Intricacies of competition,stability, and diversification: Evidence from dual banking economies

This paper investigates the nexus of competition and stability by introducing the interaction of diversification and competition. We use a sample of both conventional and Islamic banks from 14 dual banking economies over 2005–2016. The core finding illustrates that competition does not impact bank stability and that diversification is insignificant in the competition-stability nexus. Further, we find that concentration is beneficial for the banking stability of both types of banks. In most of our results, we found no difference in the impact of competition and diversification on the stability of conventional and Islamic banks. To put our findings in a broader context, we argue that no difference between the business models can be considered an early signal of possible convergence between the two systems.     

商业银行网络银行业务发展影响因素的实证研究

采用自组织数据挖掘方法(GMDH),客观、自动地筛选影响商业银行网络银行业务发展的主要因素。利用2000—2011年我国10家商业银行的季度数据,实证分析网络银行业务发展与其影响因素之间的非线性关系。研究结果表明:政策因素、电子商务发展、网络营销和安全性是影响商业银行网络银行业务发展的主要因素;政策因素和网络营销对网络银行业务发展的影响较小,电子商务发展和安全性对网络银行业务发展的影响较大;这些影响因素与网络银行业务发展之间不仅存在线性关系,而且存在非线性关系。     

银行业市场结构、效率和绩效的相关性研究--基于上海地区银行业的考察

文章利用上海市银行业1999～2003年的相关数据,对该市银行业的市场结构、综合效率和经营绩效及其相互关系进行了实证研究.研究表明,上海市银行业是一个中等集中度的市场结构类型.利用DEA技术测定的银行业效率的结果显示,上海四大国有商业银行的整体综合效率要好于股份制商业银行,且股份制上市银行的综合效率对非上市银行不具有比较优势.此外,研究发现决定商业银行绩效水平的市场力假说和效率结构假说在上海银行业中都不成立,但是银行业的规模效率对银行绩效水平具有积极的作用.     

Lending conditions in EU: The role of credit demand and supply

We analyse the bank lending activity after the financial crisis and focus on bank-specific supply factors. Using a rich microeconomic dataset from Bankscope and macroeconomic shocks data, we employ OLS and 2SLS fixed effects models with banking controls, macroeconomic shocks and institutional quality. The banks’ loan-rate spreads increased despite the recent policy of low interest rates and quantitative easing. We use the bank asset quality as instruments to capture exogenous changes in loan supply. The empirical evidence shows that loan-rate spread and through this the supply of loans is negatively affected by a low asset quality and capital ratios.     

Credit creation under multiple banking regulations: The impact of balance sheet diversity on money supply

Since the recent financial crisis along with more concentration of banking supervision, we have stepped into a new regulatory regime where multiple regulations are at play simultaneously. In this paper, we study the collective impacts of multiple regulations on credit creation in a heterogeneous banking system. Each single regulation imposes a constraint on credit creation for each bank, while with multiple regulations, only the most stringent one plays the determinant role on money supply. For the homogeneous banking system with identical balance sheets, they share the same binding regulation. In contrast, for the heterogeneous banking system with diverse balance sheets, the binding regulation for each bank may be different from other's. Those banks, who are bound by different regulatory constraints from homogeneous banks, would bring about an overall reduction in money supply, because those binding regulations impose a lower capacity (compared with the one in the case of homogeneous banks) for the banks to extend their balance sheets in this condition. We put forward an agent-based model of commercial banks integrated with two processes: credit creation and fund transfer, to demonstrate the reduction effect. The results facilitate the understandings of the transmission mechanism of monetary policy via banks and its interaction with prudential regulations.     

Does competition influence bank failures?

There has been a notable debate in the banking literature on the impact of bank competition on financial stability. The aim of this article is to provide the first investigation of the role of bank competition on the occurrence of bank failures. We analyse this issue on a large sample of Russian banks for the period 2001–2007, as the Russian banking industry is a unique example of an emerging market which has undergone a large number of bank failures during the last decade. Our findings support the view that tighter bank competition enhances the occurrence of bank failures. Thus, measures that increase bank competition could undermine financial stability.     

