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Accounting for dominance and submission: Disciplining building societies with accounting-based regulation, circa 1960

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Author Info

  • Bernardo Batiz-Lazo

    (School of Social Sciences, University of Manchester, UK)

  • Masayoshi Noguchi

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper examines how accounting-based regulation modified the operation of one type of participant in British retail finance. Specifically, the House Purchase and Housing Act, 1959 and Building Societies Act, 1960 gave the Registrar of Friendly Societies new powers of intervention and these were used to discipline building societies revealing inadequate use of their funds. Although only a tiny fraction of existing societies were ultimately sanctioned, they all observed important deviations from specified accounting-based criteria that were generally recognized as financially sound within the industry. Intervention, however, was also motivated by two other factors: the successful lobbying by the Building Society Association to discipline non-members; and attempts by the Registrar to stop property developers from abusing moribund London-based societies. Results provide enough evidence to suggest that other studies' assessment that managers of British retail financial intermediaries disregarded accounting information in executive decisions need to be revised in light of the fact that the accounting control of building societies was supplemented by the disciplinary power granted to state regulators (as represented by the Treasury and the Registrar of Friendly Societies).

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-34.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2011-34.

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Length: 43 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:kob:dpaper:dp2011-34

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Related research

Keywords: Accounting-based regulation; House Purchase and Housing Act; 1959; Building Societies Act; 1960; Chief Registrar of Friendly Societies; HM Treasury; the Building Societies Association; disciplinary power; reserve ratio; property developers.;

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  1. Bátiz-Lazo, Bernardo & Wardley, Peter, 2007. "Banking on change: information systems and technologies in UK high street banking, 1919–1969," Financial History Review, Cambridge University Press, vol. 14(02), pages 177-205, October.
  2. Nightingale, Paul & Poll, Robert, 2000. "Innovation in Investment Banking: The Dynamics of Control Systems within the Chandlerian Firm," Industrial and Corporate Change, Oxford University Press, vol. 9(1), pages 113-41, March.
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