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The purpose of this study is to examine whether the relationship between asset quality and profitability is linear or nonlinear, using a global dataset containing 2,943 banks from advanced and emerging economies.

The authors use the U-shape test to investigate the existence of a nonlinear relationship between asset quality and profitability. In addition, the dynamic panel generalised method of moments (GMM) and quantile regression are used to examine the nonlinear effect of profitability on nonperforming loans (NPLs).

After controlling for macroeconomic and bank internal factors, the authors find empirical evidence supporting the existence of a nonlinear relationship in the form of a U-shape. This is also confirmed through the three-stage U test procedure. After distinguishing between advanced and emerging economies, the authors also find that, in advanced markets, the credit policy responds more rapidly to changes in credit market conditions than in emerging markets, providing insights into credit market dynamics.

Further research can check the robustness of this study’s findings in different markets and investigate the existence of nonlinearity in other bank variables.

In a nutshell, the results demonstrate potential implications for policymakers who need to carefully monitor banks' lending behaviour to ensure that banks do not lower lending standards. In addition, banking regulators and supervisors should consider the possible nonlinear relationship in their risk assessments and macrostress tests. Further, these results are important for bank managers, who should monitor the performance of their loan portfolios to ensure that their credit officers do not lower credit standards. Likewise, for banks located in an emerging economy, investing in human capital and advanced technologies can enable them to respond more effectively to changes in the credit market.

To the best of the authors' knowledge, this study is considered the first to provide empirical evidence for the nonlinear relationship between asset quality and profitability.

Since there is no agreement on the consistency of their estimates, the purpose of this paper is to investigate whether parametric stochastic frontier analysis (SFA) and nonparametric data envelopment analysis (DEA) generate consistent bank efficiency assessments.

The authors utilize four alternative efficiency computation models: two DEA technical efficiency models based on constant and variable returns to scale, and two SFA cost efficiency models employing Translog and Fourier functional specifications. An unbalanced panel of 59 Indian banks over 1990‐2007 is employed as a model, developing country, banking market.

The Translog and Fourier specifications in SFA and the constant and variable returns to scale assumptions in DEA are found to rank and identify “best‐practice” and “worst‐practice” approximately in the same order. The association between DEA efficiency estimates and non‐frontier standard performance measures, however, is mixed and inconclusive. Unlike DEA scores, SFA efficiency assessments were found to be consistent with cost and profit ratios and hence are “believable”.

For regulators and bankers alike, the authors' findings highlight the importance of investigating the consistency of efficiency scores across various research methods. They should ensure that frontier‐based efficiency assessments are not simply “artificial constructs” of models' assumptions/specifications.

This paper extends the existing literature by checking jointly the statistical consistency of both DEA technical efficiency scores and SFA cost efficiency scores. The prior studies focus either on technical efficiency or cost efficiency, but not both. Moreover, as far as the authors are aware, this is the first cross‐methodological validation study to focus on bank efficiency in the context of a developing country banking market.

The purpose of this paper is to investigate whether the level of market concentration in Sri Lanka's banking sector is positively associated with bank‐specific interest spreads after controlling for other bank‐specific and exogenous influences.

A pooled, time‐series and cross‐section model is utilized which distinguishes between banks’ dominance in loan and deposit market segments. Results are presented for the total sample as well as for a truncated sample of private‐owned banks.

Changes in industry concentration do not affect bank‐level interest margins of Sri Lankan banks. Nevertheless, the dominant Sri Lankan banks seem to extract them and banks’ cost structures are priced in their interest spreads. The less‐capitalized, high risk banks operate with narrow interest margins, possibly due to the relatively higher deposit rates they pay to attract deposits. Although regulatory changes seem to have no effect, the growing capital market exerts negative pricing pressure on Sri Lankan banks.

The regulators should closely watch banks with larger loan and deposit market shares because they seem to exploit their dominant presence and geographical reach to extract higher spreads. Similarly, state‐owned banks should also draw regulatory attention for they extract higher interest margins, possibly, in lieu of their high operational inefficiency levels.

The authors employ an extended time‐series and cross‐section model which controls for sample heterogeneity using proxies for cost structures, risk profiles, regulatory restrictions and other environmental influences. Moreover, as far as it could be ascertained, this is the first such study on Sri Lanka's banking sector.

The purpose of this paper is to investigate whether any deviations in South Asian banks' interest margins can be attributed to market concentration (MC) after controlling for other bank‐specific factors and exogenous environmental influences.

The paper employs an improved structural price‐concentration model with multiple definitions of market share (MS) covering loan and deposit markets. This model is estimated using generalized least squares method and random effect estimates are reported. The sample consists of 120 South Asian banks with a total of 1,226 bank‐year observations over 1992‐2005.

The findings suggest that no significant deviations in bank interest margins can be attributed to MC. Instead, only dominant South Asian banks with larger MSs are found to extract higher interest margins.

This paper suffers from three main limitations: first, due to data limitations the sample only consists of South Asian domestic commercial banks. Second, due to the lack of product‐specific interest rates the authors have to contend with approximated bank‐specific interest margins. Third, throughout the study, annual bank‐specific data are used due to lack of high‐frequency data.

The regulators should closely monitor dominant banks with larger loan and deposit shares because these institutions operate with higher interest margins. Similarly, state‐owned banks (with relatively inefficient cost structures) should also draw regulatory attention for they extract higher interest margins, possibly, for survival.

The existing literature is extended by utilizing a pooled cross‐section and time series data model which controls for sample heterogeneity using proxies for cost structures, risk profiles and regulatory restrictions.

This paper provides, first, a historical perspective of accounting research relating to Asian/Pacific countries as seen from the vantage of the leading international journal in the United States and, second, a bibliographical data base and index of twenty‐six years of articles on this region of the world. It accomplishes the first objective by presenting a tabular profile of research in international accounting as it pertains to countries in the Asian/Pacific Rim region as shown in articles published in the International Journal of Accounting (formerly, the International Journal of Accounting, Education and Research) and related publications which appeared from 1965 to 1990. The articles are classified according to country, research methodology, subject, and five‐year time periods. The paper accomplishes the second objective by providing an annotated bibliography of 125 articles on Asian/Pacific Rim countries and indices by country and methodology, and subject.

The purpose of this paper is to explore the means for enhancing the image and business legitimacy of a socially discredited industry – pawnbroking in pre-1949 China – are explored. Previous studies suggest companies operating within such industries cannot solely rely on hard marketing strategies “to maximize sales and profits as they do with soaps and shoes” (Davidson, 2003, p. 7). Instead, they must find soft strategies for improving company and industry image and legitimacy.

This research relies on qualitative analysis of historical data and documents.

Soft strategies deployed by Chinese pawnbrokers – such as interpretations, moral value advocacies and institutionalized arrangements – contributed substantially to improving pawnbroking’s image and business legitimacy.

Interconnections among ethical values, image, business legitimacy and select marketing strategies are clarified. The efficacy of historically analyzing previously implemented business strategies and their embedding contexts is discussed.

Strategies Chinese pawnbrokers used to mitigate their previously negative image and boost their business legitimacy suggest strategies current socially disapproved companies can use to improve their image and business legitimacy.

A historical analysis of pre-1949 Chinese pawnbroking can suggest soft marketing strategies for overcoming consumers’ negative company and industry impressions.