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The Basel II Framework - The Practical Application in Two Swedish Banks

Ulfgrim, Erica and Johansson, Karin (2009)
Department of Business Administration
Abstract
The purpose of this thesis is to study the practical application of the Basel II Framework in two Swedish banks of different organisational structure and briefly look at the opinions of the framework now that it has been in use for some time. The theoretical perspectives begin with the concept of risk metaphors. Thereafter criticism towards a number of earlier risk measures is presented. This leads down to the issue of why risk measurements do not work. Thereafter earlier studies on why there is a reliance on numbers and why people come to believe in statements are taken up. Furthermore there is a presentation of why Basel II is argued to promote centralised management. Finally we present a study on enterprise risk management that has... (More)
The purpose of this thesis is to study the practical application of the Basel II Framework in two Swedish banks of different organisational structure and briefly look at the opinions of the framework now that it has been in use for some time. The theoretical perspectives begin with the concept of risk metaphors. Thereafter criticism towards a number of earlier risk measures is presented. This leads down to the issue of why risk measurements do not work. Thereafter earlier studies on why there is a reliance on numbers and why people come to believe in statements are taken up. Furthermore there is a presentation of why Basel II is argued to promote centralised management. Finally we present a study on enterprise risk management that has shown that variations exist in practical application. The empirical foundation consists of data from a number of interviews with respondents working at two Swedish banks of different organisational structure. One bank is decentralised and one is centralised. Furthermore one interview was conducted with the Swedish Financial Supervisory Authority. Regarding the practical application of Basel II we have found that the Bank A has gone from a more holistic approach to risk management to show more numeric tendencies. Bank B was probably had numeric tendencies already before the transfer to Basel II and this has remained so. We have also seen that the banks achieve compliance and uniformity in similar ways but emphasise different things. Bank A emphasised an understanding of the framework while Bank B put more emphasis on the use of calculations. Finally we found that the general opinions about Basel II now that it has been implemented for some time were positive. (Less)
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author
Ulfgrim, Erica and Johansson, Karin
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Basel II, calculative cultures, compliance, practical application, risk management, Management of enterprises, Företagsledning, management
language
Swedish
id
1437752
date added to LUP
2009-06-05 00:00:00
date last changed
2012-04-02 17:26:00
@misc{1437752,
  abstract     = {The purpose of this thesis is to study the practical application of the Basel II Framework in two Swedish banks of different organisational structure and briefly look at the opinions of the framework now that it has been in use for some time. The theoretical perspectives begin with the concept of risk metaphors. Thereafter criticism towards a number of earlier risk measures is presented. This leads down to the issue of why risk measurements do not work. Thereafter earlier studies on why there is a reliance on numbers and why people come to believe in statements are taken up. Furthermore there is a presentation of why Basel II is argued to promote centralised management. Finally we present a study on enterprise risk management that has shown that variations exist in practical application. The empirical foundation consists of data from a number of interviews with respondents working at two Swedish banks of different organisational structure. One bank is decentralised and one is centralised. Furthermore one interview was conducted with the Swedish Financial Supervisory Authority. Regarding the practical application of Basel II we have found that the Bank A has gone from a more holistic approach to risk management to show more numeric tendencies. Bank B was probably had numeric tendencies already before the transfer to Basel II and this has remained so. We have also seen that the banks achieve compliance and uniformity in similar ways but emphasise different things. Bank A emphasised an understanding of the framework while Bank B put more emphasis on the use of calculations. Finally we found that the general opinions about Basel II now that it has been implemented for some time were positive.},
  author       = {Ulfgrim, Erica and Johansson, Karin},
  keyword      = {Basel II,calculative cultures,compliance,practical application,risk management,Management of enterprises,Företagsledning, management},
  language     = {swe},
  note         = {Student Paper},
  title        = {The Basel II Framework - The Practical Application in Two Swedish Banks},
  year         = {2009},
}