Banking,bureaucracy and the career: the curious case of Mr Notman

The cornerstone of banks' internal control was the inspection system that fanned out from the centre to examine all local transactions and records. A critical aspect of the inspection system was reporting on staff performance. Inspection was the lynchpin of the banks' surveillance systems that reached into all aspects of their employees' professional and personal lives before 1939. The nature of this control was revealed by a court case involving a Scottish bank clerk refused permission to marry by his employer. The rationale for this marriage bar lay in the nature of the banking career which was pursued in strictly ‘closed’ internal labour markets. Promotion was governed by professional competence and the organisation's assessment of the individual's personal development.     

The contribution of macroprudential policies to banks' resilience: Lessons from the systemic crises and the COVID-19 pandemic shock

This study examines the effectiveness of macroprudential policies in reducing the banks' risk during the COVID-19 pandemic and compares these results with the systemic banking crises years. Based on a sample of 624 banks across 40 countries during the period 2006–2020, we find that loosening capital-aimed macroprudential policies effectively reduced banks' risk during the COVID-19 pandemic, while this behavior led to increased risk during the systemic crises years. In contrast, tightening the remaining macroprudential policies during the systemic crises years and during the pandemic proved effective in reducing banks' risk. Furthermore, we show that the magnitude of the impact of macroprudential policies was stronger during the systemic crisis than that during the pandemic. Finally, we show that the results are driven by the capital requirement prudential policy, both during the systemic crisis and the COVID-19 pandemic, although the conservation buffer and the leverage limit also contributes to the ineffectiveness of these policies during the COVID-19 pandemic. The banks' leverage and loan growth also play an enhancing role of the effects of the macroprudential policies.     

The Brexit Dynamics: British and EU27 Challenges After the EU Referendum

Prior to the Brexit referendum, the UK government sent an information brochure to households across the country. Surprisingly, key findings of a study by the UK Treasury — including an expected per capita income loss of £1800 — were not included in the brochure. Calculations indicate that if this information had been included, the outcome of the referendum would have been 52.1% for Remain. Instead, the pro-Brexit campaign utilised anti-immigrant rhetoric to create a scapegoat for the under-provision of local public services, when actually this was due to massive cuts in budget transfers to local communities after the financial crisis. Looking ahead, major reforms are now necessary if the EU is not to disintegrate. Given the fresh support in the UK and US for banking deregulation, the EU must stand firm in support of prudential supervision and banking regulation to prevent a new international banking crisis.     

Bank Performance and Credit Availability in the Bulgarian Banking Sector, 1997-2001

Abstract

The 1997 financial crisis wiped out 30% of the Bulgarian banking sector and created severe strains on corporations. With the establishment of the currency board in 1997 and the new Banking Law, which set the legal framework for proper bank supervision, major Bulgarian banks were rapidly privatized through sales to foreigners, now controlling around 80% of bank assets. Since 1997, the Bulgarian banking sector has recovered from the crisis by improving its profitability and efficiency and adopted a legal framework compatible with the European Union standards. Based on a regression analysis of bank balance sheets and income statements, this paper shows that low level of credit volume during 1997-1999 derived from banks' cautious stance towards credit making reflecting both the ongoing risks in the real sector, and the stringent new banking regulations. Large banks, however, benefited from scale economies in improving profitability in the same period.     

Does inside debt alleviate banks' risk taking? Evidence from a quasi-natural experiment in the Chinese banking industry

This paper investigates the causal effects of inside debt on banks' risk-taking behavior by using a quasi-natural experiment of compensation deferring policy in the Chinese banking industry. We find that the policy reduces banks' risk-taking by approximately 16.25%. Banks with high levels of government control significantly reduced their risk-taking after the compensation deferring policy was enacted, while those with low levels did not have the same response. By showing that CEOs' compensation deferring significantly reduces banks' risk-taking in an emerging market, we offer direct evidence for the academic understanding of the governance role of inside debt in emerging markets with weak country-level investor protection. Our results provide timely empirical evidence for government regulators who are concerned about the costs and benefits of banks' risk shifting or the risk of the financial system.     

The 2007–2008 financial crisis: Is there evidence of disaster myopia?

The disaster myopia hypothesis is a theoretical argument that may explain why crises are recurrent events. Under very optimistic circumstances, investors disregard any relevant information concerning the increasing degree of risk. This risky behavior may contribute to the formation of a bubble that bursts into a crisis. This paper shows that the 2007 financial crisis exhibits disaster myopia in the banking sector. Moreover, it identifies macro and specific determinant variables in banks' risk taking since the beginning of the years 2000.     

