discuss debt in US and global financial system.

Please see my related posts for evolution of Financial System Complexity and Its dynamics.

Low Interest Rates and Banks’ Profitability – Update October 2020

Funding Sources and Liquidity for US Commercial Banks

Trends in Assets and Liabilities of Commercial Banks in the USA

Size and complexity arise together. Along with balance sheet expansion comes changes in links with counterparties (financial networks and interconnections).

Research continues in this area by several institutions and academics.

  • OECD
  • BIS
  • FED RESERVE
  • ECB
  • FSB
  • BOE
  • IMF
  • BOF
  • Others

Source: Structural developments in global financial intermediationThe rise of debt and non-bank credit intermediation

The global financial crisis of 2008 underlined the importance for policy makers in understanding the scale and types of financial intermediation in their economies. During the financial crisis, non-bank financial intermediation was of particular concern to authorities, as such forms of ‘shadow banking’, contributed to both the root causes of the crisis, the transmission of financial contagion, and the amplification of shocks.

As this report is published, the rapid spread of the novel coronavirus Covid-19 has caused a global health crisis, has brought economic activity in some sectors to a halt, and has presented the greatest challenge to the global financial system since 2008. As then, understanding financial intermediation activities is critical to mapping the faultlines in the global financial system and mounting effective policy responses.

However, the shape of financial intermediation has changed in important ways since the global financial crisis. Activities in non-bank intermediation, including market-based intermediaries like investment funds and securitised products, have grown and are increasingly interconnected with financial markets. Understanding the interplay between these elements, and the benefits and risks of each, offers a more complete understanding of how global finance can contribute to sustainable economic growth. It also helps provide the full picture needed to help policy makers prepare for and respond to shocks, including pandemics.

“Structural developments in global financial intermediation: The rise of debt and non-bank credit intermediation” shines a light on the evolution of global financial intermediation in three key ways. First, it maps the broad-based growth of financial intermediation relative to GDP in many advanced and emerging market economies, and with this growth a shift toward market-based finance. Second, it assesses the shift from equity to debt markets, and the growing imbalances in sovereign and corporate debt markets during a period of highly accommodative monetary policies. Third, it draws attention to key activities in credit intermediation that could contribute to structural vulnerabilities in the global financial system, including: a sharp rise of below-investment grade corporate debt, in particular leverage loans and collateralised loan obligations; the growth of open-ended investment funds that purchase high-yield debt and leveraged loans; and risks associated with the large stock of bank contingent convertible debt.

While these various activities have helped to satisfy investors’ reach for yield during years of market exuberance, they represent new potential faultlines of systemic risk in the event of exogenous shocks, be they from trade tensions, geopolitical risks or the current global pandemic. This report underlines the need for policy frameworks to adapt to market-based finance, and fully reflect the interaction between monetary, prudential, and regulatory tools on credit intermediation. It also underlines the need for dynamic microprudential and activities-based tools to help mitigate excessive risk taking with respect to liquidity and leverage.

By mapping the global financial system, evaluating growing imbalances and risks that could amplify shocks, and assessing the interaction between macro and regulatory tools, this report provides a practical complement to the OECD’s Policy Framework for Effective and Efficient Financial Regulations. Financial authorities should use this analysis to inform both their assessments of activities and risks, and efforts to maximise available tools to harness the benefits of market-based finance to support fair, efficient markets and sustainable economic growth.

Greg Medcraft Director, OECD Directorate for Financial and Enterprise Affairs

Image Source: UNDERSTANDING THE RISKS INHERENT IN SHADOW BANKING: A PRIMER AND PRACTICAL LESSONS LEARNED

Image Source: THE ECONOMICS OF SHADOW BANKING 

Image Source: IS SHADOW BANKING REALLY BANKING?

Table Source: SHADOW BANKING AND MARKET BASED FINANCE

Table 1. A Stylized View of Structural Characteristics of Credit-based Intermediation

Characteristic:Traditional BankingShadow BankingMarket-based Finance
Key Risk TransformationsLiquidity, maturity, leverageCredit enhancement,liquidity, maturity, leverageLess emphasis on credit enhancement and less opaque vs. shadow banking
Institutions Involved in Intermediation Single entityCan be many entities, interconnected through collateral chains and credit guaranteesSingle/few entities
Formal Ex-anteBackstopYesNo / IndirectNo
Implied Sponsor Supportn.a.Yes, can sometimes be contingent liabilitiesNo(insolvency remote)
Example of EntitiesCommercial bankSynthetic CDO, Structured Investment Vehicle (SIV), CNAV MMF, ABCP ConduitBond mutual fund, Distressed debt or PE partnership,Direct lending by pension fund
Main Form of LiabilitiesDebt and deposits,Wholesale & retail-financedDebt,Mainly wholesale financedHighly diverse –Short and long-term debt and equity,Retail & wholesale financed
Key Resulting Financial Stability Risk Systemic risk(institutional spillovers)Systemic risk(institutional spillovers)Shift in price of risk (market risk premia)

My Related Posts

Shadow Banking

Economics of Broker-Dealer Banks

Evolution of Banks Complexity

Low Interest Rates and International Capital Flows

Repo Chains and Financial Instability

Global Liquidity and Cross Border Capital Flows

The Dollar Shortage, Again! in International Wholesale Money Markets

Low Interest Rates and Banks’ Profitability – Update October 2020

Funding Sources and Liquidity for US Commercial Banks

Funding Strategies of Banks

Trends in Assets and Liabilities of Commercial Banks in the USA

Key sources of Research

The growth of non-bank finance and new monetary policy tools 

Adrien d’Avernas, Quentin Vandeweyer, Matthieu Darracq Pariès  

20 April 2020

https://voxeu.org/article/growth-non-bank-finance-and-new-monetary-policy-tools

Financial Stability Report

November 2019

Board of Governors of the Federal Reserve System

Financial Intermediaries, Financial Stability, and Monetary Policy

Tobias Adrian and Hyun Song Shin
Federal Reserve Bank of New York Staff Reports, no. 346 September 2008

US BROKER-DEALER LIQUIDITY IN THE TIME OF FINANCIAL CRISIS

https://www.shearman.com/perspectives/2020/05/us-broker-dealer-liquidity-in-the-time-of-financial-crisis

Unconventional monetary policy and funding liquidity risk

ECB

Structural developments in global financial intermediation

The rise of debt and non-bank credit intermediation

by

Robert Patalano and Caroline Roulet*

OECD

https://www.oecd-ilibrary.org/finance-and-investment/structural-developments-in-global-financial-intermediation-the-rise-of-debt-and-non-bank-credit-intermediation_daa87f13-en

Financial Stability Review, May 2020

ECB

https://www.ecb.europa.eu/pub/financial-stability/fsr/html/ecb.fsr202005~1b75555f66.en.html#toc1

Structural changes in banking after the crisis

Report prepared by a Working Group established by the Committee on the Global Financial System

The Group was chaired by Claudia Buch (Deutsche Bundesbank) and B Gerard Dages (Federal Reserve Bank of New York)

January 2018

BIS

BANK-BASED OR MARKET-BASED FINANCIAL SYSTEMS: WHICH IS BETTER?

