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Banking System (banking + system)
Selected AbstractsAssessing Profitability Factors in the Greek Banking System: A Multicriteria MethodologyINTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH, Issue 5 2002Ch. Spathis The increasing competition in the national and international banking markets, the changeover towards monetary union and the new technological innovations herald major changes in the banking environment, and challenge all banks to make timely preparations in order to enter into the new competitive monetary and financial environment. Therefore, it is interesting to investigate the effectiveness of Greek banks, as it is valued by the financial markets, i.e. the greater the efficacy the higher the competitiveness and vice versa. Taking into consideration the bank assets, we distinguish banks into small and large ones. Finding factors that make the differences in such effectiveness may explain the effective advantage of these two types of financial institutions and help us understand the ,financial intermediation' industry in Greece better. Based on their size, a classification of Greek banks, in a multivariate environment, according to the return and operation factors for the years 1990,1999 takes place. In order to investigate the differences of profitability and efficiency between small and large Greek banks, as well as the factors of profitability and operation related with the size of banks, a multicriteria methodology has been used. The results of this paper may help us determine the key success (or failure) factors of these two categories of Greek banks as well as the responsible banking decision,makers for future readjustments. [source] Forecasting domestic liquidity during a crisis: what works best?JOURNAL OF FORECASTING, Issue 6 2007Winston R. MooreArticle first published online: 3 JUL 200 Abstract The 1990s were a turbulent time for Latin American and Caribbean countries. During this period, the region suffered from no less than 16 banking crises. One the most important determinants of the severity of banking a crisis is commercial bank liquidity. Banking systems that are relatively liquid are better able to deal with the large deposit withdrawals which tend to accompany bank runs. This study provides an assessment of whether behavioural models, linear time series or nonlinear time series models are better able to account for liquidity dynamics during a crisis.,,Copyright © 2007 John Wiley & Sons, Ltd. [source] RESTRUCTURING U.S. FEDERAL FINANCIAL REGULATIONCONTEMPORARY ECONOMIC POLICY, Issue 3 2007ROSE M. KUSHMEIDER Despite changes over the past 70 yr, the U.S. federal financial regulatory system remains rooted in the reforms of the 1930s. The institutions governed by this system have, nevertheless, continued to evolve. Today, regulation of large, multiproduct, internationally active financial organizations poses challenges for a system designed largely to regulate smaller, distinct, locally based organizations. Reform of the regulatory system, however, is not an easy task,complex issues regarding deposit insurance, the role of the central bank, and the dual banking system must be addressed. In the absence of a crisis, however, regulatory restructuring will not likely generate much political interest. (JEL G28) [source] Central Bank and Commercial Banks' Liquidity Management , What is the Relationship?ECONOMIC NOTES, Issue 1 2003Ulrich Bindseil The paper explores the relation between individual banks' liquidity management in the euro area and the ECB's management of the aggregate current accounts held by banks with the Eurosystem. It is argued that, in the case of the euro area with its large, remunerated reserve requirements that have to be fulfilled only on average over a one-month period, the banks' demand for working balances to serve as a buffer against market imperfections is always below reserve requirements. It is therefore normally sufficient for the ECB when steering short-term interest rates to control aggregate liquidity in a way that the aggregate banking system is in a position to fulfil adequately its reserve requirements. In particular, the ECB normally does not need to take care of any factors that affect temporarily the demand for working balances, such as the level and uncertainties of interbank payment flows. However, two exceptions are noteworthy and are discussed in the paper: the banks' balance sheet management activities implying a regular end of month peak of the EONIA rate; and the liquidity situation in the case of substantive market tensions as in the days following the terrorist attacks of 11 September 2001. The need of the ECB's liquidity management to address the associated deviations from a model of perfect markets is discussed. [source] Interbank Lending, Liquidity and Banking CrisesECONOMIC NOTES, Issue 3 2002Paola Brighi In this paper, we show that abandoning the Diamond and Dybvig hypothesis of a unique bank representing the entire banking system gives rise to the possibility of endogenizing the interbank exchanges. In a system characterized by uncertainty regarding the moment of withdrawal of deposits, access to interbank liquidity decreases the bank risk of failure and bank runs. The possibility, moreover, to invest excess liquidity in the interbank market at a positive interest rate increases expected bank