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1 – 10 of 165This case study is developed from secondary sources. Two types of data were used to develop this case. The statistical data are gathered from sources such as Yahoo! Finance…
Abstract
Research methodology
This case study is developed from secondary sources. Two types of data were used to develop this case. The statistical data are gathered from sources such as Yahoo! Finance, Trading Economics, Investing.com and The Central Bank of the Republic of Turkey. Reports on market developments are gathered from major news outlets such as Bloomberg, The Wall Street Journal and Reuters.
Case overview/synopsis
The year 2021 was a volatile year for the Turkish economy: it ended the year with 36% annual inflation, 44% currency devaluation, shortages of basic goods, street protests, etc. How does the Turkish currency crisis in 2021 play out in various financial markets such as the foreign exchange, bond, stock and cryptocurrency markets? This case study introduces students to Turkey’s economic crisis in 2021 and how the Turkish lira’s depreciation, home inflation and central bank policies interact to affect its various financial markets. In the bond market, a depreciated lira heightened the credit risk of Turkey’s bond issuers and effectively crippled the country’s bond market. In contrast, Turkey’s stock and cryptocurrency markets experienced a rally as Turks put their money into equities and cryptocurrencies to hedge against inflation. In international trade, the lira’s fall and the supply chain disruptions in Asia benefited Turkish exporters tremendously. In contrast, Turkish importers suffered. In the Turkish society, the impact of the currency and inflation crisis fell the hardest on ordinary folks, who saw the values of their wages and pension benefits erode. In times of hardship, socially responsible citizens helped the poor by anonymously paying for others’ unpaid bills.
Complexity academic level
Given the multicomplexity of a currency crisis, this case would be valuable for finance/economics students to understand how a country’s currency crisis and its central bank policies interact to impact its various financial markets. This case is appropriate for courses in Markets and Institutions with a global or cultural learning objective.
Learning Objectives
1. Describe how the Turkish lira’s depreciation affected its various financial markets, such as foreign exchange, bond, stock and cryptocurrency markets.2. Understand the cultural perspective on usury, how it exists in modern-day finance, and its’ role in President Recep Tayyip Erdoğan’s economic policy.3. Compare and contrast Turkey’s export and import industries and how they are being affected by the lira’s depreciation.4. Evaluate the risk exposure of foreign investors who participate in Turkey’s stock market given a depreciating lira.5. Evaluate the creditworthiness of Turkish corporations who issued dollar- or euro-denominated bonds as well as issuers of lira-denominated bonds given a depreciating lira.6. Understand the social impacts of a currency crisis and the charitable acts of socially responsible citizens.
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This case was developed from published sources. Three types of data were used to develop this case. The accounting data were compiled by the case researcher from bank financial…
Abstract
Research methodology
This case was developed from published sources. Three types of data were used to develop this case. The accounting data were compiled by the case researcher from bank financial statements such as Form 10-K, Form 8-K and quarterly Financial Highlights issued by the bank. Market data were compiled from data providers such as FactSet, Yahoo! Finance, Pitchbook and the Federal Reserve System. Reports on market developments were gathered from major news outlets such as CNBC, The Wall Street Journal, Fortune and S&P Global.
Case overview/synopsis
Interest rate risk played a big role in the banking crisis of 2023. For Silicon Valley Bank (SVB), which specialized in providing banking services to venture-backed startups in the technology and life sciences sectors, its exposure to interest rate risk and the lack of hedging against interest rate risk had played a crucial role both directly and indirectly in the bank’s failure. This case study discussed the various channels that interest rate risk played in SVB’s failure as well as other risk factors that include an unusually high percentage of uninsured deposits and a high securities-to-asset ratio compared to its industry peers.
In the low interest rate years of 2020 and 2021, startups were able to fundraise a record amount of funding from venture capital (VC) investors. As many startups deposited their funds at SVB, they became an important and concentrated depositor base for the bank and held large deposit accounts that easily exceeded the $250,000 limit insurable by the Federal Deposit Insurance Corporation. SVB benefited from the large deposit inflows in 2020 and 2021. The bank used some of the deposits to fund its loan portfolio, but most of the deposits were used to purchase debt securities such as US Treasuries and agency-used mortgage-backed securities. In fact, SVB’s investments in securities as a percentage of total assets were more than double its peers in the large banking organization (LBO) group, while the amount of loans funded as a percentage of total assets was almost half of its LBO peers.