Ross Levine

Working Paper 9138 http://www.nber.org/papers/w9138

NATIONAL BUREAU OF ECONOMIC RESEARCH

1050 Massachusetts Avenue
Cambridge, MA 02138
September 2002

Non-bank finance: trends and challenges

Financial Stability Review

Bank of France

2018

The Origins of Bank-Based and Market-Based Financial Systems: Germany, Japan, and the United States

Sigurt Vitols*

January 2001

Financial Stability Report

August 2020

Bank of England

Market-Based Finance:
Its Contributions and Emerging Issues

May 2016

Financial Conduct Authority

Bank-Based Versus Market-Based Financing: Implications for Systemic Risk

https://www.researchgate.net/publication/322088863_Bank-Based_Versus_Market-Based_Financing_Implications_for_Systemic_Risk

Off the radar: The rise of shadow banking in Europe 

Martin Hodula  

16 March 2020

https://voxeu.org/article/radar-rise-shadow-banking-europe

Global Monitoring Report on Non-Bank Financial Intermediation 2019

2020

FSB

https://www.fsb.org/2020/01/global-monitoring-report-on-non-bank-financial-intermediation-2019/

Global Monitoring Report on Non-Bank Financial Intermediation 2018

FSB 2019

https://www.fsb.org/2019/02/global-monitoring-report-on-non-bank-financial-intermediation-2018/

Global Shadow Banking Monitoring Report 2017

FSB 2018

https://www.fsb.org/2018/03/global-shadow-banking-monitoring-report-2017/

Global Shadow Banking Monitoring Report 2016

10 May 2017

FSB 2015 Report

FSB 2014 Report

https://www.fsb.org/wp-content/uploads/r_141030.pdf?page_moved=1

FSB 2013 Report

FSB 2012 Report

FSB 2011 Report

Shadow Banking: Monitoring Vulnerabilities and Strengthening Policy Tools

https://www.garp.org/#!/risk-intelligence/all/all/a1Z1W0000054xEzUAI

BANK-BASED AND MARKET-BASED FINANCIAL SYSTEMS: CROSS-COUNTRY COMPARISONS

Asli Demirguc-Kunt and Ross Levine*

June 1999

https://pdfs.semanticscholar.org/18e5/660bef2325f326bb8077bd0dd6f5225b1bf8.pdf?_ga=2.215410079.942675951.1605328042-1052966156.1604782392

Off the Radar: Exploring the Rise of Shadow Banking in the EU

Martin Hodula

https://www.cnb.cz/en/economic-research/research-publications/cnb-working-paper-series/Off-the-Radar-Exploring-the-Rise-of-Shadow-Banking-in-the-EU/

https://voxeu.org/article/radar-rise-shadow-banking-europe

Shadow Banking: Economics and Policy

Stijn Claessens, Zoltan Pozsar, Lev Ratnovski, and Manmohan Singh

IMF

2012

https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/Shadow-Banking-Economics-and-Policy-40132

Bank-Based and Market-Based Financial Systems: Cross-Country Comparisons

A. Demirguc-Kunt

Published 1999

https://www.semanticscholar.org/paper/Bank-Based-and-Market-Based-Financial-Systems%3A-Demirguc-Kunt/cd8cf558db2f8404271050ba40408a28ac4fcbc4

Market-based finance: a macroprudential view

Speech given by
Sir Jon Cunliffe, Deputy Governor Financial Stability, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Committee

BOE/BIS

Asset Management Derivatives Forum, Dana Point, California Friday 9 February 2017

Shadow Banking and Market Based Finance

Tobias Adrian, International Monetary Fund 
Helsinki

September 14, 2017

https://www.imf.org/en/News/Articles/2017/09/13/sp091417-shadow-banking-and-market-based-finance

Transforming Shadow Banking into Resilient Market-based Finance

An Overview of Progress

12 November 2015

FSB

Mapping Market-Based Finance in Ireland

Simone Cima, Neill Killeen and Vasileios Madouros1,2 

Central Bank of Ireland
December 13, 2019

BANK AND NONBANK LENDING OVER THE PAST 70 YEARS

FDIC

Financial Stability Review

November 2019

ECB

Shadow Banking

Zoltan Pozsar, Tobias Adrian, Adam Ashcraft, and Hayley Boesky

FRBNY Economic Policy Review / December 2013

https://www.newyorkfed.org/research/epr/2013/0713adri.html

Shadow Banking and Market-Based Finance

Tobias Adrian and Bradley Jones

IMF

No 18/14

Why Shadow Banking Is Bigger Than Ever

DANIELA GABOR

https://jacobinmag.com/2018/11/why-shadow-banking-is-bigger-than-ever

The Non-Bank Credit Cycle

Esti Kemp, Ren ́e van Stralen, Alexandros P. Vardoulakis, and Peter Wierts

2018-076

Fed Reserve

The role of financial markets for economic growth

Speech delivered by Dr. Willem F. Duisenberg, President of the European Central Bank, at the Economics Conference “The Single Financial Market: Two Years into EMU” organised by the Oesterreichische Nationalbank in Vienna on 31 May 2001

https://www.ecb.europa.eu/press/key/date/2001/html/sp010531.en.html

Bank deleveraging, the move from bank to market-based financing, and SME financing

Gert Wehinger

OECD

OECD Journal: Financial Market Trends Volume 2012/1
© OECD 2012

Shadow Banking: A Review of the Literature

Tobias Adrian Adam B. Ashcraft

2012 FRBNY

The Global Pandemic and Run on Shadow Banks

FRBKC

2020

https://www.kansascityfed.org/en/publications/research/eb/articles/2020/global-pandemic-run-shadow-banks

Shadow Banking: The Rise, Risks, and Rewards of Non-Bank Financial Services

Roy J. Girasa

The Macroeconomics of Shadow Banking

ALAN MOREIRA and ALEXI SAVOV∗

THE JOURNAL OF FINANCE • 2017

Is Shadow Banking Really Banking?

Bryan J. Noeth ,  Rajdeep Sengupta

Saturday, October 1, 2011

FRBSL

https://www.stlouisfed.org/publications/regional-economist/october-2011/is-shadow-banking-really-banking

Three Essays on Capital Regulations and Shadow Banking

Diny Ghuzini
Western Michigan University, diny.ghuzini@wmich.edu

CLARIFYING THE SHADOW BANKING DEBATE: APPLICATION AND POLICY IMPLICATIONS

Amias Gerety 2017

Institute of International Economic Law Georgetown University Law Center

Commercial Banking and Shadow Banking

The Accelerating Integration of Banks and Markets and its Implications for Regulation

ARNOUD W. A. BOOT AND ANJAN V. THAKOR

(prepared as revised version of Chapter 3 in The Oxford University Press Handbook, The Accelerating Integration of Banks and Markets and its Implications for Regulation, 3rd edition.)

The Shadow Banking System in the United States: Recent Developments and Economic Role

Tresor Economics

France

2013

https://www.tresor.economie.gouv.fr/Articles/ccfd4180-fddb-4333-bd16-0b91f2daa18c/files/6ae6455a-92be-43a5-a94d-91b03b38a8d8

Shadow Banking: Policy Challenges for Central Banks

Thorvald Grung Moe*

Levy Economics Institute of Bard College

May 2014

BANKS, SHADOW BANKING, AND FRAGILITY

Stephan Luck and Paul Schempp

2014 ECB

Restructuring the Banking System to Improve Safety and Soundness

Thomas M. Hoenig
Vice Chairman of the Federal Deposit Insurance Corporation

Charles S. Morris
Vice President and Economist Federal Reserve Bank of Kansas City

Original version: May 2011 Revised: December 2012

Understanding the Risks Inherent in Shadow Banking: A Primer and Practical Lessons Learned

by David Luttrell Harvey Rosenblum and Jackson Thies

FRB Dallas

Shadow Banking Concerns: The Case of Money Market Funds

Saad Alnahedh† , Sanjai Bhagat

Towards a theory of shadow money

Daniela Gabor* and Jakob Vestergaard

The Economics of Shadow Banking 

Manmohan Singh

2013

Regulating the Shadow Banking System

GARY GORTON

ANDREW METRICK

Yale University

The Rise of Shadow Banking: Evidence from Capital Regulation

Rustom M. Irani, Raymakal Iyer, Ralf R. Meisenzahl, and Jos ́e-Luis Peydr ́o

2018-039

Fed Reserve

Shadow Banking: Background and Policy Issues

Edward V. Murphy

Specialist in Financial Economics

December 31, 2013

Shining a Light on Shadow Banking

The Clearing House

https://www.theclearinghouse.org/banking-perspectives/2015/2015-q4-banking-perspectives/articles/shining-a-light-on-shadow-banking

REGULATING SHADOW BANKING*

STEVEN L. SCHWARCZ

2011

Duke Law

Money Creation and the Shadow Banking System Adi Sunderam

Harvard Business School and NBER September 2014

https://dash.harvard.edu/bitstream/handle/1/27336543/sunderam_money-creation.pdf?sequence=1

Financial Crisis Inquiry Commission Report Chapter 2

Shadow Banking

THE SHADOW BANKING CHARADE

By Melanie L. Fein*

February 15, 2013

Assessing shadow banking – non-bank financial intermediation in Europe

No 10/ July 2016

by
Laurent Grillet-Aubert Jean-Baptiste Haquin Clive Jackson
Neill Killeen
Christian Weistroffer

ESRB

Shedding Light on Shadow Banking

Timothy Lane

Bank of Canada

shadow banking and capital markets

RISKS AND OPPORTUNITIES

Group of Thirty

Shadow Banking and Market Based Finance

Tobias Adrian, International Monetary Fund 
Helsinki

September 14, 2017

https://www.imf.org/en/News/Articles/2017/09/13/sp091417-shadow-banking-and-market-based-finance

