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As opposed to conventional promotional methods, Word-of-Mouth (WOM) communication, especially when negative, significantly shapes customers’ repurchase decisions and preferences. Therefore, this study aims to examine the interplay between negative WOM and bank service failures, with a focus on the mediating role of customer switching intentions and the moderating role of switching costs in this relationship.

Using an online semi-structured questionnaire survey, a dataset comprising 411 responses was gathered from retail bank customers in China. This dataset was subsequently analyzed using SPSS PROCESS.

Consistent with the social exchange theory, our study revealed a significant relationship between service failure and both bank customers’ intention to switch and negative WOM communication. Additionally, we observed that switching intentions significantly influence negative WOM communications, acting as a mediator between service failures and negative WOM. Furthermore, our findings indicated that switching costs moderate the direct effect of service failures on negative WOM and moderate the indirect effect of service failures on negative WOM through switching intentions.

This study provides significant policy implications aimed at minimizing bank service failures and subsequent negative WOM communications among bank customers.

This study empirically investigates the role of service failures in promoting negative WOM communication, demonstrating a partial mediation effect of switching intentions in this relationship. Moreover, the study highlights that switching costs moderate service failures’ impact on customers’ switching intentions.

Bank failures are critical events that have far-reaching implications for the financial system and various stakeholders. This study aims to focus on analyzing the phenomenon of small bank failures in the USA.

This study adopts the coarsened exact matching (CEM) technique to enhance the reliability of the analysis. By matching similar observed characteristics, the CEM approach helps to address potential selectivity bias and facilitates a more accurate estimation of the treatment effect. This study uses a data set covering the period from 2000 through 2019 and includes 523 failed bank observations and 43,605 nonfailed bank observations.

The results reveal several key findings. Small banks, especially those with lower yields on earning assets, those with lower charge-offs on loans and leases, those with higher core capital ratios and those with higher Fed Funds rates are found to be more susceptible to failure.

Some results align with initial predictions, whereas others present contrasting outcomes.

This study underscores the significance of understanding the factors contributing to bank failure and emphasizes the importance of studying small bank failures in particular.

This study uses the CEM method. CEM is a comprehensive approach that combines matching, sample trimming and reweighting techniques. When applying CEM, researchers carefully select a set of core variables to achieve balance between the treated and control groups. The CEM process involves discretizing each continuous variable into distinct bins or categories, a process known as “coarsening.” It then requires an exact match among these binned variables between the treated and control units, which constitutes the matching step in CEM.

Given the fierce competition in financial services, service failure management and trust restoration tactics are becoming strategic priorities. Studies investigating trust restoration have increased over the years due to the significance of trust in services and the frequency of trust violations. Drawing on the sense-making and defensive approaches of attribution theory, this study aims to explore the effectiveness of various trust recovery tactics (e.g. apology, explanation, and investigation) in financial services considering the prevalence of service failure severity.

Based on a scenario-based survey, this study gathered data from 402 consumers of different banks in Pakistan. The study analyzed the data using ordinary least square regressions and structural equation modeling.

The study indicated that explanation is more effective in repairing character-competence and commitment-based trust, while investigation remained highly effective for inducing congruence-based trust. Interestingly, an apology was more effective for communication-based trust repairing, while context-based trust recovery was unaffected against all recovery tactics. Despite the prevalence of severe service failure, recovery actions proved fully effective for character-competence and commitment-based trust while partially effective for congruence-based trust recovery. This study also found that severe service failure undermines the effectiveness of recovery actions in repairing communication and context-based trust.

The study extends the literature on trust recovery by integrating sense-making and defensive attribution theory. The sense-making approach contributes to the existing knowledge on trust recovery by elucidating how consumers and service providers develop a shared understanding to facilitate the recovery mechanism of multidimensional trust in financial services.

In this paper, the authors study the failure of Russian banks between 2012 and 2019.

The authors analyze the entire population of Russian banks and combine a logit model with the survival analysis.

In addition to the usual determinants, the authors find that not-failed banks have higher levels of fulfillment of the Central Bank requirements of solvency, liquidity, provide fewer loans to their shareholders and own more shares of other banks. The results of this study suggest an asymmetric effect of the strategic orientation of banks: whereas the proportion of deposits from firms is negatively related to the probability of failure, the loans to firms are positively related to bankruptcies. According to this research, the fact of being controlled by a foreign bank has a significant negative relationship with the likelihood of failure and moderates the effect of bank size, performance and growth on the bankruptcy likelihood.

