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Article
Publication date: 17 November 2023

Oudom Hean and Parker Jabas

In the wake of rapid banking consolidations in the USA, concerns have arisen about the accessibility of capital and financial services for new businesses. With fewer and more…

Abstract

Purpose

In the wake of rapid banking consolidations in the USA, concerns have arisen about the accessibility of capital and financial services for new businesses. With fewer and more centralized banking options, the likelihood of these entities securing financing may be compromised. This study aims to explore the repercussions of this consolidation on entrepreneurial activities in the U.S. Midwest.

Design/methodology/approach

To measure entrepreneurship, this study examines various business application metrics: total applications, high-propensity business applications (i.e. those with a high likelihood of evolving into businesses with payrolls), business applications from corporations (applications stemming from corporations or personal service entities) and applications with planned wages (those indicating a forthcoming payroll date). To assess the banking sector’s consolidation, this study used the deposit-based Herfindahl–Hirschman Index (HHI), a well-known measure of banking concentration.

Findings

This research underscores the detrimental impact of banking consolidation on various new business formations. To illustrate, a one standard deviation surge in the HHI, roughly 1253 points, correlates with a decline of approximately 16 total business applications, 7.3 high-propensity business applications, 3.72 applications originating from corporations and 3 applications indicating planned wages – all per 10,000 individuals. The findings indicate that reduced banking competition could slow down new business formations and negatively affect entrepreneurship.

Originality/value

This study examines various business formation statistics and use deposits at the institution level to determine banking concentration.

Details

Journal of Financial Economic Policy, vol. 16 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

Open Access
Article
Publication date: 20 February 2024

Almina Bešić, Christian Hirt and Zijada Rahimić

This study focuses on HR practices that foster employee engagement during Covid-19. Companies in transition economies are particularly vulnerable to crisis and downsizing and…

252

Abstract

Purpose

This study focuses on HR practices that foster employee engagement during Covid-19. Companies in transition economies are particularly vulnerable to crisis and downsizing and other recessionary practices are frequently used.

Design/methodology/approach

Drawing on the model of caring human resource management, we utilise interviews with human resource representatives of 10 banks in the transition economy of Bosnia and Herzegovina. We analyse the banks at two different times to demonstrate how and why companies adapt their HR practices.

Findings

Our findings show a changing mindset in the deployment of highly context-specific HR practices. Strengthening company culture through a sense of community and communication ensure stability and continuity in work. Rather than layoffs, flexible work has become standard.

Practical implications

By highlighting the interplay between HR practices and employee engagement, we contribute to the discussion on engagement in exceptional circumstances and challenging settings and demonstrate how caring responsibilities “migrate” into HR practices in the professional context of a transition economy.

Originality/value

We propose a context-specific “protective caring approach” to foster employee engagement during crises.

Details

Employee Relations: The International Journal, vol. 46 no. 9
Type: Research Article
ISSN: 0142-5455

Keywords

Article
Publication date: 5 May 2023

Markus Tiemann

This paper aims to assess, from an empirical perspective, the research question if public media reports which relate concrete banks to concrete allegations of money laundering…

Abstract

Purpose

This paper aims to assess, from an empirical perspective, the research question if public media reports which relate concrete banks to concrete allegations of money laundering have an adverse impact on banks stock prices and what are the drivers of such impact?

Design/methodology/approach

The paper makes use of event study methodology and uses the constant mean and the market model. The event window is calibrated towards a five-day window, and the estimation window has a length of 90 days, in line with best academic practices. Drivers are identified by correlation analysis. and the market model uses ordinary least squares regression.

Findings

The application of event study methodologies yields the results that stock prices of affected banks generate, at the date of the news appearance, statistically significant negative abnormal returns under both the market model and the constant mean model. As negative abnormal returns have been mainly found at the date of the event itself, the findings confirm that the impacts of money laundering may be severe but short natured. In addition, the paper finds that the identified negative abnormal returns may be driven by the banks’ size in terms of total assets, by the bank’s profitability in terms of return on assets and by the bank’s sustainability risk.

