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Commercial Banks (commercial + bank)
Selected AbstractsA Comparison of Syndicated Loan Pricing at Investment and Commercial BanksFINANCIAL MANAGEMENT, Issue 4 2006Maretno Harjoto We reject the hypothesis that investment and commercial banks have identical loan-pricing policies. We find that compared to commercial banks, investment banks lend to less profitable, more lever aged firms, price riskier classes of term loans more generously, and offer relatively longer-term credits, usually with term, not commitment contracts. Investment banks typically establish higher credit spreads, although the premium declines when a commercial bank joins as syndicate co-arranger. Investment banks also price riskier classes of term loans more generously to borrowers than do commercial banks. Commercial-bank funding advantages do not appear to be a source of the pricing differences. [source] How Accurate Are Value-at-Risk Models at Commercial Banks?THE JOURNAL OF FINANCE, Issue 3 2002Jeremy Berkowitz In recent years, the trading accounts at large commercial banks have grown substantially and become progressively more diverse and complex. We provide descriptive statistics on the trading revenues from such activities and on the associated Value-at-Risk (VaR) forecasts internally estimated by banks. For a sample of large bank holding companies, we evaluate the performance of banks' trading risk models by examining the statistical accuracy of the VaR forecasts. Although a substantial literature has examined the statistical and economic meaning of Value-at-Risk models, this article is the first to provide a detailed analysis of the performance of models actually in use. [source] A Comparison of Syndicated Loan Pricing at Investment and Commercial BanksFINANCIAL MANAGEMENT, Issue 4 2006Maretno Harjoto We reject the hypothesis that investment and commercial banks have identical loan-pricing policies. We find that compared to commercial banks, investment banks lend to less profitable, more lever aged firms, price riskier classes of term loans more generously, and offer relatively longer-term credits, usually with term, not commitment contracts. Investment banks typically establish higher credit spreads, although the premium declines when a commercial bank joins as syndicate co-arranger. Investment banks also price riskier classes of term loans more generously to borrowers than do commercial banks. Commercial-bank funding advantages do not appear to be a source of the pricing differences. [source] Evaluating business credit risk by means of approach-integrating decision rules and case-based learningINTELLIGENT SYSTEMS IN ACCOUNTING, FINANCE & MANAGEMENT, Issue 2 2001Jerzy Stefanowski This research utilizes a new approach which uses a hybrid learning system that combines two representations of knowledge: the first in a form of decision rules referring to general knowledge, and the other of single cases corresponding to exceptions or untypical situations. The Explore algorithm was chosen as a tool for inducing general rules. It generates all simple and sufficiently strong general rules from a given data set. Examples discovered by these rules are then used to identify exceptions and untypical cases. The paper discusses problems connected with tuning parameters of this approach and introduces a new procedure for this task. This methodology is applied to solve the problem of evaluating the risk of business credit applications in a Polish commercial bank. Using information about business credit applications, as described by 35 economic parameters and using five groups of banking risk, a knowledge base consisting of 70 decision rules and 15 specific cases was induced. Testing this model in the standard ,leaving-one-out' way we achieved the best classification accuracy of 81%. A comparative study showed that results obtained by other machine-learning algorithms resulted in significantly worse classification accuracy. Copyright © 2001 John Wiley & Sons, Ltd. [source] Consumer attitudes towards debt in an islamic country: managing a conflict between religious tradition and modernity?INTERNATIONAL JOURNAL OF CONSUMER STUDIES, Issue 3 2008Alhassan G. Abdul-MuhminArticle first published online: 10 APR 200 Abstract Saudi Arabia is an important country in the Islamic world, and Islam prohibits the payment and receipt of interest, a key component of modern commercial bank loans. Yet the levels of commercial bank lending in the country for private non-commercial purposes has been rising sharply for the past decade. This study seeks an explanation for this increase by examining the nature of consumer attitudes towards debt in the country, and whether the increasing levels of consumer debt can be explained by existing positive debt attitudes. Using data from a convenience sample of consumers in the major cities of the country, the study finds general debt attitudes to be surprisingly positive, though tempered by the consumption purpose for which the debt is acquired. However, the positive attitudes are unrelated to actual debt acquisition. Rather, socio-demographic differences in attitudes are similar to those reported in the literature. Attitudes are generally more positive among young, highly educated Saudi males than other socio-demographic groups. This suggests a possible struggle to manage a conflict between the Islamic prohibition of interest-based borrowing and demands of the modern economy. [source] Information and Incentives Inside the Firm: