Insomnia cure

For all those Cats having difficulty sleeping – my good friend Chris Berg has posted his PhD thesis online.

From the abstract:

Between the 1890s and 2008 the Australian system of prudential regulation of banking went from an almost entirely unregulated free banking system to a system where prudential regulation was both heavy and thorough. Yet there has been no general study of the trajectory of prudential regulation in Australian history. From the crash of 1893 to the global financial crisis (GFC) of 2008, the safety and soundness of Australian banks has been a window through which Australians have conceptualised the state’s involvement in the economy. This thesis attempts to provide that study. It does so at a time when the institutions of prudential regulation are subject to a great deal of policy and scholarly attention. A new understanding the origins and arc of prudential policy over time should inform that discussion.


The thesis provides an institutional perspective on the development and evolution of prudential regulation in Australia. Djankov, Glaeser, et al. (2003) provide a framework whereby institutional arrangements can be compared both between economic systems and over time. My concern is to understand the factors which lead to institutional variation by reference to economic theories of public policy formation: public interest, private interest, and ideology. The thesis is able to adjust our understanding of the relationships between these factors and their historical contingencies. The thesis modifies and integrates these two frameworks, offering a significant theoretical advance in institutional economics titled “subjective political economy”.

The thesis also makes a number of significant contributions to knowledge about the history of Australian banking and NBFIs and Australian economic reform more generally. First, it sheds new light on the origins of the Australian bank deposit scheme. Second, it reorientates our understanding of the source of financial regulatory change in the 1980s by seeing it as the result of an ideological contest between the Whitlam and Fraser governments. Third, the thesis provides the first account of Australia’s involvement and integration with the Basel Committee on Banking Supervision between 1974 and 1988. Fourth, the thesis offers a reinterpretation of the development of prudential regulation in the 1980s, focusing on the formalisation of prudential controls which were brought on by the introduction of foreign banks and the consequent end of informal, cooperative regulatory relationships. By bringing the Basel adoption and prudential regulatory changes to the front of any account of the period of financial regulatory reform, we can see how the reform movement was characterised less by ‘deregulation’ and more by regulatory evolution and expansion.

In all seriousness it is a magnificent piece of work and people with an interest in financial history and/or prudential regulation should have a read.

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7 Responses to Insomnia cure

  1. .

    Between the 1890s and 2008 the Australian system of prudential regulation of banking went from an almost entirely unregulated free banking system to a system where prudential regulation was both heavy and thorough.

    Can we raise the comment limit to 5000 per page on this one?

  2. Dr Fred Lenin

    Economic theory . The Mogadon of the masses . Boring as watching grass growv,and mostly bullshit . Just look at the mess the career pollie who take notice pf them have got us in to .

  3. C.L.

    Sounds very interesting. Congratulations to Berg for coming up with such a viable, substantive topic and for completing the thesis.

  4. .

    Dr Fred Lenin
    #2267146, posted on January 19, 2017 at 4:55 pm
    Economic theory . The Mogadon of the masses . Boring as watching grass growv,and mostly bullshit . Just look at the mess the career pollie who take notice pf them have got us in to .

    Careful, read it and you might learn something.

  5. Tel

    That looks quite interesting. Not having read it yet I’m already raising the flag about unregulated banking.

    Of course those early banks were very tightly regulated [1] by British common law, [2] by enormous discretionary powers of the local Governor, which rarely got used but when they did get used could be highly effective, and [3] by the concept of strict liability for business debts. Now, these things are a bit of a different way of regulation than what we see as regulation today, but that’s a strategic implementation decision, not the absence of regulation.

    The trouble is that now we see “regulation” as automatically being large numbers of prescriptive rules generally based in statutory law or cranked out by some government department. The belief is that if you have enough rules, then nothing can ever fail. There are many other possible ways to regulate an industry, this is merely the method that happens to be popular right now.

  6. RobK

    Tel,
    I couldnt have said it better myself. Thank you.

  7. .

    The trouble is that now we see “regulation” as automatically being large numbers of prescriptive rules generally based in statutory law or cranked out by some government department.

    Correct. Regulation is delegated legislation made in such a manner. Thanks for playing.

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