State contingent banking and asset price bubbles: The case of Islamic banking industry

This paper examines how state contingent banking can help neutralize challenges like debt overhang and lack of optimal risk takings, problems associated with conventional banking that can eventually manifest in the creation of asset price bubbles and a financial crisis. Our analysis also contributes to the literature on Islamic banking which considers state contingent contracts as ideal from a religious perspective. We develop a model of banking with state contingent contracts on the liability and asset sides. Our model shows that in state contingent banking, the returns for the depositors, bank and the borrowers are more aligned with the real economy, which reduces the incentive for excessive borrowing, lending and investing. Our model also shows that with the state contingent banking on the liability side, during periods of heightened macroeconomic risk, depositors' payoff would be more volatile reducing the liquidity influx from the real economy to the banking sector. This neutralizes the pressure on state contingent banks to excessively lend on the asset side. Our model further demonstrates that state contingent contracts on the asset side can help avoid too much (or too little) lending by reducing the managerial discretion in charging low (or high) interest rates. With returns linked to the prices of the underlying assets, state contingent contracts may prevent lack of optimal risk taking.     

Retail banking and behavioral financial engineering: The case of structured products

We apply cumulative prospect theory and hedonic framing to evaluate discount reverse convertibles (DRCs) and reverse convertible bonds (RCBs) as important examples of structured products from a boundedly rational investor’s point of view. While common expected utility theory would also conclude that DRCs and RCBs are of interest to investors with moderate return expectations and underestimated stock return volatility, that theory would overestimate the market success of DRCs and underestimate that of RCBs in comparison to a situation with bounded rationality. Hedonic framing and relatively low subjectively felt competence levels of investors are decisive for the demand for RCBs.     

Islamic banking: Interest-free or interest-based?

A unique feature of Islamic banking, in theory, is its profit-and-loss sharing (PLS) paradigm. In practice, however, we find that Islamic banking is not very different from conventional banking. Our study on Malaysia shows that only a negligible portion of Islamic bank financing is strictly PLS based and that Islamic deposits are not interest-free, but are closely pegged to conventional deposits. Our findings suggest that the rapid growth in Islamic banking is largely driven by the Islamic resurgence worldwide rather than by the advantages of the PLS paradigm and that Islamic banks should be subject to regulations similar to those of their western counterparts.     

Efficiency in Islamic vs. conventional banking: The role of capital and liquidity

We show that higher capital and liquidity ratios increase the efficiency of conventional and Islamic banks. Using conditional quantile regressions, we further show that the effect is stronger for highly efficient, small, highly liquid, and highly capitalized conventional banks. We also find that more capitalized and liquid banks were efficient during the 2008/2009 financial crisis and the Arab Spring. Our findings support the view that the constraints imposed by Shari'a law may widen the efficiency gap between the two bank types, at the expense of Islamic banks. Furthermore, our findings suggest that the efficiency of conventional banks not only depends on bank capital and liquidity, but also on the level of bank efficiency while the relationship is inconclusive for Islamic banks. These findings provide insight into how capital and liquidity can shape bank efficiency. They suggest that higher capital and liquidity buffers serve a constraint on policymakers and may function very differently depending on the level of bank efficiency.     

The bank lending channel in the Malaysian Islamic and conventional banking system

This paper examines the bank lending channel of monetary transmission in Malaysia, a country with a dual banking system including both Islamic and conventional banks, over the period 1994: 01-2015:06. A two-regime threshold vector autoregression (TVAR) model is estimated to take into account possible nonlinearities in the relationship between bank lending and monetary policy under different economic conditions. The results indicate that Islamic credit is less responsive than conventional credit to interest rate shocks in both the high and low growth regimes; however, the sub-sample estimation shows that its response has increased in more recent years becoming quite similar to that of conventional credit. Moreover, the relative importance of Islamic credit shocks in driving output growth is notable in the low growth regime, their effects being positive. These findings can be interpreted in terms of the distinctive features of Islamic banks.     

Islamic vs. conventional banking: Business model,efficiency and stability

How different are Islamic banks from conventional banks? Does the recent crisis justify a closer look at the Sharia-compliant business model for banking? When comparing conventional and Islamic banks, controlling for time-variant country-fixed effects, we find few significant differences in business orientation. There is evidence however, that Islamic banks are less cost-effective, but have a higher intermediation ratio, higher asset quality and are better capitalized. We also find large cross-country variation in the differences between conventional and Islamic banks as well as across Islamic banks of different sizes. Furthermore, we find that Islamic banks are better capitalized, have higher asset quality and are less likely to disintermediate during crises. The better stock performance of listed Islamic banks during the recent crisis is also due to their higher capitalization and better asset quality.     