Evidence from Loan Officer RotationTHE JOURNAL OF FINANCE, Issue 3 2010ANDREW HERTZBERG ABSTRACT We present evidence that reassigning tasks among agents can alleviate moral hazard in communication. A rotation policy that routinely reassigns loan officers to borrowers of a commercial bank affects the officers' reporting behavior. When an officer anticipates rotation, reports are more accurate and contain more bad news about the borrower's repayment prospects. As a result, the rotation policy makes bank lending decisions more sensitive to officer reports. The threat of rotation improves communication because self-reporting bad news has a smaller negative effect on an officer's career prospects than bad news exposed by a successor. [source] Against the mainstream: Nazi privatization in 1930s Germany1ECONOMIC HISTORY REVIEW, Issue 1 2010GERMŔ BEL Nationalization was particularly important in the early 1930s in Germany. The state took over a large industrial concern, large commercial banks, and other minor firms. In the mid-1930s, the Nazi regime transferred public ownership to the private sector. In doing so, they went against the mainstream trends in western capitalistic countries, none of which systematically reprivatized firms during the 1930s. Privatization was used as a political tool to enhance support for the government and for the Nazi Party. In addition, growing financial restrictions because of the cost of the rearmament programme provided additional motivations for privatization. [source] A Comparison of Syndicated Loan Pricing at Investment and Commercial BanksFINANCIAL MANAGEMENT, Issue 4 2006Maretno Harjoto We reject the hypothesis that investment and commercial banks have identical loan-pricing policies. We find that compared to commercial banks, investment banks lend to less profitable, more lever aged firms, price riskier classes of term loans more generously, and offer relatively longer-term credits, usually with term, not commitment contracts. Investment banks typically establish higher credit spreads, although the premium declines when a commercial bank joins as syndicate co-arranger. Investment banks also price riskier classes of term loans more generously to borrowers than do commercial banks. Commercial-bank funding advantages do not appear to be a source of the pricing differences. [source] Evidence on Value Creation in the Financial Services Industries through the Use of Joint Ventures and Strategic AlliancesFINANCIAL REVIEW, Issue 2 2003Kimberly C. Gleason G21/G29/G14 Abstract While an extensive body of literature has examined merger, acquisition, and consolidation activity in commercial banks and other financial services firms, little attention has been paid to examining how these institutions use the cooperative activities of joint ventures and strategic alliances to accomplish their growth objectives. We analyze the effects of the use of joint ventures and strategic alliances by a sample of firms in the banking, investment services, and insurance industries. Our results show that commercial banks, investment services firms, and insurance companies experience significant abnormal returns of 0.66% on average when they announce their participation in a joint venture or strategic alliance. These abnormal returns are significantly positive across the four strategic motives of domestic, international, horizontal, and diversifying cooperative activities. Using a matched sample, we also show that our sample firms enjoy significant, positive, abnormal returns for holding periods of six, 12, and 18 months after the announcement of the cooperative activity. [source] Sources of Bank Interest Rate RiskFINANCIAL REVIEW, Issue 3 2002Donald R. Fraser We investigate bank stocks'sensitivity to changes in interest rates and the factors affecting this sensitivity. We focus on whether the exposure of commercial banks to interest rate risk is conditioned on certain balance sheet and income statement ratios. We find a significantly negative relation between bank stock returns and changes in interest rates over the period 1991,1996. We also find that bank characteristics measured from basic financial statement information explain bank stocks'sensitivity to interest rate changes. These results suggest that bank managers, analysts, and regulators can use this information to assess the relative risk exposure of banks. [source] Valuing the Potential Transformation of Banks into Financial Service Conglomerates: Evidence from the Citigroup MergerFINANCIAL REVIEW, Issue 2 2000Jarrod Johnston G21/G22 Abstract The merger between Citicorp and Travelers Group on April 6, 1998 could have emitted two relevant signals for firms that provide financial services. The first signal is the endorsement by two prominent financial institutions that benefits from cross-selling of bank services with insurance services, brokerage services, and other financial services can be realized. The second signal is that regulators will allow the combination of commercial banking with insurance underwriting and full-service brokerage, paving a path for similar combinations in the future. We document a favorable share price response for commercial banks, insurance companies, and brokerage firms, which supports the argument that the merger sets a precedent for other combinations between banks and nonbank financial services that will facilitate cross-selling and efficiencies. [source] Banking reform in India and ChinaINTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 3 2001Lawrence Sáez Abstract