Impact of website characteristics on relationship quality: a comparison of banks financial cooperatives

This study seeks to investigate differences exhibited by bank customers and members of financial cooperatives respecting website characteristics (website design, convenience, information quality, ease of use and security/confidentiality) and their impact on online relationship quality (composed of trust, commitment and satisfaction). An online survey was conducted with 476 banking sector customers (banks and financial cooperatives), followed by a confirmatory factors analysis and multigroup analysis using EQS 6.2 software. Results evidence a significant difference in terms of website design and security/confidentiality. The impact of these variables on relationship quality proves significantly higher in the case of banks. This study submits that web strategies used by banks and financial cooperatives to develop online relationship quality may vary based on the type of organization.     

Strong Increases in Downside Risk Aversion

A ranking of risk preferences is of economic interest insofar as it leads to unambiguous comparative statics predictions, and for this to be the case, the ranking must be a strict partial ordering. The ranking by greater risk aversion meets this demand at the second order, and yields a variety of well-known predictions concerning the effect of greater risk aversion on demands for insurance and risky assets, among many other applications. There has been less success at the third order, where ranking preferences by aversion to downside risk has not produced a strict partial ordering. The problem is that account has not been taken of the fact that an increase in downside risk aversion must induce changes in risk aversion as well. We propose a definition of stronger downside risk aversion that does yield a strict partial ordering by requiring a nested increase in both second- and third-order risk aversion, so that v is more strongly downside risk averse than u if v is more risk averse and more downside risk averse than u. We demonstrate that v being more strongly downside risk averse than u is characterized by v never liking any change in the probability distribution for y that induces a third-order stochastic dominance deterioration in the distribution for u(y). We apply the definition to obtain intuitive comparative statics predictions in the precautionary saving problem, and relate the definition to alternatives proposed in the literature.     

Erklärung der privaten Krankenversicherungsnachfrage anhand ökonomischer und psychologischer Einflussfaktoren

To be able to plan measures insales planning successfully, informations are necessary about the expected trend of demand in the future. In this respecttheoretical funded andempirical relevant correlations between exogenous influencing factors and the process of demand must be systematically explored. Consequently for the private health insurance aglobal model was developed, which is the basis for presenting exemplarily an approach of explanation for the health cost insurance. Via this approach theshort-term fluctuations in the trend of demand, which were noticed in the past, can be traced satisfactorily. In this context besideseconomical alsopsychological influences like attitudes and expectations must be explicitly integrated in the approach of explanation. Naturally also the effects ofsociopolitical events, which are relevant to demand, were included in the analysis, especially as the process of demand for private health insurance is substantially marked by sociopolitical legislation.     

Small-time ruin for a financial process modulated by a Harris recurrent Markov chain

We consider a nonstandard ruin problem where: (i) the increments of the process are heavy-tailed and Markov-dependent, modulated by a general Harris recurrent Markov chain; (ii) ruin occurs when a positive boundary is attained within a sufficiently small time. Our main result provides sharp asymptotics for the small-time probability of ruin, viz., P(sup? _{n≤δ u} S _n ≥u), where {S _n } denotes the discrete partial sums of the process and δ∈(0,1/μ), where μ is the mean drift. We apply our results to obtain risk estimates which quantify, e.g., repetitive operational risk losses or the extremal behavior for a GARCH(1,1) process.     

Quadratic minimization with portfolio and terminal wealth constraints

We address a problem of stochastic optimal control drawn from the area of mathematical finance. The goal is to minimize the expected value of a general quadratic loss function of the wealth at close of trade when there is a specified convex constraint on the portfolio over the trading interval, together with a specified almost-sure lower-bound on the wealth at close of trade. We use a variational approach of Rockafellar which leads naturally to an appropriate vector space of dual variables, a dual functional on the space of dual variables such that the dual problem of maximizing the dual functional is guaranteed to have a solution (i.e. a Lagrange multiplier) when a simple and natural Slater condition holds for the terminal wealth constraint, and obtain necessary and sufficient conditions for optimality of a candidate wealth process. The dual variables are pairs, each comprising an Itô process paired with a member of the adjoint of the space of essentially bounded random variables measurable with respect to the event \(\sigma \)-algebra at close of trade. The necessary and sufficient conditions are used to construct an optimal portfolio in terms of the Lagrange multiplier. The dual problem simplifies to maximization of a concave function over the real line when the portfolio is unconstrained but the terminal wealth constraint is maintained.     

