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This paper aims to examine the relevance of cross-border activity in the European banking sector, evaluating the role of differences in regulation to explain the level of interest in entering foreign markets.

The sample considers all banks in the European Union (EU 28) existing at year-end 2017, and information about the ultimate owners’ nationality to classify local and foreign banks is collected. The analysis provides a mapping of regulatory restrictions for foreign banks and evaluates how they impact the role of foreign players in the deposit and lending markets.

Results show that the lower are the capital adequacy requirements, the higher are the amounts of loans and deposits offered by non-European Economic Area banks and, additionally, the higher the probability of having a foreign bank operating in the country.

This paper provides new evidence on regulatory arbitrage opportunities in the EU and outlines differences among EU countries not previously studied.

This study examines how FX OTC derivatives transactions of foreign banks’ branches funded by short term borrowings affect the volatility of stock markets and FX markets in Korea based on historical data. It founds that they use call money for FX-derivatives trading, rather than borrowings from their Head Quarter. This result also proves that their derivatives trading is funded by call market increasing stock markets’ volatility in Korea, even if foreign banks’ branches have been using various funding sources. Also the role of foreign banks’ branches as FX money supplier for the korean local banks effects to stock markets by increasing the volatility via call markets. On the other hands, derivatives liabilities of foreign banks’ branches tend to increase volatility of the korean stock markets, but their derivatives assets tend to decrease the volatility. This result together with O/N dollar call volatility should be regarded as a kind of liquidity risk because they could give serious impacts to Korean financial markets if shocks break out. When considering the main revenue source of foreign banks’ branches, derivatives trading creates much higher leverage effects to them than korean local banks, and their roles in financial and capital markets of Korea this study provides with a reason that regulators should give complex and multilateral attentions to foreign banks’ branches.

This paper examines the effectiveness of the three macro-prudential measures introduced by the Korean government in 2010 and 2011: (i) introduction of limit for FX forward positions of domestic banks and foreign bank branches, (ii) reintroduction of tax on foreign investors' earnings from Korean government bonds, and (iii) imposition of macro-prudential stability levy on non-deposit foreign currency liabilities appeared in bank balance sheets. The results show that the three measures were not successful: The limits of FX forward position did not lead to the decrease in foreign borrowings. The reintroduction of the tax did not reduce foreign investments in Korean government bonds. Lastly, the levy on non-deposit foreign currency liabilities did not lower the foreign borrowings from the banks and did not result in more financing through deposits for banks. The ineffectiveness of the capital flow management system in controling the amount of foreign capital flows implies that the system might not be effective in mitigating the pressure on exchange rate caused by excessive volatility of foreign capital flows.

This research examines the relationship between market power and liquidity creation in the specific context of bank profitability in the Vietnamese banking sector.

The study applies the methodology proposed by Berger and Bouwman (2009) to demonstrate the creation of bank liquidity through a three-step procedure for investigating the relationship between market power and liquidity creation. The three steps include non-fat liquidity (NFLC), fat liquidity (FLC) and system generalized method of moments estimation for panel data.

This study finds that liquidity creation increases when a bank has high market power. Further, highly profitable banks positively impact the market power of banks with regard to liquidity creation, relative to less profitable banks. Moreover, bank size, capital, economic growth and interest rate negatively influence bank liquidity creation, while credit risk positively relates to bank liquidity creation.

Measurements used in this study are based on the works of Berger and Bouwman (2009). There are specific variations, relative to Basel III. In addition, other variables significantly impact bank liquidity creation that have not been considered in the models, and a quadratic model should have been considered to measure market power and bank liquidity creation.

This study suggests that managers should control the liquidity of their banks by supervising vulnerable characteristics that have been mentioned herein and emphasizing improvements in profitability. Further, the government may consider encouraging banks to generate more liquidity by modifying regulations concerned with market power or reinforcing policies about improving the transparent business environment.

This study characterizes an attempt to examine the influence of market power on the liquidity creation of banks in Vietnam, which represents one of the most dynamic systems in Asia, with several varied participating banks. The current study also examines the same within the specific context of the modifying impact of the profitability of banks.