委托-代理、薪酬激励与商业银行治理

本文建立了一个银行薪酬激励约束的博弈模型,分析薪酬激励机制的决定和约束因素,并运用中国16家上市商业银行2001至2010年的面板数据对其进行了检验。结果发现中国上市银行高管薪酬激励与经营业绩因素之间基本正相关,与经营业绩稳定性因素没有相关性。其中,净资产收益率是影响高管薪酬的主要因素,而高管薪酬约束与经营风险因素之间没有确切的相关性。银行治理结构在银行经营业绩上有正向激励作用．在经营风险控制上并没有起到太大的作用。     

经营活动、融资策略对银 行利润和风险的影响 ——基于我国商业银行的验证

2008年全球金融危机引发了对银行经营模式的思考。本文基于我国97家商业银行2005-2012年的面板数据，综合考虑了银行经营活动和融资策略之间的关联，并系统验证了两者分别对银行风险和利润的影响。结果发现非利息业务的开展与融资渠道的拓宽都未起到显著提升利润、分散风险的效果。这个结论虽然与发达国家的经验存在一定的差异，但是由于我国商业银行积极开展非利息业务的动机较弱，并且仍然高度依赖存款融资，因此符合我国目前的情况。     

Does the BRRD affect the retail banking business model in the Euro area?

This paper discusses how the introduction of the Banking Recovery and Resolution Directive (BRRD) in European Union legislation may change the retail banking business model, which is the most prevalent model in Southern European countries. The main point is the treatment of deposits in the BRRD. Uninsured deposits may be written down or converted into equity in case of resolution of a bank. This contrasts with the treatment of other short-term liabilities, in particular repurchase agreements. Short maturity repos are excluded from the bail-in, regardless of their size. Also, liabilities related to securities lending and derivatives are given privileged treatment. It is argued that this will be an advantage for wholesale and investment banks, which use these types of short-term funding largely to finance asset purchases. Moreover, it will severely hit retail banking business models of various types by undermining the trust of depositors in the bank, causing bank runs whenever rumours circulate about financial distress situations, thus increasing its cost of funding and lowering the value of its shares. Therefore, to avoid runs on repos, runs on banks are resurging.     

On exogenous money and bank behaviour: the Pandora's box kept shut in Keynes' theory of liquidity preference?

This essay examines Keynes' views on banking behaviour and the relationships between central banks and banks as they evolved from his Tract on Monetary Reform to The General Theory. The objective is to clarify in what sense money may be exogenous in his final work. We identify a distinctly Keynesian position on the money-supply process, featuring money exogeneity due to bank behaviour. Our findings run counter to both neoclassical synthesis view on exogenous money cum passive banks as well as the post Keynesian challenge of endogenous money cum passive banks.     

Bank loan supply shocks and leverage adjustment

We investigate the effect of bank loan supply shocks on firms’ leverage adjustment. We show that the impact of bank shocks is larger for firms with greater dependence on financially troubled banks. We measure firms’ pre-crisis loan dependence on troubled banks by using matched firm–bank loan data. Using the boom-bust cycle from 1987 to 2014 in Japan as a quasi-experiment, we find that financially constrained firms adjust their leverage slower during credit-crunch periods than during other periods. During credit-crunch periods following banking crisis, firms associated with failing banks or with banks that have a limited capacity to supply loans show a slower adjustment than other firms. Bank shocks have significant effects on small firms’ adjustment but not on that of large firms. These results are robust when we consider demand-side effects and perform other robustness tests. Our results imply that bank shocks have a persistent effect on borrowers’ leverage.     

Did foreign banks stay committed to emerging Europe during recent financial crises?

