Testing for profitability and contestability in banking: evidence from Austria

The paper investigates the determinants of banking profitability and banking market conditions in Austria. We conduct a panel econometric analysis which allows for testing the hypotheses which have become the most prominent in the literature on bank profitability: the structure–conduct–performance hypothesis, the efficient‐structure hypothesis and the relative market‐power hypothesis. Further, we test whether Austrian banking markets are, on average, contestable. A newly compiled dataset covering more than 700 Austrian banks ranging over the period from 1995 to 2002 is used to carry out these econometric analyses. The empirical findings support the view that the Austrian banks do exert, on average, some local market power. However, the gains in terms of excess profits are rather minor as a result of low deterrence powers of the incumbent banks.     

银行盈利的宏微观因素——对中国银行业的实证研究

This paper seeks to examine the determinants of the profitability of the Chinese banking sector during the post-reform period of 2000–2005. The empirical findings from this study suggest that all the determinants variables have statistically significant impact on China banks profitability. However, the impacts are not uniform across bank types. We find that liquidity, credit risk, and capitalization have positive impacts on the state owned commercial banks (SOCBs) profitability, while the impact of cost is negative. Similar to their SOCB counterparts, we find that joint stock commercial banks (JSCB) with higher credit risk tend to be more profitable, while higher cost results in a lower JSCB profitability levels. During the period under study, the empirical findings suggest that size and cost results in a lower city commercial banks (CITY) profitability, while the more diversified and relatively better capitalized CITY tend to exhibit higher profitability levels. The impact of economic growth is positive, while growth in money supply is negatively related to the SOCB and CITY profitability levels.      

Banking structure and financial stability: a comparison of Chinese and German banking systems

In the process of financial globalization and diversification, the issue of financial stability has become heated all over the world. This paper attempts to uncover the delicate relationship between banking structure and financial stability by comparing and analyzing the situation of the Chinese and German banking systems. This paper suggests that (i) the trade-off between competition and concentration in banking industry is a vital factor to maintain financial stability and (ii) concentration is not always a bad thing for financial stability, especially in banking systems with discontent bank performance.     

The determinants of banking efficiency in Hong Kong 2004-2014

The cost efficiency of the Hong Kong Banking sector over the period 2004–2014 is estimated by data envelopment window analysis. A second stage regression analysis finds that bank size and GDP growth are positively associated with efficiency, whereas revenue diversification and inflation are associated with lower efficiency. Stock exchange listing status is associated with lower efficiency but no clear relationship between measures of market structure and efficiency is found.     

Competition and risk in South East Asian commercial banking

This article investigates the effects of competition on bank risk taking behaviour in four South East Asian countries (Indonesia, Malaysia, Philippines and Vietnam). Our main finding is that competition does not increase bank risk-taking behaviour and the results appear robust to different model specifications, estimation approaches and variable construction. We also find that concentration is inversely related to bank risk whereas regulatory restrictions positively influence bank risk-taking.     

Switching costs and implicit contracts

When firms can discriminate between old and new customers and when multiperiod binding commitments are too costly, the effects of switching costs may be mitigated thanks to implicit contracts offered (competitively) by firms in equilibrium and backed by reputation.     

混业经营：中国商业银行发展的必由之路

分业经营在经济发展水平较低的时期对金融的发展具有一定的促进作用。在而，对现代金融来说它却带来了一系列的问题，银行风险的恶化、竞争力的下降等，更严重的是，随着我国加入世贸组织，我国商业银行将面临更大的冲击，坚持分业经营无异于作茧自缚，摆在我们面前的路只有一条-混业经营，这是大势所趋。     

Estimating switching costs after introducing Fixed-Mobile Convergence in Japan

In this study, based on a conjoint-type survey analysis, the switching cost of several Japanese telecom services are empirically examined simultaneously, contingent on each carrier’s bundling strategies. The results suggest the following conclusions. The hierarchy of switching costs is mobile phone service, fixed phone service, ISP (Internet Service Provider), and broadband access service, in descending order. Even if the government prohibits the formerly state-owned monopoly NTT from forming alliances with other carriers, the legacy NTT group would still command more than half of the market share under FMC if each carrier adopts a pure bundling strategy. If mixed bundling emerges as the primary strategy in the FMC market, the resulting type of competition from the introduction of FMC does not stimulate competitive pricing.     

