Efficiency,growth and market power in the banking industry: New approach to efficient structure hypothesis

We extend the work of Homma, Tsutsui, and Uchida (2014) to provide empirical evidence on nexus of relationships in efficient structure (ES) hypothesis. In this framework, we test causality from cost efficiency to bank growth and then from bank growth to market concentration. We apply this approach to banking industry in Association of South East Asian (ASEAN) over the period of 1999–2014. The efficiency scores have been estimated by employing Slack Based Measurements Data Envelopment Analysis (SMB DEA). We apply Two-step system Generalized Method of Moments (GMM) and Panel Vector Auto Regression (PVAR) to account for endogeneity in estimation models. The results show that cost efficiency enables the banks to grow and obtain higher market share. The resultant growth then leads to higher market concentration/bank market power. There is also some evidence to support for quiet life (QL) hypothesis. Therefore, both ES and QL hypotheses may coexist in ASEAN banking industry.     

The impacts of competition and shadow banking on profitability: Evidence from the Chinese banking industry

This paper contributes to the empirical literature on banking profitability by testing the impacts of competition and shadow banking on bank profitability using a sample of 100 Chinese commercial banks over 2003–2013 with 417 and 395 observations. The current study fills the gaps in the empirical studies by examining the competition in different banking markets (i.e. deposit market, loan market and non-interest income market) in China and further evaluating their impacts on bank profitability. The findings show that the non-interest income market has a higher level of competition compared to the deposit market and loan market. It is further reported that a lower level of competition in deposit market leads to an increase in the profitability of Chinese commercial banks. Finally, the results suggest that shadow banking improves the profitability of Chinese banks.     

On the industry experience premium and labor mobility

There is evidence that experience premium differs across industries. We propose a theoretical model for explaining these differences. We assume that labor mobility brings external knowledge to the firm, which increases its productivity. We find that industry experience premium is decreasing in inter-firm mobility costs, while increasing in the learning-by-doing and the technological level of the industry. Moreover, it has a U-shape relationship with the level of learning-by-hiring, the substitutability between different types of experienced workers and the variety of knowledge in the industry. Results are consistent with the empirical findings that R&D-intensive industries have steeper wage profiles.     

Consolidation in the financial services industry: Are there industry gains for acquisitions of security firms?

We examine the revaluation of target security firms, their respective acquirers, both banks and non-banks, and their corresponding rivals before and after the major consolidation wave of 1994 to 1997. We find that target security firms as well as their respective acquirers are favorably revalued at the time of their acquisitions. The valuation effects are more favorable for non-bank acquirers and for acquirers with more growth potential and a lower degree of financial leverage. This suggests that investors expect greater synergies for mergers by better capitalized, faster growing, non-bank acquirers. In contrast to previous merger studies that generally find negative wealth effects for acquiring firms, cumulative abnormal returns (CARs) are on average positive for acquirers, targets, and portfolios of competing security firms, with the highest positive CARs for targets.     

Assessing output and productivity growth in the banking industry

This paper assesses the evolution of output and productivity in the Greek banking industry for the period 1990–2006. Three main categories of bank output were estimated based on modern theoretical approaches, while for the estimation of output and productivity (partial and total factor) we relied on the index number method (Tornqvist index). We also considered the effect of labor quality on banks’ productivity and the contribution of total factor productivity to bank output growth. Bank output and labor productivity outpaced considerably the respective GDP growth and labor productivity of the Greek economy during the period under examination. Capital and total factor productivity have also improved remarkably mainly since 1999, due to the structural changes that took place within the industry, capital (mainly IT) investments and improvement in the quality of human capital.     

Beyond profitability: effects of acquisitions on technical efficiency in the Italian pasta industry

Unlike traditional studies on the impact of ownership changes—which use either profitability measures or stock prices—this paper investigates the impact of acquisitions on acquired firms' technical efficiency. Using a panel of Italian firms in the pasta industry for the 1981–1997 period, I estimate a stochastic production frontier with exogenous factors affecting efficiency in a translog specification with non‐neutral technical progress. The main result is that acquired firms experience, within the 6 years period following the acquisition, an increase in technical efficiency of the order of 10%. This result is statistically significant and proves to be robust with respect to the inclusion of size and calendar year effects as explanatory variables of firms' inefficiency. These findings contribute to the debate on the welfare gains of ownership changes by providing evidence that mergers and acquisitions lead to cost savings, due to the reduction of acquired firms' X‐inefficiency. Copyright © 2002 John Wiley & Sons, Ltd.     

