Complexity in history: modelling the organisational demography of the British banking sector

Abstract

Using a new historical data set on the ‘population’ of British Banks for the last 200 years, we consider why, since its peak of approximately 1100 banks 1810, the population of British banks has declined to its present day population of less that 100. We hypothesise that amalgamation became an advantageous way for banks to expand, and use an agent-based simulation to test this hypothesis against the baking data. We are unable to falsify the hypothesis and show that the simulation reproduces many aspects of the real data with the minimum of assumptions.

Keywords::

• banking
• simulation
• model
• modelling
• agent-based

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Erratum

Acknowledgements

This work forms part of the Tipping Points project at Durham University funded by the Leverhulme Trust, grant number F/00128/BF. We would like to thank Prof. Ranald Michie for useful discussion and insight.

Notes

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^2.Fligstein, “Chandler and the Sociology”; Iversen, “Measuring Chandler's Impact”; McCraw, “Alfred Chandler”; Whittington, “Alfred Chandler.”

^3.Colli, de Jong, and Iversen, “Mapping Strategy”; Whittington, “More Ssop.”

^4.Popp and Holt, “The Presence” and “Entrepreneurship and Being.”

^5.Carroll and Hannan, The Demography of Corporations.

^6.Scranton and Fridenson, Reimagining Business History,” 69.

^7.Cameron and Crisp, “Banking in the Early Stages.”.

^8.Homes and Green, “Midland”; Ackrill and Hannah, “Barclays.”

^9.Haldane and May, “Systemic Risk”; May, Levin, and Sugihara, “Ecology for Bankers.”

^10.Moore, “The Banker's Almanac”; Anonymous, “Bankers Almanac Volume 5.”

^11.Sykes, “The Amalgamation Movement.”

^12.Sykes, “The Amalgamation Movement”; Homes and Green, “Midland”; Collins, “Money and Banking”; Ackrill and Hannah, “Barclays.”

^13.Kolev, Haleblien, and McNamara, “A Review of the Merger.”

^14.DiMaggio and Powell, “The Iron Cage Revisited.”

^15.Homes and Green, “Midland”; Moore, “The Banker's Almanac”; Anonymous, “Bankers Almanac Volume 5.”

^16. Neo4J, The World's Leading Graph Database, 2012.

^17.Garnett, Stepney, and Leyser, “Towards an Executable Model”; Andrews, Polack, Sampson, Stepney, and Timmis, “The Cosmos Process.”

^18.Garnett, Stepney, Day, and Leyser, “Using the Cosmos Process”; Droop, Garnett, Polack, and Stepney, “Multiple Model Simulation”; Polack, Droop, Garnett, Ghetiu, and Stepney, “Simulation Validation”; Garnett, “Going Around Again.”

^19.Sykes, “The Amalgamation Movement”; Collins, “Money and Banking.”

^20.Collins, “The Banking Crisis”; Barnes, “Minsky's Financial Instability.”

^21.Collins, “The Banking Crisis.”

^22.Neal, “The Financial Crisis.”

^23.Timothy and Thomas, “Toward a Unified Ecology.”

^24.Lansing and Kremer, “Emergent Properties.”

^25.Andreoni and Miller, “Auctions with Artificial Adaptive Agents.”

^26.Haldane and May, “Systemic Risk.”

^27.Haldane and May, “Systemic Risk.”

^28.Haldane and May, “Systemic Risk.”

^29.Bascompte, “Disentangling the Web”; Watts, “A Simple Model.”

^30.Collins, “The Banking Crisis”; Neal, “The Financial Crisis”; Barnes, “Minsky's Financial Instability”; Billings and Capie, “Financial Crisis.”

^31.Presnell, “Country Banking”; Collins, “Money and Banking.”

^32.Baker and Collins, “English Commercial Banks.”

^33.Howarth, “The Banks”; Sykes, “The Amalgamation Movement”; Sayers, “Lloyds Bank”; Winton, “Lloyds Bank”; Homes and Green, “Midland”; Ackrill and Hannah, “Barclays”

^34.William Howarth, Our Leading Banks, 1; Sayers, “Lloyds Bank.”

Additional information

Notes on contributors

Philip Garnett

Philip Garnett is a Lecturer at the York Management School, University of York, where he is also a member of the York Centre for Complex Systems.

Simon Mollan

Simon Mollan is Senior Lecturer at The York Management School, University of York.

R. Alexander Bentley

Alex Bentley is Professor of Anthropology at Bristol University, where he is also a member of of the Cabot Institute.