Financial Stability Report – November 2020

Federal Reserve

https://www.federalreserve.gov/publications/2020-november-financial-stability-report-purpose.htm

https://www.federalreserve.gov/publications/2019-november-financial-stability-report-purpose.htm

https://www.federalreserve.gov/publications/2018-november-financial-stability-report-purpose.htm

https://www.federalreserve.gov/publications/financial-stability-report.htm

Funding Sources and Liquidity for US Commercial Banks

Funding Sources and Liquidity for US Commercial Banks

Funding Types

  • Secured
  • Unsecured
  • Short Term
  • Long Term
  • Domestic
  • Foreign

Image Source: THE DARK SIDE OF BANK WHOLESALE FUNDING

Image Source: WHOLESALE FUNDING OF THE BIG SIX CANADIAN BANKS

Canadian Banks Funding Types

Canadian Banks Funding Instruments

MAPPING U.S. DOLLAR FUNDING FLOWS

US Dollar Funding Sources and Instruments
  • Interbank Funding Market
  • Money Market Mutual Funds Market
  • Repo Market
  • Fed Funds Market
  • Commercial Paper Market
  • Asset Backed Commercial Paper Market
  • Certificate of Deposits
  • Auction Rate Securities
  • Bilateral and Tri Party Repos
  • GSEs
  • GSE Mortgage Pools
  • Finance Companies
  • Broker Dealers
  • ABS Insurers

Major Trends prior to Global Financial Crisis of 2008

  • Decline of Banks and Growth of Mutual Funds
  • Rise of Market Based Finance (Non Bank Finance, Shadow Banking)
  • Globalization of Financial Intermediation
  • Rise of Repo Market
  • Securitization

Please see detailed discussion in this reference from which I have used most of the charts.

Economic Policy Review

Federal Reserve Bank New York

Special Issue: The Stability of Funding Models, Feb 2014

Decline of Banks and Growth of Mutual Funds

Rise of MArket based Finance

Also, known as Non Bank Finance, Shadow Banking

Globalization of Financial Intermediation

Rise of Repo Market

Securitization

How did Central Banks respended during the crisis?

Central Bank Backstops During Financial Crisis

During financial crisis, US Federal Reserve has provided emergency liquidity facilities for markets in which liquidity dried up.

  • AMLF Asset Back Comercial Papers Funding Facility
  • MMLF Money MArket Mutual Funds Funding Facility
  • CPFF Commercial Paper Funding Facility

Macro Prudential Policies and Regulations

For financial stability

Some of the important policies that aim at promoting stability are as follows:

  • deposit insurance
  • lender of last resort
  • supervision
  • capital requirements
  • reserve requirements
  • liquidity requirements
  • transparency and disclosure requirements

Key Terms

  • Market based Finance
  • Shadow Banking
  • Funding LIquidity
  • Funding Sources
  • Funding Instruments
  • Bank Liabilities
  • Interlinked Balance sheets
  • Interconnectivity
  • Balance Sheet Expansion
  • Money Flows
  • Systemic Risk
  • Financial Contagion
  • Capital Requirements
  • BASEL III
  • LCR Liquidity Coverage Ratio
  • Money Market Mutual Funds MMMF
  • Asset Backed Commercial Paper ABCP
  • Commercial Paper CP
  • Repurchase Agreements REPOs
  • Fed Funds
  • Interbank Funds
  • Exposure
  • Spillover
  • Counterparties
  • Cross Border Claims
  • Quadruple accounting

My related Posts

Funding Strategies of Banks

Shadow Banking

The Dollar Shortage, Again! in International Wholesale Money Markets

Low Interest Rates and International Capital Flows

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Contagion in Financial (Balance sheets) Networks

Economics of Money, Credit and Debt

Trends in Assets and Liabilities of Commercial Banks in the USA

Low Interest Rates and Banks’ Profitability – Update October 2020

Key Sources of Research

US dollar funding markets during the Covid-19 crisis – the money market fund turmoil

12 May 2020

BIS

Mapping U.S. Dollar Funding Flows

This interactive map shows how various institutions generally engage with one another, and the Federal Reserve’s balance sheet, in the course of borrowing and lending U.S. dollar instruments in the money markets.

https://www.newyorkfed.org/research/blog/2019_LSE_Markets_Interactive_afonso

Recent stress in money market funds has exposed potential risks for the wider financial system

Prepared by Miguel Boucinha, Laura Capotă, Katharina Cera, Emmanuel Faïk, Jean-Baptiste Galléty, Margherita Giuzio, Maciej Grodzicki, Isabel Kerner, Simon Kördel, Luis Molestina Vivar, Giulio Nicoletti, Ellen Ryan and Christian Weistroffer

Published as part of Financial Stability Review, May 2020.

https://www.ecb.europa.eu/pub/financial-stability/fsr/focus/2020/html/ecb.fsrbox202005_07~725c8a7ec8.en.html

The circular flow of dollars in the world financial markets

Kashi NathTiwari

https://www.sciencedirect.com/science/article/abs/pii/104402839090012C

The Euro-dollar market as a source of United States bank liquidity

Steve B. Steib

Iowa State University

Shadow Banking: The Money View

Zoltan Pozsar

Key Information on the Money Market Mutual Fund Liquidity Facility (MMLF)

https://www.bostonfed.org/news-and-events/news/2020/03/key-information-money-market-mutual-fund-liquidity-facility.aspx

https://www.federalreserve.gov/monetarypolicy/mmlf.htm

Managing the Liquidity Crisis

April 09, 2020

https://hbr.org/2020/04/managing-the-liquidity-crisis

Financial Stability Report

May 2020

Financial Stability Board

FED Reserve

Interbank lending market

https://en.wikipedia.org/wiki/Interbank_lending_market

Liquidity Risk and Credit in the Financial Crisis

BY PHILIP E. STRAHAN

FRBSF ECONOMIC LETTER

2012

The Money Market Mutual Fund Liquidity Facility

Marco Cipriani, Gabriele La Spada, Reed Orchinik, and Aaron Plesset

2020

https://libertystreeteconomics.newyorkfed.org/2020/05/the-money-market-mutual-fund-liquidity-facility.html

US money market funds and US dollar funding

Céline Choulet

BNP Paribas

2018

The Dark Side of Bank Wholesale Funding

Rocco Huang

Philadelphia Fed

Lev Ratnovski

Bank of England

A Macroeconomic Model of Liquidity, Wholesale Funding and Banking Regulation

Corinne Dubois* Luisa Lambertini􏰀

The Effect of Monetary Policy on Bank Wholesale Funding

Dong Beom Choi (Federal Reserve Bank of New York)

Hyun-Soo Choi (Singapore Management University)

Between deluge and drought: The future of US bank liquidity and funding

Rebalancing the balance sheet during turbulent times

Kevin Buehler Peter Noteboom Dan Williams

July 2013
McKinsey & Company

https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Risk/Working%20papers/48_Future%20of%20US%20funding.ashx

Can Banks Provide Liquidity in a Financial Crisis?

By Nada Mora

How important was the worldwide use of wholesale funds for the international transmission of the US subprime crisis? 

Claudio Raddatz  15 March 2010

https://voxeu.org/article/how-bank-credit-market-funding-helped-spread-global-crisis

The Role of Liquidity in the Financial System

Notes from the Vault

Larry D. Wall
November 2015

https://www.frbatlanta.org/cenfis/publications/notesfromthevault/1511

Global Banks, Dollar Funding, and Regulation

by Iñaki Aldasoro, Torsten Ehlers and Egemen Eren

Monetary and Economic Department March 2018, revised May 2019

Global Monitoring Report on
Non-Bank Financial Intermediation 2019 

19 January 2020

Bank Financing: The Disappearance of Interbank Lending

March 05, 2018

https://www.moneyandbanking.com/commentary/2018/3/4/bank-financing-the-disappearance-of-interbank-lending

Liquidity Risk and Funding Cost

Taking Market-Based Finance Out of the Shadows

Distinguishing Market-Based Finance from Shadow Banking

2018

Blackrock

Wholesale Funding of the Big Six Canadian Banks

Matthieu Truno, Andriy Stolyarov, Danny Auger and Michel Assaf, Financial Markets Department

Bank of Canada Review

Liquidity Risk after the Crisis 

By Allan M. Malz

https://www.cato.org/cato-journal/winter-2018/liquidity-risk-after-crisis

Global Shadow Banking Monitoring Report 2017

5 March 2018

The Federal Funds Market since the Financial Crisis

https://www.clevelandfed.org/en/newsroom-and-events/publications/economic-commentary/2017-economic-commentaries/ec-201707-the-federal-funds-market-since-the-financial-crisis.aspx

Funding liquidity regulation

Allan M. Malz

The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF)

Rosalind Z. Wiggins2,
Yale Program on Financial Stability Case Study

May 9, 2017, revised: October 10, 2020

Liquidity Risk and Credit in the Financial Crisis

BY PHILIP E. STRAHAN

Economic Policy Review

February 2014 Volume 20 Number 1

Special Issue: The Stability of Funding Models

Trends in Assets and Liabilities of Commercial Banks in the USA

Trends in Assets and Liabilities of Commercial Banks in the USA

To big to fail means too interconnected to fail.
As the balance sheets of banks have expanded so has their number of counterparties on both sides of balance sheets.