Islamic finance development and banking ESG scores: Evidence from a cross-country analysis

An extensive body of literature on CSR examined its effects on several business dimensions. However, little attention has been paid on the relationship between the growing role played by Islamic finance, its connection with sustainability and the drivers of such relationship.Based on a sample of 224 banks from sixteen emerging and advanced countries in the period 2014–2017, this paper assesses whether and to what extent the development of Islamic financial markets relates to banks’ sustainability strategies. We propose a novel perspective that includes the new Islamic Finance Development Indicator (IFDI), its components and how it relates to aggregate and individual ESG scores.Our results show a positive relationship between IFDI and ESG scores that mostly revolves around the social pillar. This finding strengthens the generally acknowledged link between Islamic finance and sensitivity to social implications, despite gains in sustainability are subject to non-linearity.     

A comparison of conventional versus Islamic banking customers attitudes and judgment

This investigates the impact of customer attitude and judgment regarding conventional and Islamic banking system in Pakistan. This study attempts to find out, how the customers of Islamic banks perceive about Islamic banking practices in terms of Shariah compliance and conventional banking system regarding earning more profits. This study consists on primary data through a well design questionnaire. Four hundred and thirty (430) questionnaires were distributed among different customers of all three types of banking, such as Islamic, conventional and stand-alone branches in order to investigate customer’s attitude and judgment toward banking system. The findings indicate that overall 28% of Islamic banking customers don’t know the essential concept of Islamic financial institution’s in Pakistan. Furthermore, 54% customers of conventional banking show their interest to convert their accounts toward Islamic banks.

     

Leverage-based index revisions: The case of Dow Jones Islamic Market World Index

US firms added to the Dow Jones Islamic Market World Index, a leverage-based index, witness permanent positive price and liquidity effects, whereas excluded firms sustain negative price and liquidity effects but no decrease in the investor awareness. Included/excluded firms experience a significant drop/no change in the cost of equity. Among the deleted firms, those with an increase in debt level bear a more severe decrease in liquidity and institutional ownership, and an increased cost of equity than those firms without an increase in debt use. Conveying private information on changes in a firm's corporate strategy and operating environment, revisions by a leverage-based index are different from those by size-based indexes.     

企业银行系统安全产品选择

企业银行也称企业自助银行，指企业通过专线或远程拨号与银行计算机系统建立连接，使用银行提供的客户端软件或浏览器登录银行计算机系统，办理账户信息查询、转账、汇款、集团户管理等金融业务的一套自助金融服务系统。企业银行的主要特征是基于专线连接为企业提供特定服务。     

Payout policy and ownership structure: The case of Islamic and conventional banks

Using a sample of Islamic and conventional financial institutions domiciled in 16 countries for the period 2000–2015, we examine how ownership structure affects dividend policy. Our main findings indicate that ownership identity is important in explaining dividend policy in these banks, albeit in different patterns. In particular, the results suggest that government ownership seems to exert negative effects on dividend payouts in both types of banks, which is in line with the preference of governments towards bank stability. With respect to family ownership, the impact is negative for conventional banks but positive for Islamic ones, consistent with agency theory. These results are to some extent similar in the case of foreign ownership where it is associated with a higher payout policy in Islamic banks, but not significant in conventional ones. Our results are robust to an array of additional analyses including propensity score matching.     

The interplay between quantitative easing,risk and competition: The case of Japanese banking

The Japanese economy is infamous for the magnitude of bank nonperforming loans that have originated back in the 1990s, whereas they are still causing controversies. Japan is also known for an extended quantitative easing programme of unprecedented scale. Yet the links between risk‐taking activities, quantitative easing and bank competition are largely unexplored. This paper employs, for the first time, the Boone indicator to measure bank competition in Japan to examine these underlying linkages. Given the scale of nonperforming loans, we explicitly measure bank risk‐taking based on a new data set of bankrupt and restructured loans. The dynamic panel threshold and panel Vector Autoregression analyses show that enhancing quantitative easing and competition would reduce bankrupt and restructured loans, but it would negatively affect financial stability. Given the recent adoption of negative rates in January 2016 by the Bank of Japan, our study provides new insights as clearly there is a trade‐off between quantitative easing and financial stability beyond a certain threshold. Caution, therefore, regarding further scaling up quantitative easing is warranted.     