The purpose of this study is to examine whether regulations can prevent financial crises based on the case of Sweden in the 20th century. The evolution of banking regulation relies heavily on learning across borders as well as responding to recent and remembered crises. Sweden went from being an open economy with a highly protected national banking system with several banking crises under the Classical regime, through the Statist regime with no crises followed by abrupt liberalisation in the 1980s as the country changed to a more market-based regime. This study examines the regulatory responses to crises in each of these periods to assess how, and whether, an often backward-looking regulatory framework can address forward-looking risks.

This study is a qualitative study using a historical method. The authors use archival material, official publications and statistical data as well as secondary literature to succinctly analyse crises and regulatory responses in different regulatory regimes in the 20th century. The theoretical framework builds on three macro- and microeconomic policy regimes, the Classical, the Statist and the Market regime.

The authors find that regulations can play a decisive role in alleviating a banking crisis, but the relationship between regulations and economic development is complex, and regulations alone cannot prevent a crisis.

To the best of the authors’ knowledge, this is the first longitudinal study of banking regulations in Sweden and how these change in response to crises with the aim of improving the role of banks in financial intermediation and financial stability. This study contributes to a body of literature on financial crises with a long-term perspective and an assessment of regulations as a policy response.

This paper aims to discuss the evolution of the Egyptian banking sector and the main trends in financial development in Egypt. The purpose of this study is to examine empirically the relationship between the development of the financial sector and economic growth in Egypt between 1980 and 2016.

The paper draws comparisons based on critical financial indicators between Egypt and selected emerging markets and developing economies. It uses a new data set of financial development indexes released by the International Monetary Fund. This paper uses econometric time series modelling of bivariate regressions for real growth per capita and measures of financial development to assess the relationship between financial development and economic growth in Egypt.

There are three specific findings based on the empirical analysis. First, there is a strong association between real growth per capita and financial development measured by money supply to GDP. Second, access to and the efficiency of banking services are not associated with real per capita income. Third, the Financial Markets Access Index – which compiles data on market capitalization outside of the top ten largest companies and the number of corporate issuers of debt – indicates a robust association with real per capita GDP.

The paper uses advanced empirical investigation techniques and new data sets available to assess the critical relationship between finance and growth in Egypt. The main policy implications of the empirical results of this paper suggest a stronger focus on promoting a more proactive role for the financial services industry in Egypt. In particular, there is a critical role for bank financing to support the private sector to maintain an inclusive growth momentum. Further development of the capital market will promote sustainability of such economic growth.

The purpose of this study is to examine the South African banks’ customer due diligence (CDD) practices in the fintech era to mitigate money laundering (ML) risks and ensure financial stability. Financial technologies have brought substantial transformations to the financial services sector. However, such technologies have exposed the sector to emerging risks that threaten the integrity and stability of the financial system globally. Before any bank–customer relationship is established, proper customer background checks must be conducted. These background checks enable financial institutions to validate information provided and ensure customers are properly risk profiled. Failure to risk profile customers could result in financial institutions being used as conduits for ML. Undoubtedly, CDD procedures are pivotal to overall anti-money laundering efforts and curbing financing terrorism in a regulatory framework.

A qualitative research approach was adopted to address the research questions of the study. Given the confidentiality associated with the financial services sector, data triangulation was used in blending mainly secondary and primary data sources. Secondary data sources used in the study were published reports available in the public domain that were corroborated with subject matter experts’ interviews.

Based on the findings of this study, it is concluded that in South Africa, technological solutions have been incorporated into CDD functions, which is now risk-based (enhanced due diligence). Also, legally, South Africa has incorporated the biometrics, integration with Department of Home Affairs and Companies and Intellectual Property Commission databases, customer consent to third-party sources with the Financial Intelligence Centre Act and the Protection of Personal Information Act.

The shift towards digital banking in South Africa results in increased data and dynamic risk profiling. This study advocates a policy shift requiring a risk-based approach to mitigating emerging ML risks (in particular digital laundering), especially in the wake of South Africa’s recent greylisting by the Financial Action Task Force.