The impact of foreign capital on the Chinese banking market

In China, the foreign capital share of banks was restricted to 25% until 2006. Does such a relatively low share of foreign capital have any impact on the banking sector? In this paper, we use panel data on 19 major banks during 1996–2004 to shed light on the impact of foreign capital participation on the Chinese banking industry. We find that although the operating performance of foreign-owned banks is basically worse than that of domestic banks, as the market share of foreign-owned banks rises, they improve. For domestic banks, non-interest income decreases, while interest income increases. Therefore, the net effect of the foreign-owned banks' share on the profitability of domestic banks is small.     

Macroeconomic determinants of bank spread in Latin America: a recent analysis with special focus on Brazil

Latin America has one of the highest interest margins in the world; furthermore, credit to private sector and bank spread are negatively correlated. Brazil, in particular, has one the highest bank spreads in the world – it is even so far the highest one among the Latin American economies. Indeed, despite of the decline in interest rates since mid‐1999, bank spread in Brazil continues to be extremely high in international terms, and in recent years has stood at around 40 percentage points. This paper intends to explore the discussion in the recent literature on bank spread about what determines bank spread in Latin America, with special focus on the Brazilian case, seeking in particular but not exclusively to analyze the macroeconomic determinants of bank spread in recent times.     

Looking at the determinants of efficiency in banking: evidence from Italian mutual-cooperatives

Italy has experienced a restructuring and consolidation process in the banking industry since the 1990s that is expected to foster efficiency and competition. Despite the reforms, a peculiarity of the industry is the persistence of small mutual-cooperative banks (Banche di Credito Cooperativo, BCCs) active in narrow markets. The scope of this paper is to analyze the determinants of BCCs’ efficiency in the 2006–2011 period. In the first step of the study, a stochastic cost frontier is used to yield bank efficiency. Then the cost efficiency becomes the dependent variable of fixed and random effect models. The reference market of BCCs is the province (NUTS3). We find that BCC cost efficiency is positively affected by market concentration and demand density and inversely related to branching. Importantly, these results are robust to any sample restriction anchored to the distribution of efficiency. While the evidence regarding the credit quality is inconclusive for all BCCs, the sensitivity analysis shows that the risk in local markets is a source of BCC cost inefficiency.     

Factors affecting profitability of multi-finance company in Indonesia

The aim of this study is to examine the profitabilily of multi-finance companies. This study uses macroeconomic determinants and fundamental variables as factors that affected profitability. The samples of the study was multifinance company in Indonesia over period 2005-2007. The study uses an unbalanced panel data as a methodology. The result suggests that, the ownership of financial assets doesn＇t significantly affect multi-finance performances. This result indicates that multi-finance face difficult situation to generate profit from the credit given. And the result also suggests that all macroeconomic determinants affect multi-finance profitability, with more concern on inflation that have negative significant.     

Uncertainty and the slowdown of capital accumulation in Europe

The slowdown in the process of capital formation in continental Europe in the 1990s is analysed. Sector-level data from the OECD's International Sectoral Data Base (ISDB) are used. Econometric estimates of an investment function indicate structural instability in the early 1990s and, specifically, a break in the coefficient linking the growth of capital stock to demand. This result neither seems to be related to non-linearities in the relationship between capital formation and expected demand, nor to the sectoral composition of European economies. Evidence is found that the drop in the accelerator is at least partly attributable to greater demand uncertainty in the 1990s as compared with the earlier period.     

Free banking and the stability of early joint-stock banking

Proponents of free banking argue that systems adopting theirpolicies will be stable. In this paper, we present evidencesuggesting that, in general, early joint-stock banking systemsdid not adopt free banking, and those that did proved to beunstable. In particular, we demonstrate that those systems imposingregulations were generally stable. We rationalise the successof regulation as a pragmatic solution to the time-inconsistencyproblem arising from the peculiar nature of the banking firm.Notably, we find that the ‘golden age’ of free bankingstability can be attributed to restrictions on the organisationalform of the early banking firm.     