Our objective is to investigate empirically the behavior of foreign banks with respect to real loan growth during periods of financial crisis for a set of countries in which foreign banks dominate the banking sectors due primarily to having taken over large existing former state-owned banks. The eight countries are among the most developed in emerging Europe, their banking sectors having been modernized by the middle of the last decade. We consider a data period that includes an initial credit boom (2005 – 2007) followed by the global financial crisis (2008 & 2009) and the onset of the Eurozone crisis (2010). Our two innovations with respect to the existing literature on banking during the financial crisis are to separate foreign banks into two categories, namely, subsidiaries of the Big 6 European multinational banks (MNBs) and all other foreign-controlled banks, and to take account of the impact of exchange rates during the period. Our results show that bank lending was impacted adversely by both crises but that the two types of foreign banks behaved differently. The Big 6 banks remained committed to the region in that their lending behavior was not different from that of domestic banks supporting the notion that these countries are treated as a “second home market” by these European MNBs. Contrariwise, the other foreign banks active in the region were involved in fueling the credit boom but then decreased their lending aggressively during the crisis periods. Our results also indicate that bank behavior in countries having flexible exchange rate regimes differs from that in those in (or effectively in) the Eurozone. Our results suggest that both innovations matter for studying bank behavior during crisis periods in the region and, by extension, to other small countries in which banking sectors are dominated by foreign financial institutions having different business models.     

Bank efficiency in South‐Eastern Europe

This study examines the cost and profit efficiency of banking sectors in six transition countries of South‐Eastern Europe over the period 1998–2008. Using a stochastic frontier approach, our analysis reveals that the average cost efficiency of South‐Eastern European banks is 68.59 percent, and the average profit efficiency is 53.87 percent. Regressions on the determinants of bank efficiency show that foreign banks are characterized by higher profit efficiency but lower cost efficiency, and government‐owned banks are associated with lower profit efficiency than domestic private banks. However, the efficiency gap between foreign‐, domestic private‐ and government‐owned banks narrows over time. We also find that the market power of a bank has a positive association with both cost and profit efficiency. Institutional development, proxied by progress in banking regulatory reforms, privatization and enterprise corporate governance restructuring, also has a positive impact on bank efficiency.     

Expected default based score for identifying systemically important banks

The issue of identifying systemically important banks has gained prominence since the recent global financial crisis in 2007. However, the extant methods either neglect the adverse impact on the financial system posed by a bank or ignore the various interactions among banks. To resolve this issue, the objective of this study is to put forward an expected default based score (EDBS) that overcomes the drawbacks of the existing methods from the perspective of contagion risk. This indicator measures the systemic importance of a bank by calculating the expected bank defaults triggered by its initial failure. In the empirical study, the expected default based score is applied to identify the systemically important banks in the Chinese banking system. Both the quantitative comparison with other major methods and the qualitative evaluation of the Delphi method validate the reliability of the EDBS method. The empirical results also demonstrate that interconnectedness among banks is an important and complementary driver of systemic importance in addition to asset size.     

中国银行业改革的侧重点:产权结构还是市场结构

本文对运用SCP(结构—行为—绩效 )框架及其从行业结构的角度揭示中国银行业主要问题的思路及提炼出的政策含义提出了批评 ,认为在现代技术不断改变着银行运作机制、主要发达国家的银行业的行业结构进一步向集中化发展、各个银行在努力追求规模经济和范围经济效应的背景下 ,中国银行业保持一定程度的集中率是符合国际银行业发展趋势的。中国银行业的主要问题是国有银行产权结构单一 ,而不是行业集中的问题。从行业结构的角度为突破口的改革将可能导致中国经济的振荡。正是中国银行业的资产与市场份额集中于带病的国有商业银行 ,改革的侧重点就不能从行业结构的调整为起点 ,而是相反 ,要充分利用进入WTO后的有限的过渡期 ,在国有银行的市场份额发生显著萎缩之前 ,坚决地进行国有商业银行的产权改革 ,努力避免潜在金融风险的总爆发。     

Pre-recession efficiencies and input allocation decisions of agricultural and critically insolvent banks

