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The purpose of this paper is to analyze the impact of financial penalties on the stability of the banking sector.

A unique database of 671 financial penalties imposed on 68 international listed banks between 2007 and 2014 and a fixed-effects panel data approach were used.

The results show that financial penalties increase banks’ systemic risk exposure but do not significantly affect banks’ contribution to systemic risk. Additionally, the link between financial penalties and systemic risk exposure is weaker in regulatory and supervisory systems with more prompt corrective power among national authorities. By contrast, supervisory authorities’ stronger power to declare insolvency and a greater external monitoring culture exacerbate the positive effects of financial penalties on systemic risk exposure.

The punishment of misconduct should correct the social harm and prevent future misconduct while ensuring the banking system’s stability. Therefore, authorities should punish misconduct by implementing penalties against the financial institutions at a specific amount that offsets the damages of misconduct but does not threaten systemic stability. Penalties against institutions may be complemented by financial penalties against upper management to induce a more responsible culture in banks.

This paper is the first to study the effect of financial penalties on the stability of the financial system. The results contribute to the ongoing debate on the appropriateness of financial penalties and address the question of whether bank regulators reduce or contribute to banks’ systemic risk.

The purpose of this paper is to examine service level agreements (SLAs) in the retail industry and uses empirical data to draw conclusions on the relationships between SLA parameters and retailer financial performance.

Based on prior SLA theories, hypotheses about the impacts of SLA confidentiality, choice of chargeback mechanisms and chargeback penalty on retailer inventory turnover are tested.

Retailer inventory turnover could vary by the level of SLA confidentiality, and the variation of retailer inventory turnovers could be explained by chargeback penalty.

The research findings may not be readily applicable to SLAs outside of the retail industry. Also, most conclusions were drawn from publicly available SLAs.

The significant relationships between SLA parameters and retailer inventory turnover imply that a retailer could improve its financial performance by leveraging its SLA design.

Not only does this study contribute to the understanding of retail SLA design in practice, but it also extends prior theories by investigating the implications of SLA design on the retailer inventory turnover.

The purpose of this study is to examine regulatory sanctions from an emerging economy perspective and analyzing the impact of regulators imposed monetary sanctions on banks’ performance.

The study adopted correlational research design to examine the effect of regulatory penalties on the performance of deposit money banks in Nigeria. This study used panel data from a sample of 15 deposit money banks in Nigeria for the period of 2006-2015. Multiple regression analysis was carried out.

Results showed that penalties imposed by regulators in the Nigerian banking industry have no significant impact on the bottom line of the defaulters. Penalties imposed on foreign exchange and international trade related infraction showed that the cost of penalties is below the benefits enjoyed from such infractions.

The insignificant impact of penalties on performance implies that deposit money banks have considered penalties imposed by regulators as operational expenses and transferred such to customers.

The study differs from other studies that examined regulatory penalties on performance by focusing on financial performance and using data from an emerging economy perceived to have weak regulatory environment.

The purpose of this study is to critically analyze the Financial Compensation Funds being accumulated by Islamic Banks of Bangladesh in credit-based transactions. In this connection, due to the evolved liquidity crisis amidst the COVID-19, industry opinions are observed that suggest including the compensations or the donation funds directly into the bank's income account. But the Sharīʿah does not permit it. Such alternative proposals of using compensation or donation fund during crises are scrutinized under Sharīʿah principles to come to a logical conclusion.

The approach followed in the study is textual and discourse analysis through descriptions of ideal Sharīʿah-compliant methods for handling late payment of credit and comparison with the industry practices.

It is observed that there are conceptual gaps in the industry as is reflected in the Islamic Banking Guideline of Bangladesh. The funds collected from the debtor due to late payment are named as compensation (Ta‘wīḍ) whereas the nature of the transaction is a donation (Tabarru'). The misconception can lead to various Sharīʿah non-compliant activities later with the funds. The proposals brought out in the industry to use such compensation/donation funds during a crisis are a consequence of this. The proposals of using such funds for banks' purposes in any situation are not supported by Sharīʿah principles and are against the Islamic banking philosophy.

The study is very relevant to the current crisis of COVID-19 in the domestic Islamic Banking Industry and also instrumental for the future guidance to stick to the Sharīʿah principles in managing compensation or donation funds by the Islamic Banks.

The overuse and scarcity of resources emphasize the importance of the circular economy. The technology facilitated by Industry 4.0 stimulates the implementation of the circular economy that aims to reduce resource use and enhance operational efficiency. This study focuses on enhancing delivery efficiency in an online-to-offline (O2O) context from an Industry 4.0 technology-facilitated personal configuration perspective, that is, comparing in-house and crowdsourced delivery efficiency in China's O2O on-demand food delivery context.

The authors collect 128,152 orders from 38 restaurants of an online restaurant chain in China. The authors adopt multiple regression analysis to examine the delivery efficiency gap between in-house and crowdsourced deliverymen and the determinants of this efficiency gap.

The findings of this study reveal that crowdsourced deliverymen exhibit higher delivery efficiency, in terms of a shorter delivery time, than in-house deliverymen. In addition, the authors find that platforms providing monetary incentives or implementing late delivery penalties enlarge this efficiency gap. Furthermore, the authors show that external factors, such as working on weekends and bad weather conditions, contribute to the narrowing of this performance efficiency.

The study's findings suggest that platforms should use advanced technologies facilitated by Industry 4.0 to optimize their personnel configuration to enhance their delivery efficiency and reduce carbon emissions. The effective approaches include using financial incentives and improving working schedules.