The US commercial banks have have expanded their balance sheets.

On assets side, the loans portfolio has expanded.

Low Interest Rates and Banks’ Profitability – Update October 2020

On liabilities side, the deposits and borrowings have increased.

US Federal Reserve publishes H8 report on Assets and Liabilities of the US commercial banks. Detailed information on aggregate data presented in this post can be obtained from it.

https://www.federalreserve.gov/releases/h8/h8notes.htm

On liabilities side, the borrowings from wholesale money markets and shadow banking contributed to systemic risk during 2008 financial crisis. Please see my posts on this subject.

Funding Strategies of Banks

Shadow Banking

There were also capital flows in US markets from foreign banks and other markets.

Low Interest Rates and International Capital Flows

On liabilities side, because of increased borrowings from short term markets, the financial interconnections have also increased resulting in systemic risk and financial contagion.

On assets side, because of increased volumes of loan portfolios, the systemic risk and chances for financial contagion have increased.

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Contagion in Financial (Balance sheets) Networks

For analytical framework, accounting approach (Post Keynesian Economics) is one of the option.

Balance Sheet Economics – Financial Input-Output Analysis (using Asset Liability Matrices) – Update March 2018

Foundations of Balance Sheet Economics

Economics of Money, Credit and Debt

Morris Copeland and Flow of Funds accounts

Stock-Flow Consistent Modeling

Key Terms

  • Money View
  • Money Flows
  • Stocks and Flows
  • System Dynamics
  • Business Dynamics
  • Business Strategy
  • Asset Liability Management ALM
  • Balance Sheet Economics
  • Monetary Policy
  • Interest Rates
  • Credit
  • Debt
  • Money
  • Balance Sheet Expansion
  • Systemic Risk
  • Interconnectivity
  • Loan Portfolio
  • To big to fail
  • Networks
  • Funding Strategy
  • Market Liquidity
  • Funding Liquidity
  • Deposits
  • Interest Income
  • Non Interest Income
  • Borrowings
  • Wholesale Money Markets
  • Shadow Banking
  • International Capital Flows
  • Round Tripping
  • Global Liquidity
  • Eurodollar Market
  • Money Market Mutual Funds
  • Quadruple Accounting
  • Morris Copeland
  • Hyman Minsky
  • Wynn Godley
  • Perry Mehrling

Image Source: Liberty Street Economics 2017

AVERAGE NET INTEREST MARGIN OF BANKS IN THE UNITED STATES FROM 1995 TO 2019
Image Source: Statista

NET INTEREST MARGIN FOR ALL U.S. BANKS (USNIM)
Image Source: FRED

Total Assets, All Commercial Banks (TLAACBW027SBOG)
Image Source: FRED

Total Liabilities, All Commercial Banks (TLBACBW027NBOG)
Image Source: FRED

DEPOSITS, ALL COMMERCIAL BANKS (DPSACBW027SBOG)
Image Source: FRED

My Related Posts

Balance Sheet Economics – Financial Input-Output Analysis (using Asset Liability Matrices) – Update March 2018

Foundations of Balance Sheet Economics

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Funding Strategies of Banks

Economics of Money, Credit and Debt

Low Interest Rates and International Capital Flows

Low Interest Rates and Banks’ Profitability – Update October 2020

Morris Copeland and Flow of Funds accounts

Key Sources of Research

Deposits, All Commercial Banks (DPSACBW027SBOG)

https://fred.stlouisfed.org/series/DPSACBW027SBOG

Total Liabilities, All Commercial Banks (TLBACBW027NBOG)

https://fred.stlouisfed.org/series/TLBACBW027NBOG

TOTAL ASSETS, ALL COMMERCIAL BANKS (TLAACBW027SBOG)

https://fred.stlouisfed.org/series/TLAACBW027SBOG

Between deluge and drought:
The future of US bank liquidity and funding

Rebalancing the balance sheet during turbulent times

McKinsey

2013

https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Risk/Working%20papers/48_Future%20of%20US%20funding.ashx

Assets and Liabilities of Commercial Banks in the United States – H.8

https://www.federalreserve.gov/releases/h8/h8notes.htm

The geography of dollar funding of non-US banks1

Low Interest Rates and Banks’ Profitability – Update October 2020

Low Interest Rates and Banks’ Profitability – Update October 2020

My last post on this topic was in May 2019.

Research continues on this important topic. What are the effects of Monetary policy on Financial Institution?

Please see my previous posts to find the issues. In this post I have compiled papers and articles published since my last post in 2019.

Rational Decision making by the firms
  • Lend More – When margins decline, the volumes must go up to maintain or increase profits. This increases risk taking.
  • Diversify – Look for other sources of earnings
  • Consolidate – Merge with other banks as a business strategy to grow loan volumes.

How do banks make money? What is source of their income? How much is Net interest income? How much is Non Interest Income?

As you can see from the graphs below, Net interest income of banks is going up. Although the net interest margins are down, Banks are earning their income mostly from net interest income.

Volumes of Outstanding loans must be going up to make up for decrease in margins.

Sources of interest income can be

  • Commercial loans
  • Real Estate loans
  • Auto Loans
  • Credit cards
  • Student Loans

Additionally consolidation among the banks can be partially explained by the decling number of banks. See graph below.

Diversification to find other sources of earnings.

Image Source: FRED
EFFECTIVE FEDERAL FUNDS RATE (FEDFUNDS)

Image Source: FRED
NET INTEREST MARGIN FOR ALL U.S. BANKS (USNIM)

Image Source: Statista
AVERAGE NET INTEREST MARGIN OF BANKS IN THE UNITED STATES FROM 1995 TO 2019

Image Source: Liberty Street Economics 2017

Image Source: FRED
BANK’S NON-INTEREST INCOME TO TOTAL INCOME FOR UNITED STATES

Image Source: FRED
Net Interest Income for Commercial Banks in United States

Image Source: FRED
Bank Credit, All Commercial Banks (TOTBKCR)

Image Source: FRED
Loans and Leases in Bank Credit, All Commercial Banks (TOTLL)

Image Source: FRED
Commercial and Industrial Loans, All Commercial Banks (BUSLOANS)

Image Source: FRED
REAL ESTATE LOANS, ALL COMMERCIAL BANKS (REALLN)

Image Source: FRED
Consumer Loans, All Commercial Banks (CONSUMER)

Image Source: FRED
COMMERCIAL BANKS IN THE U.S. (USNUM)

Key Terms

  • Net Interest Margin
  • Profitability
  • Interest Income
  • Non Interest Income
  • Monetary Policy
  • Fed Funds Rate
  • 10 Year T Bond’s Rate
  • Shadow Banking
  • Search for Yield
  • Risk Taking
  • Housing Loans
  • Auto Loan
  • Deposits
  • Credit Cards
  • Money Markets Mutual Funds
  • Money Markets
  • Capital Markets
  • International Capital Flows
  • Diversification
  • Mergers
  • To Big to Fail
  • Non Core Business

My Related Posts

Low Interest Rates and Bank’s Profitability – Update May 2019

Low Interest Rates and Banks’ Profitability : Update July 2017

Low Interest Rates and Banks Profitability: Update – December 2016

Impact of Low Interest Rates on Bank’s Profitability

Non Interest Income of Banks: Diversification and Consolidation

Evolution of Banks Complexity

Shadow Banking

Funding Strategies of Banks

Low Interest Rates and Risk taking channel of Monetary Policy

Low Interest Rates and International Investment Position of USA

Low Interest Rates and International Capital Flows

Key Sources of Research

Bank profitability and risk‐taking under low interest rates

Jacob A. Bikker1,2 | Tobias M. Vervliet3

https://www.researchgate.net/publication/321277826_Bank_profitability_and_risk-taking_under_low_interest_rates

How banks can ease the pain of negative interest rates

March 3, 2020 | Article

https://www.mckinsey.com/business-functions/risk/our-insights/how-banks-can-ease-the-pain-of-negative-interest-rates#

Bank intermediation when interest rates are very low for long 

Michael Brei, Claudio Borio, Leonardo Gambacorta  

07 February 2020

https://voxeu.org/article/bank-intermediation-when-interest-rates-are-very-low-long

Implications of negative interest rates for the net interest margin and lending of euro area banks

by Melanie Klein

Monetary and Economic Department 

March 2020

Are Banks Exposed to Interest Rate Risk?

