Professor Jack Revell

Economist of banking and financial systems
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The Independent Online

The economist Jack Revell acquired an international reputation for his emphasis on the importance of understanding how financial institutions and markets work in practice in order to help improve both policy formulation and economic theory development.

John Robert Stephen Revell, economist: born Tunbridge Wells, Kent 15 April 1920; Research Officer, Department of Applied Economics, Cambridge University 1957-63, Senior Research Officer 1963-68; Director of Studies in Economics, Selwyn College, Cambridge 1960-65; Director of Studies in Economics, Fitzwilliam College, Cambridge 1964-67, Fellow 1965-68, Tutor in Economics 1965-67, Senior Tutor in Economics 1967-68; Professor of Economics, University College of North Wales, Bangor 1969-83; married 1946 Pat Hyatt (one son, two daughters); died Cambridge 4 November 2004.

The economist Jack Revell acquired an international reputation for his emphasis on the importance of understanding how financial institutions and markets work in practice in order to help improve both policy formulation and economic theory development.

This was a lonely path to tread during an era when mathematical and statistical modelling increasingly dominated in modern economics. Revell did not dispute the need for these developments or their capacity for increasing the rigour of the subject. His contribution was to remind the economics profession of the necessity of ensuring that the institutions, markets and respective data being modelled in a theoretical setting did in fact reflect the real world that economists seek to explore, explain and ultimately to improve.

Revell's work began in earnest in 1957 when he was appointed Research Officer in the Department of Applied Economics at Cambridge University, later becoming Tutor and Fellow at Fitzwilliam College.

From 1963 to 1966 his work on national balance sheets was a core part of a wider research project at Cambridge, under the direction of Professor Richard Stone, that studied the financial implications of growth in the British economy. Publishing his findings in 1967 as The Wealth of the Nation, Revell became an expert on national balance sheets and the respective institutional structures of financial systems.

Revell took up the Chair in Economics at the University College of North Wales, Bangor (now the University of Wales, Bangor) in 1969. From then until his "retirement" (he never stopped writing) in 1983 and his return to Cambridge, he published a wide array of research papers and monographs - more than 30 books - that explored some of the developing problems in banking and the policies to best tackle them. Two influential titles were Solvency and Regulations of Banks (1975) and Mergers and the Role of Large Banks (1987).

At Bangor he also set up the Institute of European Finance, which became recognised internationally for its research. In 1982 he established the "Wolpertinger Club", a European association of researchers with an interest in the industrial economics of banking.

Revell had strong socialist principles. He did not favour economic systems that allowed the "forces of Mammon" to reign unfettered. His first job on graduation from the London School of Economics was as a researcher with Tass, the Soviet news agency. Although he made some lifelong friends there, he gradually became disillusioned with the Communist Party, finally leaving it in 1956 when the Russians invaded Hungary.

Nevertheless, Revell held socialist views throughout his life. The reputation that he developed in banking and financial system research was no abrogation of his beliefs in fair play and equal opportunity for all, together with a firm understanding that the free market unaided cannot deliver all of these benefits.

In the last decade of his career, Revell wrote on savings banks and co- operative models of banking. In countries like Spain, Italy, France and Germany, where these kinds of banks are particularly important, he became something of a modern-day guru. His research had an increasing preoccupation with social banking.

The modern economic phenomenon of "financial exclusion", whereby certain groups in society do not have access to financial products, crystallises the kinds of concerns that Revell had about the unrestrained growth of free competition banking systems. Financial exclusion is now recognised to be a major policy challenge of deregulating banking and financial systems; proximity banking - ensuring that there are enough local branches to serve all customers - is viewed as one of the most effective responses.

Revell also identified the need for effective banking supervision by regulators and the special economic role of capital adequacy - the amount of capital that banks should be required to hold in relation to the risks assumed in their business.

In such regulatory systems, Revell emphasised the need for some kind of "vicarious participation" by supervisory authorities in bank management so as to avoid the (then) theoretical problems of "regulatory arbitrage", where banks might attempt to innovate around a binding regulatory restriction. He was also a strong advocate of the technique of stress testing for bank capital adequacy at a time when capital adequacy was barely recognised as a UK banking problem, much less a future strategic driver of the global banking industry.

Both of these fundamental approaches characterise the new global "Basel 2" standards for banking supervision and capital adequacy that will become operational in 2007; Revell first explored and emphasised these areas in his research and writings over 30 years ago.

Jack Revell's research dealt with a world less elegant and precise than that often inhabited by modern economic theory, but his informed commentaries were read by a wide audience. "Everything should be made as simple as possible, but not simpler": Einstein's statement captures the contribution that Revell made to our understanding of modern banking and financial systems.

Ted Gardener

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