The authors' findings contribute to the online fulfillment literature by focusing on delivery efficiency in the O2O context from the Industry 4.0 technology-facilitated personnel configuration perspective. The authors examine how internal and external factors moderate the performance efficiency between these two types of deliverymen.

The principal issue that will be considered in this chapter is how the banking sector facilitates the crimes of money laundering and tax evasion. This will entail asking a series of related questions. Does the assistance of the banking sector in financial crime involve a small number of wayward employees at the periphery of banking? Or are multinational financial institutions willing participants in the systemic evasion of global antifinancial crime standards? In exploring these questions, the theory and practice of money laundering will be explored by focusing on the three stages of the money laundering cycle. The global anti-money laundering standards that apply to the banking sector, and the role of bank secrecy in promoting tax evasion, will be examined through a series of case studies. It will be argued that there is strong empirical evidence that the banking sector is a systemic offender facilitating financial crimes, despite the enactment of international and national antifinancial crime standards and criminal prosecutions of financial institutions.

This chapter investigates the effect of the geographical distance between institutional investors and firms on managers' financial misconduct. The evidence shows that the likelihood of committing financial misconduct by management is positively associated with distance. The distance effect is more prominent for firms with higher information asymmetry and more dedicated institutional investors. In line with the balance between risk-taking and benefit extraction from misconduct, the severity of financial misconduct is higher for firms closer to their institutional investors. Results show that geographical proximity can significantly reduce the cost of information production and facilitate monitoring through access to soft information.

The purpose of this paper is to understand the reasons why some financial crises do not result in extensive criminal prosecutions.

The authors examine three major events: the crash of 1929 leading to the Great Depression, the collapse of the US Savings and Loan industry circa 1990 and the sub-prime mortgage meltdown. The authors explain how circumstances surrounding these financial collapses led to stark differences in criminal prosecutions.

This review of prosecutions during three financial crises underscores the contingent nature of seeking criminal penalties for financial wrongdoing. The decision is influenced by a number of factors, including a prosecutor’s level of risk tolerance (probable win test); the potential economic impact of a successful conviction; the number of laws and regulations available in the prosecutorial tool kit; and the desired outcome which can range from new regulatory structures, to prosecutions that fix blame and satisfy the desire for scapegoats, to seeking financial penalties that shore up the government’s bottom line.

This study covers three crises and focuses on the US responses. A broader study could look across countries.

Regulators and lawmakers are interested in avoiding future crises. Because crises are not anticipated, responses are determined by conditions of the moment. A frequent result is that laws and regulations are not in place. Decisions about likely preferred responses would allow anticipatory legislation and regulations.

Financial crises obviously have major implications for ordinary citizens far removed from the centers of finance. Improved responses to mitigate or avoid disasters would have profound impacts on people’s quality of life.

The three crises have been studied individually. This work is different in that it examines the impact of a common set of factors over three crises covering a span of 80 years.

This paper aims to analyze thoroughly all of the sources of research used to develop the money laundering (ML) and terrorist financing (TF) low-risk rating, a rating attained by Norway according to the Basel Institute of Governance, and determine the reasons why Norway is one of only two countries in the world according to the 2012 report, with the other being Estonia, to gain an overall low-risk ML and TF rating.

The differences between the USA and Norway which has obtained a low-risk ranking, were compared and contrasted.

Beginning with the Basel Institute Rating index as a legitimate source for use in assessing anti-money-laundering (AML)/TF risk, and the amount of documentation used in the index’s methodology, it has been proven that the low-risk rating Norway has received is well deserved, and that the US rating of medium risk is also deserved for the time the report was published. Achieving a low-risk rating is not as ambiguous as recently thought and neither is its application on a global scale.

The paper identifies practical areas of improvement and concerns in addressing the overall issue of ML and terrorist financing.

The purpose of this paper is to investigate the effects that the framing of contractual performance incentives have on supplier’s behavioural and relational responses and on the buyer–supplier relationship.

The authors conducted three in-depth case studies of contractual relationships, which exhibit differences in terms of how performance incentives are framed, i.e., using promotion, prevention and “hybrid” frames, respectively. The study involved 38 semi-structured interviews and content analysis of contract agreements.

First, while promotion-framed incentives lead to positive supplier responses and improved relationships, prevention-framed incentives result in negative responses and deteriorating relations. Second, hybrid-framed incentives can lead to productive supplier responses when positive ex ante expectations are met, although the creation of such positive expectations in the first place depends on the proportionality of bonus and penalty elements. Third, promotion- and hybrid-framed incentives do not by default lead to positive effects, as these are contingent on factors pertaining to contractual clarity. Fourth, the overarching purpose of the contract moderates the effects of contract framing on supplier responses.

The study contributes to contracting research by showing how the framing of performance incentives influences supplier behavioural and relational responses. It also extends the existing literature on contract framing by examining the effects of hybrid-framed incentives, and stressing that contract framing should be considered in joint with the clarity and overall purpose of the contract to elicit desired supplier behaviours.

Managers of buying firms may differentiate their approach to contract framing depending on the type of supplier relationship in focus. Furthermore, effective design of promotion- and hybrid-framed incentives requires attention to: realistic performance targets (on the short, medium and long term); salient bonuses related to these targets; incentive structures that appropriately balance rewards and risks; and: mechanisms that explicate and consider uncontrollable factors in the calculation of bonus–malus payments.

The paper extends the literature stressing the psychological impact of contracts on buyer–supplier relationships by highlighting that contractual clarity and the overarching purpose of the contract moderate the effects of contract framing on supplier behavioural and relational responses.