Pascal Paul and Simon W. Zhu

2020-16 | June 22, 2020 | Research from Federal Reserve Bank of San Francisco

Negative rates and the transmission of monetary policy

Prepared by Miguel Boucinha and Lorenzo Burlon[1]

Published as part of the ECB Economic Bulletin, Issue 3/2020.

https://www.ecb.europa.eu/pub/economic-bulletin/articles/2020/html/ecb.ebart202003_02~4768be84e7.en.html#toc2

Is there a zero lower bound?
The effects of negative policy rates on banks and firms

Revised June 2020


The impact of very low interest rates on bank profitability

https://www.rbnz.govt.nz/financial-stability/financial-stability-report/fsr-november-2019/the-impact-of-very-low-interest-rates-on-bank-profitability

Bank intermediation activity in a low interest rate environment

by Michael Brei, Claudio Borio and Leonardo Gambacorta

Monetary and Economic Department August 2019

Do Negative Interest Rates Explain Low Profitability of European Banks?1

Nicholas Coleman* and Viktors Stebunovs*

https://www.federalreserve.gov/econres/notes/feds-notes/do-negative-interest-rates-explain-low-profitability-of-european-banks-20191129.htm

Monetary Policy and Bank Equity Values in a Time of Low and Negative Interest Rates1

Miguel Ampudia2 and Skander J. Van den Heuvel3 May 2019

Negative Interest Rates, Bank Profitability and Risk-taking

Whelsy Boungou

https://www.researchgate.net/publication/334528681_Negative_Interest_Rates_Bank_Profitability_and_Risk-taking

Monetary Policy and Bank Profitability in a Low Interest Rate Environment: A Follow-up and a Rejoinder

By Charles Goodhart and Ali Kabiri

Monetary Policy and Bank Profitability in a Low Interest Rate Environment

Carlo Altavilla, Miguel Boucinha and José-Luis Peydró

Barcelona GSE Working Paper: 1101 | May 2019

https://www.barcelonagse.eu/research/working-papers/monetary-policy-and-bank-profitability-low-interest-rate-environment

Going Negative at the Zero Lower Bound: The Effects of Negative Nominal Interest Rates

Mauricio Ulate Campos Federal Reserve Bank of San Francisco

September 2019

NEGATIVE NOMINAL INTEREST RATES AND THE BANK LENDING CHANNEL

Gauti B. Eggertsson Ragnar E. Juelsrud Lawrence H. Summers Ella Getz Wold

Working Paper 25416

Implications of negative interest rates for the net interest margin and lending of euro area banks

Melanie Klein

Negative Nominal Interest Rates: A Primer

https://www.moneyandbanking.com/commentary/2019/11/30/negative-nominal-interest-rates-a-primer

Trends in the Noninterest Income of Banks

Joseph G. Haubrich and Tristan Young

https://www.clevelandfed.org/en/newsroom-and-events/publications/economic-commentary/2019-economic-commentaries/ec-201914-trends-in-the-noninterest-income-of-banks.aspx

Negative interest rates in the euro area: does it hurt banks?

https://www.oecd-ilibrary.org/economics/negative-interest-rates-in-the-euro-area-does-it-hurt-banks_d3227540-en

Interest rate pass-through in the low interest rate environment

Average net interest margin of banks in the United States from 1995 to 2019

https://www.statista.com/statistics/210869/net-interest-margin-for-all-us-banks/

Effective Federal Funds Rate (FEDFUNDS)

https://fred.stlouisfed.org/series/FEDFUNDS

https://www.newyorkfed.org/markets/obfrinfo

How low interest rates can hurt competition, and the economy

They help big companies more than small ones, depressing investment and productivity

https://review.chicagobooth.edu/economics/2019/article/how-low-interest-rates-can-hurt-competition-and-economy

Monetary Policy Report

June 12, 2020

Federal Reserve

The Long Decline of Global Interest Rates

Posted On :  Published By : BER staff

GLOBAL FINANCIAL STABILITY REPORT:

Markets in the Time of COVID-19

Chapter 4

April 2020

IMF

https://www.imf.org/en/Publications/GFSR/Issues/2020/04/14/global-financial-stability-report-april-2020

Low Interest Rates and Bank Profits

Katherine Di Lucido, Anna Kovner, and Samantha Zeller

Liberty Street Economics

2017

https://libertystreeteconomics.newyorkfed.org/2017/06/low-interest-rates-and-bank-profits.html

Bank’s Non-Interest Income to Total Income for United States (DDEI03USA156NWDB)

https://fred.stlouisfed.org/series/DDEI03USA156NWDB

Net Interest Income for Commercial Banks in United States

Net Interest Margin for all U.S. Banks (USNIM)

https://fred.stlouisfed.org/series/USNIM

Commercial Banks in the U.S. (USNUM)

https://fred.stlouisfed.org/series/USNUM

Loans and Leases in Bank Credit, All Commercial Banks (TOTLL)

https://fred.stlouisfed.org/series/TOTLL

Bank Credit, All Commercial Banks (TOTBKCR)

https://fred.stlouisfed.org/series/TOTBKCR

Commercial and Industrial Loans, All Commercial Banks (BUSLOANS)

https://fred.stlouisfed.org/series/BUSLOANS

Consumer Credit

https://fred.stlouisfed.org/categories/101

Real Estate Loans, All Commercial Banks (REALLN)

https://fred.stlouisfed.org/series/REALLN

Consumer Loans, All Commercial Banks (CONSUMER)

https://fred.stlouisfed.org/series/CONSUMER

Low Interest Rates and Business Investments – Update October 2020

Low Interest Rates and Business Investments – Update October 2020

There has been several new research on the topic of Low Interest Rates and Business Investments since my last post.

Decision Making by Firms in Low Interest rates environment

  • Invest and Grow
  • Merge / Consolidate
  • Pay Dividends
  • Buyback Shares
  • Divestures
  • Acquisitions
  • Horizontal Mergers (Market Share)
  • Vertical Mergers (Costs)
  • Innovation M&A (New Tech, New Product)

Key Terms

  • Business Investments
  • Monetary Polcy
  • Zero Lower Bound
  • Interest Rates
  • Fed Funds Rate
  • Corporate Finance
  • Hurdle Rates
  • Capital Budgeting
  • Internal Rate of Return IRR
  • CAGR Compond Annual Growth Rate
  • Cost of Capital
  • Discounted Cash Flow
  • Net Present Value
  • Mergers vs Investments
  • Organic Growth
  • Inorganic Growth
  • State of the Industry
  • State of the Economy
  • Liquidity Financial
  • Bank Lending
  • Capital Markets
  • Economic Growth
  • Corporate Planning
  • Strategic Planning
  • Strategic Management

My Related Posts

Increasing Market Concentration in USA: Update April 2019

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

Low Interest Rates and Business Investments : Update August 2017

Business Investments and Low Interest Rates

Cash and Investments: Corporate Savings Glut in USA

Low Interest Rates and Monetary Policy Effectiveness

Low Interest Rates and Risk taking channel of Monetary Policy

Low Interest Rates and International Investment Position of USA

Low Interest Rates and Bank’s Profitability – Update May 2019

Low Interest Rates and Banks’ Profitability : Update July 2017

Low Interest Rates and Banks Profitability: Update – December 2016

Impact of Low Interest Rates on Bank’s Profitability

The Decline in Long Term Real Interest Rates

Cash and Investments: Corporate Savings Glut in USA

Why do Firms buyback their Shares? Causes and Consequences.