profits. (J.E.L.: E52, G21). [source] The Italian Banking Structure in the 1990s: Testing the Multimarket Contact HypothesisECONOMIC NOTES, Issue 2 2000Riccardo De Bonis The multimarket contact hypothesis holds that more contacts between firms competing in the same markets may induce more collusion. This paper tests the hypothesis for the Italian banking market, analysing the behaviour of the largest Italian banks from 1990 to 1996. Market rivalry is gauged by changes in loan market shares and interest rates in each Italian province. We estimate the effects of increasing multimarket contacts, concentration indicators, banks' costs and loan demand on variations in market shares and interest rates. No support is found for the multimarket contact hypothesis. Geographical overlap in banking is positively correlated with changes in market shares, confirming the thesis of an overall increase in competition within the Italian banking system. Greater multimarket links also seem to correspond to lower lending rates. (J.E.L.:G21, C33, L40.) [source] CHANGING PATTERN OF CORPORATE GOVERNANCE AND FINANCING IN THE KOREAN CHAEBOLSECONOMIC PAPERS: A JOURNAL OF APPLIED ECONOMICS AND POLICY, Issue 3 2007BYUNG S. MIN The de jure financial system in Korea has moved from mainly R (relationship)-mode financial contracts towards M (market)-mode contracts since the 1997 financial crisis, due largely to reforms introducing Anglo-American style corporate governance and the disintermediation of the larger business groups in corporate financing. Analysis shows that the effectiveness of this change in improving firms' performances has yet to be demonstrated. Unlike the disintermediation of the big-name firms, the affiliates of small and medium business groups and small and medium-sized independent firms have relied heavily on bank loans and internal finance. The impact of a more concentrated banking system and intensified competition on the type of corporate investment has yet to be analysed. [source] Operational Risk Measurement in Banking Institutions and Investment Firms: New European EvidencesFINANCIAL MARKETS, INSTITUTIONS & INSTRUMENTS, Issue 4 2008Enrique Bonsón The banking/investment sector must deal with a new variable, Operational Risk, for explaining various recent crises and bankruptcies. Operational Risk, which can be defined briefly as the risk generated by possible failures of a entity's Information Systems (IS), must be measured, covered, mitigated and managed by applying a series of methodologies, each of which assumes that the IS of the bank operates at a certain Stage of Sophistication. The present study proposes a scheme of evolution that details the stages of enhancement in the sophistication of their IS that banking entities may implement, so as to be capable of capturing, mitigating and managing Operational Risk. Using econometric methods, we create a proxy variable to capture the IS Sophistication of each entity. Then, the factor of entity size has been analyzed, and the country effect is explored. Additionally, the importance of intangible assets is weighted, among others entity aspects. The entity size has been revealed as the variable with most influence on the plans formulated in this respect by European entities, against other variables also considered in the present study, such as the country effect or the importance of intangible assets. The work shows how IS decisions referring to Operational Risk management are very influenced by size. It could introduce competition differences in the European banking system. [source] The Politics of Banking in Romania: Soft Loans, Looting and Cardboard BillionairesGOVERNMENT AND OPPOSITION, Issue 3 2004Lucian Cernat In this article attention is focused on the features of the emerging Romanian banking system, its failures, and their determinants. These failures were either politically driven or simply a result of the weak regulatory capacity of the state (as the owner of the banks) and lax monitoring from the central bank, as the central authority entrusted with the responsibility to maintain a well-functioning banking system. The reluctance of various governments, regardless of their political orientation, to apply sanctions against banks that are in trouble until the last possible moment encourage excessive risk-taking when banks first encounter financial difficultics, and asset-stripping when the insiders realize that a bank's continued viability is in jeopardy. Based on a number of case studies, the article argues that, in post-1989 Romania, insider trading, self-loans and blunt theft appeared more as systemic features rather than isolated incidents. [source] Lessons from the Russian Meltdown: The Economics of Soft Legal ConstraintsINTERNATIONAL FINANCE, Issue 3 2002Enrico Perotti On 17 August 1998, Russia abandoned its exchange rate regime, defaulted on its domestic public debt and declared a moratorium on all private foreign liabilities, which was equivalent to an outright default. The depth and speed of the Russian meltdown shocked the international markets, and precipitated a period of serious financial instability. Important lessons on issues of bank supervision and international stability can be learned by understanding the roots of such a crisis. The visible reason of the crisis was an unsustainable fiscal deficit coupled with massive capital flight, but what were their