Profit efficiency and earnings quality: Evidence from the Spanish banking industry

Journal of Productivity Analysis - The analysis of efficiency and productivity in banking has received a great deal of attention for almost three decades now. However, most of the existing...     

Insider ownership and dividend signals: Additional evidence from the banking industry

This study investigates the relationship between the concentration of insider ownership and the share-price response to dividend-policy changes implemented by bank holding companies (BHCs). Using a cross-industry sample, previous research (Born 1988) found that there are differences in the magnitude of the share-price response to dividend initiations which may be explained by the concentration of insider ownership of the sampled firms. We hypothesize that the concentration of insider ownership does not play a role in differences in share price for BHCs due to the presence of regulatory monitors. The results of this study support our hypothesis.     

The effects of accounting regulations on stock valuation and volatility: Evidence from the banking industry

Banking regulators and market participants learn from price signals in the stock market (e.g., Flannery, Journal of Money, Credit and Banking 30: 273, 1998). Therefore, the system becomes more secure and developed as stock prices become more informative about banks’ financial conditions. Using a sample that includes major banks from 35 countries, this study investigates how accounting regulations affect bank stock valuation and volatility. The evidence suggests that bank stocks have higher valuation and lower volatility in countries that strictly regulate the quality of external audits and financial statement transparency. This study presents a comprehensive picture of the effects of bank accounting regulations on the stock market.     

Accounting for financial instruments in the banking industry: conclusions from a simulation model

The paper analyses the effects of three sets of accounting rules for financial instruments – Old IAS before IAS 39 became effective, Current IAS or US GAAP, and the Full Fair Value (FFV) model proposed by the Joint Working Group (JWG) – on the financial statements of banks. We develop a simulation model that captures the essential characteristics of a modern universal bank with investment banking and commercial banking activities. We run simulations for different strategies (fully hedged, partially hedged) using historical data from periods with rising and falling interest rates.

We show that under Old IAS a fully hedged bank can portray its zero economic earnings in its financial statements. As Old IAS offer much discretion, this bank may also present income that is either positive or negative. We further show that because of the restrictive hedge accounting rules, banks cannot adequately portray their best-practice risk management activities under Current IAS or US GAAP. We demonstrate that – contrary to assertions from the banking industry – mandatory FFV accounting adequately reflects the economics of banking activities.

Our detailed analysis identifies, in addition, several critical issues of the accounting models that have not been covered in previous literature.     

我国银行私人理财业务的特点与展望

本文总结了国外银行私人理财的基本业务,分析了我国银行私人理财产生的条件和经营特点,指出了未来发展的三个方向,即向证券业、信托业和投资基金业发展。混业经营是大势所趋,本文的观点包含了对我国金融分业经营模式的改革要求。     

Market reaction to uniform capital adequacy guidelines in the banking industry

In this paper the authors assess the stock market reaction to information on uniform capital requirements that was disseminated on four different dates: September 29, 1987; December 7, 1987; December 10, 1987; and July 11, 1988. The share prices of U.S. money center banks were adversely affected by the December 7, 1987, announcement regarding proposals to make regulatory standards more uniform. The share prices of U.S. superregional banks were not affected by this announcement. The difference in degree of response is attributed to disparate capital positions between the two groups of banks. In order to meet the new guidelines, U.S. money center banks may need to implement policies (such as issuing new stock) that are viewed unfavorably by the market.     