Whistleblowing,Governance and Regulation Before the Financial Crisis: The Case of HBOS

Following the financial crisis of 2008, the Treasury Committee of the UK House of Commons undertook an inquiry into the lessons that might be learned from the banking crisis. Paul Moore, head of group regulatory risk at Halifax Bank of Scotland (HBOS) during 2002–2005, provided evidence of his experience of questioning HBOS policies which resulted in his dismissal from HBOS. The problems that surfaced at HBOS during the financial crisis were so serious that it was forced to merge with Lloyds TSB, another UK bank, to form the Lloyds Banking Group in which the government took a significant stake. Moore’s evidence to the Treasury Committee revealed that long before the financial crisis, he had raised major concerns with the management of HBOS and with the Financial Services Authority (FSA), the UK financial services regulator. Moore’s evidence led to the submission of further disclosures, replies and rejoinders as evidence to the Treasury Committee. Moore’s case is therefore of considerable interest to researchers of whistleblowing because it is a rare instance of high-level whistleblowing, the details of which subsequently entered the public domain. The information revealed in evidence to the Treasury Committee sheds light on the process of whistleblowing in the context of the governance and regulation of a major UK bank that subsequently had to be rescued by government intervention during the financial crisis. The paper makes a contribution to the wider literature on whistleblowing, and to a greater understanding of aspects of the financial crisis.     

Cross-sectional determinants of bank performance under deposit dollarization in emerging markets

Dollar-denominated deposits and loans could increase financial fragility in emerging market banking systems. This currency mismatch does not only increase banks' currency risk when the proportion of dollar-denominated loans with respect to local-denominated loans increases but also it increases their clients' default risk if depreciation occurs. This paper investigates the profitability of 36 dollarized banking systems. Results suggest that after controlling for some macroeconomic and institutional variables, dollarization, as the currency mismatch hypothesis suggests, depresses bank performance and lowers bank profitability. Results also show that the effect of institutions more than offsets the negative impact of dollarization on banks' profitability.     

Liberalisation,privatisation and the productivity of Egyptian banks: a non-parametric approach

This paper evaluates the performance of Egyptian banks during a period characterised by changes in economic policies. The Egyptian government's liberalisation policies in the early 1990s have had a positive or negative impact on the performance of the Egyptian banks. In addition, whether the liberalisation impact has influenced different forms of banks' ownership and sizes with consistent magnitude is examined. Another objective of this paper is to examine the impact of the privatisation process at the end of 1995 on the efficiency and productivity performance of the overall banking sector and on joint-venture banks in particular. The data envelopment analysis Malmquist methodology is employed to estimate the productivity of Egyptian banks.     

The moderating effect of perceived control on motivation to engage in deliberative processing

Research has demonstrated that perceived control adds explanatory power to the prediction of behavioral intention. This research extends previous findings by demonstrating how different levels of perceived control can affect an individual's motivation to engage cognitive resources for deliberative processing when forming a behavioral intent. The results of three studies support predictions that lower versus higher levels of perceived control result in the formation of behavioral intent based on deliberative rather than nondeliberative processing. © 2005 Wiley Periodicals, Inc.     

Banking competition and firm-level financial constraints in Latin America

Prior literature argues that, given the existence of information asymmetries and agency costs, higher competition may increase financial constraints by reducing banks' incentives to build lending relationships. Using a sample of listed firms for six Latin American countries, we analyze the relation between banking competition and financial constraints. We find evidence in line with prior research that banking competition increases financial constraints. This result is robust and heterogeneous. We include other country-specific variables and check the robustness of our findings; the main results hold. Our results show that the effect of competition differs across firms and industries. Specifically, consistent with the information hypothesis, the negative impact of competition is higher for small quoted firms and for low-assets tangibility industries. Also, as expected, we find evidence that firms are more affected by financial constraints during the last crisis. This negative effect is larger for firms in more competitive banking industries.     

The Coalescence of a Cluster of Corporate International Banks, 1855–75

Through reviewing the establishment of British international corporate banks during the mid-nineteenth century, the paper reveals the remarkable, disproportionate role played by a promotional group composed of members and associates of the London private bank Glyn, Mills. However, despite the banking and merchanting backgrounds of this group, the successful creation of these international banks involved the resolution of substantial difficulties, arising from competition for the necessary concessions, problems in composing suitable boards of directors, and both economic and political instability. This is shown through an examination in particular of the founding of the Imperial Ottoman Bank, the London & Brazilian Bank and the Anglo-Italian Bank. Lastly, an analysis of the subscribers to the banks' shares reveals that, more widely, they were largely backed financially by the banking and mercantile milieu of the metropolis, but also with a significant capital involvement of a European cosmopolitan bourgeoisie.     

Regret and Satisfaction as Determinants of Lapsed Donor Recommencement Decisions

Although a large amount of research has been undertaken into donor acquisition, relationship development, and the reasons why certain donors terminate their support for fundraising charities, few studies have examined the factors that encourage lapsed donors to resume giving to the organizations they have deserted. This empirical investigation sought to contribute to contemporary knowledge concerning this important matter via a survey of 310 lapsed donors (some of whom had resumed giving) to a hospice charity in the south east of England. The variables hypothesized to influence donor revival decisions comprised a person's satisfaction with the charity's work, past communications received from the organization, communications associated with the charity's revival efforts, the individual's donation history and reason for initial lapse, and the ex‐donor's degree of involvement with charity giving. A person's feelings of regret were posited to represent a critical mediating variable between several of the abovementioned factors and a lapsed donor's decision to resume or not to resume giving. The results suggest that regret did indeed play a major role in lapsed donors' revival processes and that an individual's satisfaction with the quality of a charity's communications requesting the recommencement of the individual's support was a crucial determinant of restart decisions.     

