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1 – 10 of 164Divya Mittal and Shiv Ratan Agrawal
The purpose of this paper is to identify the traditional practices in the modern banking system (MBS) and examine the effects of these on employee response, customer reactions and…
Abstract
Purpose
The purpose of this paper is to identify the traditional practices in the modern banking system (MBS) and examine the effects of these on employee response, customer reactions and customer loyalty, in the context of public sector banks in India. The study also investigates the effects on customers of employees’ use of traditional banking practices in the MBS.
Design/methodology/approach
A total of 460 usable responses were gathered from customers of seven public sector banks in Bhopal (MP), India. The study scales were refined and validated by exploratory factor analysis and confirmatory factor analysis.
Findings
The results indicated that the MBS utilising traditional practices (MBSTP) significantly influences unfavourable employee responses, customer reactions and loyalty. In addition, employee responses in MBSTP motivate and generate unfavourable reactions of customers, which further influence their loyalty adversely towards public sector banks.
Practical implications
The identified traditional practices with MBS are expected to bring clarity to the issue of employee response, customer reaction and loyalty. This would help the management of banks.
Originality/value
The results of the analysis indicated that public sector banking services are facing the internal challenges by its own service processes and employees’ behavioural intentions.
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The emergence of metaverse banking services (MBS) enables customers to interact and socialise in a virtual environment. However, there is a lack of research on MBS adoption. This…
Abstract
Purpose
The emergence of metaverse banking services (MBS) enables customers to interact and socialise in a virtual environment. However, there is a lack of research on MBS adoption. This study aims to examine the key factors influencing customer behaviour in adopting MBS, with a specific focus on Pakistan as a developing country.
Design/methodology/approach
Semi-structured interviews were conducted with 22 Pakistani banking customers, and the resulting data were transcribed and subjected to thematic analysis using NVivo software.
Findings
This qualitative investigation into the determinants of MBS adoption encompasses a wide range of facilitators, inhibitors and customer resources. These findings ultimately contribute fresh perspectives to the field, challenging prevailing beliefs and offering new insights into the complex dynamics driving customer behaviour in the MBS context.
Research limitations/implications
Since this study only focused on Pakistan with a limited scope, future studies on MBS adoption would benefit from a comparative analysis across several countries, especially in Asian nations.
Practical implications
This study advances our understanding of MBS adoption by revealing key determinants of customer intentions. Moreover, it offers actionable guidance for banking professionals, marketers and policymakers to navigate the implementation of MBS and unlock promising avenues for growth and innovation.
Originality/value
The first scholarly inquiry into MBS adoption seeks to expand extant knowledge by elucidating customers' viewpoints, thereby revealing novel insights into the key factors that influence customer behaviour within the MBS landscape.
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Neil Fligstein and Adam Goldstein
The current crisis in the mortgage securitization industry highlights significant failures in our models of how markets work and our political will, organizational capability, and…
Abstract
The current crisis in the mortgage securitization industry highlights significant failures in our models of how markets work and our political will, organizational capability, and ideological desire to intervene in markets. This article shows that one of the main sources of failure has been the lack of a coherent understanding of how these markets came into existence, how tactics and strategies of the principal firms in these markets have evolved over time, and how we ended up with the economic collapse of the main firms. It seeks to provide some insight into these processes by compiling both historical and quantitative data on the emergence and spread of these tactics across the largest investment banks and their principal competitors from the mortgage origination industry. It ends by offering some policy proscriptions based on the analysis.
Porchiung Ben Chou, Michael A. Ehrlich and Ronald Sverdlove
By applying models of social and economic networks to financial institutions, the purpose of this paper is to address the issues of how policy makers can promote financial network…
Abstract
Purpose
By applying models of social and economic networks to financial institutions, the purpose of this paper is to address the issues of how policy makers can promote financial network stability and social efficiency.
Design/methodology/approach
The authors characterize the decentralized network formation of financial institutions in three stages through which institutions choose to become member banks connected to a central bank, bank-holding company subsidiaries or non-banks. Financial institutions choose one of the three roles in an endogenous process by considering the effects of sharing shocks among the members of the network. In the model, there is a social-welfare-maximizing government regulator at the center of the network.
Findings
The authors show that the stable equilibrium network is not always the efficient network, so the central authority must use policy instruments to ensure that the stable equilibrium network is as close as possible to the efficient network.
Research limitations/implications
To obtain the theoretical results, the authors make assumptions about the utility function and risk aversion of a financial institution, as well as about the costs of network formation. These assumptions might need to be relaxed to bring the model closer to real-world institutions.
Practical implications
The results suggest that regulators must try to set their policy variables to make the efficient network as close as possible to the stable network.
Originality/value
The contribution is to incorporate concepts from social network theory into the modeling of financial networks. The results may be of use to regulators in maintaining the stability of the financial system.