<Emphasis Type="Italic">Shariah</Emphasis>-compliant equities: Empirical evaluation of performance in the European market during credit crunch

Islamic finance is based on the Islamic Jurisprudence as prescribed by the Shariah, and has witnessed significant growth and development in the recent decades. During the period of economic slowdown and following the financial crisis during FY 2007–2009, it was claimed that Islamic financial system seemed to be better in coping with economic slowdowns than conventional financial systems. The article analyses whether the same holds true for Shariah-compliant equities in the market, that is, whether Shariah-compliant equities perform better in the market as compared to the general market. Three portfolios are constructed based on the constituents of S&P Europe 350 to represent the overall market, the market without the financial firms and the market of Shariah-compliant equities. It is found that the portfolio of Shariah-compliant equities outperforms the other two portfolios in all aspects of analysis. However, it slightly underperforms the market portfolio when there is an upward growth trend in the economy. The findings of this article are very relevant for policymakers, investors and fund managers to determine policy matters, deciding on investment and marketing strategy for Islamic capital market products.     

Towards a better understanding of mobile banking: the impact of customer experience on trust and commitment

In the current context of ubiquitous connectedness through portable mobile devices and services, it is important to comprehend more fully the nature of consumer/bank interactions and relationships. At the same time, firms in the service sector are trying to provide customers with impactful positive experiences. This article examines the impact of mobile banking experience on trust and commitment based on the customer experience dimensions defined by Schmitt and expanded to include the negative aspect of the affective dimension. A total of 396 panellists of a recognized Canadian research firm responded to a self-administered online questionnaire. Findings demonstrate that the cognitive and negative affective dimensions of mobile experience impact trust, whereas the positive affective/sensory dimension influences commitment. The behavioural and social dimensions do not have significant impacts. This study enriches the theoretical corpus of knowledge in customer experience, relationship marketing and m-banking literature, lending practical implications for mobile services managers. Financial institutions, for example, should offer sensory mobile applications designed to appeal to the eye or to the touch (positive affective/sensory dimension), provide tools and information intended to arouse user curiosity and provoke reflection (cognitive dimension), while avoiding negative experiences which can lead to damaging feelings/emotions such as disappointment and anger (negative affective dimension).     

Quadratic minimization with portfolio and intertemporal wealth constraints

We address a problem of stochastic optimal control motivated by portfolio optimization in mathematical finance, the goal of which is to minimize the expected value of a general quadratic loss function of the wealth at close of trade when there is a specified convex constraint on the portfolio, together with a specified almost-sure lower-bound on intertemporal wealth over the full trading interval. A precursor to the present work, by Heunis (Ann Financ 11:243–282, 2015), addressed the simpler problem of minimizing a general quadratic loss function with a convex portfolio constraint and a stipulated almost-sure lower-bound on the wealth only at close of trade. In the parlance of optimal control the problem that we shall address here exhibits the combination of a control constraint (i.e. the portfolio constraint) together with an almost-sure intertemporal state constraint (on the wealth over the full trading interval). Optimal control problems with this combination of constraints are well known to be quite challenging even in the deterministic case, and of course become still more so when one deals with these same constraints in a stochastic setting. We nevertheless find that an ingenious variational approach of Rockafellar (Conjugate duality and optimization, CBMS-NSF series no. 16, SIAM, 1974), which played a key role in the precursor work noted above, is fully equal to the challenges posed by this problem, and leads naturally to an appropriate vector space of dual variables, together with a dual functional on the space of dual variables, such that the dual problem of maximizing the dual functional is guaranteed to have a solution (or Lagrange multiplier) when the problem constraints satisfy a simple and natural Slater condition. We then establish necessary and sufficient conditions for the optimality of a candidate wealth process in terms of the Lagrange multiplier, and use these conditions to construct an optimal portfolio.     

The role of electronic word of mouth,conventional media,and subjective norms on the intention to purchase <Emphasis Type="Italic">Sharia</Emphasis> insurance services

The aim of this study was to investigate the effect of electronic word of mouth (eWOM) and conventional media on subjective norms and intention to purchase Sharia insurance in Indonesian Muslim society. The research data consisted of 458 Muslim clients who were members of an online community and also policy holders of Sharia insurance in the three largest cities in Indonesia: Jakarta, Semarang, and Surabaya. This study used purposive sampling and structural equation modeling. The research showed that eWOM and conventional media can affect subjective norms. Additionally, subjective norms have a significant effect on the intention to purchase among Sharia insurance customers. This study validated the importance of the variables of eWOM and conventional media in influencing subjective norms and intention to purchase. For Sharia insurance company management, this study can serve as a very useful reference in drafting and formulating campaign strategies. This study also justifies the integrated relationship between eWOM and conventional media with subjective norms and intention to purchase Sharia insurance.     

