Failed crisis communication: The Northern Rock Bank case

• Abstract Purpose: Although granted funding from government agencies, Britain’s Northern Rock (NR) Bank experienced a depositors’ bank run in 2007. This study explores bank managers’ and the Triparties’ communications, in their failed attempt to reassure depositors during the crisis. Design/methodology/approach: The paper is based on content analysis of information given to depositors by bank managers and the Triparties via mass media. The theoretical concepts of rituals and masking were utilized. Findings: Results suggest that nonfinancial reporting supersedes financial reporting. Rather than hidden losses, bank regulators’ and politicians’ discussions of emergency funding for NR was the crucial incident signaling “something going on”. Even positive statements by prominent organizational actors may have signaled serious problems that compromised NR’s “business as usual” stance. Practical implications: Collective action manifested in a bank run is triggered by reasons other than numbers in financial reporting. The research results indicate a need to consider how regulatory authorities act during financial crises. Originality/value: Previous studies concluded that sensegivers must be consistent in framing communication to sensemakers. Sensemaking requires that the crisis communication is also consistent in the sensemakers’ framing. Because it is difficult for sensegivers to reshape the collective sensemakers’ frame, successful crisis communication requires that sensegivers change their comummication to match the sensemakers’ frame, including symbolic actions. Additionally, a bank run is characterized first by loss of trust in financial reporting; second, in nonfinancial reporting; and, finally, in the sensegiving actor: a domino effect.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

Nyckelord

Bank run

crisis communication

collective sensemaking

regulation

Publikations- och innehållstyp

ref (ämneskategori)

art (ämneskategori)