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Donald Palmer and Michael Maher
We use normal accident theory to analyze the financial sector, especially that part of the financial sector that processed home mortgages, and the mortgage meltdown. We maintain…
Abstract
We use normal accident theory to analyze the financial sector, especially that part of the financial sector that processed home mortgages, and the mortgage meltdown. We maintain that the financial sector was highly complex and tightly coupled in the years leading up to the mortgage meltdown. And we argue that the meltdown exhibited characteristics of a system or normal accident; the result of a component failure (unusually high mortgage defaults) that, in the context of unique conditions (which included low interest rates and government policy encouraging home loans to less credit-worthy households), resulted in complex and tightly coupled interactions that financial elites and government officials were ill-equipped to control. We also consider the role that agency and wrongdoing played in the design of the financial system and the unfolding of the mortgage meltdown. We conclude that a fundamental restructuring of the financial system, so as to reduce complexity and coupling, is required to avert future similar financial debacles. But we also conclude that such a restructuring faces significant obstacles, given the interests of powerful actors and the difficulties of labeling those responsible for the meltdown as wrongdoers.
Fannie Mae and Freddie Mac receive explicit and implicit off-budget subsidies from the federal government. This paper reviews the methods to estimate the dollar amount of the…
Abstract
Fannie Mae and Freddie Mac receive explicit and implicit off-budget subsidies from the federal government. This paper reviews the methods to estimate the dollar amount of the subsidies. None of the three techniques to estimate the indirect subsidy yield accurate point estimates. They do suggest that Fannie and Freddie could receive billions of dollars in subsidies in some years and much smaller amounts in other years. However, assessing the size of the implied subsidies is most valuable in demonstrating that Fannie and Freddie, not the federal government, control their size. Efforts to improve federal control face significant difficulties including informational asymmetries and the political incentives that have led to the status quo. These drawbacks bolster the rationale for eliminating federal support for Fannie and Freddie.
– The purpose of this paper is to provide a cohesive review of the major findings in the literature concerning the Global Financial Crisis.
Abstract
Purpose
The purpose of this paper is to provide a cohesive review of the major findings in the literature concerning the Global Financial Crisis.
Design/methodology/approach
Papers published in top-rated finance and economics journal since the crisis up to the present were reviewed. A large number of these were selected for inclusion, primarily based on the number of citations they had received adjusted for the amount of time elapsed since their publication, but also partly based on how well they fit in with the narrative.
Findings
Much has been done to investigate the causes of the Global Financial Crisis, its effects on various aspects of the financial system, and the effectiveness of regulatory measures undertaken to restore the financial system. While more remains to be done, the existing body of research paints an interesting picture of what happened and why it happened, describes the interrelationships between the mortgage markets and financial markets created by the large scale securitization of financial assets, identifies the problems created by these inter-linkages and offers possible solutions, and assesses the effectiveness of the regulatory response to the crisis.
Originality/value
This study summarizes a vast amount of literature using a framework that allows the reader to quickly absorb a large amount of information as well as identify specific works that they may wish to examine more closely. By providing a picture of what has been done, it may also assist the reader in identifying areas that should be the subject of future research.
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Thomas L. Hogan and G. P. Manish
The Federal Reserve regulates U.S. commercial banks using a system of risk-based capital (RBC) regulations based on the Basel Accords. Unfortunately, the Fed’s mis-rating of…
Abstract
The Federal Reserve regulates U.S. commercial banks using a system of risk-based capital (RBC) regulations based on the Basel Accords. Unfortunately, the Fed’s mis-rating of several assets such as mortgage-backed securities encouraged the build-up of these assets in the banking system and was a major contributing factor to the 2008 financial crisis. The Basel system of RBC regulation is a prime example of a Hayekian knowledge problem. The contextual, tacit, and subjective knowledge required to properly assess asset risk cannot be aggregated and utilized by regulators. An effective system of banking regulation must acknowledge man’s limited knowledge and place greater value on individual decisions than on top-down planning.
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This paper seeks to examine the role that regulation and regulatory agencies played in the creating of the subprime mortgage market, and the subsequent crash of the mortgage…
Abstract
Purpose
This paper seeks to examine the role that regulation and regulatory agencies played in the creating of the subprime mortgage market, and the subsequent crash of the mortgage market. The paper has two goals. First, it seeks to document the degree to which the US housing markets, and the US housing finance market, were regulated prior to the crash. Second, it seeks to show that regulatory bodies set policies which created both incentives and explicit requirements for Fannie Mae and Freddie Mac, as well as depository institutions, to enter the subprime market.
Design/methodology/approach
The paper examines the regulatory environment of the subprime market. It uses regulatory filings and other documents as primary sources.
Findings
The popular perception that the subprime mortgage market arose because housing finance was largely unregulated is incorrect. In point of fact, the housing finance market was very heavily regulated. Indeed, the paper shows that the creation of the subprime market was a formal goal of the federal government, and that federal regulatory agencies explicitly required participation by the Government Sponsored Enterprises (GSEs).
Originality/value
The paper's primary implication is that incentive conflicts within the US housing finance system significantly contributed to the mortgage crisis. These incentive conflicts were not just within private firms, but also extend to the GSEs and regulatory agencies. Regulatory agencies not only failed to anticipate the crisis; they actively encouraged the policies which created it. As a result, the primary focus of reform efforts should be on identifying and eliminating such conflicts.
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