Developing Performance Measurement Systems in financial institutions in conditions of tightening regulation
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
After a crash in the financial industry in 2008, financial institutions have been struggling. Customers are more sceptical of the value that banks deliver and lawmakers have tightened regulations, squeezing costs up and revenues down. As a result, banks need to increase their effectiveness in providing value to their market and to increase efficiency to reduce costs. The purpose of this thesis is to investigate how Performance Measurement Systems should be developed to help communicate the necessary changes in strategy and operations needed to enable banks to cope with a rapidly changing regulatory and supervisory environment. First, by examining how regulation has affected the current business of banks and then by investigating how the effects of regulation can be aligned with strategy in the development of an improved Performance Measurement System. The literature on performance measurement within financial institutions has mainly focused on efficiency in their operations, but also to some extent on how to incorporate non-financial measures into their Performance Measurement Systems. More research is needed to adjust the development of Performance Measurement Systems adequately to the specific conditions and services of financial institution. A single case study was conducted on the retail banking operations of an Icelandic financial institution. The bank’s strategy had recently been adjusted to accommodate changing conditions, partly due to tighter regulations. The strategy and current performance measurements were identified and an approach to redesigning the measures is proposed. The intent is to help align the Performance Measurement System better with strategy.
Place, publisher, year, edition, pages
2014. , 64 p.
Performance Measurement System, Financial industry, Regulation
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-147709OAI: oai:DiVA.org:kth-147709DiVA: diva2:731900