Practical implications

The findings have implications in terms of banking and supervisory practices. In specific, the findings help to argue that banking consolidation is needed to lower the impacts of AML cases, as stock prices of larger banks show less sensitivity. In addition, the findings could be used to determine financial sanctions against banks violating AML regulation. Finally, the findings imply that AML news can have severe and fast-moving financial stability considerations and are, therefore, important in crisis situations.

Originality/value

As there appears to be no substantial research that applies event study methodology to the money laundering context, the combination of research question and methodology has an innovative character. In addition, there is no clear literature on media and money laundering.

Details

Journal of Money Laundering Control, vol. 27 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 4 August 2023

Japan Huynh

The paper empirically investigates the link between banking market structure and funding liquidity risk.

Abstract

Purpose

The paper empirically investigates the link between banking market structure and funding liquidity risk.

Design/methodology/approach

With a panel of Vietnamese commercial banks from 2007 to 2021, the system generalized method of moments (GMM) estimator is applied as the primary regression method, while the random-effect model and the corrected least square dummy variable (LSDVC) technique are also considered in robustness checks.

Findings

Competition may increase banks' funding liquidity risk. This finding holds for competition measures derived from the Boone index and concentration ratios but not in the case of the Lerner index as a proxy for market power. Further results indicate that the funding liquidity risk of banks that are larger and have better performance (less credit risk and higher return) tends to be less affected by competition. Besides, the overall impact of bank competition on funding liquidity risk is amplified by the financial crisis and the COVID-19 pandemic.

Originality/value

The study extends the empirical literature by exploring the relationship between bank competition and funding liquidity risk. Additionally, the paper also studies how the impact of bank competition on funding liquidity risk depends on the characteristics of the banking sector and the macroeconomic conditions of the economy, including the moderating effect of the COVID-19 pandemic.

Details

Managerial Finance, vol. 50 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Book part
Publication date: 26 March 2024

Kesu Singh

Introduction: According to the existing research, one of the key determinants of a company’s survival and market development is its ability to get bank loans or other external…

Abstract

Introduction: According to the existing research, one of the key determinants of a company’s survival and market development is its ability to get bank loans or other external sources of finance for business expansion.

Purpose: The study aims to explore the factors affecting access to finance and their effects on the development of medium- and small-sized businesses. These factors include business size and age, profitability, the length of a company’s association with a commercial bank, and banking sector characteristics.

Need for the study: It is particularly crucial for small- and medium-sized businesses since they often have trouble getting funding from banks because they don’t supply the banks with the information they need to assess their loan application prospects, however, when a company’s economic and financial situation improves, banks get access to more information about the firms, and financing is thus more readily available.

Methodology: This research is based on qualitative methods, focus on an elaborative study of the existing literature, and provide suggestions based on the same.

Findings: The findings show that small- and medium-sized businesses, like those in other European nations, have less access to finance than large businesses. It revealed that the company’s size, liquidity, profitability, and banking industry state significantly influence the availability of bank loans.

Details

The Framework for Resilient Industry: A Holistic Approach for Developing Economies
Type: Book
ISBN: 978-1-83753-735-8

Keywords

Article
Publication date: 19 October 2023

Aamir Aijaz Syed

The purpose of this study is to explore how the unprecedented rise in the economic policy uncertainty influence Indian banking sector stability. The unprecedented rise in the…

Abstract

Purpose

The purpose of this study is to explore how the unprecedented rise in the economic policy uncertainty influence Indian banking sector stability. The unprecedented rise in the economic policy uncertainty during the recent pandemic has garnered the attention of policymakers to investigate its consequences on different sectors of the economy.

Design/methodology/approach

In this quest, the present study uses system generalized method of moments and other econometric tools to examine the influence of economic policy uncertainty on the Indian banking sector, covering the time frame from 2000 to 2022. In addition, the current study also investigates the mediating role of regulation and supervision in the nexus of economic policy uncertainty and the Indian banking sector stability.

