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A brief review is provided as to the growth of home banking in the UK in general and in Scotland in particular. Some attention is paid to a comparison in the services provided by two leading home banking systems and a speculative extrapolation is made as to how developments in home banking may proceed into the future.

Adam Smith’s theory of economic growth, as presented in the Wealth of Nations, is based upon the potential for increasing returns in manufacturing generated by increased specialization and division of labour and upon the accumulation of real capital, which is necessary to support the greater division of labour. The increasing returns part of Smith’s theory leaves open the possibility that bank credit, issued judiciously, might be used to extend the market and so increase an economy’s growth rate. However, Smith’s theory of bank credit and note extension is quite conservative. Henry Dunning Macleod, a century after Smith, made much of the potential of credit to extend the market. Notes Smith’s apparent inconsistency and considers reasons why he might have chosen not to promote the use of credit to enhance economic growth.

Haldane has suggested that modularity would add sustainability to the financial system. The purpose of this paper is to suggest a route by which such modularity might be achieved.

The paper attempts to explore the micro‐foundations of regulatory regimes as rule bound orders and demonstrate that externally imposed rules may not be absolutely necessary to constrain the behaviour of individuals or organisations. Voluntarily self‐agreed rules may allow for greater communication and monitoring among the participants in a group. This in turn can result in greater sustainability. The paper uses examples from the work of Ostrom on sustainable common‐pool resources to support this view. Examples are also given from the financial services industry.

The paper suggests that non‐legislative, informal rules of behaviour may be a useful source of constraining unsustainable behaviour in the financial services industry. In turn these self‐enforcing rule‐bound regimes may facilitate one feature of sustainable systems – modularity.

The paper suggests that stakeholders in financial systems may find it useful, on a bottom‐up basis, to facilitate the creation of groups of financial institutions that would create and then adhere to self‐enforcing rules that could result in sustainable practices.

The originality of the paper is on the focus on self‐created and self‐enforced rule‐following and on using the work of Ostrom in a financial services setting.

Commercial banks are the major source of external finance for small firms in the UK. Describes a study which was carried out to investigate how bank managers make decisions on lending to small firms. The study looked at adverse selection (i.e. where a manager turns down a good proposal which turns out to be a success) and its effect on small firm liquidity constraints. The researcher took on the role of an entrepreneur and presented a business plan based on an actual lending proposition to bank managers in Scotland. Compares the study with an English study. Findings suggest a more favourable treatment of the proposition by the Scottish bank managers. However, there was variation among banks in the way managers assessed the proposition. There was an emphasis on financial information, gearing and security which reflects the capital‐based approach to bank risk assessment in the UK. Considers policy implications for risk assessment and small firms/banking relationships.

The purpose of this paper is to investigate the underlying causes of the series of banking disasters that unfolded from July 2007 onwards and to suggest what action should be taken to avoid a repetition.

The practices and culture that have evolved in banking over recent decades are compared and contrasted with general principles of actuarial science and with Adam Smith's blueprint for a well‐functioning market economy as set out in his Wealth of Nations. Recent instances of financial turmoil such as the Northern Rock debacle and the global “credit crunch” are then viewed from a longer term perspective.

The serious weaknesses identified by comparisons with actuarial science and the wisdom of Adam Smith, amplified by perverse methodologies of finance theory and “fair value” accounting and unchecked by the lax regulatory framework, take not only the global banking industry, but also the entire global economy to the point where the self‐stabilising properties of Western capitalism are destroyed. To avoid a repetition, banking practices and culture must be completely rebuilt along actuarial and “Adam Smith” lines, the destabilising methodologies of finance theory and “fair value” accounting must be abandoned, and the new and more prudent approach must be rigorously enforced by a strong regulatory regime.

By adopting a longer term actuarial perspective, the paper identifies deeper problems and suggests more fundamental solutions than have generally been the case in the continuing debate as to the best way forward in rebuilding a robust financial system.

This is the second part of a detailed annotated chronology of significant events in the history of money in the context of social, economic, political and technological developments from the dawn of civilization until the closing years of the twentieth century. Part 2 covers events from the start of the industrial revolution onwards. This period saw major changes in the relative importance of coinage, paper money and bank money, as well as the beginnings of electronic money. These changes, and the financial effects of the Napoleonic and World Wars, the rise and decline of the British Empire, the emergence of the United States and Japan, decolonisation and Third World debt, and moves towards a single currency in Europe, are all covered.

This paper sheds some light on the debate about the extent of use of IT in services, in this case in banking. In such a competitive sector where quality of service can be a differentiator in the marketplace, the balance between personal interaction and technologically delivered services must be right if customers are to be retained over time. Research was carried out in Scotland to elicit the views of personal bank customers, business customers and bank staff with respect to the use of different banking technologies. Findings point towards the need for a balanced approach that avoids over use of technology at the expense of the personal approach to service delivery and towards the need to provide customers with some technological training rather than assuming they will automatically accept technology and make use of it.

Introduction Consider a hi‐fi loudspeaker manufacturing company acquired on the brink of insolvency by an American multinational. The new owners discover with growing concern that the product range is obsolete, that manufacturing facilities are totally inadequate and that there is a complete absence of any real management substance or structure. They decide on the need to relocate urgently so as to provide continuity of supply at the very high — a market about to shrink at a rate unprecedented in its history.

The purpose of this paper is to correct Rozeff (2010). He contends that fractional-reserve banking is legitimate and efficacious. The authors demonstrate that it is not.

The design of this paper is to quote widely from Rozeff (2010) and then to expose his errors of analysis.

The authors demonstrate that fractional-reserve banking is neither legitimate nor efficacious.

Money is the lifeblood of the economy. If so, then banking is the marrow of the economy, since it is from that sector that money arises in the first place. It is crucially important, then, that the monetary system be based on sound principles. Fractional-reserve banking is a violation of these sound principles. Therefore, it is valuable to demonstrate that this is indeed the case.

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.