On Institutional Demands in Banking and the Exchange of Hard and Soft Accounting Information

The overarching purpose of the thesis is to explore how institutional demands influence banks, which has been a core issue in banking research. This has become even more critical since the financial crisis of 2007–2009. By conducting a qualitative study and paying attention to the exchange of different forms of hard and soft accounting information, the thesis expands the current knowledge on how institutional demands influence highly regulated organisations, such as banks, which can face sanctions if they are not compliant when potential regulations enter into force. The thesis contributes to literature on institutional demands, as the thesis shows that even financial regulatory initiatives influence banks. Accordingly, the potential regulations can create tensions between banks and regulators. Here, the increased dependency on information technology (IT), which must be developed, is central. This is demonstrated by studying regulations and the formation of regulatory initiatives, including MiFID II, KRITA and financial robo-advising. The thesis includes four individual studies and puts them in a larger context, and it relates them to each other to increase our knowledge. Study I, which contributes to knowledge on how exchanges between firms and banks take place. It demonstrates that the exchange is more complex than previous literature suggests, and that the exchange differs depending on what financial services are considered. Studies II–IV then add knowledge on how institutional demands, manifested by regulations and regulatory initiatives, influence banks. These studies also reflect on the importance of qualitative information when adopting new financial regulations and when regulating certain bank services, primarily those services that rely on softer forms of accounting information. Specifically, Study IV demonstrates how financial robo-advising comes into being and influences financial intermediaries, including FinTech companies, such as modern banks, by focusing on the regulatory discourse and the regulators’ definition of financial robo-advising. Furthermore, the thesis contributes to the literature on hard and soft accounting information, in the sense that there are a number of different definitions that, to some extent, can be paradoxical. The study demonstrates how the definition that is used in our attempt to capture accounting information also influences the result. This touches on the value that we attempt to measure and the core of what is considered as accounting information. Finally, the thesis demonstrates that regulators tend to rely more on information, such as numbers and quantitative information, instead of more context dependent information, such as qualitative information. Thus, the demanded accounting information influences and materialises, to some extent, what banks become. This means that the demand from regulators influences these regulated firms, which, in turn, adapt to the demands and develop their infrastructure accordingly. Thus, the IT-infrastructure becomes a part of our physical reality – i.e. the ideas and demands of regulators become transformed by the regulated into the physical information systems, manifested by e.g. financial robo-advisors.