The late 2000s’ economic recession is considered the longest economic downturn since the 1930s Great Depression. Declining real estate values ignited an increase in loan defaults and mortgage foreclosures that led to a surge of bank failures at a rate not experienced by the U.S. banking industry since the 1980s. A total of 509 bank failures were recorded by the FDIC from January 2007–December 2014, with nearly 60% of these failures occurring in 2009 and 2010. In contrast, there were only 24 bank failures in the U.S. during the 7-year period prior to 2007. This study analyzed certain components of operating decisions made by banks that either survived or became critically insolvent during the late 2000s financial crisis using an Input Distance Stochastic Frontier function to estimate the technical efficiency (TE) and allocative efficiency (AE) between agricultural banks and non-agricultural banks. This efficiency analysis was applied to a 7-year pre-recession period and is designed to final out any early warning signals that decrease the efficiency level of banks. Results suggest that survival banks were more technically efficient than critically insolvent banks, and banks’ tendency to utilize cheaper inputs were more likely to stand the economic crisis.     

Determinants of income diversification: evidence from Chinese banks

This article presents an analysis of the determinants of Chinese commercial banks’ income diversification decisions. Using a panel dataset comprising 88 Chinese domestic banks from 2003 to 2010, we find that bank diversification reflects a variety of managerial abilities: insolvency risks, cost, capital position, asset scale and ownership structure. A larger ratio of banking assets to gross domestic product and lower interest spread lead to a higher level of diversification. Moreover, national banks and regional banks have different strategic responses to the macroeconomic, and indeed, regulatory environment. Resisting shocks from the banking sector and the macro economy, and supplementing liquidity shortages from intermediation business seem to be the driving forces of national banks to operate in non-banking sectors.     

A new approach to measuring universal banking

Noninterest income is widely used in the literature to account for the degree of the universal business model by banks. This paper proposes a novel measure of universal banking constructed using the relative contribution of each operating segment to total assets using an entropy approach. We here propose a novel dataset containing the Universal Banking Index (UBI) at both country and bank levels. Using a sample of international banks, we evaluate the extent to which our proposed metric affects banks’ profitability, stability, liquidity and capitalisation. Results suggest that a higher degree of diversification is associated with increased stability. In addition, banks that feature a more diversified business model, as proxied by the UBI, are also better capitalised, as opposed to banks with high noninterest income share. Our results suggest that regulatory-induced restriction on universal banking may indeed reduce the benefits of risk sharing across operating segments, exposing banks to heightened risks.     

Business cycle and bank lending procyclicality in a dual banking system

The paper studies bank lending behaviour over the business cycle in a dual banking system, Malaysia, with the objective of ascertaining whether Islamic banks have a role in stabilizing credit. The study makes use of unbalanced panel data of 21 conventional banks and 16 Islamic banks covering mostly the period 2001–2013. Applying dynamic GMM estimators, we find the aggregate loans by banks to be pro-cyclical in conformity with existing studies. However, when we segregate the lending/financing behaviour of conventional and Islamic banks, the cyclicality of bank lending seems to be true only for conventional banks. As for the Islamic banks, the business cycle does not seem to affect their financing decisions. Indeed, there is indication that the Islamic banks in general and the full-fledged Islamic banks in particular can even be counter-cyclical in their financing decisions. This conclusion is fairly robust to a different loan measure, alternative model specifications, and to an alternative business cycle measure. Hence, our results provide further support to the “stability” view of the Islamic banks in that they have the ability to stabilize credit.     

我国银行类型对货币政策传导影响机制差异化研究

本文选取1993～2008年我国4家国有控股银行,3家政策性银行,10家全国性股份制商业银行数据,考察了我国不同类型银行在货币政策传导机制中的差异化作用.运用协整检验及格兰杰因果检验发现,国有控股银行在对货币政策传导至CPI的影响较为显著,而股份制商业银行对货币供给量有着显著性影响.