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A bank like any other? The transformation of Proparco and of administered finance

Antoine Ducastel, Development Sociologist and Researcher, French Agricultural Research Centre for International Development (CIRAD)

The article was published in Actes de la recherche en sciences sociales - 2019/4 (no 229), pp. 34 à 45

Subject
In this article, the author presents a monographic study of Proparco, a public-private development finance institution. He uses Proparco as a case study to trace the history of the financialisation of public investment and to shed light on recent changes in public financial institutions more broadly. The article analyses the “financialisation of administered finance” by exploring how Proparco – a small but symbolically important player in the French administered finance landscape – gradually adopted the management practices of market-based financing. The author shows how this change was driven by a shift in mindset among Proparco’s executives, who no longer saw their role as one of government planning, but instead as one of financial risk management.

Data
The author begins by examining the professional norms that organized and delimited the space of administered finance, and how they have evolved over the past 40 years. Through interviews with former Proparco executives and account managers, he then looks at the careers and daily operations within Proparco as a way to trace, from the ground up, the continuities and transformations in the history of this institution. The last section addresses the financialisation of Proparco by analysing both the pathways of its diffusion and the internal tensions it generates. Throughout the article, the author draws comparisons with the French Development Agency (AFD) and Bpifrance, the French public investment bank, demonstrating both similar dynamics between the three institutions and the fact that Proparco has its own, distinctive identity.

Findings
From his analysis, the author observes that, over time, Proparco has rationalised both its financial and political operations. Although some professional norms have remained unchanged (the institution still manages public and private financing flows centrally, and its activities are legitimised on public-interest grounds), the focus of much of its internal work has shifted to risk management. The financialisation of Proparco’s operations and personnel can be attributed to two factors: first, the partial overhaul of public financing circuits in general, and administered financial institutions in particular, and second – and more importantly – the adoption of market-based financing practices by its staff.

The European Union’s voice on Twitter: the European External Affairs Service (EEAS) and the use of Public Diplomacy
Anne-Marie Cotton, Senior Lecturer in Applied Sciences, Artevelde University College, Ghent, Belgium

The article was published in Communication & Management – 2019/2 (Vol. 16), pp. 51 à 64 and is available online here

 

Subject
Social networks are playing an increasingly prominent role in the communication strategies of public organisations. The author examines the use of Twitter by the European External Action Service (EEAS) to illustrate how the European Union (EU) uses public diplomacy (i.e. its public tweets on Twitter) as a tool to negotiate its interests with non-EU countries and with international organisations. Unlike conventional diplomacy, which draws on military and economic power, public diplomacy relies more on cultural and educational power. Public diplomacy refers to a communication strategy in which states seek to influence not only other governments, but also the global public at large. It has four main aims: (i) to openly publish the official stances and views of a government or international organisation; (ii) to inform foreign media outlets of the government’s or organisation’s diplomatic postures; (iii) to encourage engagement and interaction with different types of audience; and (iv) to develop a cultural exchange policy.

Data
The author qualitatively analyses 340 tweets published on the EEAS Twitter account between 8 March and 6 April 2017, encoding and interpreting the content of the tweets against a set of microblogging indicators. Specifically, she categorises each tweet by linking it to EEAS-specific themes (five objectives and five strategic areas of focus). The author also analyses each tweet from a cognitive perspective by identifying connections with one or more public diplomacy themes from a predefined list of 13 themes.

Findings
The results of this analysis reveal that, in its use of Twitter, the EEAS is actively implementing the strategic objectives related to public diplomacy. She finds that 41.17% of the tweets encourage followers to support EU policy, 53.53% provide insights into the EU’s purpose, and 27.94% foster a greater understanding of the EU’s values. Moreover, 40.88% of the tweets aim to widen cooperation opportunities by promoting understanding, mutual respect and trust, while 32.94% support relationship- and network-building between communities of current and future leaders. The author concludes, however, that while Twitter is an important channel for influence and is changing the way the EEAS shares information with its audiences, it does not represent a shift from a one-way to a two-way communication strategy.

