Is sovereign risk related to the banking sector?

We examine whether the banking sector within a nation is related to sovereign risk. We hypothesize that more competitive and sophisticated financial systems are less prone to panics or bank runs, and consequently will be associated with superior sovereign credit ratings. Using Ordered Probit with Aggregate Time Effects methodology, our results show that banking sector characteristics such as concentration in the banking system, liquidity of bank assets, and size of financial system are significantly related to sovereign credit ratings. Since the use of these sovereign ratings is ubiquitous in international finance in varied applications such as determination of the cost of international borrowing by governments, international cost of capital for FDI, and others, the relationships identified in this paper have important public policy implications.     

What factors drive the adoption of digital banking? An empirical study from the perspective of Omani retail banking

This study aims to investigate the factors influencing the adoption of digital banking by retail banking customers. A theoretical model was developed based on an extended technology acceptance model to conceptualize the linkage among the factors impacting digital banking adoption. The primary data were acquired through a structured questionnaire from 200 customers. The multiple linear regression equation was used to analyse the relationship among six independent factors. The study revealed awareness, web features and perceived usefulness have significant positive influence on adoption of digital banking. The study is useful to plan and promote service model to enhance digital banking adoption.     

Back to the basics in banking? A micro-analysis of banking system stability

This paper analyzes the relationship between banks’ divergent strategies toward specialization and diversification of financial activities and their ability to withstand a banking sector crash. We first generate market-based measures of banks’ systemic risk exposures using extreme value analysis. Systemic banking risk is measured as the tail beta, which equals the probability of a sharp decline in a bank’s stock price conditional on a crash in a banking index. Subsequently, the impact of (the correlation between) interest income and the components of non-interest income on this risk measure is assessed. The heterogeneity in extreme bank risk is attributed to differences in the scope of non-traditional banking activities: non-interest generating activities increase banks’ tail beta. In addition, smaller banks and better-capitalized banks are better able to withstand extremely adverse conditions. These relationships are stronger during turbulent times compared to normal economic conditions. Overall, diversifying financial activities under one umbrella institution does not improve banking system stability, which may explain why financial conglomerates trade at a discount.     

Is that a future we want?: An ecofeminist exploration of images of the future in contemporary film

Contemporary film images of the future are usually made within the hegemonic world of the Hollywood¹ film industry. This paper will argue that these films, with their global reach, are contributing to the dominant single view of the future. A view that limits the future to a Western high-tech, white, heterosexual, patriarchal, militaristic, dark blandness where a small number of the rich and powerful men are in control; it is a view that misses out on the lushness of human and biological diversity and the joyful messiness of plurality and truly democratic systems of shared power. Using Causal Layered Analysis as a methodological framework, and ecofeminism to ask questions, this paper explores images of the future in a small number of contemporary films, with specific attention to images of the ecological future in depictions of landscape, food, and animals as well as women's roles in society as an indicator of social justice and equality.Ecofeminism provides a theoretical base from which to identify areas of domination of women, human Others, non-human Others, and the Earth. Ecofeminism combined with Futures Studies provides direction on alternative ways to envision futures—futures that celebrate and protect local human and biological diversity as well as a recognition of common values based on requirements for peace, shelter, food, water, basic material well-being, and cultural expression.     

How resilient is the German banking system to macroeconomic shocks?

Macroeconomic stress testing studies often rely on rather short sample periods due to the limited availability of banking data. They may fail to appropriately account for the cyclicality in the interaction between the banking system and macroeconomic developments. In this paper, we use a newly constructed data set on German banks’ income and loss statements over the past 39 years to model the interaction between the banking sector and the macroeconomy. Our VAR analysis indicates that the level of stress in the banking sector is strongly affected by monetary policy shocks. The results rationalize the active behavior of central banks observed during periods of financial market crises.     

