Showing papers by "Alistair Milne published in 2005"
TL;DR: In this paper, the authors compare payments arrangements in the UK, Norway, Sweden, and Finland, and discuss the impact of network effects on incentives to adopt new payments technology, in which private benefits for investment in shared inter-bank payments infrastructure are weak.
Abstract: The developed world exhibits substantial but poorly understood differences in the efficiency and quality of low-value payment services. This paper compares payments arrangements in the UK, Norway, Sweden, and Finland, and discusses the impact of network effects on incentives to adopt new payments technology. A model is presented, in which private benefits for investment in shared inter-bank payments infrastructure are weak. In contrast, due to 'account externalities', there are strong incentives for investment in intra-bank payment systems. These two features, distinguishing bank payments from other network industries, can help explain some of the observed cross country differences in payments arrangements.
83 citations
Posted Content•
TL;DR: In this article, the authors compare payments arrangements in the UK, Norway, Sweden, and Finland and discuss the impact of network effects on incentives to adopt new payments technology, in which private benefits for investment in shared inter-bank payments infrastructure are weak.
Abstract: The developed world exhibits substantial but poorly understood differences in the efficiency and quality of low-value payment services.This paper compares payments arrangements in the UK, Norway, Sweden, and Finland, and discusses the impact of network effects on incentives to adopt new payments technology.A model is presented, in which private benefits for investment in shared inter-bank payments infrastructure are weak.In contrast, due to 'account externalities', there are strong incentives for investment in intra-bank payment systems.These two features, distinguishing bank payments from other network industries, can help explain some of the observed cross country differences in payments arrangements. Key words: network effects, incentives, payment technology, externalities JEL classification numbers: G21, L14
10 citations
TL;DR: In this paper, the authors calibrate a simulation model of credit value-at-risk for mortgage lending to UK experience and conclude that Pillar 2 supervisory review should increase capital requirements above IRB levels for secured bank assets, those whose returns can potentially fall furthest relative to other, normally riskier assets, in extreme outcomes.
Abstract: We calibrate a simulation model of credit value-at-risk for mortgage lending to UK experience. Simulations to capture the skewness of returns that might arise in the context of a financial crisis suggest that the IRB calculations of the new Basel Accord can substantially understate prudential capital adequacy. The same model shows that raising capital requirements has only a small impact on bank funding costs. We conclude that Pillar 2 supervisory review should increase capital requirements above IRB levels for secured bank assets—those whose returns can potentially fall furthest, relative to other, normally “riskier” assets, in extreme outcomes.
10 citations
Journal Article•
TL;DR: In this paper, the impact of messaging and technical standards on competition in the supply of securities transaction management services is examined and two simple switching cost models are used to clarify the impact on barriers to entry and on the incentives to adopt harmonised and simplified securities processing standards.
Abstract: This paper examines the impact of messaging and technical standards on competition in the supply of securities transaction management services. Two simple switching cost models are used to clarify the impact of standards on barriers to entry and on the incentives to adopt harmonised and simplified securities processing standards. Policy implications are discussed briefly. Key words: securities settlement, standards, inter-operability, switching costs JEL classification numbers: L15, L86
6 citations