Monetary policy and bank risk-taking: Evidence from emerging economies

This paper addresses the impact of monetary policy on banks' risk-taking by using bank-level panel data from more than 1000 banks in 29 emerging economies during 2000–2012. We find that, consistent with the proposition of the “bank risk-taking channel” of monetary policy transmission, banks' riskiness increases when monetary policy is eased. This result is robust when we adopt alternative measures of monetary policy and bank risk, and use different econometric methodologies. In addition, we find that bank risk-taking amid expansionary monetary policy is less conspicuous in a more consolidated banking sector and when monetary policy is more transparent.     

Banking market power and its determinants: New insights from MENA countries

This paper evaluates the degree and determinants of banks' market power in 13 MENA countries for the years 2000 to 2018, with a special focus on customers' switching costs and banks' cost efficiency. We find that MENA banks enjoy a substantial degree of market power on the loan market, while their customers have to face remarkable costs in case of switching to other banks. Banking market power increases with the level of switching costs and is higher when credit institutions are more cost efficient, focus on the traditional intermediation activity, are smaller in size, and operate in countries where stock markets are less developed, banking markets are more concentrated, the inflation rate is lower, and GDP growth is poor. Our results are robust to alternative specifications and estimation techniques.     

Does it really hurt? Making sense of varieties of anger

While research has shown that consumer anger causes a range of negative consequences, the conceptualization and measurement of this emotion remain inconsistent. Some studies link anger to consumer revenge motivated by a desire to hurt the company, while others associate anger with a desire to cooperate with the company. This inconsistency is caused by the fact that anger is a broad label used to refer to almost any brand failure. We argue that, rather than considering anger as a single construct, scholars should distinguish between a supportive facet of anger, which comprises feelings of annoyance, frustration and other mild negative feelings, and a vindictive facet of anger, which comprises feelings of intense anger, rage, and outrage. These two facets of anger reconcile divergent arguments presented in past research. Research benefits from moving beyond the generic label of anger to consider supportive and vindictive facets of anger that influence consumers' reactions under different circumstances. Only vindictive anger prompts consumers to take revenge and punish the company for unfair treatment. Supportive anger triggers instead a desire to solve the problem by cooperating with the company. This study presents important managerial implications for assessing and managing feelings of anger following brand failures.     

Banks' Efficiency and Stock Prices in Emerging Markets: Evidence from Malaysia

ABSTRACT

This paper empirically investigates the X-efficiency and P-efficiencies of Malaysian banks listed in the Kuala Lumpur Stock Exchange (KLSE) during 2002–2003 by applying a non-parametric Data Envelopment Analysis (DEA) method. We find that during the period of study, the X-efficiency of Malaysian listed banks was on average significantly higher compared to the P-efficiencies. The P-inefficiency was largely due to inefficient production of profits rather than the wrong scale of operations. Our results also suggest that the large banking groups were on average more X-efficient whereas the smaller banking groups were found to be more P-efficient. We further link the X-efficiency and P-efficiency to the respective banks' share prices and find that the stock prices of Malaysian banks react more towards the improvements in P-efficiency rather than the improvements in X-efficiency.     

Anger in social conflict: Cross-situational comparisons and suggestions for the future

This paper reviews research on the role of anger in conflict. We distinguish between intrapersonal and interpersonal effects of anger, the former referring to the impact of parties’ feelings of anger on their own behavior and the latter referring to the impact of one parties’ anger on the other’s behavior. We further compare the effects of anger across a variety of conflict settings, including negotiation, ultimatum bargaining, prisoner’s dilemma, resource dilemma, and coalition formation. At the intrapersonal level, anger is associated with competition in all conflict settings. In contrast, the interpersonal effects of anger differ across situations, with anger sometimes eliciting cooperation, sometimes eliciting competition, and sometimes having no effect. Based on the research reviewed, we conclude that the interpersonal effects of anger in conflict are determined by the level of interdependence of the parties, their information processing tendencies, and the justifiability of the anger expressions. Preparation of this paper was facilitated by a Veni grant from the Netherlands Organization for Scientific Research (NWO 451–05–010) awarded to Gerben A. Van Kleef.     

Culture and compensation—unpicking the intricate relationship between reward and organizational culture

Interest in culture and reward came to public attention during the banking crisis. This article builds a framework for further research on the linkages between reward systems and organizational culture. From European viewpoints, there is interest in applying social frameworks to reward systems, complementing economic and psychological perspectives. The theoretical complexity of culture could be a barrier to research but, it is argued, Martin's (2002) three perspectives and Hatch's (1993) cultural dynamics model provide sound foundations. For reward practitioners, the main message may be to spend as much time evaluating how reward plans are received as in designing perfect plans. © 2010 Wiley Periodicals, Inc.