As interest rates increased rapidly throughout 2022, bond prices fell. SVB experienced unrealized losses of $15.2bn in its held-to-maturity securities portfolio, which was almost equivalent to its equity of $16bn at the time. However, SVB implemented little or no hedging against the risk of rising interest rates. At the same time, fundraising activities slowed in the VC sector amid high interest rates and, thus, SVB’s startups clients had to draw on past deposits to continue to fund their operations. This resulted in SVB experiencing significant deposit outflows throughout 2022.
On March 8, 2023, SVB announced that it had sold all $21bn of its available-for-sale securities portfolio and suffered an $1.8bn in realized losses, which was greater than its entire last year’s net income. Markets jittered following the news. Over the next two days, depositors rushed to withdraw $142bn of deposits that represented 82% of its last year’s total deposits. Unable to withstand the crippling weight of deposit withdrawal, on March 10 the parent company of SVB filed for bankruptcy.
Complexity and academic level
Given the multiplexity of the banking crisis of 2023, this case study specifically discussed the collapse of SVB, which was the second largest bank failure at the time of its collapse. This case would be valuable for finance and economics students to learn how various risk factors interact that precipitated SVB’s failure. While there were many risk factors at play, this case study homes in on how SVB’s exposure to interest rate risk and the lack of hedging contributed to its downfall. For purpose of pedagogy, this case also explains how a bank could use on-balance-sheet as well as off-balance-sheet methods to hedge interest rate risk. This case is appropriate for courses in Risk Management, Derivatives as well as Financial Markets and Institutions with a focus on interest rate risk and its corresponding hedging methods. A course in Money and Banking may also find this case relevant. Before starting, it is assumed that students have already taken foundational finance and macroeconomics courses, have a basic understanding of financial statement analysis and its interpretations, derivative instruments such as futures and swaps, as well as have prior experience with basic duration calculations.
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Wen-Chin Tsao, Ming-Tsang Hsieh and Tom M.Y. Lin
Stimulated by trends in group purchasing and online social communities, consumers are changing their shopping behavior and increasingly turning to websites for their shopping…
Abstract
Purpose
Stimulated by trends in group purchasing and online social communities, consumers are changing their shopping behavior and increasingly turning to websites for their shopping needs. The purpose of this paper is to investigate how website quality influences shopping websites to create value for the customer and promote loyalty among customers, as well as moderating effects of online shopping experience.
Design/methodology/approach
This study collected data from 275 respondents for testing against the proposed research model by means of the partial least squares (PLS) path modeling. ADANCO software was used to assess the reliability and validity of the measurement model, conduct an analysis of the goodness of model fit for the overall model, and test the hypotheses through structural modeling.
Findings
Empirical results demonstrate that system quality and electronic service quality (e-service quality) have a significant positive effect on the perceived value of consumer/seller relationship; the perceived value of the consumer/seller relationship has a significant positive effect on online loyalty; online shopping experience does not exert a moderating effect on the relationship between website quality and the perceived value of consumer/seller relationship.
Originality/value
This study applied the PLS path modeling approach using ADANCO variance-based structural equation modeling software to verify that website quality plays an important role in distinguishing a brand from other brands in e-tailing, making it an essential factor of a shopping website’s business success. This study further verified that the amount of previous online shopping experience a consumer has does not interfere with the positive influence that website quality exerts on the perceived value of the consumer/seller relationship. The above indicates that it is imperative for website managers to adopt online shopping experience of consumers as a market segmentation variable so as to enhance website quality, increase the perceived value of consumer-seller relationships, and win consumer loyalty.
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This study aims to examine individuals' tendency to strictly follow their own signal while ignoring predecessors' decisions when making decisions under varying degrees of…
Abstract
Purpose
This study aims to examine individuals' tendency to strictly follow their own signal while ignoring predecessors' decisions when making decisions under varying degrees of uncertainty.