Territories, well-being and public policy

Yann Algan, Professor of Economics, Sciences Po, Paris, France
Clément Malgouyres, Economist and Researcher, Institut des Politiques Publiques (IPP), Paris, France
Claudia Senik, Professor of Economics, Université Paris-Sorbonne and Paris School of Economics, France

The article was published in Notes du Conseil d’analyse économique, 2019/7 (n° 55), pp. 1 à 12 and is available online here

Subject
The Gilets Jaunes (Yellow Vests) crisis has brought the discontent felt in many French regions and communities into sharp focus. Various attempts have been made to explain the reasons behind this social unrest, including socio-economic and geographical factors. This Note explores the movement from a territorial dimension. It does not focus on purely geographical aspects, or seek to categorise towns and cities by size. Instead, it examines the relationships between the symptoms of public discontent and living conditions at the local (i.e. municipal) level. The authors therefore analyse how observed changes at this level in recent years are reflected in residents’ level of dissatisfaction.

Data
The authors measure local public discontent against three indicators: (i) Yellow Vest gatherings (data taken from prefectural sources); (ii) abstention in the 2012 and 2017 presidential elections (data taken from Ministry of the Interior statistics); and (iii) self-reported well-being (as reported in CEVIPOF election polls in 2017 and 2018). They analyse the relationship between changes across these three indicators and trends in local living conditions as expressed by five factors: employment, local taxation, the closure of local shops and public services, real estate, and associative life.

Findings
The authors identify a number of factors behind local discontent. While the employment rate plays an important role, the loss of public services and local facilities, coupled with the disappearance of place of socialisation, also have significant effects. They call for a change in the emphasis of territorial policies, with a greater focus on programmes that improve well-being and quality of life at the local level, and targeted support for territories facing the greatest losses of local well-being. The authors conclude by making four recommendations. First, they recommend redefining the objectives of support to territories by taking into account all dimensions of well-being and not only economic criteria. Second, they call for a renewal of central government’s approach to territorial support policies, giving priority to technical and financial support for projects initiated locally and supported by all relevant stakeholders, and promoting the right to experimentation. Third, they advise abolishing rural tax exemption policies, which have not been shown to work, and using this budget to fund local projects for rural areas. And fourth, they suggest that the new “France Services” network could help to nurture social links by facilitating access to certain “essential” public services such as local shops and the hosting of non-profit organisations in multi-purpose, hybrid venues adapted to each territory.

Accompaniment government. When the government professionalises employing non-profit organizations

Simon Cottin-Marx, PhD in Sociology, Postdoctoral Researcher, Techniques, Territories and Societies Laboratory (LATTS, CNRS UMR 8134), École des Ponts ParisTech and Université Paris-Est-Marne-la-Vallée, France

The article was published in Marché et Organisation – 2019/3 (no 36), pp. 135 à 151 and is available online here

Subject
France’s non-profit sector employs 1.8 million people and is supported by 22 million volunteers. Between 60,000 and 70,000 new non-profit organisations are set up every year. The government has played a key role helping the sector thrive, not least by “outsourcing” the running of public and public-interest facilities – such as childcare centres, domestic care services, sports clubs and centres for disabled children – to non-profits. Yet while the government has outsourced delivery of these services, it retains many tools to govern non-profit organisations. In this article, the author looks at so-called “accompaniment government” via a case study of the French Local Accompaniment Facility (DLA), a government policy established in 2002 to offer management advice to employing non-profit organisations in order to support their business model and professionalise them.

Data
The author draws on data from a field survey he conducted in 2013-2015, during which he spoke to various DLA stakeholders (designers of the policy, relevant government agencies and departments, non-profit organisations involved in the scheme, project officers and service providers). He also reviews the literature produced to support implementation of the policy (circulars, guides, internal documents, etc.) and the DLA impact assessment, which used quantitative data from the scheme’s national information system to determine how it had affected beneficiary organisations.

Findings
The author analyses the role of the DLA project officers responsible for setting up the scheme, selecting and on-boarding eligible non-profit organisations, and determining what management advice they require (a task outsourced to external service providers such as consultants and consulting firms). He concludes that, although the government appears to take a back seat in delivery of the policy, it continues to oversee the process and sets objectives that are well followed. According to his analysis, the DLA pushes non-profit organisations to adopt management tools, to structure their work and the division of labour, and to set up control mechanisms such as internal rules and organisational charts. The policy also forces non-profit organisations to comply with labour laws and regulations and supports the creation of long-term paid employment. Moreover, the DLA has contributed to a shifting mindset in the sector, encouraging non-profits to adopt business and commercial practices, bringing the idea of resource diversification into the mainstream, and highlighting the precariousness of public financing.