Shadow prices,fractional Brownian motion,and portfolio optimisation under transaction costs

The present paper accomplishes a major step towards a reconciliation of two conflicting approaches in mathematical finance: on the one hand, the mainstream approach based on the notion of no arbitrage (Black, Merton & Scholes), and on the other hand, the consideration of non-semimartingale price processes, the archetype of which being fractional Brownian motion (Mandelbrot). Imposing (arbitrarily small) proportional transaction costs and considering logarithmic utility optimisers, we are able to show the existence of a semimartingale, frictionless shadow price process for an exponential fractional Brownian financial market.     

Mobile banking innovators and early adopters: How they differ from other online users?

The rapid pace of technological development has created opportunities for financial service providers to offer their services via multiple electronic channels. The mobile phone is one of the most promising but so far marginally adopted channel for using financial services by consumers. Earlier literature on innovation adoption argued that those among the first to adopt new innovations possess unique characteristics compared to the majority of consumers. This paper aims to study how mobile banking innovators and early adopters differ from other users of online banking services. An internet survey was conducted among customers of a large Scandinavian bank in Finland yielding 2,675 responses. Logistic regression was used to identify variables differentiating between users of mobile banking and other online banking services. Somewhat contradictory to earlier findings the results indicate that only age (p<0.0005) and gender (p=0.010) differentiate these two groups of customers, while education (p=0.957), income (p=0.624), occupation (p=0.596) and size of the household (p=0.151) were found to be insignificant in differentiating the groups. The results offer service providers better knowledge of the typical mobile banking user thus adding value to their marketing actions in the field of electronic banking.     

The impact of SEC investigations and accounting and auditing enforcement releases on firms’ cost of equity capital

I study the impact of an SEC investigation (as captured by accounting and auditing enforcement releases) on a firm’s cost of equity capital. AAERs are often used in accounting literature as a proxy for fraudulent financial reporting. Fraudulent financial reporting should lead to an increase in cost of equity capital as a firm’s future cash flows become less certain. Overall, this study provides evidence of changes in cost of equity capital for firms targeted by an SEC AAER on the date the investigation is first made public.     

A differential evolution copula-based approach for a multi-period cryptocurrency portfolio optimization

Recent years have seen a growing interest among investors in the new technology of blockchain and cryptocurrencies and some early investors in this new type of digital assets have made significant gains. The heuristic algorithm, differential evolution, has been advocated as a powerful tool in portfolio optimization. We propose in this study two new approaches derived from the traditional differential evolution (DE) method: the GARCH-differential evolution (GARCH-DE) and the GARCH-differential evolution t-copula (GARCH-DE-t-copula). We then contrast these two models with DE (benchmark) in single and multi-period optimizations on a portfolio consisting of five cryptoassets under the coherent risk measure CVaR constraint. Our analysis shows that the GARCH-DE-t-copula outperforms the DE and GARCH-DE approaches in both single- and multi-period frameworks. For these notoriously volatile assets, the GARCH-DE-t-copula has shown risk-control ability, hereby confirming the ability of t-copula to capture the dependence structure in the fat tail.     

Enhancement of value investing strategies based on financial statement variables: the German evidence

This paper examines the added-value of combining traditional valuation ratios with each other as well as with some financial statement variables in the German stock markets during the 2000–2015 period. The results show that combination pays off and, moreover, that the benefits of combination are greater in Germany than in most other developed stock markets. Particularly, we find strong evidence of the added-value of using Piotroski’s F-score as a supplementary selection criterion for value stocks as well as for low-accrual stocks. Our results show further that the F-score also boosts the efficacy of other valuation ratios besides the book-to-price ratio. In addition, the inclusion of F-score besides a relative value measure tends to increase the average market equity of portfolio firms. The decomposition of the full-sample-period performance into separate bull- and bear-period performance shows clearly that the better performance of F-score-boosted portfolios is mostly attributable to their outperformance during bearish periods, even though on average, they also generate higher bull-period returns than the comparable value portfolios formed without F-score. The use of F-score as a supplementary criterion also increases the proportion of stocks that earn above-market-average returns during the subsequent holding period. For the first time in the financial literature, we also document a strong relationship between high F-score stocks and momentum stocks.     