Findings

The empirical outcome reveals that economic policy uncertainty negatively influences banking stability. However, when economic policy uncertainty interacts with stringent banking regulations, private monitoring and supervisions, it assists in diversifying the negative impact of economic policy uncertainty on the Indian banking sector stability.

Originality/value

To the best of the author’s knowledge, the study is an original work and provides robust estimates that will assist policymakers in understanding the influence of policy uncertainty on the banking stability. Moreover, the study also helps in understanding the role of supervision and regulation in mitigating the negative consequences of policy uncertainty on the banking stability.

Details

Journal of Financial Regulation and Compliance, vol. 32 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 31 January 2024

Rizky Yudaruddin

This study aims to assess the effectiveness of the banking market discipline in relation to the development of Financial Technology (FinTech) startups.

Abstract

Purpose

This study aims to assess the effectiveness of the banking market discipline in relation to the development of Financial Technology (FinTech) startups.

Design/methodology/approach

Using panel data collected from 144 banks in Indonesia from 2004 to 2018, this study’s regression models were estimated using fixed effects with robust standard errors.

Findings

This study finds that FinTech startups disturb bank deposits. Meanwhile, market discipline exists in Indonesian banks, as indicated by depositors’ behavior with higher credit and liquidity risks. However, market discipline does not exist for bank insolvency risk, which is indicated by a significant and positive relationship with the dependent variable. Therefore, the higher the number of FinTech startups, the more effective the market discipline. Empirical findings also revealed that the joint impact between FinTech startups and bank risk is also important in explaining the difference in the effectiveness of banking market discipline.

Practical implications

This study has policy implications for banks in mitigating risk associated with market discipline and instability of financial intermediation.

Originality/value

This study offers a significant contribution to the empirical literature because it specifically explores the effectiveness of the banking market discipline by focusing on the joint impact of FinTech startups and bank risk on deposits. Furthermore, this study contributes to providing empirical evidence that links between FinTech startups and bank risk affect depositor behavior at government-owned, private, large and small, as well as nonmobile and mobile adoption banks.

Details

Journal of Asia Business Studies, vol. 18 no. 2
Type: Research Article
ISSN: 1558-7894

Keywords

Article
Publication date: 8 January 2024

Ali Shaddady and Faisal Alnori

The purpose of this paper is to investigate whether banks’ environmental, social and governance (ESG) initiatives increase or decrease banks’ efficiency.

Abstract

Purpose

The purpose of this paper is to investigate whether banks’ environmental, social and governance (ESG) initiatives increase or decrease banks’ efficiency.

Design/methodology/approach

The sample used includes all listed banks in Saudi Arabia over the years 2016–2021. The authors performed different methods, including data envelopment analysis (DEA), ordinary least squares (OLS) and quantile regressions.

Findings

The OLS regression results show a negative linkage between ESG and banks’ efficiency. Further, the quantile regression analysis indicates that the ESG effect on banks' efficiency is negative across different quantiles. However, the DEA method shows that the DEA-generated scores for Banks’ efficiency are higher for ESG-adjusted scores in comparison to efficiency scores without incorporating ESG. Further, the comparison of the DEA-generated efficiency scores, over the sample period, of adjusted ESG banks still suffers from decreasing in their efficiency over the years. Concerning existing theory, the results are consistent with the stakeholders and the resource-based theories postulating that banks' ESG practices are ethical commitments and enable firms to gain competitive advantage and increase their reputation among stakeholders.

Practical implications

The findings of this study offer important implications for regulators and bankers. Policymakers and bank regulators should make collective efforts to encourage financial institutions to adopt green finance initiatives to create an efficient financial system capable of counteracting risks from the external environment and stimulating economic growth. Banks’ managers should be aware that ESG initiatives serve society and the environment and offer a positive influence on banks’ efficiency.

