Are Competitive Banking Systems More Stable?

Using the Panzar and Rosse H-statistic as a measure of competition in 45 countries, we find that more competitive banking systems are less prone to experience a systemic crisis and exhibit increased time to crisis. This result holds even when we control for banking system concentration, which is associated with higher probability of a crisis and shorter time to crisis. Our results indicate that competition and concentration capture different characteristics of banking systems, meaning that concentration is an inappropriate proxy for competition. The findings suggest that policies promoting competition among banks, if well executed, have the potential to improve systemic stability.     

Bank competition efficiency in Europe: A frontier approach

There are numerous ways to indicate the degree of banking competition across countries. Antitrust authorities rely on the structure-conduct-performance paradigm while academics prefer price mark-ups (Lerner index) or correlations of input costs with output prices (H-statistic). These measures are not always strongly correlated within or across countries. Frontier efficiency analysis is used to devise an alternative indicator of competition and rank European countries by their dispersion from a “competition frontier”. The frontier is determined by how well payment and other costs explain variations in loan-deposit rate spread and non-interest activity revenues. Overall, differences in competition appear to be small.     

Consolidation and Competition in the Banking Industries of the EU Member and Candidate Countries

This paper investigates competitive conditions in the banking markets of all EU member and candidate countries over the period 1995-2007. The Panzar and Rosse (1987) model is implemented on bank-level data. In particular, the unscaled revenue equation is employed to assess market structure. Country-specific empirical results suggest a wide variation in the competitive conditions of the banking systems in the sampled countries. Nineteen banking systems are characterized as monopolistically competitive, nine as monopolies or perfectly colluding oligopolies, and two as perfectly competitive over the sample period. This study also investigates whether competition conditions changed over the sample period, using 2001 as an endogenously determined break year. The empirical evidence reveals that banking systems became less competitive after that time.     

Empirical assessment of the competitive conduct of Nigerian banks in a post-consolidation era

This paper is an empirical assessment of the level of competition in the Nigerian banking industry following the consolidation exercise, using a bank-level panel data, for the period 2005–2014. Empirical evidence from the Panzar and Rosse (1987) H-statistic reveals that market power in the Nigerian banking industry is consistent with monopolistic competition, which implies that firms are independent in their decision-making and conduct. This study innovates by incorporating non-interest income accounts in the assessment of revenue, and findings suggest that bank competitiveness decreases as revenue tends toward an inclusion of non-interest income or fee-based services.     

Are there diversification benefits of increasing noninterest income in the Chinese banking industry?

This paper assesses the potential diversification benefits of the increasing reliance on nontraditional business activities based on data from the Chinese banking industry in 1986–2008. At the aggregate level, there are diversification benefits of the increase in noninterest income. However, noninterest income has higher volatility and cyclicality than net interest income, and the marginal benefit of diversification decreases with the increase in noninterest income. At the bank level, the correlation coefficients of the growth rates of net interest income and noninterest income are mostly negative, which also suggests that there are diversification benefits of increasing the noninterest income. However, further model analysis indicates that the effect of the noninterest income share on the Chinese banking industry's revenue and risk is not significant. Overall, our findings suggest that noninterest income diversifies bank revenue, but increased reliance on noninterest income may worsen the risk/return trade-off for the Chinese banking industry.     

The effects of revenue diversification and cross border banking on risk and return of banks in Africa

The paper analyses the implications of revenue diversification and cross-border banking for risk and return. We sample 320 banks across 29 African countries and employ System GMM estimator as a methodological approach to shed further light on the diversification-stability nexus by examining the complex interaction between three key variables: cross-border banking, diversification and bank stability. The results suggest that exploration risk reduces diversification as the level of capital increases when banks cross border to diversify across revenue generating activities. Our analyses further show that, banks in Africa derive absolute benefits from diversification if they cross border and diversify their revenue base concurrently. These results are robust to a range of controls including alternative variable specifications, regulatory environment that bank operate and methodology.     

Competition in fragmented markets: New evidence from the German banking industry in the light of the subprime crisis

Of all of the EU member states, Germany has the largest banking market. However, not all German banking institutions necessarily face fierce competition. Because the industry is highly fragmented, strict separation of the three existing banking pillars may impede competition, with negative effects on financial stability. We assess the competitive stances of 1,888 universal banks from 2001 to 2009 by using the Panzar–Rosse revenue test. We find evidence that measuring competition at an average country level does not necessarily generate valid evaluations of fragmented markets. In addition, we find no clear indication that either the particular objectives of cooperative and savings banks or the legal protection of these institutions impedes competition or discriminates against private banks. Therefore, as long as the relationship between competition and financial stability is dubious, the overall effect and the social costs or benefits of political measures that influence the structure of the German banking market are at least questionable.     