Educating digital natives for the future: accounting educators’ evaluation of the accounting curriculum

The global digital revolution has irrevocably transformed societies and industries. The accounting profession is predicted to experience a significant change in the future, due to technological developments. Practices will be automated and related positions obsolete, thus accounting graduates need to be educated for new and different tasks and positions. The current study focussed on these expected changes and how accounting profession, practice and, consequently, education will be affected and adjusted to these new technologies in an evaluation approach. A qualitative methodology was employed, investigating accounting educators’ perceptions of these developments. Semi-structured interview data and online accessible empirical data, such as podcasts, were analysed in two coding cycles. The findings illustrate that while significant changes are expected, participants’ opinions vary regarding the necessity of adjusting the accounting curriculum. Supportive changes include amending respective courses to emphasise classic skills, such as problem-solving, and contemporary skills, such as new technologies, to illustrate developments practically.     

Is performance measurement and management fit for the future?

Performance measurement and management (PMM) is a management and research paradox. On one hand, it provides management with many critical, useful, and needed functions. Yet, there is evidence that it can adversely affect performance. This paper attempts to resolve this paradox by focusing on the issue of “fit”. That is, in today's dynamic and turbulent environment, changes in either the business environment or the business strategy can lead to the need for new or revised measures and metrics. Yet, if these measures and metrics are either not revised or incorrectly revised, then we can encounter situations where what the firm wants to achieve (as communicated by its strategy) and what the firm measures and rewards are not synchronised with each other (i.e., there is a lack of “fit”). This situation can adversely affect the ability of the firm to compete. The issue of fit is explored using a three phase Delphi approach. Initially intended to resolve this first paradox, the Delphi study identified another paradox – one in which the researchers found that in a dynamic environment, firms do revise their strategies, yet, often the PMM system is not changed. To resolve this second paradox, the paper proposes a new framework – one that shows that under certain conditions, the observed metrics “lag” is not only explainable but also desirable. The findings suggest a need to recast the accepted relationship between strategy and PMM system and the output included the Performance Alignment Matrix that had utility for managers.     

Surprised or not surprised? The investors’ reaction to the comprehensive assessment preceding the launch of the banking union

Did the Comprehensive Assessment (CA), preceding the Single Supervisory Mechanism (SSM) launch in Europe, achieve its aims of producing new valuable information for the market? We show that the CA achieved the goal of increasing transparency: investors were able to detect weak banks at the announcement of the procedure (23rd October 2013), but gained full information on the amount of the capital shortfall only at the disclosure of the results (26th October 2014). Furthermore, at the official launch of the SSM (4th November 2014), banks under direct European Central Bank (ECB) supervision registered a more negative market reaction with respect to banks maintaining their national supervisors. Using a regression model including possible confounders and allowing for treatment effect heterogeneity, this negative reaction is confirmed. These findings suggest that, at least in the short run, investors penalized banks subject to direct ECB supervision, probably because of the fear of regulatory inconsistencies.     

Single-equation,multiple-regression methodology: Is it an appropriate methodology for the estimation of the structure-performance relationship in banking?

Tests of the structure-performance paradigm of the industrial organization literature have been carried out almost exclusively using a single-equation, multiple-regression methodology. The purpose of this paper is to suggest that where the firms being considered are multiple product in nature and may pursue objectives in addition to maximizing the value of the firm, such a methodology may be inappropriate. The results presented in this paper suggest that the absence of a consistently strong, positive, and statistically significant relationship between market concentration and bank profitability may be traced in part to such an inappropriate methodology.     

Is sustainability rating material to the market?

This study examines whether information about a firm's engagement in environmental, social, and governance (ESG) practices is material to market participants. Evidence from a sample of 1856 initial public offerings (IPOs) by U.S. companies for the 2007–2018 period robustly documents that firms for which there is available ESG performance information prior to going public exhibit higher underpricing due to a positive market response. Such a reaction is validated by agency cost-reducing practices that ESG-rated firms follow prior to the IPO, the superior post-IPO market performance they exhibit in terms of equity financing, and the higher share of financially sophisticated investors they attract compared to their ESG-unrated peers. Overall, our results highlight that it pays off to do good and to have the right investors; however, firms’ good ESG practices need to be visible to the market, through rating practices, to reap the benefits.     