Free software to tackle the lack of transparency in the social tax system.
Sociology of a heterogeneous movement at the margins of the state

Sébastien Schulz, PhD in Sociology, Université Paris-Est-Marne-la-Vallée, France

The article was published in Revue française de science politique – 2019/5-6 (Vol. 69), pp. 845 à 868 and is available online here

Subject
This article examines the Openfisca software program and the technical, cognitive and institutional work that made it possible. Openfisca was developed to push back against the monopoly of information held by the Ministry for the economy and Finance, which used a proprietary and exclusive microsimulator to screen proposed social tax reforms. Although social tax rules are published on the legifrance.fr website, the associated code was not publicly available. Meanwhile, tax data was guarded for internal use only on the grounds of government secrecy. The author shows how those involved in the project successfully bypassed this monopoly of information and embedded practices inspired by the digital commons model within government.

Data
The author uses data from two sources: 28 interviews with individuals involved in the Openfisca project (founders, economists, developers, MPs, officials at the Ministry for the economy and Finance, etc.), and a review of an extensive documentary corpus (parliamentary reports, legislation, journal articles and blog posts). He also draws on the literature on open data and digital commons to trace the history of a project that aims to render all the opaque and elusive public information that constitutes France’s social tax system accessible to all.

Findings
The author demonstrates how political hackers at the margins of the Ministry for the economy and Finance managed to work together to build common resources from information previously held exclusively by government. He also argues that, because Openfisca was designed to be open to community contributions from the outset, it was possible to build a specific set of practices around the software (open-source licence, collaborative platform, online communication tools, and a modular design compatible with different scripts). Lastly, he shows that the determination by all involved to make Openfisca a digital commons (an online resource that is developed and managed by a community according to its own governance rules, and that follows a shared-ownership model) provides useful insights into the institutional relationship between the software’s creators and contributors on the one hand, and the government on the other, and sheds light on the tensions in this relationship. The Openfisca community is subject to the subordination principle that applies to the civil service because it derives its institutional legitimacy from being part of the apparatus of the state, and because it relies on the government for much of its funding. Yet this principle is potentially at odds with another principle: self-governance of the commons.

Market finance in an era of cheap intelligence

Charles-Albert Lehalle, Head of Data Analytics, Capital Fund Management, Paris, France, and Visiting Researcher, Imperial College London, United Kingdom

This article was published in Revue d’économie financière – 2019/3 (n° 135), pp. 67 à 84 and is available online here

Subject
In the 1990s, the financial industry was one of a handful of early adopters of high-powered computing and mass storage capacity. Yet the sector has not been at the forefront of advances in artificial intelligence (AI). Although AI is not a new field, tools provided by data sciences have been at the heart of a series of progresses allowing machines to “solve complex problems, without being intelligent”. The author examines how innovations in AI, and the associated practices, are transforming the financial industry.

Data
The author traces the history of developments in AI since the late 19th century, stressing the key role played by data in the implementation of this technology. Drawing on the literature, he describes the various applications of AI in market finance (account management, risk management and nowcasting) and how the adoption of related technologies has driven organizational change, especially in the brokerage industry, looking in particular at regulatory aspects and how market participants are adopting the platform model.

Findings
The author provides a historical overview of two complementary approaches in AI: Turing’s approach (based on the laws of logic and the ability to quickly compute multiple combinations at depth), and Wiener’s approach (based on training deep neutral networks through big data and statistical learning). He stresses the importance of creating large databases, and how humans can be employed to clean and label these databases cheaply via dedicated platforms. Hence, the author terms this the “era of cheap intelligence”, rather than the era of AI. He identifies several areas where AI is playing an increasingly prominent role in market finance, such as personalising the client experience and providing investment advice. Other areas include intermediation, risk estimation, and collecting “alternative data” to value financial products. The author concludes that secondary innovations coming for AI will transform the financial industry in three directions: towards client experience and construction of bespoke products on the fly, towards real economy and nowcasting, and towards risk management. He observes that these innovations are already impacting market participants that are modularising their services and re-engineering themselves into platforms.

Practices of legitimation and emergence of a field: ten years of coworking in Paris

Thesis by Aurore Dandoy, PhD candidate in Management Science, Université Paris-Dauphine Doctoral School, France, in partnership with Université Paris-Dauphine Management Research Laboratory, France. Supervised by François-Xavier de Vaujany. Thesis defence date: 1 July 2019.

This thesis explores the growing popularity of coworking since 2005, examining the phenomenon from its various dimensions (communities, spaces, practices, values and political aspects). The author paints picture of a complex, multifaceted practice that is both new yet anchored in certain fundamental and long-standing concepts. She demonstrates how coworking is both a global, globalised and political phenomenon, and a set of practices, spaces, activities, events and values.