Das Direktanspruchsstatut nach dem EuGH-Urteil „Odenbreit“

This Article deals with the impact of the ECJ’s decision in the case “Odenbreit” in which it allowed the injured person—in the concrete case injured in a car accident—to sue the liability insurer of the tortfeaser, both domiciled in another Member State, by means of the direct action, in the Member State of his or her own domicile. As a consequence, the court situated at the domicile of the injured person has to apply foreign law, which brings about some disadvantages to the injured person. The application of the lex fori, however, enjoys several advantages. The analysis shows to what extent the application of the lex fori would be possible de lege lata and de lege ferenda.     

Through bubbles and crises: An analysis of the <Emphasis Type="Italic">Journal of Financial Services Marketing</Emphasis> from 2000 to 2012

This article presents an analysis of all publications of the Journal of Financial Services Marketing (JFSM), from 2000 until the end of 2012. The objectives of this study were: (i) to compare the subjects covered by the journal with industry trends, and identify opportunities for future research, and (ii) to assess the journal’s development over time and its influence in the field of financial services marketing. Data for this content analysis was collected manually from the publisher’s Website and from each paper, and a grounded theory approach was used to group the papers into clusters based on emerging themes. The study indicates that JFSM has been successful in covering the industry’s most important trends, including mobile banking, relationship management, Customer Relationship Management (CRM) and service quality. A number of gaps were identified, in particular regarding mobile banking services and the impact of new online business models (for example, PayPal, crowdfunding, Bitcoin). These findings should assist JFSM’s editorial board to determine its future direction, and offer readers insight into industry trends and the journal’s role in covering them.     

Punitive Damages in Bad Faith Actions Against Insurers in the USA: The Impact of <Emphasis Type="Italic">Campbell v. State Farm</Emphasis>

This article provides an overview of the history and practice of punitive damages in the USA, including U.S. Supreme Court resistance to punitive damages beginning in the 1990s. The 2003 Campbell decision continued this doctrinal trend in an case of seemingly egregious insurer “bad faith.” Examining insurance bad faith cases after Campbell, it appears that the Court’s decision had a practical impact as well as a doctrinal impact. Since Campbell, insurers appear to have enjoyed greater judicial protection against punitive damages in bad faith cases, expanding a trend discernable after the Court’s 1996 BMW v. Gore decision. However, the 50 states have not modified their jury instructions on punitive damages since these decisions, seemingly ceding this area to the courts as a matter of federal constitutional review. The 2007 Williams v. Philip Morris decision continued the trend in a non-insurance case, as the court overturned a large punitive award against a tobacco company.     

Variables influencing the customer relationship management of banks

Banks are important role players to the economy of any country. However, to survive in a competitive business environment banks need to focus on building and maintaining client relationships and to identify how their employees influence these relationships. This study investigates the influence of variables, with regard to bank employees, on the customer relationship management (CRM) of banks. A literature study explains CRM, the banking industry and employees' involvement with banking clients. To assess the impact of the predetermined variables from literature on the CRM of banks, a number of hypotheses were constructed and tested empirically among a sample of banking clients. The findings reveal that the variables knowledgeability and attitude of bank employees have a statistically significant impact on the effectiveness of the CRM strategies of banks. Based on the findings of the empirical investigation, strategies are provided for banks to improve their employees' knowledgeability and attitude in order to ensure more effective CRM strategies.     

Effects of perceived cost,service quality,and customer satisfaction on health insurance service continuance

This paper aims to contribute to the universal discourse on financial services continuance behavior by examining the impact of service cost on customers’ service-quality perception and service continuance intention. It presents the results of an empirical study that has explored the impacts of service cost, service quality, and customer satisfaction on health insurance customers’ behavioral intention toward continuing or discontinuing with their service providers. Very few studies had examined the impact of service cost on service-quality perception. Our study attempts to fill that gap. A sample of 820 customers was surveyed, and 624 usable responses were analyzed with ANOVA, standard multiple regression, and logistic regression. Our findings indicate that, although highly satisfied health insurance customers will most likely retain their current service providers, customer dissatisfaction does not necessarily lead to discontinuance. Our results also provide some operational implications for health insurance managers, with strategies for reducing attrition and improving customer retention.     

Öffentliche Güter mit Versicherungscharakter

Dikes as well as early warning systems against natural disasters are just two examples for pure public goods that serve as an insurance device. Dikes reduce the probability of a loss caused by flooding. Such public goods can be seen as public self-protection. By contrast, early warning systems do not reduce the probability of a loss, but the size of a loss. Hence, such public goods can be seen as public self-insurance. The present paper presents a model which takes these characteristics into account. Conditions for the efficient provision of such public goods are derived. Moreover, we analyze the consequences of a change in income and risk aversion towards the efficient provision level as well as the interaction with private market insurance.