Exploring the nexus between financial sector reforms and the emergence of digital banking culture – Evidences from a developing country

Several financial and banking sector reform programs were instituted in different countries over the last three decades. The underlining purpose of these reforms was largely to improve banking sector supervision and regulation, introduce bank privatization mechanism, introduce clearance and settlement systems, infuse competition and to stimulate financial innovation. The objectives of this study are to 1) review the relevant published literature and market survey reports on the financial & banking sector reforms undertaken in Pakistan and elsewhere, 2) analyze how these reform programs develop digital banking culture and increase financial inclusion in the country and 3) guide future research by putting forward a research agenda. The findings of the study suggest a link between the financial and banking sector reforms and the stimulation of financial innovation; the promotion of digital banking culture; and the infusion of financial inclusion in Pakistan. We discuss managerial/policy implications of the study, limitations and presents recommendations for future research.     

Is provision for old-age the main saving motive of the future?—An empirical analysis for Germany

The demographic development is a big challenge for public and private pension schemes. In this context it is important to know if individuals recognize the problem and if this reflects on their attitude towards private pension schemes. The aim of our study is to analyze the general importance of the saving motive old-age provision as well as its impact on the ownership and the demand for old-age provision linked insurance products. We apply panel analysis techniques to show among others that old-age provision as a saving motive primarily impacts the ownership and the demand for annuities. On the contrary to this result, the state funding seems to be the dominant motivation behind the decision to buy state promoted annuities.     

Can patients drive the future of health care?

As the traditional system of health care in the United States gives way to a regime run increasingly by the private sector, a powerful force is emerging: the patient. According to Harvard Business School professor Regina Herzlinger, health care is much like other service industries. Providers that hope to survive must cater to increasingly demanding and well-educated consumers. In a review of Herzlinger's book Market-Driven Health Care: Who Wins, Who Loses in the Transformation of America's Largest Service Industry, Alexandra Wyke, managing editor at the Economist Intelligence Unit, argues that the path to consumerism in medicine will be longer and bumpier than Herzlinger suggests. Consumers of medicine don't simply want health care to be more convenient; they want cures for all ills. How can providers gratify this appetite for ever better medicine? Furthermore, patients are not always capable of making sound decisions about their medical care. And health care professionals, who emphasize the complex nature of decision making in medicine, are doing their best to keep patients from holding the health care steering wheel. Herzlinger has written a bullish book on the virtues of market-driven health care, but, Wyke contends, she has overlooked the far-reaching effects that emerging technology could have in shaping medicine--especially in reducing the need for specialists. She also has given short shrift to the young managed-care industry, which has succeeded in controlling costs and is now under competitive pressure to meet patients' needs better.     

How to identify targets in the M&A banking operations? Case of cross-border strategies in Europe by line of activity

During the last decades, the European banking system has known some deep changes. They have led to mergers and acquisitions (M&As). The available studies show that the failure rate of theses M&As is relatively high. Cross-border operations are more exposed to this risk. The high failure rate is due to the cultural and contextual differences between the M&A participants, differences which make the process of integration particularly difficult. Thus, the success of M&As depends on the choice of adequate M&A targets. This choice constitutes the main challenge for company leadership. The aim of this paper is therefore to determine the factors which permit to identify the M&A targets. Our contribution compared to that of previous research is that we study M&As and the identification of targets by line of bank activities. On the basis of a sample made up of 1071 European banks, between 2000 and 2006, we use a Logit Multinomial Model. Our main results show that the target banks tend to be specialized in investment and market activities while the acquiring banks tend to approach themselves to the universal bank model.     

The influence of oil prices on the banking sector in oil-exporting economies: Is there a psychological barrier?

This paper examines the relationship between crude oil prices and banking sector market indices in the oil-exporting economies of the Gulf Cooperation Council (GCC), using daily frequency data over 2010–2017. Controlling for global banking impacts (S&P500 Banking Index) and interest rates (T-bills), dynamic ordinary least squared (DOLS) and fully modified ordinary least squared (FM-OLS) analysis indicates that oil prices positively affect bank indices until the $95 per barrel mark, after which the impact becomes negative, close to the psychological barrier found in the US equity market. The S&P500 Banking Index positively affects the GCC banking sector, whereas the interest rate affects it negatively. The validity of an inverse U-shaped relationship between crude oil price and banking sector indices is demonstrated. Causality analysis reveals the existence of bidirectional causalities between the prices of crude oil, GCC banking sectors, and the US banking sector. This paper demonstrates a vital non-linear relationship for oil-banking portfolio management and hedging strategies with oil price risk.     