Design/methodology/approach
Using a controlled laboratory experiment, the authors separate the follow-own-signal behavior from other types of behavior such as Bayes consistent or herd-like (i.e. follow-the-majority) behavior.
Findings
As the authors systemically increase the degree of uncertainty in the information environment, participants are increasingly more likely to act only on their own signal. This suggests that financial decisions that are made under highly uncertain market conditions may be more signal revealing, and hence, may lead to better information aggregation than previously thought. The authors also find that as uncertainty increases, participants are more likely to switch in and out of this behavior, suggesting that behavior under highly uncertain conditions may also be more random and complex.
Originality/value
The authors are the first to examine how uncertainty affects the follow-own-signal behavior. The authors also offer potential testable empirical implications, such as an increase in contrarian investing, home bias, and own-company ownership under times of increased uncertainty or in more uncertain markets.
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Shi‐Woei Lin and Ming‐Tsang Lu
Methods and techniques of aggregating preferences or priorities in the analytic hierarchy process (AHP) usually ignore variation or dispersion among experts and are vulnerable to…
Abstract
Purpose
Methods and techniques of aggregating preferences or priorities in the analytic hierarchy process (AHP) usually ignore variation or dispersion among experts and are vulnerable to extreme values (generated by particular viewpoints or experts trying to distort the final ranking). The purpose of this paper is to propose a modelling approach and a graphical representation to characterize inconsistency and disagreement in the group decision making in the AHP.
Design/methodology/approach
The authors apply a regression approach for estimating the decision weights of the AHP using linear mixed models (LMM). They also test the linear mixed model and the multi‐dimensional scaling graphical display using a case of strategic performance management in education.
Findings
In addition to determining the weight vectors, this model also allows the authors to decompose the variation or uncertainty in experts' judgment. Well‐known statistical theories can estimate and rigorously test disagreement among experts, the residual uncertainty due to rounding errors in AHP scale, and the inconsistency within individual experts' judgments. Other than characterizing different sources of uncertainty, this model allows the authors to rigorously test other factors that might significantly affect weight assessments.
Originality/value
This study provides a model to better characterize different sources of uncertainty. This approach can improve decision quality by allowing analysts to view the aggregated judgments in a proper context and pinpoint the uncertain component that significantly affects decisions.
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Ming-Tsang Lu, Shu-Kung Hu, Li-Hua Huang and Gwo-Hshiung Tzeng
The invention and use of mobile commerce (m-commerce) technology have progressed in recent years. In small to medium-sized enterprises (SMEs), the decision to implement…
Abstract
Purpose
The invention and use of mobile commerce (m-commerce) technology have progressed in recent years. In small to medium-sized enterprises (SMEs), the decision to implement business-to-business m-commerce is a multiple-criteria decision analysis problem that involves both qualitative and quantitative factors, and its evaluation may be based on imprecise information or uncertain data. Furthermore, there may be significant dependences or important feedback among different levels of criteria or alternatives. However, most conventional decision models cannot capture these complex interrelationships. The purpose of this paper is to adopt a new hybrid multiple attribute decision model (MADM) model to evaluate the implementation of business-to-business m-commerce by SMEs in Taiwan to enhance the thinking of management and improve decision gaps.
Design/methodology/approach
In this study, the authors present the use of a new hybrid MADM combined with a decision-making trial and evaluation laboratory (DEMATEL) method to construct an influential network relationship map (INRM) and find the influential weights of DANP (DEMATEL-based ANP) in criteria from the influential relationship matrix, and the modified VIKOR method using influential weights to evaluate and integrate the criteria performance in the gaps and to analyze how to reduce the gaps to evaluate the decision to implement business-to-business m-commerce by SMEs based on INRM.
Findings
The findings of using the new hybrid MADM model can efficiently and successfully be applied to the business-to-business m-commerce of SMEs to improve and reduce the performance gaps among each criterion/aspect when setting improvement strategies for achieving an aspiration level based on INRM.