我国银行业监管有效性分析与对策研究

如何提高我国银行业的有效性已经成为国内各界关注的重大问题，文章试图通过对我国银行监管的现状分析，提出如何提高我国银行监管有效性的对策。     

我国银行业监管有效性分析与对策研究

如何提高我国银行业的有效性已经成为国内各界关注的重大问题,文章试图通过对我国银行监管的现状分析,提出如何提高我国银行监管有效性的对策。     

The effects of interactive leadership on human resource management in Singapore's banking industry

Reviewing the literature about interactive leadership and its effects on human resource management in business organizations, this paper proposes that interactive leadership has two major components: interaction skills and team building. Both components have positive effects on employees' trust in their leaders, on employees' motivation and employees' commitment to their companies. Based on these hypotheses, the paper develops an empirical test of the effectiveness of interactive leadership in Singapore's banking industry. Seventy-seven middle-level managers participated in this study by responding to a questionnaire about their leaders, their motivation, their commitment and their trust in these leaders. The results support the hypotheses and suggest some important implications for human resource management in business organizations, especially for human resource management in Oriental societies.     

Locational concentration and institutional diversification: Evidence from foreign direct investments in the banking industry

We study locational concentration and institutional diversification strategies in the context of foreign direct investment based on Dunning’s eclectic paradigm in the banking industry. We report that locational concentration and institutional diversification strategies can enhance multinational bank return independently and simultaneously. Further, we document that locational concentration increases operational risk, while an institutional diversification strategy reduces this risk for a multinational bank. Our findings suggest that even when concentrating in a limited number of geographic locations, it is preferable to select more institutionally dissimilar countries. Overall, we conclude that multinational banks can achieve better performance by focusing on either locational concentration or institutional diversification, or a combination of both.     

Profit efficiency in the European Union banking industry: a directional technology distance function approach

We employ the directional technology distance function approach and present estimates of profit efficiency in the 25 European Union (EU) member states over the period 1998–2008. This method decomposes profit efficiency into its technical and allocative components. We investigate potential efficiency differences across the old EU region and the new EU member states, across countries and across banks of different size. Our results indicate a significant level of profit inefficiency for the EU region, which is predominantly attributed to allocative inefficiency. Our findings also suggest that banks operating in the old EU region are, on average, more profit efficient than credit institutions in the new EU member states. Overall, we observe considerable variation of efficiency scores across countries and different patterns in efficiency change over time, as well as a negative relationship between bank size and efficiency.     

Measuring systemic risk of the Chinese banking industry: A wavelet-based quantile regression approach

In systemic risk measure, a large amount of literature has emerged, but few of them take into account the multi-scale natures of financial data. Considering these natures, we develop a novel W-QR-CoVaR method to measure systemic risk. To be specific, the W-QR-CoVaR method combines the wavelet multiresolution analysis (MRA) with the conditional value-at-risk (CoVaR) method based on the quantile regression (QR) framework. We then apply it to measure the systemic risk in the Chinese banking industry covering the period from September 2007 to September 2018. Our experiment results show that the hybrid W-QR-CoVaR method performs better than the traditional CoVaR method in terms of predictive accuracy. Furthermore, we also explore the relation between the systemic risk contribution of each individual bank and the bank-specific characteristics. Size and leverage appear to be the most robustness determinants. The findings suggest that regulators should pay more attention to the banks with smaller size and higher leverage.     

Bank competition,concentration and financial stability in the Turkish banking industry

This paper analyzes the impact of competition and concentration on bank stability in the Turkish banking industry over the period 2002–2012. The Boone indicator and the efficiency-adjusted Lerner index are used as proxies for competition, while the non-performing loans (NPL) ratio and Z-scores are used as proxies for bank stability. The main results indicate that competition is negatively related to the NPL ratio but positively related to the Z-score. The results further indicate that greater concentration has a positive impact on the NPL and a negative impact on the Z-score. We also use a quadratic term of the competition measures to capture a possible non-linear relationship between competition and stability. The results show that the coefficient of the quadratic term is negative for the NPL model and positive for the Z-score model. Overall, our findings provide support for the competition-fragility view.     

Economies of scale and scope in French commercial banking industry

This paper presents estimations of economies of scale and scope in the French banking industry. Using a translog model of bank costs, the paper demonstrates the existence of economies of scale for French banks, particularly in what concerns operating costs. Economies of scale are observed in all classes of bank size. Results also suggest that cost subadditivity exists in the French banking industry.