On the whole, the results of this study support the new Central Bank rules, but show that the thresholds imposed by the Russian regulator actually do not make a difference between failed and not failed banks in the short and medium term.

The authors specially focus on the effectiveness of new rules issued by the Central Bank of Russia in 2013.

The paper aims to explore the effects of the behavioural antecedents suggested by the theory of planned behaviour (TPB) (i.e. positive subjective norms, high perceived behavioural control and positive attitudes towards switching) on the switching propensity of retail banking customers at several critical switching incidents (CSIs) (i.e. events of unfavourable reputation concerning their current bank or favourable reputation concerning competitor banks, service failures, problems with charges and interest rates, herding behaviour, inconvenience, alternative banks' attractiveness and unethical bank practices).

A self-completed online survey was conducted among 324 Cypriot retail banking customers. For the data analysis, the researchers used principal component analysis (PCA), confirmatory factor analysis (CFA) and structural equation modelling (SEM).

The study revealed that the behavioural antecedents specified by TPB play different roles in various CSIs. Positive subjective norms may drive bank customers to switch at critical incidents such as: service failure, unfavourable bank reputation, alternative banks' attractiveness, inconvenience, favourable reputation of other banks and herding behaviour. High perceived behavioural control can lead to switching, only in the case of other banks' favourable reputation. Finally, positive attitudes towards switching may affect bank clients to switch in cases of service failure, unfavourable bank reputation, alternative attractiveness and inconvenience.

To the best of the authors' knowledge, no other previous research work has examined the interaction between the antecedents of switching behaviour (as specified by TPB) and switching propensity at different CSIs. The study addresses the gap of explaining the reasons for which, at similar incidents, some bank customers choose to switch to other banks, whereas others do not.

This paper aims to improve the debate linking the business models of banks to their riskiness by checking if diversification exerts different impacts on the probability of bank distress depending on the level of capital buffers.

The paper focuses on a sample of listed bank holding companies observed between 2007:Q3 and 2022:Q4. The authors use three subindexes of bank diversification. The authors estimate a dynamic model specification using a system generalized method of moments with robust standard errors and consistent estimators under heteroskedasticity and autocorrelation within a panel. Sensitivity and robustness checks are performed.

Asset and income diversification increase the probability of distress in low-capitalized banks during normal periods (excluding periods of crises and high uncertainty). Concerning crisis periods, a marginal increase in asset diversification during the global financial crisis (GFC) and the COVID-19 pandemic crisis induces a more important increase in the probability of failure of well-capitalized banks relative to low-capitalized ones. Contrary to the results obtained for the GFC period, well-capitalized banks were found to pursue more careful funding diversification in reaction to the sudden increase of uncertainty during the Russia–Ukraine war.

Prudential supervision should concentrate on well-capitalized banks to encompass unexpected excessive risk-taking during crisis periods. Regulatory requirements should constrain fragile banks to avoid pursuing assets and income diversification strategies that increase earnings volatility.

The main originality of this paper is to consider the interaction between three different dimensions of bank diversification and capital regulation during stable and unstable periods using the marginal effect analysis. Moreover, this paper uses, initially, the GFC as the reference crisis period to study the impact of capital buffers and diversification interactions on the probability of bank distress. Then, the authors extend the observation period until 2022:Q4 to include two additional major events, namely, the COVID-19 pandemic and the Russia-Ukraine war.

This paper aims to develop a novel approach to Islamic deposit insurance, specifically addressing the deficiencies in the current prevailing models of Islamic deposit insurance.

The analysis in this paper adopts a qualitative content analysis approach to review the existing literature on Islamic deposit insurance and propose a new model.

The proposed model includes a revised scheme. In the event of a bank failure, the funds used to reimburse depositors of the failed bank are divided into two distinct categories. The first category includes nonrepayable premiums that have been previously paid by the failed bank and managed by the Islamic deposit insurance agency or Islamic deposit insurance corporation. The second category comprises qard hasan, an interest-free loan provided by the Islamic deposit insurance agency or Islamic deposit insurance corporation using the deposit insurance funds from the collective pool of premiums of other banks.