Investor ambiguity,systemic banking risk and economic activity: The case of too-big-to-fail

This paper examines the relationship between investors' ambiguity in the financial options market and systemic banks' risk. Eliciting ambiguity information from option pricing data on the twelve major U.S. banks between 2003 and 2010, we show that higher behavioral deviations from risk-neutral and Bayesian valuation (i.e., investor ambiguity) are associated with higher systemic banks' downside, market and credit risks. Consistent with behavioral explanations, we confirm the detrimental effect of ambiguity on financial market outcomes and find strong evidence of ambiguity among call and put option holders. Variance decomposition indicates that such a pattern of behavior explains a significant proportion of U.S. banking risk variance. This effect is more pronounced during periods of economic turbulence and bank stress (i.e., the 2007–2009 crisis), and holds after controlling for size, tail risk, implied volatility, and volatility of volatility dynamics. We also document that ambiguity from the financial market has a depressing impact on real economic activity, including capacity utilization, non-farm payrolls and overall economic performance. Our findings are robust to alternative specifications of ambiguity such as multiple priors and expected utilities with uncertain probabilities.     

EAI技术在银行业中的应用实例

根据国家统计局提供的数据，2005年我国电子计算机制造业（不含软件销售）的产品销售收入超过了1万亿元人民币。另据国家发改委提供的数据，去年头10个月我国软件销售收入达到2500多亿元，全年软件收入超过3000亿元。两项合计，我国计算机信息产业已经达到每年13000亿元的规模。信息产业的总量和其在国民经济中的占比稳步提高，信息产业在社会生活中的地位越来越重要。一方面，庞大的信息系统成为企业进行生产经营活动的助推器和发动机，为企业的生存和发展带来了巨大收益；另一方面也使得企业在生产、     

Shareholder wealth effects of interstate banking: The case of Delaware's Financial Center Development Act

The Financial Center Development Act (FCDA) of Delaware was signed into law in March 1981, to permit out-of-state bank holding companies (BHCs) to establish special purpose banking subsidiaries within the state of Delaware. The FCDA can be viewed as part of the growing national trend toward interstate banking. If interstate banking is to succeed, the benefits from BHCs establishing interstate subsidiaries must be consistent with the welfare of the BHCs shareholders. The purpose of this study is to determine the impact on shareholder wealth of the decision by BHCs to establish subsidiaries within the state of Delaware. Using event study methodology, the results from this study show that the decision to establish a special purpose banking subsidiary within the state of Delaware under the FCDA is consistent with the maximization of shareholder wealth.Funding for this research was made available by the University of Delaware General Research Fund. The authors thank Paul Horvitz, Kevin Scanlon, Ron Watson, and David Walker for helpful comments.     

基于多层关联规则的银行产品交叉销售策略

我国商业银行在近些年的改革发展中存在两个共性问题：第一,基础设施投资巨大,生存和发展的途径主要靠吸引和保留足够数量的客户;第二,产品差别小,各个商业银行很难提供差别化、个性化的金融产品,长期留住客户比较困难。因此,商业银行在不断扩展业务范围、不断加大科技投入的同时要注重以客户为中心的管理,对客户需求的满足能力是银行能否与客户保持紧密联系、获得发展的关键所在。在这种背景下,如何利用先进的技术对现有客户进行有效交叉销售,从而最大化客户的生命价值就变得非常重要。     

Dependence patterns among Asian banking sector stocks: A copula approach

Asian banks have recorded 22 banking crisis between 1945 and 2008 and its total share of years in a banking crisis since 1945 is 12.4%, the highest compared to all regions. Interestingly, most of the financial institutions in the region remained largely unscathed during the recent global financial crisis, mainly due to their strong liquidity and capital buffers. Yet, given the episodes of past crisis, the rapid increase in regional corporations and cross-border flows in the region, as well as the paramount importance of the banking sector in the Asian region, it is interesting to study how the banking sectors in the various economies co-move with each other. Against this backdrop, we examine the dependence structure between banking sectors in the region using copula functions. Several findings are documented. First, average dependence generally remain at moderate levels, though dependence between the banking sectors of the developed Asian markets are relatively higher than the emerging markets. Second, we find evidence of asymmetric dependence, suggesting that banking sector returns co-movement varies in bearish and bullish markets. Third, our results show a mild increase in the bivariate dynamic correlations during crisis periods, indicating very limited risk of contagion. Our results provide significant implications for portfolio managers and policymakers.     

The initial stages of new service development: A case study from the Greek banking sector

Despite the importance of developing new services by bank institutions, the empirical research that has been undertaken concerning the process of developing new services is rather limited. This is even more obvious as far as the initial stages of the procedure are concerned, despite the fact that many authors have stressed their importance for the success of the whole effort. This paper examines the initial stages of new service development in the case of a leading Greek bank. Nine in-depth interviews were conducted with senior and middle executives. These revealed a different way for developing new services in comparison with the main body of the existing literature. Its main difference is the fact that each business unit is almost exclusively responsible for the development of new services, without collaborating extensively with other departments within the bank.