Short term Thinking in Investment Decisions of Businesses and Financial Markets

Key Sources of Reserach

Lengthy era of rock-bottom interest rates leaving its mark on U.S. economy

Weak demand in U.S. and other rich nations explains historic shift

Washington Post

https://www.washingtonpost.com/business/2020/10/03/low-interest-rates/

Do Interest Rates Affect Business Investment? Evidence from Australian Company-level Data

Jonathan Hambur and Gianni La Cava

Low Interest Rates Have Benefits … and Costs

Kevin L. Kliesen

October 1, 2010

https://www.stlouisfed.org/publications/regional-economist/october-2010/low-interest-rates-have-benefits–and-costs

Low for Long?
Causes and Consequences of Persistently Low Interest Rates

Geneva Reports on the World Economy 17 Charles Bean

London School of Economics and CEPR

Christian Broda

Duquesne Capital Management

Takatoshi Ito

SIPA Columbia University and CEPR

Randall Kroszner

Booth School of Business, University of Chicago

2015

Low Interest Rates, Market Power, and Productivity Growth∗

Ernest Liu

Princeton University

Atif Mian
Princeton University and NBER

Amir Sufi
University of Chicago Booth School of Business and NBER

August 18, 2020

The Economic Effects of Low Interest Rates and Unconventional Monetary Policy

17 September 2020

Rochelle Guttmann, Dana Lawson and Peter Rickards

RBA

https://www.rba.gov.au/publications/bulletin/2020/sep/the-economic-effects-of-low-interest-rates-and-unconventional-monetary-policy.html

Firms’ Investment Decisions and Interest Rates

Kevin Lane and Tom Rosewall

RBA

Has Business Fixed Investment Really Been Unusually Low?

By François Gourio

Chicago Fed Letter, No. 418, 2019

https://www.chicagofed.org/publications/chicago-fed-letter/2019/418

Fiscal Policy with High Debt and Low Interest Rates

William Gale

July 1, 2019

The impact of negative interest rates on banks and firms 

Carlo Altavilla, Lorenzo Burlon, Mariassunta Giannetti, Sarah Holton  

08 November 2019

https://voxeu.org/article/impact-negative-interest-rates-banks-and-firms

Global Trends in Interest Rates

Marco Del Negro Domenico Giannone Marc P. Giannoni Andrea Tambalotti

Staff Report No. 866 September 2018

Financial stability implications of a prolonged period of low interest rates

Report submitted by a Working Group established by the Committee on the Global Financial System

The Group was co-chaired by Ulrich Bindseil (European Central Bank) and Steven B Kamin (Board of Governors of the Federal Reserve System)

July 2018

BIS

Eight centuries of global real interest rates, R-G, and the ‘suprasecular’ decline, 1311-2018.

Paul Schmelzing

https://economics.rutgers.edu/downloads-hidden-menu/news-and-events/workshops/money-history-and-finance/1823-paulschmelzing/file

Low Interest Rates and Risk Taking: Evidence from Individual Investment Decisions

Review of Financial Studies

49 Pages Posted: 14 Jul 2016 Last revised: 29 Aug 2018

Chen Lian

Massachusetts Institute of Technology (MIT)

Yueran Ma

University of Chicago – Booth School of Business

Carmen Wang

Harvard University – Department of Economics; HBS Negotiations, Organizations and Markets Unit

Date Written: August 22, 2018

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2809191

MONETARY POLICY, CORPORATE FINANCE AND INVESTMENT

James Cloyne Clodomiro Ferreira Maren Froemel Paolo Surico

Determinants of the real interest rate

Remarks by Philip R. Lane, Member of the Executive Board of the ECB, at the National Treasury Management Agency

Dublin, 28 November 2019

https://www.ecb.europa.eu/press/key/date/2019/html/ecb.sp191128_1~de8e7283e6.en.html

Understanding Weak Capital Investment: the Role of Market Concentration and Intangibles∗

Nicolas Crouzet and Janice Eberly

Prepared for the Jackson Hole Economic Policy Symposium Federal Reserve Bank of Kansas City

August 23 – 25, 2018 This version: May 14, 2019

Monetary policy in advanced economies

Low policy rates are here to stay

https://www2.deloitte.com/us/en/insights/economy/monetary-policy-low-interest-rates-advanced-economies.html

Have low interest rates led to excessive risk taking?

https://www.aeaweb.org/forum/311/have-low-interest-rates-led-to-excessive-risk-taking

The Policy Perils of Low Interest Rates

The consequences of prolonged low interest rates in Europe

https://www.gisreportsonline.com/the-consequences-of-prolonged-low-interest-rates-in-europe,economy,2465.html

Increasing Market Concentration – Update October 2020

Increasung Market Concentration – Update October 2020

In this post I have compiled several newly published papers books and articles on the subject of Increasing market concentration. Mainly in 2019 and 2020.

Books
  • The Curse of Bigness
  • The Myth of Capitalism
Several new reserach papers were published by
  • Cato Institute
  • Brookings Institution
  • Federal Reserve

Reports

Rational decision making by the firms

  • Organic Growth – Use business investments to grow business – During growth phase of the firm and the industry
  • Inorganic Growth – Use Mergers and Acquisitions to grow – During mature phase and Declining Markets due to Technological Changes
  • Casacading effects
    • Leaders merge
    • Laggards merge
    • Suppliers merge
  • Micro Motives and Macro Behavior
  • What is good for a firm, May not be good for economy

Key Terms

  • Shareholder Capitalism
  • Market Concentration
  • Industry Concentration
  • Horizontal Merger
  • Verical Merger
  • Mergers and Acquisition
  • Competition Policy
  • Profits and Profitability
  • Corporate Finance
  • Anti Trust Laws
  • Industry Consolidation
  • Capitalism
  • Market Share
  • Competitive Dynamics
  • Organic Growth
  • Inorganic Growth
  • Business Investments
  • Macro Growth
  • Market Maturity
  • Product Life Cycles
  • Technological Changes
  • Wealth and Income Inequality
  • Monopoly
  • Oligopoly
  • Cross Border Mergers
  • Innovation based Mergers in Technology
  • HHI

My Related Posts

Shareholder Capitalism: Rising Market Concentration, Slower Productivity Growth, Rising Inequality, Rising Profits, and Rising Equities Markets

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

Rising Profits, Rising Inequality, and Rising Industry Concentration in the USA

Competition, Concentration, and Anti-Trust Laws in the USA

Concentration, Investment, and Growth

Increasing Market Concentration in USA: Update April 2019

Mergers and Acquisitions – Long Term Trends and Waves

The Decline in Long Term Real Interest Rates

Low Interest Rates and Business Investments : Update August 2017

Business Investments and Low Interest Rates

Why do Firms buyback their Shares? Causes and Consequences.

Cash and Investments: Corporate Savings Glut in USA

Key sources of Research

What if Rising Concentration were an Indication of More Cimpetition, not Less?

Causes, Consequences, and Policy Responses to Market Concentration

The Rise of Corporate Market Power

Market Concentration Is Threatening the U.S. Economy

The United States’s low-growth/high-inequality problem is due to too few firms holding too much power.CHAZEN GLOBAL INSIGHTSJoseph E. Stiglitz March 12, 2019 

https://www8.gsb.columbia.edu/articles/chazen-global-insights/market-concentration-threatening-us-economy

Increasing market concentration in Europe is more likely to be a sign of strength than a cause for concern 

Tommaso Bighelli, Filippo di Mauro, Marc Melitz, Matthias Mertens  13 October 2020

https://voxeu.org/article/increasing-market-concentration-europe-more-likely-be-sign-strength-cause-concern

The Economics and Politics of Market Concentration

Thomas Philippon

https://www.nber.org/reporter/2019number4/economics-and-politics-market-concentration

The Great Consolidation:
Industry and Equity Market Concentration after the Crisis

Top 5 Highly Concentrated Manufacturing Industries

by Marisa Lifschutz, Senior Analyst – Team Lead 
May 02 2019 

https://www.ibisworld.com/industry-insider/analyst-insights/top-5-highly-concentrated-manufacturing-industries/

How Market Power has Increased US Inequality

Are Markets Becoming Less Competitive?