This paper analyzes the important process about financial reform in the area of bank illiquidity in low-income emerging markets. This process is taking place within the context of a debate as to whether or not governments should try to rehabilitate existing state-owned banks or allow a new or parallel banking system to emerge in order to reduce non-performing assets from state-owned commercial banks. A comparison of institutional development in China and India suggests that new entry rather than the rehabilitation approach may work more favorably to reduce non-performing assets. The paper offers an explanation as to why governments choose rehabilitation over new entry. Copyright © 2001 John Wiley & Sons, Ltd. [source] Cost Efficiency in South Asian Banking: The Impact of Bank Size, State Ownership and Stock Exchange Listings,INTERNATIONAL REVIEW OF FINANCE, Issue 1-2 2007SHRIMAL PERERA ABSTRACT This study examines the cost efficiency performance of 111 commercial banks in Bangladesh, India, Pakistan and Sri Lanka over 1997,2004. The primary focus is to assess whether bank size, state ownership and stock exchange listing have significant effects on South Asian banks' efficiency performance. To this end, a translog-form composite-error cost efficiency model, which allows for exogenous environmental influences, is estimated. The results indicate that the overall efficiency of South Asian banks declined over 1997,2004. Larger banks and banks with widespread ownership through stock exchange listings were found to be relatively more cost efficient. In contrast, state-owned banks were less efficient. [source] An Examination of the Equity Market Response to The Gramm-Leach-Bliley Act Across Commercial Banking, Investment Banking, and Insurance FirmsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2006H. Semih Yildirim Abstract:, This paper examines the wealth effects of the events surrounding the passage of the Gramm-Leach-Bliley Act of 1999 and changes in systematic risk from the pre-Act period to the post-Act period for commercial banks, investment banks, and insurance firms. The results suggest that investment banks and insurance firms are better positioned to exploit the benefits of product-line diversification opportunities allowed by the legislation compared to commercial banks that experience no significant market reaction. Further evidence indicates a significant risk shift and overall reduction in riskiness for the financial sectors under consideration around the event period. [source] Bank Relationship and Firm Performance: Evidence From Thailand Before the Asian Financial CrisisJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2004Piman Limpaphayom Abstract: This study examines the relation between bank relations and market performance in Thailand, an economy in which commercial banks play a crucial role through lending relationship and, for a number of companies, equity ownership. Overall, bank relationships, both equity-based and debt-based, positively affect capital investment. However, there is a negative relation between lending relationships, both short-term and long-term, and market performance indicating that bank lending may not always be consistent with value maximization. There is also evidence of a positive marginal effect of bank monitoring through equity ownership on market performance. Further, the relation between bank equity ownership and market performance appears to be non-linear with a concave function. Ownership by corporate insiders is also negatively related to bank equity ownership. Overall, the findings highlight the detrimental effects of excessive short-term debt usage, one of the factors believed to contribute to the financial crisis in Thailand, and the marginal benefit of the equity-based relationship on firm value. [source] MONETARY TRANSMISSION MECHANISM IN CENTRAL AND EASTERN EUROPE: SURVEYING THE SURVEYABLEJOURNAL OF ECONOMIC SURVEYS, Issue 2 2009Balázs Égert Abstract This paper surveys recent advances in empirical studies of the monetary transmission mechanism, with special attention to Central and Eastern Europe (CEE). Our results indicate that the strength of the exchange rate pass-through substantially declined over time mainly due to a fall in inflation rates and to some extent due to the so-called composition effect. The asset price channel is weak and is likely to remain weak because of shallow stock and private bond markets and because of low stock and bond holdings of domestic households. House prices may become an exception with booming mortgage lending and with high owner occupancy ratios. While the credit channel could be a powerful channel of monetary transmission , as new funds raised on capital markets are close to zero in CEE , it is actually not, as both commercial banks and non-financial corporations can escape domestic monetary conditions by borrowing from their foreign mother companies. The moderately good news, however, is that those banks and firms are influenced by monetary policy in the euro area because their parent institutions are themselves subjected to the credit channel in the euro area. [source] Do Solicitations Matter in Bank Credit Ratings?JOURNAL OF MONEY, CREDIT AND BANKING, Issue 2-3 2009Results from a Study of 72 Countries banks; credit rating; unsolicited; NRSROs Would the credit ratings of unsolicited banks be higher if they were solicited? Alternatively, would the credit ratings of solicited banks would be lower if they were unsolicited? To answer these questions, we use an