Is M&A different during a crisis? Evidence from the European banking sector

The financial crisis has affected the landscape of the banking sector around the world. We use a sample of transactions carried out by European acquirers in 2007–2010 to study the acquirer’s stock price market reaction to both announcements and completions of acquisitions. At the aggregate level, we find that there are no significant abnormal returns around the announcement of an acquisition while there are positive abnormal returns at completions. We study the cross-sectional determinants of abnormal returns and find that announcement returns are mainly explained by the acquirer bank characteristics, while completion returns mainly depend on opacity of the target and on the drop in idiosyncratic volatility associated with a reduction of uncertainty.     

Cross-border M&As in the financial sector: Is banking different from insurance?

This paper investigates what factors might help explain the internationalization strategy of banks and insurance companies, by comparing the determinants of cross-border M&As in the two sectors in a unified framework. The empirical analysis shows that between 1990 and 2003 the internationalization of banks and insurance companies followed similar patterns. Distance and economic and cultural integration are important determinants for both the banks’ and the insurance companies’ expansion abroad. Comparative advantage also has a prominent role, the more so for banks. The evidence is less supportive of the view that cross-border M&As are more frequent between similar countries, as predicted by the new trade theory. Finally, and most interestingly, we find indirect evidence consistent with the hypothesis that implicit barriers to foreign entry are more important in explaining the behavior of banks than that of insurance companies.     

Is the accrual anomaly robust to firm-level analysis?

This study investigates whether firm-level accrual mispricing exists and if such mispricing is persistent. Our results show both under and overpricing of accruals that persevere. Specifically, we show that a trading strategy going a dollar long (short) in underpriced (overpriced) accrual firms yields significant abnormal returns in most years investigated. We examine whether firm characteristics such as size, analyst following and real activities management can explain why some firms are mispriced and others not. Our findings show that firm-level mispricing differs from that documented at the country-level. Whilst the country-level anomaly seems to have diminished; the firm-level accrual anomaly remains.     

Is the Mean Return of Hotel Real Estate Stocks Apt to Overreact to Past Performance?

This study examines the return patterns of hotel real estate stocks in the U.S. during the period from 1990 to 2007.We find that the magnitude and persistence of future mean returns of hotel real estate stocks can be predicted based on past returns, past earnings surprise, trading volume, firm size, and holding period. The empirical evidence found from this paper confirms that short-horizon contrarian profits can be partially explained by the lead-lag effects, while in the intermediate-term price momentum profits and long-term contrarian profits can be partially attributed to the firms’ overreaction to past price changes. Our results support the contrarian/overreaction hypothesis, and they are inconsistent with the Fama-French risk-based hypothesis or the underreaction hypothesis. The study also confirms the earning underreaction hypothesis and finds the high volume stocks tend to earn high momentum profits in the intermediate-term. The study finds that the earning momentum effect for hotel stocks is more short-lived and smaller in magnitude than the market average. Price momentum portfolios (or contrarian portfolios) of big hotel firms underperform small hotel firms and the hotel price momentum portfolio (or contrarian portfolios) significantly underperform the overall market over the intermediate-term (or the long-term). These findings imply that the U.S. hotel industry, particularly the big hotel firms, have experienced relatively conservative growth in the sample period. It suggests that a conservative hotel growth strategy accompanied by an internal-oriented financing policy is proper in a period of prosperity.     

The development of digital payments – Past,present, and future – From the literature

We seek to deepen and increase knowledge on the evolution of scholarship regarding digital payments by highlighting the main interpretative strands in the literature and the changes, if any, in research approaches. Using bibliometric and scientometric measures, we explore research hotspots and developmental trends in digital payments to identify influential aspects of published contributions and research streams. Our sample consists of 723 articles published between 1985 and 2021 obtained from the Web of Science. The results show that the most investigated digital payments are mobile payments, with the main analysis methodologies typically linked to technology adoption models. This review, original in terms of sample size and methodology, advances knowledge on the evolution of innovative payments and guides scholars in visualising various research models.