underlying causes? We argue that the structure of individual incentives in a context of capture of state decisions by special interests, compounded by a rouble overvaluation driven by exceptional international support, helps to explain the build,up of non,payment, theft and capital flight that led to the crisis. We offer an explicit model of rational collective non,compliance, cash stripping and rational collective non,payment which led to the fiscal and banking crisis and, ultimately, to a complete meltdown. In our view, the banking sector was already insolvent prior to the crisis, and contributed directly and indirectly to it. We conclude with a radical policy proposal for a stable banking system for Russia, appropriate for its current capacity for legal and supervisory enforcement. It is based on a segmented, narrow banking sector, concentration in commercial banking and a cautious extension of deposit insurance. [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] Sophistication in Risk Management, Bank Equity, and Stability,INTERNATIONAL REVIEW OF FINANCE, Issue 1 2010HANS GERSBACH ABSTRACT We investigate the question of whether sophistication in risk management fosters banking stability. We compare a simple banking system that uses an average rating with a sophisticated banking system in which banks are able to assess the default risk of entrepreneurs individually. Both banking systems compete for deposits, loans, and bank equity. While a sophisticated system rewards entrepreneurs with low default risks with low loan interest rates, a simple system acquires more bank equity and finances more entrepreneurs. Expected repayments in a simple system are always higher and its default risk may be lower. As an economy with a sophisticated banking system invests its funds more efficiently, there is a trade-off between efficiency and stability of a banking system. [source] Is Contemporary Interest Rate in Conflict with Islamic Ethics?KYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 1 2008Erhun Kula SUMMARY This paper considers whether the modern interest rate theory is in conflict with Islamic values. Unfortunately, the issue is not sufficiently debated in economic and cognate literature and thus a mist surrounds the Islamic concept of interest (riba) and its use in the Moslem world that contains about 1.3 billion people and hundreds of billions of dollars of surplus funds. A substantial part of this money has not been made available to the commercial banking system as Islamists in particular keep their savings in the form of gold, precious stones or durable foreign currency, in residential or other safe places, believing that earning interest on savings is against the principles of Islam. This attitude by creating a shortage of funds for investment projects is hampering the economic development of many Moslem countries where standards of living are generally low. The finding of the paper is that only one component part of the time preference rate, namely pure time discount, may be objectionable from the Islamic as well as from secular viewpoints; the rest does not appear to be against Muslim ethics. However, a truly competitive financial market structure is likely to wipe away the excessive pure time discount rate leaving the market interest rate free from any objectionable parameter. [source] INSTITUTIONS, BANKING DEVELOPMENT, AND ECONOMIC GROWTHTHE DEVELOPING ECONOMIES, Issue 4 2009M. Sami NABI O16; O17; O41 Does the institutional environment affect the causal relationship between banking development and economic growth? In the theoretical section of this paper, we develop an endogenous growth model where the institutional environment is captured through two indicators: judicial system efficiency and easiness of informal trade. We show that an improvement in the institutional environment has two effects. First, it intensifies the causality direction from banking to economic growth through a reduction in defaulting loans. Second, it reduces the interest rate spread. In the empirical section of the paper, we find bidirectional causality when analyzing 22 Middle Eastern and North African countries over the period 1984,2004. The first causality, which runs from banking development to economic growth, is more intense in countries with more developed institutional environment. The second causality runs from economic growth to banking and indicates that a more developed economy has a more developed banking system. [source] CAN TUNISIA MOVE TO INFLATION TARGETING?THE DEVELOPING ECONOMIES, Issue 1 2007Adel BOUGHRARA E47; E52; E58 Inflation targeting has become an alternative monetary strategy that has been followed by many industrial and emerging countries. This study considers whether the adoption of inflation targeting would be relevant for Tunisia. More specifically, this paper aims at checking whether the necessary conditions for the successful implementation of such a strategy are fulfilled or not. It is found that fiscal dominance does not constitute the main hindrance to the adoption of inflation targeting. Other impediments have been identified, especially a weak financial system in general, the unsound and fragile banking system in particular, and the glaring lack of knowledge about the monetary transmission mechanism. Furthermore, it has been pointed out that if Tunisian monetary authorities continue to carry out