Federal Reserve of Richmond

2019

https://www.richmondfed.org/publications/research/economic_brief/2019/eb_19-06/

Trends in Financial Market Concentration and Their Implications for Market Stability

Is Rising Concentration Hampering Productivity Growth?

Peter J. Klenow, Huiyu Li, and Theodore Naff

Rising Bank Concentration

Dean CorbaeUniversity of Wisconsin – Madison and NBER

Pablo D’Erasmo

Federal Reserve Bank of Philadelphia

https://www.minneapolisfed.org/research/staff-reports/rising-bank-concentration

Are Markets Too Concentrated?

Industries are increasingly concentrated in the hands of fewer firms. But is that a bad thing?Article by: Tim Sablik

Richmond Federal Reserve

https://www.richmondfed.com/publications/research/econ_focus/2018/q1/cover_story

Have Acquisitions of Failed Banks Increased the Concentration of U.S. Banking Markets? 

By Wheelock, David C.

https://www.questia.com/library/journal/1G1-257675083/have-acquisitions-of-failed-banks-increased-the-concentration

Large Banks Improve Competition and Consumer Choice in Local Markets

Sean Campbell•20 May 2019•

https://www.fsforum.com/types/press/blog/large-banks-improve-competition-consumer-choice/

Low Interest Rates Don’t Drive Market Concentration

A critical assessment of Atif Mian, Amir Sufi and Ernest Liu’s paper 

https://nathantankus.substack.com/p/low-interest-rates-dont-drive-market

Market Power and Monetary Policy

Speech given by

Andrew G Haldane Chief Economist Bank of England

Competition and Productivity: A Review of Evidence

Thomas J. Holmes

University of Minnesota,
Federal Reserve Bank of Minneapolis,
and National Bureau of Economic Research

James A. Schmitz, Jr.
Federal Reserve Bank of Minneapolis

2010

Understanding market concentration: internet-based applications from the banking industry

Abstract

Fred H. Hays
University of Missouri-Kansas City

Sidne Gail Ward University of Missouri-Kansas City

Concentration, market power and dynamism in the euro area

Monopoly Myths: Are Markets Becoming More Concentrated?

Joe Kennedy 

June 29, 2020

https://itif.org/publications/2020/06/29/monopoly-myths-are-markets-becoming-more-concentrated

BENEFITS OF COMPETITION AND INDICATORS

2016

Council of Economic Advisors

Obama whitehouse

Why Is the Stock Market So Strong When the Economy Is Weak?

The Myth of Capitalism: Monopolies and the Death of Competition

Jonathan TepperDenise Hearn (With)

ISBN: 978-1-119-54819-5 November 2018 320 Pages

https://www.wiley.com/en-us/The+Myth+of+Capitalism%3A+Monopolies+and+the+Death+of+Competition-p-9781119548195

Number of Banks in USA

https://fred.stlouisfed.org/series/USNUM

Number of Listed Companies in USA

https://fred.stlouisfed.org/series/DDOM01USA644NWDB

Long-Term Government Bond Yields: 10-year: Main (Including Benchmark) for the United States 

https://fred.stlouisfed.org/series/IRLTLT01USM156N

Mergers and Acquisitions Data for USA and Worldwide

http://www.imaa-institute.org

Market Power, Inequality, and Financial Instability

Isabel Cair ́o and Jae Sim 

2020-057

What Happened to U.S. Business Dynamism?1

Ufuk Akcigit and Sina T. Ates

https://www.federalreserve.gov/econres/notes/feds-notes/what-happened-to-us-business-dynamism-20200214.htm

Untangling the Complex Causes of Inequality

December 4, 2018

https://www.frbatlanta.org/economy-matters/economic-research/2018/12/04/untangling-the-complex-causes-of-income-wealth-and-opportunity-inequality

Capitalism is not the source of our economic struggles

The real culprit is less obvious but can be remedied

Increased corporate concentration and the influence of market power

The New Economic Concentration

The competition that justifies capitalism is being destroyed—by capitalists.

BY DAVID DAYEN

JANUARY 16, 2019

https://prospect.org/power/new-economic-concentration/

SUPPLEMENTAL NOTES ON MARKET CONCENTRATION AND MARKET POWER

By
Dennis L. Weisman

The Curse of Bigness
Antitrust in the New Gilded Age

The Curse of Bigness by Tim Wu

Low Interest Rates and Bank’s Profitability – Update May 2019

Low Interest Rates and Bank’s Profitability – Update May 2019

My last post on this important topic was in 2017.  Since then several new articles and research papers have been published. I have compiled them in this post.  Please see references.

In my posts I have shown how many trends in economics for the last thirty years can be explained by unintendend consequences of US Federal Researve monetary policy of lowering interest rates to boost economic growth.

  • Rise of Shadow Banking – MMMF
  • Rise of International capital flows in USA
  • Growth of Consumer credit – Credit Cards and Housing Loans
  • Decline in Net Interest Margins of the Banks
  • Risk taking by banks to maintain and increase their profits
  • Rise of Non interest income of Banks
  • Rise of Non core business of banks
  • Rise of Mergers/Acquisitions/Consolidation in Banking sector

Related to these are:

  • Business Investments by Production side of economy
  • Increase in Market concentration of Products
  • Increase in Mergers and Acquisitions/consolidation among Product market businesses
  • Decreasing monitory policy effectiveness
  • Wrong economic growth forecasts
  • Secular Stagnation Hypothesis
  • Rise of Outsourcing and global value chains
  • Free Trade agreements
  • Increase in Ineqality of wealth and Income
  • Increase in corporate profits and equities market
  • Increase in corporate savings
  • Increase in share buybacks, and dividends payouts

 

 

and this one,

Increasing Market Concentration in USA: Update April 2019

Key Sources of Research:

Monetary policy and bank profitability in a low interest rate environment

Click to access ecb-wp2105.en.pdf

The “Reversal Interest Rate”: An Effective Lower Bound on Monetary Policy∗

Markus K. Brunnermeier and Yann Koby

This version: May 3, 2017

Click to access 16f_reversalrate.pdf

Click to access 26d_rir_bankofcanada.pdf

Interest Rate and Its Effect on Bank’s Profitability

Muhammad Faizan Malik1,2, Shehzad Khan1,2, Muhammad Ibrahim Khan1, Faisal Khan

https://www.researchgate.net/publication/318648785_Interest_Rate_and_Its_Effect_on_Bank’s_Profitability

Bank performance under negative interest rates

VOXEU

https://voxeu.org/article/bank-performance-under-negative-interest-rates

How low interest rates impact bank

BBVA

https://www.bbva.com/en/how-low-interest-rates-impact-bank-profitability/

Negative-nominal-interest-rates-and-banking

Money and Banking

https://www.moneyandbanking.com/commentary/2018/10/21/negative-nominal-interest-rates-and-banking

Monetary policy and bank equity values in a time of low interest rates

Miguel Ampudia, Skander Van den Heuvel

 

Click to access ecb.wp2199.en.pdf

 

Bank Profitability and Financial Stability

Prepared by TengTeng Xu, Kun Hu, and Udaibir S. Das1

IMF

January 2019

 

https://www.imf.org/~/media/Files/Publications/WP/2019/wp1905.ashx

 

Financial stability implications of a prolonged period of low interest rates

Report submitted by a Working Group established by the Committee on the Global Financial System

The Group was co-chaired by Ulrich Bindseil (European Central Bank) and Steven B Kamin (Board of Governors of the Federal Reserve System)

July 2018

 

Click to access cgfs61.pdf

 

Monetary policy and bank profitability in a low interest rate environment

Carlo Altavilla Miguel Boucinha José-Luis Peydró
Economic Policy, Volume 33, Issue 96, October 2018, Pages 531–586,
Published: 09 October 2018

 

https://academic.oup.com/economicpolicy/article/33/96/531/5124289

 

 

Determinants of bank profitability in emerging markets

by E. Kohlscheen, A. Murcia and J. Contreras

Monetary and Economic Department

January 2018

BIS

Click to access work686.pdf

 

 

 

The Risk-Taking Channel of Monetary Policy Transmission in the Euro Area

 

Matthias Neuenkirch, Matthias Nöckel

4/2018

 

Click to access cesifo1_wp6982.pdf

 

 

 

 

ADAPTING LENDING POLICIES WHEN NEGATIVE INTEREST RATES HIT BANKS’ PROFITS

Óscar Arce, Miguel García-Posada, Sergio Mayordomo and Steven Ongena

2018

Click to access dt1832e.pdf

 

