Household indebtedness and financial stability

Bayes Business School welcomed Dame Colette Bowe, External Member of the Financial Policy Committee (FPC) at the Bank of England, to deliver a keynote at the Building Societies Association’s (BSA) 2^nd Research Workshop.

The event, titled ‘The Future of Financial Mutuals’, was hosted by the Centre for Banking Research at Bayes and attended by global academics and practitioners. The programme included sessions discussing the structure, role, models and cases for cooperative and non-profit banks, as well as the challenges facing mutual organisations.

The Financial Policy Committee is a Bank of England body responsible for monitoring and acting to reduce systemic risk in order to ensure the UK’s financial systems resilience.

Dame Colette’s speech addressed the need for mechanisms to ease financial pressures in the current cost of living crisis, and outlined how the Bank of England plans to help households through what is a very challenging period. The keynote updated delegates on the progress of the Bank into understanding the changing nature of household debt burdens, as well as its recent work on housing tools and consultation on affordability.

Following her speech, Dame Colette took questions from the audience and engaged in a discussion about how the Bank of England could work more closely with the industry to alleviate the strain of household debt and protect the wellbeing of cooperatives.

On delivering her keynote, Dame Colette Bowe said:

“High inflation and rising pressure on household bills are a major concern for the country, and a key priority for the Bank of England right now. It was great to speak directly to those heading up financial mutuals about the work that we are doing to maintain and support financial sector resilience – something of paramount importance to their members and stakeholders at this time.

“These conversations are extremely useful for us as policymakers too in our own decision making as well. We will continue to monitor closely the financial pressures on household finances, especially through our cost of living adjusted debt-servicing ratio measure, to help inform our policy actions.”

Professor Barbara Casu, Director of the Centre for Banking Research, said she was very interested to hear about how the Bank of England planned to help those in need, as well as the latest academic research on structural opportunities and risks of mutuals.

“In a time of great financial uncertainty, the role of mutual financial institutions is increasingly important to meet the needs of households up and down the country, particularly those affected by the impact of increased interest rates on mortgages,” Professor Casu said.

“Dame Colette’s keynote hopefully offered reassurance to our guests and a plan of action to help their members through the crisis.

“It was also a pleasure to hear from our academic presenters about the latest research into various aspects of mutual organisational culture and characteristics, which will have informed practitioners and provoked excellent discussion points about the path forward.

“The Centre for Banking Research exists to connect cutting-edge research with banking practice, so it was exciting to bring the two together for the BSA workshop.”

Read Dame Colette Bowe’s keynote speech in full.

See below for the full programme of papers presented at the Building Societies Association 2^nd Research Workshop:

Keynote: Household indebtedness and financial stability

Dame Colette Bowe

Network vs Integrated Organizational Structure of Cooperative Banks: Evidence on the Italian Reform
Elena Beccalli, Ludovico Rossi, Andrea Viola

Cooperative banks, business models and efficiency: A stochastic frontier approach analysis
Rym Ayadi, Sandra Challita, Doriana Cucinelli

Agency problems in mutual insurance organisations: A financial soundness perspective
Benjamin Smet, Frederiek Schoubben, Cynthia Van Hulle

Deposit Insurance and Credit Union Financial Reporting Quality
Dimitris Chronopoulos, Linh Nguyen, Lemonia Rempoutsika, John Wilson

Are (Nonprofit) Banks Special? The Economic Effects of Banking with Credit Unions
Andrés Shahidinejad

Members remuneration as a motivation of earnings management in credit union
Javier Gomez Biscarri, Germán López-Espinosa, Andrés Mesa-Toro

Co-operative values and principles oriented HRM practices, ‘co-operative difference’ and affective commitment: The moderating role of the size of organisation
Przemysław Piasecki, Andrew Gall, Burcin Hatipoglu

The Beauty of Being Involved: The Cooperative Bank Case
Franco Fiordelisi, Stefano Grimaldi, Juan Sergio Lopez, Maria Carmela Mazzilis

Launch of Credito Cooperativo Research Centre (CCRC) on Cooperative Studies
Elena Beccalli

Panel Discussion: The Future of Financial Mutuals
Panellists: Hans Groeneveld (Tilburg University), Thomas Poulsen (Copenhagen Business School), Giorgio Caselli (University of Cambridge), Eric Meyer (Münster University)

Read more about the Centre for Banking Research.

Find out about Bayes Business School’s MSc Banking and International Finance programme.