The author looks specifically at the role of the community manager and how, through practices of legitimation, community managers are contributing to the emergence of coworking as a discipline. Her research focuses primarily on coworking spaces in western Paris, where she carried out a three-year autoethnographic study by taking up a role as a community manager in order to understand the phenomenon “from the inside”. As well as analysing the wider Parisian coworking ecosystem, she also draws on autoethnographic research in two other locations: Uni-Lab (a coworking space for student entrepreneurs) and Sceaux Smart (an independent coworking space more geared towards the local start-up community).

In her thesis, the author identifies 12 practices of legitimation that, over time, have contributed to the emergence of coworking as a discipline in its own right: 1. On-boarding community members; 2. Managing networks; 3. Attending unifying events (trade shows, gatherings, etc.); 4 & 5. Speaking as a community; 6 & 7. Organising events; 8. Officially opening a coworking space; 9. Setting norms and rules; 10. Standardising facilities and equipment; and 11 & 12. Developing institutional practices and co-constructing meaning. At the same time, the author observes that these legitimising practices have challenged the position of the individual in the community and in society.

The thesis is available online

Employee recognition and organisational commitment in the public sector

Thesis by Marianne Capdevielle, PhD candidate in Management Science, Social Sciences: Territories, Economics, Law (SSTED) Doctoral School, University of Tours, France, in partnership with Val de Loire Research in Management (VALLOREM), Tours, France. Supervised by Patricia Coutelle-Brillet and Franck Brillet. Thesis defence date: 11 January 2019.

Employee recognition is one of the most expressed expectations by workers regardless of the type of organisation they work for according to a TNS-Sofres/Anact survey conducted in 2013. When people talk about their work, it is not uncommon that the lack or absence of recognition at work is their main reason for discontent and the public sector does not escape this phenomenon. Because of this context, employee recognition has been the subject of much research in recent years. However, the issue of the specificity of the expectations of recognition that could be expressed by public sector agents has, to date, never been explored.

This research therefore aims to specify the expectations of recognition of public sector workers to determine the means available to public decision-makers to try to meet these expectations. It also studies the impact of public sector workers’ expectations of recognition on their level of organisational commitment. A theoretical model is built from the literature in management sciences and is enriched by a first exploratory qualitative study made up of 35 semi-structured interviews. A quantitative study, conducted by questionnaire with 1,259 respondents, then allowed the author to test this model.

The results show that the expectations in terms of employee recognition of public sector workers are numerous and can be met in various ways. Public sector workers want meaningful work and to be able to provide a high-quality public service, as well as the possibility of developing their skills. On the other hand, the elements that have the greatest impact on the organisational involvement of the agents are the financial elements and the possibility of working in good conditions.

The thesis is available online

Evolution of risk management methods in banks under Basel III: a study on macroprudential stress tests in Europe

Thesis by Julien Dhima, PhD candidate in Economics, Doctoral School of Economics, Université Paris 1 Panthéon-Sorbonne, France, in partnership with the Sorbonne Centre for Economics (CES), Université Paris 1 Panthéon-Sorbonne, France. Supervised by Christian de Boissieu and Catherine Bruneau. Thesis defence date: 11 October 2019.

This thesis explains, by way of theoretical elements, the imperfections of EBA/ECB macroprudential stress tests, and proposes a new methodology of their application, as well as two additional, specific stress tests.

The author shows that macroprudential stress tests may be irrelevant when the two basic assumptions of the Gordy-Vasicek core model used to assess banks’ regulatory capital in internal methods (IRB) in the context of credit risk (asymptotically granular credit portfolio and presence of a single source of systematic risk which is the macroeconomic conjuncture), are not respected. Firstly, there are concentrated portfolios for which macro-stress tests are not sufficient to measure potential losses or even ineffective in the case where these portfolios involve non-cyclical counterparties. Secondly, systematic risk can come from several sources; the current one-factor model does not allow for the impact specific to “macro” shocks.

The author proposes a specific credit stress test which makes it possible to understand the specific credit risk of a concentrated portfolio, as well as a specific liquidity stress test which makes it possible to measure the impact of liquidity shocks on the bank’s solvency. He also proposes a multifactorial generalisation of the regulatory capital valuation model in IRB, which allows macro-stress test shocks to be applied to each sectorial portfolio, stressing in a clear, precise and transparent way the systematic risk factors impacting it. This methodology factors in the impact of these shocks on the conditional probability of default of the counterparties of these portfolios, and therefore supports better evaluation of the capital charge of the bank.

The thesis is available online