the present exchange rate regime, namely, the constant real exchange rate rule, an inflation targeting regime will not be sufficient to properly contain the inflation pressures caused by demand shocks. [source] COMPETITIVE ISSUES IN THE TAIWANESE BANKING INDUSTRY: MERGERS AND UNIVERSAL BANKSTHE DEVELOPING ECONOMIES, Issue 3 2003Peiyi YU This paper investigates scale economies and scope economies in the Taiwanese banking system, looking beyond the market-power (MP) and efficient-structure (ES) hypotheses. Given the existence of overall economies of scale and the positive value of expansion path sub-additivity, we conclude that there might be large increases in profits following mergers. Moreover, since the profit-structure relationship after financial reform is determined by the relative-market-power hypothesis, this consolidation trend will not necessarily decrease the social benefit for Taiwanese consumers. With regard to scope economies and product-specific economies of scale, we are unable to recommend whether Taiwanese banks should develop as specialized banks or diversified banks in the future. Finally, we find that risk indicators play an important role in explaining the observed variation in bank profitability, and present evidence that default risk and leverage risk have negative effects on the profits of banking, although the effect of portfolio risk is uncertain. [source] Public Sector Banks in India: Rationale and Prerequisites for reformANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 1 2002T.G. Arun This paper contributes to the debate on public sector banks by suggesting several rationales for government ownership of banks in India. The paper then proceeds to argue that due to high economic costs, the current public sector banking system is unsustainable. Although a policy of wider private ownership was introduced in the 1990s, it is suggested that there are several prerequisites to be met before such a reform can be more fully implemented. It is argued that these prerequisites arise from the rationales for government ownership, and they include a credible bank regulatory regime, and government promotion of co-operative banks and credit unions. [source] Banking crises and the evolution of the regulatory framework in Hong Kong 1945,1970AUSTRALIAN ECONOMIC HISTORY REVIEW, Issue 2 2003Catherine R. Schenk Hong Kong initially emerged relatively unscathed from the East Asian financial crisis of 1997,1998 and was able to defend the pegged exchange rate on which its status as an international financial centre depended. The soundness and transparency of the financial system is widely credited with allowing Hong Kong to avoid the worst excesses that brought down financial systems elsewhere. This article explores the evolution of the regulatory framework in the post-war period, revealing the reluctance with which the state tightened its control over the banking system. This resulted in the combination of poor supervision and constraints on competition that contributed to further instability. [source] The Choice Among Interbank Settlement Systems: The European ExperienceECONOMIC NOTES, Issue 1 2003Angelo Baglioni This paper addresses the choice of banks between alternative channels for interbank payments. The conventional view assumes a tradeoff between the safety of real-time gross settlement (RTGS) and the liquidity savings of multilateral netting. Moreover, correspondent banking is believed to be inefficient, both in terms of liquidity and of administrative costs. In the last decade, however, the impulse of the Committee on Payment and Settlement Systems, technological changes and the management of RTGS systems by central banks have reduced the difference between the various systems. This is especially true for risk, whereas liquidity cost crucially depends on the refinancing policy adopted by the central bank and the co-ordination among the participants. On the basis of the recent evolution of payment systems in Europe, we verify the importance of liquidity, as well as other variables like transaction costs, for the choice of banks among different settlement systems. Cost factors imply that the nature of payments flows (value, commercial versus financial) and some structural features of the banking systems (dimension of the intermediaries, concentration of the banking sector) become important. The analysis is carried out both through a theoretical model and a cross-country comparison based on three data sources: ECB (European Central Bank, EBA (Euro Banking Association) and SWIFT (Society for Worldwide Interbank Financial Telecommunication). [source] The Structure of Banking Systems in Developed and Transition EconomiesEUROPEAN FINANCIAL MANAGEMENT, Issue 2 2001Dwight Jaffee The paper empirically analyses the determinants of banking system structure (as measured by bank assets, number, branches and employees) for 26 developed OECD countries. The estimated regressions are then applied to 23 transition economies, to obtain benchmarks for the efficient structure of their banking systems. The actual and benchmark measures of banking structure are compared to evaluate the state of banking system development, including the computation of a measure of ,banking system convergence'. The results are objective and replicable multidimensional measures of banking system development for the transition economies. [source] Cross-Border