Originality/value
This study achieves the following: successfully building a decision network (called an influential network relation map (INRM)) of the technological advances and implementations of business-to-business m-commerce for solving the inter-dependence and feedback of criteria/aspects in the real world problem; how changing effective solutions from existing performance of situations/alternatives into aspiration levels to fit the current competitive markets in the business-to-business m-commerce of SMEs; and efficiently shifting from ranking and selection when determining the most preferable approaches to performance improvement by modified VIKOR methods.
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Tsang-Lang Liang, Hsueh-Feng Chang, Ming-Hsiang Ko and Chih-Wei Lin
This study aims to explore the relationship between transformational leadership and employee voice behavior and the role of relational identification and work engagement as…
Abstract
Purpose
This study aims to explore the relationship between transformational leadership and employee voice behavior and the role of relational identification and work engagement as mediators in the same.
Design/methodology/approach
This study uses structural equation modeling to analyze the data from a questionnaire survey of 251 Taiwanese hospitality industry employees.
Findings
The findings demonstrate that transformational leadership has significant relationships with relational identification, work engagement and employee voice behavior and that relational identification and work engagement sequentially mediate between transformational leadership and employee voice behavior.
Practical implications
The results of this study provide insights into the intervening mechanisms linking leaders’ behavior with employees’ voices, while also highlighting the potential importance of relational identification in organizations, especially concerning the enhancement of employees’ work engagement and voice.
Originality/value
The findings reveal the mechanisms by which supervisors’ transformational leadership encourages employees to voice their suggestions, providing empirical evidence of the sequential mediation of relational identification and work engagement. The results help clarify the psychological process by which leaders influence their followers.
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Consumer-generated online product reviews (OPRs) have become a crucial source of information for consumers; however, OPRs are increasingly being incentivized. The purpose of this…
Abstract
Purpose
Consumer-generated online product reviews (OPRs) have become a crucial source of information for consumers; however, OPRs are increasingly being incentivized. The purpose of this paper is to find a method of sponsorship and disclosure that could be considered ethically sound.
Design/methodology/approach
This study adopted a quasi-experimental approach to clarifying how the method of sponsorship impacts reader perceptions of OPRs in terms of helpfulness, credibility and purchase intention. Two experiments were performed on an online platform using data from 480 participants. Hypotheses were tested using analysis of covariance.
Findings
Meaning under the premise that sponsorship information is disclosed and not withheld from the readers, Study 1 revealed that experiential sponsorship is the best sponsorship. Study 2 revealed that featuring reviewers with greater influence in the online community increases the positive influence of disclosing experiential sponsorship on OPR persuasiveness.
Originality/value
The findings in this study provide rational incentives for firms to disclose sponsorship information, i.e. demonstrate high ethical standards in marketing. This was shown to create a win-win-win situation for consumers, firms and reviewers. Managerial implications for online marketing managers are also discussed.
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The purpose of this study is to investigate empirically how the determinant attributes of coffee quality, service, food and beverage, and extra benefits influenced…
Abstract
Purpose
The purpose of this study is to investigate empirically how the determinant attributes of coffee quality, service, food and beverage, and extra benefits influenced customer‐perceived value in the coffee outlet industry.
Design/methodology/approach
A self‐administrated questionnaire was distributed to 834 respondents from chain and independent coffee outlets for the study. Multiple regression analysis was used to identify which factors of determinant attributes of service quality influenced customer‐perceived value.
Findings
The study found that factors of determinant attributes of service quality significantly influenced functional and symbolic dimensions of perceived value with the former being related with coffee quality, service, and food and beverage, whereas the latter is positively related with coffee quality, food and beverage, and extra benefits.
Practical implications
The paper bears significant theoretical and practical results. Theoretically, determinant attributes of service quality can enhance not only functional value but also symbolic value, ignored in previous value‐based research. It is believed that perceived value should be considered as a base in designing determinant attributes of service quality. Practically, it is imperative for marketers to gain a thorough understanding of the consumption experience of their customers by enhancing value perceptions in terms of determinant attributes of service quality.
Originality/value
The study challenges the existing literature by identifying how customers perceived function and symbolic values based on determinant attributes of service quality offered in the coffee outlet industry.
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