商业银行集团客户信贷风险管理研究

近年来,一系列集团客户先后爆发债务危机,给银行信贷资产带来重大损失和负面影响。本文针对集团客户的风险特征和我国商业银行的管理缺陷,指出集团客户信贷风险的成因。文中指出构建完善的集团客户风险管理体系主要在于:一是建立集中的信贷风险管理体制;二是建立集团客户风险管理长效机制,包括基础信贷风险管理制度、风险联动监督机制、风险信息预警提示制度、差别化的客户管理机制、有效的风险预警指标体系、双轨互动的风险管理机制、账户资金收支监测分析、内部风险评级体系建设等;三是构建社会监督机制,主要包括行际信息沟通机制、社会信息监督平台及完善银行同业协会功能等。     

Beyond state-owned banks: Evidence from Shanghai bank customers

In light of a reformed and liberalized banking sector in China, this article sets out to examine the role of socio-demographic factors and customers’ banking experiences and priorities in customers’ selection of banks. As state-owned banks have long dominated the banking industry, the article also investigates the receptiveness of the Shanghai Chinese towards newer commercial banks, such as the joint-stock banks, and the penetration of foreign banks into China's banking industry. Comparing customers who use state-owned banks only and those who patronize joint-stock banks, it is found that education, income, age, occupation sector and location of hometown affects customers of state-owned banks only. Further, it is also found that state-owned banks remain dominant despite the opening up of the banking sector, and perception towards state-owned banks remains favourable.     

Bank Competition: Measurement,Decision‐Making,and Risk‐Taking

This paper investigates whether greater competition increases or decreases individual bank and banking system risk. Using a new text‐based measure of competition, and an instrumental variables analysis that exploits exogenous variation in bank deregulation, we provide robust evidence that greater competition increases both individual bank risk and a bank's contribution to system‐wide risk. Specifically, we find that higher competition is associated with lower underwriting standards, less timely loan loss recognition, and a shift toward noninterest revenue. Further, we find that higher competition is associated with higher stand‐alone risk of individual banks, greater sensitivity of a bank's downside equity risk to system‐wide distress, and a greater contribution by individual banks to downside risk of the banking sector.     

The effect of tax revenue budgeting errors on fiscal balance: evidence from the Swiss cantons

This study is an empirical analysis of the impact of direct tax revenue budgeting errors on fiscal deficits. Using panel data from 26 Swiss cantons between 1980 and 2002, we estimate a single equation model on the fiscal balance, as well as a simultaneous equation model on revenue and expenditure. We use new data on budgeted and actual tax revenue to show that underestimating tax revenue significantly reduces fiscal deficits. Furthermore, we show that this effect is channeled through decreased expenditure. The effects of over and underestimation turn out to be symmetric.     

Understanding the intention to use mobile banking by existing online banking customers: an empirical study

The Indian banking sector can take advantage of the proliferation of smartphones as well as the government’s encouragement of cashless transactions to accelerate the use of mobile and online banking. The purpose of this study is to understand the initial acceptance of mobile banking by existing online banking users. Few studies have focused on online banking users’ behavioural intention to use similar services (such as mobile banking) in India. To this end, a theoretical model was developed using the technology acceptance model, which was extended to cover the adoption factors that influence users of online banking to use mobile banking. These adoption factors comprise perceived ease of use, perceived security, mobile self-efficacy, social influence and customer support. The dependent variable is customers’ behavioural intention to use mobile banking. A partial least squares structural equation modelling analysis was used to test the theoretical model with sample data from 420 online banking customers of various public, private, foreign and co-operative banks in India. The study found that the adoption factors had a significant impact on customers’ behavioural intention to use mobile banking. The findings of this study provide insight into digital banking channels, contribute to existing research on digital banking adoption and will educate banks and financial institutions on the adoption of mobile banking in India.

     

Noninterest income mix and bank performance: Generalized propensity score fractional dose–response function evidence

This paper investigates the impact of different levels of noninterest income on the risk-adjusted profitability and financial stability of banks in the Middle Eastern and North African banking industry from 1988 to 2020. We apply a program impact evaluation analysis, using the generalized propensity score-fractional dose–response function method, and assess the effect of each level (or dose) of noninterest income mix on bank performance (the dose–response function). Splitting the sample into Gulf Cooperation Council- and non-Gulf Cooperation Council-based banks reveals that while higher levels of revenue diversification are beneficial for the former, a focus on traditional banking activities is preferable for the latter to achieve the best performance. The findings could serve as an early warning flag for bank managers, policy-makers, and regulators in dealing with these strategic shifts.     