Exposures and Financial ContagionINTERNATIONAL REVIEW OF FINANCE, Issue 2 2010HANS DEGRYSE ABSTRACT Integrated financial markets provide opportunities for expansion and improved risk sharing, but also pose threats of contagion risk through cross-border exposures. This paper examines cross-border contagion risk over the period 1999,2006. To that purpose we use aggregate cross-border exposures of 17 countries as reported in the Bank for International Settlements Consolidated Banking Statistics. We find that a shock that affects the liabilities of one country may undermine the stability of the entire financial system. Particularly, a shock wiping out 25% (35%) of US (UK) cross-border liabilities against non-US (non-UK) banks could lead to bank contagion eroding at least 94% (45%) of the recipient countries' banking assets. We also find that since 2006 a shock to Eastern Europe, Turkey and Russia affects most countries. Our simulations also reveal that the ,speed of propagation of contagion' has increased in recent years resulting in a higher number of directly exposed banking systems. Finally, we find that contagion is more widespread in geographical proximities. [source] Sophistication in Risk Management, Bank Equity, and Stability,INTERNATIONAL REVIEW OF FINANCE, Issue 1 2010HANS GERSBACH ABSTRACT We investigate the question of whether sophistication in risk management fosters banking stability. We compare a simple banking system that uses an average rating with a sophisticated banking system in which banks are able to assess the default risk of entrepreneurs individually. Both banking systems compete for deposits, loans, and bank equity. While a sophisticated system rewards entrepreneurs with low default risks with low loan interest rates, a simple system acquires more bank equity and finances more entrepreneurs. Expected repayments in a simple system are always higher and its default risk may be lower. As an economy with a sophisticated banking system invests its funds more efficiently, there is a trade-off between efficiency and stability of a banking system. [source] Excess Risk Premia of Asian BanksINTERNATIONAL REVIEW OF FINANCE, Issue 2 2000Jianping (J.P.) Mei This paper develops a framework for gauging the risks of emerging market banks by using stock market data. Employing a multifactor asset pricing model that allows for time-varying risk premia, we find the presence of large excess risk premia on Asian bank stocks, especially in those markets affected by the Asian financial crisis. We find that the excess risk premia appear to be negatively related to the degree of economic freedom of a country but positively related to its corruption level. Thus, our findings are consistent with the view that crony capitalism in Asia may have distorted the market mechanism or the systematic risk exposure of banks. This suggests that the excess risk premium provides useful information on risk exposure for opaque banking systems where quality accounting information is not available. [source] BANK COMPETITION, CONCENTRATION AND EFFICIENCY IN THE SINGLE EUROPEAN MARKET,THE MANCHESTER SCHOOL, Issue 4 2006BARBARA CASU The deregulation of financial services in the European Union (EU), together with the establishment of the Economic and Monetary Union, aimed at the creation of a level playing-field in the provision of banking services across the EU. The plan was to remove entry barriers and to foster both competition and efficiency in national banking markets. However, one of the effects of the regulatory changes was to spur a trend towards consolidation, resulting in the recent wave of mergers and acquisitions. To investigate the impact of increased consolidation on the competitive conditions of the EU banking markets, we employ both structural (concentration ratios) and non-structural (Panzar,Rosse statistic) concentration measures. Using bank-level balance sheet data for the major EU banking markets, in a period following the introduction of the Single Banking Licence (1997,2003), this paper also investigates the factors that may influence the competitive conditions. Specifically, we control for differences in efficiency estimates, structural conditions and institutional characteristics. The results seem to suggest that the degree of concentration is not necessarily related to the degree of competition. We also find little evidence that more efficient banking systems are also more competitive. The relationship between competition and efficiency is not a straightforward one: increased competition has forced banks to become more efficient but increased efficiency does not seem to be fostering more competitive EU banking systems. [source] Design and correctness proof of a security protocol for mobile bankingBELL LABS TECHNICAL JOURNAL, Issue 1 2009Dalton Li A strong security protocol is the cornerstone for the implementation of mobile banking services and is used to determine the security properties of the system. This paper proposes an application layer security protocol for mobile banking services,the mobile banking (MB) protocol,based on requirements from mobile banking systems. Our research provides an in-depth analysis of the design technologies used in the MB protocol, as well as a correctness proof of its security properties based on the strand space model. © 2009 Alcatel-Lucent. [source] | ||||||||||||||||||||||||||||