ABSTRACT
The focal question for analysis is how a risk-averse bank that, in theory, should have seen danger at every turn, not only ended up with catastrophic exposure to risk but also was oblivious to it. In an intriguing analysis of the psychodynamics of Barings’ collapse, Stein (2000) argues that the anxiety associated with deregulation (Big Bang) drove Barings to seek as saviour an opposite or shadow to itself in terms of class and background – a role that Leeson would eventually fulfil.