 

Banks, Money and the Zero Lower Bound

Michael Kumhof

Xuan Wang

Click to access 2018-16.pdf

 

 

 

Banking in a Steady State of Low Growth and Interest Rates

by Qianying Chen, Mitsuru Katagiri, and Jay Surti

IMF

https://www.imf.org/~/media/Files/Publications/WP/2018/wp18192.ashx

 

 

 

Changes in Monetary Policy and Banks’ Net Interest Margins: A Comparison across Four Tightening Episodes

Jared Berry, Felicia Ionescu, Robert Kurtzman, and Rebecca Zarutskie

Federal Reserve

2019

https://www.federalreserve.gov/econres/notes/feds-notes/changes-in-monetary-policy-and-banks-net-interest-margins-a-comparison-20190419.htm

 

 

 

Monetary Policy and Bank Profitability, 1870 – 2015

47 Pages Posted: 8 Feb 2019

Kaspar Zimmermann

University of Bonn

Date Written: January 25, 2019

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3322331

 

 

The effect of falling interest rates and yield curve to banks’ interest margin and profitability: cross-country evidence from the EU banks in the aftermath of 2008 financial crisis

Giorgi Chagoshvili

MS Thesis

 

https://repository.ihu.edu.gr/xmlui/bitstream/handle/11544/29306/The%20effect%20of%20falling%20interest%20rates%20and%20yield%20curve%20to%20banks%20%20interest%20margin%20and%20profitability%20cross%20country%20evidence%20from%20the%20EU%20banks%20in%20the%20aftermath%20of%202008%20financial%20crisis.pdf?sequence=1

 

 

 

 

Bank Performance under Negative Interest Rates

 

by Jose A. Lopez, Andrew K. Rose, and Mark M. Spiegel

 

Click to access VOXNNIR.pdf

Determinants of bank’s interest margin in the aftermath of the crisis: the effect of interest rates and the yield curve slope

  • Paula Cruz-García
  • Juan Fernández de GuevaraEmail author
  • Joaquín Maudos

https://link.springer.com/article/10.1007/s00181-017-1360-0

 

 

 

 

Key Determinants of Net Interest Margin of Banks in the EU and the US

MS Thesis

Charles University

Bc. Petr Hanzlík

 

https://dspace.cuni.cz/bitstream/handle/20.500.11956/99546/120297262.pdf?sequence=1

 

Increasing Market Concentration in USA: Update April 2019

Increasing Market Concentration in USA: Update April 2019

In this post, I have compiled recent articles and papers on the issues of:

  • Increased Market Power
  • Increased Market Concentration
  • Increased Corporate Profits
  • Increased Inequality
  • Anti Trust Laws and Competition policy
  • Interest rates and Business Investments
  • Interest rates and Mergers and Acquisitions
  • Stock Buybacks, Dividends, and Business Investments
  • Outsourcing, and Global Value Chains
  • Corporate Savings Glut
  • Slower Economic Growth
  • Reduced Dynamism

 

From Low Interest Rates, Market Power, and Productivity Growth

How does the production side of the economy respond to a low interest rate environment? This study provides a new theoretical result that low interest rates encourage market concentration by giving industry leaders a strategic advantage over followers, and this effect strengthens as the interest rate approaches zero. The model provides a unified explanation for why the fall in long-term interest rates has been associated with rising market concentration, reduced dynamism, a widening productivity-gap between industry leaders and followers, and slower productivity growth. Support for the model’s key mechanism is established by showing that a decline in the ten year Treasury yield generates positive excess returns for industry leaders, and the magnitude of the excess returns rises as the Treasury yield approaches zero.

Please see my related posts:

 

Competition, Concentration, and Anti-Trust Laws in the USA

Concentration, Investment, and Growth

Shareholder Capitalism: Rising Market Concentration, Slower Productivity Growth, Rising Inequality, Rising Profits, and Rising Equities Markets

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

Rising Profits, Rising Inequality, and Rising Industry Concentration in the USA

Why are Macro-economic Growth Forecasts so wrong?

Low Interest Rates and Business Investments : Update August 2017

Mergers and Acquisitions – Long Term Trends and Waves

Business Investments and Low Interest Rates

Economic Growth Theories – Orthodox and Heterodox

The Decline in Long Term Real Interest Rates

Why do Firms buyback their Shares? Causes and Consequences.

On Inequality of Wealth and Income – Causes and Consequences

Intra Industry Trade and International Production and Distribution Networks

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

Understanding Trade in Intermediate Goods

Trends in Intra Firm Trade of USA

Cash and Investments: Corporate Savings Glut in USA

Key sources:

Markups, Consumption and Market Concentration

American Economic Association

https://www.aeaweb.org/conference/2019/preliminary/814?q=eNqrVipOLS7OzM8LqSxIVbKqhnGVrJQMlWp1lBKLi_OTgRwlHaWS1KJcXAgrJbESKpSZmwphlWWmloO0FxUUgLQagFwwSH9BYjpIBZANXDDjnB7P

AMERICA’S CONCENTRATION CRISIS

AN OPEN MARKETS INSTITUTE REPORT

https://concentrationcrisis.openmarketsinstitute.org

How Low Interest Rates Have Led To Increased Market Concentration

Seeking Alpha

March, 2019

https://seekingalpha.com/article/4245601-low-interest-rates-led-increased-market-concentration

 

Market Concentration Is Threatening the US Economy

https://www.project-syndicate.org/commentary/united-states-economy-rising-market-power-by-joseph-e-stiglitz-2019-03

Concentration increasing?

John Cochrane

2019

https://johnhcochrane.blogspot.com/2019/03/concentration-increasing.html

Industry Concentration in Europe and North America

OECD

2019

Monopolies are the ‘missing piece of the puzzle’ when it comes to analyzing US inequality, investment researchers argue

Barclays Launches New Research Study Analyzing how Market Concentration is Affecting the US Economy

March 26, 2019

DISRUPTION CONCENTRATION AND THE NEW ECONOMY

The Surprising Thing About Market Concentration

by esteban rossi-hansberg, pierre-daniel sarte and nicholas trachter

 

Increased market power: a global problem that needs solving?

January 2019

https://www.oxera.com/agenda/increased-market-power-a-global-problem-that-needs-solving/

Click to access Increased-market-power.pdf

 

 

 

70 Years of US Corporate Profits∗

Simcha Barkai

Seth G. Benzell

April 2018

 

Click to access 2270yearsofuscorporateprofits.pdf

 

 

Low Interest Rates, Market Power, and Productivity Growth

Ernest Liu, Atif Mian, Amir Sufi

January 2019

NBER

https://www.nber.org/papers/w25505

Click to access BFI-MFRI-2019-09.pdf

Chapter 2: The Rise of Corporate Market Power and Its Macroeconomic Effects

World Economic Outlook

April 2019

IMF

https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019

Outsourcing, Occupational and Industrial Concentration

Nicholas Bloom (Stanford), Audrey Guo (Stanford) and Brian Lucking (Stanford)
November 2018

 

 

 

Diverging Trends in National and Local Concentration∗

Esteban Rossi-Hansberg Pierre-Daniel Sarte

Nicholas Trachter

February 26, 2019

 

Click to access DTNLC.pdf

 

 

 

Macroeconomics and Market Power: Facts, Potential Explanations, and Open Questions

Chad Syverson

January 2019

Brookings

 

Click to access ES_20190116_Syverson-Macro-Micro-Market-Power.pdf

A Theory of Falling Growth and Rising Rents

Author(s): Philippe Aghion, Antonin Bergeaud, Timo Boppart, Peter J. Klenow, and Huiyu Li

March 2019

Fed Reserve San Francisco

https://www.frbsf.org/economic-research/publications/working-papers/2019/11/

Competition and market concentration in the United States

 

December 2018

https://www.tresor.economie.gouv.fr/Articles/bd779c20-ede1-4266-94ee-13eb70d0b882/files/c19bc114-e2ee-4f2e-99a4-6ca645b6f0d5

Concentration, Market Power and Dynamism in the Euro Area

ECB Working Paper No. 2253 (2019); ISBN 978-92-899-3515-9

 

Posted: 26 Mar 2019

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3360233&download=yes

The Rise of Market Power and the Macroeconomic Implications

Jan De Loecker
Jan Eeckhout
Gabriel Unger
November 22, 2018

 

Click to access RMP.pdf