Do the business cycle and revenue diversification matter for banks’ capital buffer and credit risk: Evidence from ASEAN banks

We examine the association of the business cycle and revenue diversification with the banks’ capital buffer and credit risk for a sample of banks from the Association of Southeast Asian Nations (ASEAN) region from 1998 to 2018, using 2847 banking firm–year observations. We find that ASEAN region banks react anticyclically in adjusting their capital buffer levels and credit risk. We find revenue diversification benefits and that banks, through revenue diversification, can reduce their credit risk while achieving capital savings when confronting economic downturns. Our results offer support for the Basel III accord. However, the relations revealed are somewhat moderated by the regulatory quality, competition, and phase of the business cycle encountered by ASEAN region banks.     

Bank ownership,privatization, and performance: Evidence from a transition country

This paper combines the static effect of ownership and the dynamic effect of privatization on bank performance in China over 1995–2010, reporting a significantly higher performance by private intermediaries – joint stock commercial banks and city commercial banks – relative to state-owned commercial banks. However, publicly traded banks, subject to multiple monitoring and vetting in capital markets, perform better regardless of ownership status. The privatization of banks has improved performance with respect to revenue inflow and efficiency gains in the short- or long-run (initial public offerings). The positive long-run effect is more relevant and significant for banking institutions with minority foreign ownership. Moreover, this paper innovatively estimates interest income efficiency and non-interest income efficiency at the same time. The results suggest that Chinese banks are much more efficient in generating interest income than raising non-interest revenue, although the latter aspect has improved significantly during the sample period.     

美国银行关联交易监管演变考及借鉴

美国对银行业对外关联关系监管经历从“状态限制”到“行为限制”的发展过程,其理论基础是基于对银行独立市场判断能力的维护。我国应借鉴美国经验,加强对银行业关联交易的立法和外部监管,强化商业银行的内部控制;在监管中要兼顾效率和公平,加大对非公允关联交易的处罚力度,并赋予监管者一定的自由裁量权;不断修改、完善监管制度。     

中国银行业税负比较、绩效影响与对策选择

本文通过历史比较与国际比较,指出中国银行业虽然综合税负不断下降,但仍较国外偏重,进而运用面板数据模型论证了相对过重的税收负担对中国银行业经营绩效产生负效应,最后,提出降低我国银行业税负的若干政策建议,以应对经济全球化和国际金融危机的双重挑战,提高中国银行业在开放金融体系中的竞争力。     

Internet Banking

We use multivariate logistic regressions to identify factors affecting adoption of Internet banking. These factors include membership in a bank holding company, an urban location, and relatively higher premises and other fixed expenses to net operating revenue, higher noninterest income, and greater accounting cost efficiency than non-Internet banks. More profitable banks were more likely to adopt Internet banking after Quarter 2 1998, but more profitable institutions were less likely to be among the first movers in adopting Internet banking. Among banks with assets over $100 million, institutions with transactional Internet banking were generally more profitable and tended to rely less heavily on traditional banking activities. For banks with less than $100 million in assets, there was no statistical difference in profitability among mature Internet and non-Internet banks, but de novo Internet banks were significantly less profitable than non-Internet de novos.An erratum to this article can be found at     

Taxes,Theft, and Firm Performance

This paper examines the interaction between income diversion and firm performance. Using unique Russian banking transaction data, I identify 42,483 spacemen, fly‐by‐night firms created specifically for income diversion. Next, I build a direct measure of income diversion for 45,429 companies and show that it is negatively related to firm performance. I identify the main reason for the observed effect as managerial diversion rather than tax evasion per se. I further show that stricter tax enforcement can improve firm performance: a one standard deviation increase in tax enforcement corresponds to an increase in the annual revenue growth rate of 2.6%.     

The determinants of shareholder value in European banking

This paper examines the determinants of shareholder value creation for a large sample of European banks between 1998 and 2005. As the recent turmoil in global banking systems has illustrated, bank performance can have a substantial influence on efficient capital allocation, company growth and economic development. We use a dynamic panel data model where the bank’s shareholder value is a linear function of various bank-specific, industry-specific and macroeconomic variables. We show that shareholder value has a positive relationship with cost efficiency changes, while economic profits are linked to revenue efficiency changes. Credit losses, market and liquidity risk and leverage are also found to substantially influence bank performance. These results are robust to a variety of different model specifications.