The proposed model ensures that well-managed banks are not unfairly burdened by the failures of their poorly managed counterparts, thus preventing a sense of unfairness and inefficiency. Implementing the proposed model may result in higher business practices and risk management standards, ultimately leading to better depositors’ protection and banking system’s stability.

This paper offers a significant contribution to the limited literature on Islamic deposit insurance. The proposed model enriches the discourse and offers valuable insights for the future development of Islamic banking.

This study aims to investigate the influence of banking consolidations on bank stability in Sub-Saharan African (SSA) countries for the period 2003–2019, following a series of bank mergers and acquisitions (M&As) in the region and whether regulation-induced bank M&As affect banking sector stability.

The fixed effect panel regression model is used to understand the influence of regulation-induced and voluntary bank mergers and acquisitions on banking stability in SSA. The study also controlled for bank-specific factors, market concentration and macroeconomic variables that affect banking stability. The study used three measures of bank stability: the Z-score, risk-adjusted return on assets and risk-adjusted bank capital.

The study results reveal that voluntary bank M&As, market concentration, net interest margin, bank capital, bank deposits and income diversification influence banking sector stability positively. However, the findings show that regulation-induced bank mergers and acquisitions impact banking stability negatively. Where bank M&As were a result of banking regulatory reforms, called regulation-induced mergers and acquisitions (RIM&As), banking stability suffered, but voluntary bank M&As improved banking stability. Again, the study supports the concentration–stability argument rather than the competition–stability hypothesis. Therefore, more concentrated banking markets in SSA countries have more stable banks and fewer risks of system-wide bank failures. Other factors influencing banking stability in SSA are return on equity, bank efficiency (cost-to-income), bank size and deposits-to-assets ratio. However, their relationship is negative with the stability of the banking sector.

The findings imply that the regulatory authorities should encourage voluntary bank M&As and not regulation-induced bank M&As to improve the stability of the banking systems in SSA.

The study provides new evidence on the effects of regulation-induced bank M&As on the stability of banks.

This study aims to examine the various internal and external factors affecting the financial stability of Indian Commercial Banks. The aim is to improve the effectiveness of the Indian banking system in facilitating the transmission of monetary policy and to strengthen its resilience in the event of a banking crisis.

A panel data regression analysis is employed on unbalanced panel data of Indian commercial banks including public sector, private sector and foreign sector banks for the period of 2005–2022.

This study revealed that Indian banks with higher profits and high capitalization are more stable than others. However, banks with large bank size and high management costs are less stable as compared to other banks. In the case of macroeconomic variables, foreign exchange reserves have a significant positive impact on banking stability. Moreover, the unemployment rate has a significant negative impact on the banking stability of India.

Research identifies relevant micro and macroeconomic drivers pertaining to India’s banking stability, a developing economy. These findings have significant implications and can attract the attention of analysts, regulators, bankers and academicians in this area. Nevertheless, the scope of the study is limited to the variables chosen to evaluate their contribution to banking stability, but other variables may influence Indian banking conditions.

Indian banks are advised by the research to place a high priority on profitability, capitalization and effective risk management. Customers and investors should choose banks with strong metrics. The priorities for policymakers should be preserving robust reserves and tackling unemployment with focused initiatives. Adopting digitalization can improve banks’ customer service and operational effectiveness, which is important for overcoming economic obstacles. These tactics provide doable measures to improve the resilience and stability of the banking industry in India and other emerging nations.

This research differentiates from the rest by focusing solely on the Indian banking system, in contrast to previous ones that often treated India as part of a bigger part like the BRICS or South Asia continent. It acknowledges the need to comprehending the unique traits and difficulties faced by the Indian banking system. Moreover, the current study distinguishes itself by focusing on the combined impact of microeconomic and macroeconomic indicators in the Indian context, unlike earlier research that concentrated on assessing the effects of individual variables. The current study also investigated new variables like corporate governance and foreign exchange reserves in the context of Indian banking which have not been explored by existing literature. Research is also crucial in the context of the analysis’s time frame, since it captures the period of economic transformation that included demonization, implementation of GST, major mergers and global COVID-19 pandemic.