This study explored how board diversity affects environmental, social, and governance (ESG) performance in the Italian banking sector. Specifically, this study examined whether the presence of specific corporate governance (CG) characteristics (board diversity) in Italian Cooperative Credit banks is related to ESG dimensions.

The authors examined a sample of 247 Italian Cooperative Credit banks for the period 2017–2021 and developed an econometric model by applying unbalanced panel data with firm fixed effects and controls per year. To verify the research hypotheses, the authors analyzed board diversity in terms of board attributes variables (size, gender diversity, age, activity, independence and corporate social responsibility/sustainability committee (CSR) and measured ESG dimensions using the ESG score provided by Refinitiv.

The findings suggest that board size, independence and the existence of a CSR/sustainability committee positively affect banks' ESG performance, while no significant relationship between board average age and ESG performance was found. The study also explored how the critical mass of women on a board affects ESG performance by testing the positive impact of gender diversity on ESG dimensions only up to a certain threshold of female directors.

This study is highly relevant to managers and investors who consider ESG issues in their decision-making processes. The findings support regulators by offering insights into ways to improve ESG performance through the specific design and application of governance mechanisms.

From a practical perspective, this investigation has implications for both practitioners and regulators, suggesting that chief executive officers (CEOs) and managers should pay more attention to CG aspects to improve ESG performance and that policy-makers should give greater consideration to these aspects of CG in their efforts to enhance ESG performance.

This study offers an in-depth analysis of banks' ESG practices and attempts to bridge the gap in the literature on ESG in the Italian banking industry. This study is the first to investigate the relationship between CG variables and ESG dimensions in this context.

This study aims to investigate the impact of environmental performance, social responsibility and corporate governance (ESG) on bank performance (BP) in the Italian banking sector. It analyzes the relationships between 10 dimensions of ESG pillars and BP indicators during the period 2016–2020.

This study examines a sample of 105 Italian banks and develops three econometric models to verify the effect of ESG initiatives on BP indicators. The independent variables are the ESG dimensions collected from the Refinitiv database, whereas the explanatory variables are performance indicators measured through accounting and market variables.

The findings show that ESG policies negatively affect operational and market performance in the banking sector, suggesting that Italian banks have not fully embraced strong sustainability procedures. However, the relationships between ESG dimensions are mixed if measured individually. The results show a significant positive impact of emission and waste reductions on financial and operating performance, but regarding social aspects, it is proved that better product responsibility decreases accounting performance.

This study offers an in-depth examination of ESG practices in relation to current and future performance. In particular, the findings provide practitioners and academics with an actual set of predictors in the ESG area to improve BP.

To the best of the authors’ knowledge, this is the only study that has investigated the impact of ESG issues on BP in Italy. Few prior studies have used all dimensions of ESG policies at a disaggregated level to investigate their effect on various performance indicators.

This paper aims to address two fundamental questions: (1) How has Bahrain's industrial policy evolved during the 21st century? and (2) what factors contribute to this evolution?

Utilizing secondary data, this paper identifies key decision-makers responsible for economic policy in Bahrain and delineates the evolution of Bahrain's industrial policy throughout the 21st century. Subsequently, it employs a series of interviews with elite civil servants engaged in the formulation and implementation of Bahrain's economic policies to understand the reasons behind the observed changes.

Since assuming the role of Crown Prince in 1999, Sh. Salman bin Hamad Al Khalifa has been the key economic decision-maker in Bahrain. During the 21st century, Bahrain has shifted away from decisions closely aligned with the Washington Consensus towards those more in line with classical industrial policy. Interviews reveal that the private sector's underperformance in job creation, coupled with fiscal pressures, has driven this departure from the Washington Consensus. Moreover, the early successes of the interventionist Saudi Vision 2030 and Bahrain's own success in technocratically managing the COVID-19 pandemic have accelerated this transition.

Insights into the determinants of Bahrain's industrial policy can guide policymakers in refining future strategies. Recognizing the positive role of intellectual developments in academic economics literature becomes crucial for informed decision-making.

This paper fills a gap in the existing literature by providing answers to its research questions, particularly considering the significant changes witnessed in Bahrain's industrial policy post-pandemic.