Originality/value

To the best of the authors’ knowledge, this is the first study to explore the influence of ESG activities on banks' efficiency using DEA for banks in Saudi Arabia.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 25 December 2023

Nemer Badwan, Besan Saleh and Montaser Hamdan

This paper aims to investigate the determinants that contribute to the financial stability and banking sector of Palestinian banks listed on the Palestine Stock Exchange (PEX) by…

Abstract

Purpose

This paper aims to investigate the determinants that contribute to the financial stability and banking sector of Palestinian banks listed on the Palestine Stock Exchange (PEX) by using yearly data for the years 2012–2022.

Design/methodology/approach

Pooled ordinary least squares (OLS) and two-stage least squares (2SLS) were used to identify the variables and factors affecting the financial stability and banking sector of Palestinian banks. The study’s data were collected from the banks listed on PEX and from the yearly reports posted on the Palestine Monetary Authority’s (PMA) webpage over the years from 2012–2022. According to this research’s analysis, SMEs loans and capital sufficiency have a statistically significant positive impact on the stability of Palestinian banks. Unobserved heterogeneity, simultaneity and dynamic endogeneity are taken into account when using the 2SLS regression approach to adjust for the study endogeneity factor.

Findings

The study’s findings show that some factors and determinants might have both good and negative effects on financial stability and banking sector. Loans to small and medium-sized businesses (SMEs) and enough capital are two characteristics that statistically have a major favourable impact on the stability of Palestinian banks since they help the banks withstand deficits. A further potential discovery relates to the favourable effects of financial inclusion (FI) and digital financial services (DFS) on the stability of banks.

Research limitations/implications

This research has faced some limitations, such as the lack of a defined index from the regulatory organizations, this research is based on information from bank annual accounts. It has mostly relied on self-developed or World Bank indexes. Furthermore, the research solely used information from the supply side (banks); demand-side data were not taken into consideration.

Practical implications

This paper has managerial implications for stability of banking sector. The Palestine Monetary Authority, as the central bank, must increase the percentage of bank loans directed to small and medium-sized companies and oblige bank management to adhere to adequate capital standards, which contributes to strengthening the Palestinian banking sector and increasing its profits. The study findings advise banks that are enjoying financial stability to speed up the pace of FI and DFSs because most of these reliable banks have relatively low FI ratios. PMA is responsible for preserving the stability of the financial system. PMA, decision makers and banks management must retain adequate liquidity in their institutions and raise client collateral expectations to raise credit conditions.

Originality/value

This paper adds some contributions to the literature. To adjust for discrepancies between various types of banks, the authors concentrate on conventional and Islamic banks, which enables us to use a homogenous data set as opposed to depending on dichotomous variables. The authors used Z-scores, which have recently been used in research, to measure stability and FI at the level of specific institutions. This research contributes in some key aspects that no prior research has addressed. Conventional banks are different from Islamic banks, and a number of issues might impact their stability. To evaluate the connection between FI and DFSs, it is important to consider the actions of bank regulators.

Details

Journal of Financial Regulation and Compliance, vol. 32 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 1 September 2023

Aslıhan Kıymalıoğlu, Serkan Akıncı and Akzhan Alragig

This article aims to question the role of attitude towards behavior and bank reputation in the relationship between consumer compatibility and behavioral intention.

Abstract

Purpose

This article aims to question the role of attitude towards behavior and bank reputation in the relationship between consumer compatibility and behavioral intention.

Design/methodology/approach

Using survey data from 640 mobile bank users in a developing country setting, the authors explored the conditional effects of users' compatibility on their future intention to use mobile banking services through attitude towards use as a function of perceived corporate reputation.

Findings

The results indicated that the attitude towards using mobile banking services has a partial mediating role in the relationship between compatibility and future intention to use. This indirect path depends on the reputation of the bank.

Originality/value

The original contribution of this study is to detail the mechanism between compatibility and usage intention that emerges within the scope of the model the authors propose and to realize this through the Johnson-Neyman approach.

Details

Managerial Finance, vol. 50 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

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