endogenous regime-switching model and data from 460 commercial banks in 72 countries, excluding the United States, for the period 1998,2003. The answer to both questions is yes. Our results show that the observed differences between solicited and unsolicited ratings can be explained by both the solicitation status and financial profile of the banks. This finding is a new contribution to the literature. [source] Small Business Credit Scoring and Credit Availability,JOURNAL OF SMALL BUSINESS MANAGEMENT, Issue 1 2007Allen N. Berger U.S. commercial banks are increasingly using small business credit-scoring models to underwrite small business credits. The paper discusses this lending technology, evaluates the research findings on the effects of this technology on small business credit availability, and links these findings to a number of research and policy issues. [source] The Los Angeles Community Development Bank: The Possible Pitfalls of Public-Private PartnershipsJOURNAL OF URBAN AFFAIRS, Issue 2 2001Julia Sass Rubin In response to the 1992 Los Angeles riots, the federal government, city and county officials, commercial banks and community leaders established the nonprofit Los Angeles Community Development Bank (LACDB). This public-private partnership was a new development model, designed to spur economic growth in some of Los Angeles' most disadvantaged areas. The LACDB was capitalized with $435 million from the U.S. Department of Housing and Urban Development and ranks as the federal government's largest inner-city lending initiative. By January 2001, however, the bank had experienced unacceptably high losses and was seeking permission to continue operations, after reducing its staff by half and closing most of its offices. This article examines why this innovative public-private economic development partnership confronted such difficulties. Public-private partnerships continue to be an important vehicle for urban economic development. This case study provides a warning of potential pitfalls that can occur from such arrangements. [source] MEASUREMENT ERROR IN RESEARCH ON HUMAN RESOURCES AND FIRM PERFORMANCE: ADDITIONAL DATA AND SUGGESTIONS FOR FUTURE RESEARCHPERSONNEL PSYCHOLOGY, Issue 4 2001PATRICK M. WRIGHT Gerhart and colleagues (2000) and Huselid and Becker (2000) recently debated the presence and implications of measurement error in measures of human resource practices. This paper presents data from 3 more studies, 1 of large organizations from different industries at the corporate level, 1 from commercial banks, and the other of autonomous business units at the level of the job. Results of all 3 studies provide additional evidence that single respondent measures of HR practices contain large amounts of measurement error. Implications for future research into the HR firm performance relationship are discussed. [source] How Accurate Are Value-at-Risk Models at Commercial Banks?THE JOURNAL OF FINANCE, Issue 3 2002Jeremy Berkowitz In recent years, the trading accounts at large commercial banks have grown substantially and become progressively more diverse and complex. We provide descriptive statistics on the trading revenues from such activities and on the associated Value-at-Risk (VaR) forecasts internally estimated by banks. For a sample of large bank holding companies, we evaluate the performance of banks' trading risk models by examining the statistical accuracy of the VaR forecasts. Although a substantial literature has examined the statistical and economic meaning of Value-at-Risk models, this article is the first to provide a detailed analysis of the performance of models actually in use. [source] Comparison of Economic Efficiency Estimation Methods: Parametric and Non,parametric TechniquesTHE MANCHESTER SCHOOL, Issue 5 2002Hsin Huang We employ a wide range of parametric and non,parametric cost frontiers' efficiency estimation methods to estimate economic efficiency and economies of scale, using the same panel data of 22 Taiwanese commercial banks over the period 1982,97. According to our empirical implementation, the two methodologies yield similar average efficiency estimates, yet they come to very dissimilar results pertaining to the efficiency rankings, the stability of measured efficiency over time, the consistency between frontier efficiency and conventional performance measures, and the estimates of scale economies. Thus, the choice of an estimation approach can result in very different conclusions and policy implications regarding cost efficiencies and cost economies. These findings suggest that making policy decisions and evaluations relies on multiple techniques and specifications. [source] Risk Sensitivity of Bank Stocks in Malaysia: Empirical Evidence Across the Asian Financial CrisisASIAN ECONOMIC JOURNAL, Issue 3 2004Chee Wooi Hooy The present study examines the sensitivity of commercial banks' stock excess returns to their volatility and financial risk factors, measured by interest rates and exchange rates, across the recent Asian financial crisis. In general, we found that there were no significant differences among Malaysian commercial banks in their risk exposure prior to and during the Asian financial crisis. The introduction of selective capital controls, a fixed exchange rate regime and a forced banking consolidation program, however, had increased the risk exposure of both large and small domestic banks. The effects of these risk factors were significantly detected in both large and small banks. [source] | |||||||||||||||||||||||||