转移成本、价格歧视与银行竞争——基于霍特林模型的实证分析

在银行业竞争中,转移成本能够锁定消费者,使银行能够对锁定的消费者定一个较高的价格,但是,转移成本也使银行对没有被锁定的消费者的竞争更加激烈。研究发现,转移成本的存在增加了银行的利润,并且转移成本越高,银行从信贷中获得的利润越高。但是,当存在存款市场和贷款市场竞争时,由于价格歧视的存在,银行的利润随着转移成本的增加而降低,转移成本没有给银行带来优势。     

Effects of main bank switching on new business bankruptcy

This paper examines the effects of main bank switching on the probability of bankruptcy of new small businesses using a propensity score matching estimation approach. We use a unique firm-level dataset of approximately 1,000 small and medium-sized enterprises (SMEs) incorporated in Japan; these SMEs are young and unlisted just after incorporation. We find that switching main bank relationships increases the probability of firm bankruptcy. In addition, the result holds only when the relationship between the firm and its main bank is terminated. Specifically, the probability of bankruptcy increases when firms switch their main banks to financial institutions with which they have not previously transacted, and when the ex-post main banks are not affiliated financial institutions of their ex-ante main banks. These results may be because such switching worsens the financial condition of client firms, and thus, it leads to bankruptcy.     

Costs associated with non-medical switching from originator to biosimilar etanercept in patients with rheumatoid arthritis in the UK

Abstract

Aims: To estimate the cost impact of non-medical switching from originator to biosimilar etanercept in stable patients with rheumatoid arthritis (RA) in the UK.

Materials and methods: A cohort-based decision tree model was developed with a 1-year time horizon. The model population included patients with stable RA (patients who responded to originator etanercept treatment with no treatment changes in the previous 6?months). Patients could undergo a non-medical switch to a biosimilar and then switch treatment again, if medically required, after 3–6?months. Data on the proportion of patients switching therapies, baseline healthcare resource use, and impact of switching on resource use were sourced from a survey of 150 rheumatologists from EU5 markets (France, Germany, Italy, Spain, UK). The average impact of switching was evaluated as mean values for change in resource utilization due to switching. Also, low- and high-impact scenarios (lower and upper values of the 95% confidence intervals for change in resource utilization due to switching) were modelled as sensitivity analyses. Cost data came from published UK sources.

Results: The model assumed that 5,000 patients were treated with originator etanercept, with 1,259 (25.2%) switching to a biosimilar. Of those, 875 (69.5%) and 384 (30.5%) switched to SB4 and GP2015, respectively. After 3?months, 26.3% of patients who switched treatments did so again: 8.3% back to originator, 3.8% to the other biosimilar, and 14.2% to another biologic. Although originator etanercept was more expensive than the biosimilars, switching was more costly than continuous originator treatment across all impact scenarios. Switching treatment chains had higher overall annual per-patient costs than continuous originator treatment. Switching was associated with increased healthcare resource use.

Limitations: Results from this analysis are not transferable to other (non-RA) etanercept indications.

Conclusion: Non-medical switching can result in increased payer costs because of increased healthcare resource use following switching.     

Market structure, cost of intermediation and profitability in commercial banking

The effects of market structure on the relative cost of intermediation and on profitability of banks are re-examined using market data in a unit banking environment. Unlike earlier studies, market concentration is shown to affect both measures of bank performance.     

Harmonizing national options and discretions in the EU banking regulation

The European Central Bank strives to harmonize over 160 national options and discretions (O&Ds) that contribute to the fragmentation of banking union’s regulatory framework. National authorities seem prepared to accept it, despite previously insisting on the inclusion of all O&Ds into the EU legislation. We analyze a sample of O&D choices and their correspondence to cleavages pertinent to the political economy of EU banking. We find that the 11 post-communist member states use O&Ds more stringently to protect capital and liquidity in the local subsidiaries of foreign-own banks, which may complicate their potential opt-in to the banking union.