David T. Llewellyn, Maria J. Nieto, Thomas F. Huertas and Charles Enoch
This paper aims to quantify the (syndicated) loan exposure to elevated environmental risk sectors of the banking system in the USA, EU, China, Japan and Switzerland at US$1.6tn…
Abstract
Purpose
This paper aims to quantify the (syndicated) loan exposure to elevated environmental risk sectors of the banking system in the USA, EU, China, Japan and Switzerland at US$1.6tn and to highlight its importance, which ranges from 3.8 (USA) to 0.5 per cent (China) in terms of total national banking assets. The paper highlights the relevance of exploring prudential policy responses, including a harmonized taxonomy, statistical and reporting framework that could contribute to internalizing the negative externalities associated with climate risks by both banks and their supervisors. Among the prudential supervisory tools, credit registers facilitate the assessment of environmental risk drivers in “carbon stress tests.” This paper also presents a framework of analysis for the regulatory treatment of climate-related risks.
Design/methodology/approach
Similarly to Weyzig et al. (2014), this paper uses financial databases on the banks’ role as book runners for syndicated loans; that is, as the lead arrangers who also provide a large share of the actual lending. Loans are outstanding on December 31, 2014, and the paper assumes linear amortization of loans issued before that date and with maturity after that date. This study includes the largest banks from the above-mentioned countries with financial information available in SNL Financial and EU banks with financial information available in the ECB database on December 31, 2014. By assessing the relative share of the ten largest (or total reporting if less) banks’ exposure to each high environmental risk sector in relation to their total assets, these findings can be extrapolated across sectors in the respective country.
Findings
This paper quantifies the loan exposure to elevated environmental risk sectors of the banking system in the USA, EU, China, Japan and Switzerland in US$1.6tn, broadly in line with the findings of Battiston et al. (2017) and Weyzig et al. (2014). This paper also explores prudential policy approaches and tools. In addition to the lack of taxonomy of “brown” vs “green,” the paper identifies the limitations to assess the risks involved in the transition to a low-carbon economy: supervisory reports that do not make full use of the existing international statistical framework (e.g. EU COREP and FINREP); lack of harmonized reporting requirements of environmental risks; lack of credit registers as tools to perform carbon stress-testing; and supervisors’ governance framework that do not internalize environmental risks (e.g. proposed revision of the Basel Core Principles of Banking Supervision). As per the stress-testing, the paper presents two examples. The paper presents a framework of analysis for the regulatory treatment of climate-related risks. The author identifies two critical elements of such framework if prudential regulation of environmental risks is to be considered: the consideration or not of climate risk as credit risk and the impact of environmental risks over probabilities of default over the entire business cycle.
Research limitations/implications
No internationally accepted “official” taxonomy of high environmental risk sectors exists. This paper uses Moody’s (2015a) classification of sectors according to their environmental risk exposure. This paper’s exposures do not reflect the real risk exposure of these institutions and the banking industry as a whole because, as explained in Page 6, these values are without regard to bilateral loans and guarantees and securitizations of loans; in the case of loans to power generation companies, renewable sources are not excluding and, similarly, for the production of electric vehicles, loans are not excluded. Furthermore, this paper does not assess banks’ exposures to sovereigns subject to high environmental risks and bonds and equity issued by corporations operating in high environmental risk sectors.
Practical implications
Contribution to the present policy debate on how to regulate banks’ exposure to high environmental risk and how to manage the transition to a low-carbon economy.
Social implications
This paper can increase awareness of the banking sector transition risks to a low-carbon economy.
Originality/value
This paper quantifies banks direct exposures to high environmental risk sectors using an ample definition of sectors exposed to environmental risk. The author suggests policy actions to assess the environmental risks. The author defines a regulatory framework for banks to internalize the negative externalities of environmental risks.
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Gillian G.H. Garcia, Rosa M. Lastra and María J. Nieto
The purpose of this paper is to examine the complexities of reorganizing and/or liquidating troubled banks under the European Union's (EU) current institutional framework as it is…
Abstract
Purpose
The purpose of this paper is to examine the complexities of reorganizing and/or liquidating troubled banks under the European Union's (EU) current institutional framework as it is defined by its directives and by national supervisory, remedial, and insolvency practices.
Design/methodology/approach
The paper compares provisions of different EU directives that impact financial institutions and summarizes national remedial practices.
Findings
The paper documents the diversity that currently exists among national supervisory, remedial and failure resolution practices for banks. It also assesses the economic efficiency of the institutional framework for resolving problem banks that is defined by the Reorganization and Winding‐up Directive and identifies components of the directive that can hamper efficient cross‐border resolutions.
Research limitations/implications
There is a deficiency in publicly available information on EU member countries' practices for disciplining and resolving troubled banks.
Practical implications
The paper assesses issues/conditions that can hamper efficient cross‐border resolutions – issues on which policymakers should focus when they reform the current framework. It also explores areas of coordination with other EU directives that deal with financial crisis management that are relevant in the current financial crisis.
Originality/value
The paper makes policy recommendations for reforming the EU's current institutional framework for resolving troubled banks.
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Maria J. Nieto and Gillian G. Garcia
The purpose of this paper is to analyze the rationale for Bank Recovery and Resolution Funds (BRRFs) in the context of the present European Union's (EU) decentralized safety net.
Abstract
Purpose
The purpose of this paper is to analyze the rationale for Bank Recovery and Resolution Funds (BRRFs) in the context of the present European Union's (EU) decentralized safety net.
Design/methodology/approach
The paper makes some reflections on the governance aspects of BRRFs that would require minimum harmonization in the EU, emphasizing that BRRFs are only one institutional component of financial institutions' effective and credible resolution regime. This paper focuses on depository institutions, but the rationale of BRRFs could be extended to other credit institutions.
Findings
BRRFs contribute to shifting the government's trade‐off between bailing out and restructuring in favour of restructuring, to the extent that there is also an effective bank resolution legal framework. In turn, banks' contributions to BRRFs aim at discouraging their excess systemic risk creation, particularly through financial system leverage.
Originality/value
The paper provides input in the current regulatory debate to develop new measures for the reform of the regulatory framework of financial services in the EU.
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Donato Masciandaro, Maria J. Nieto and Henriette Prast
This paper aims to analyse the economics of financing banking supervision and attempts to respond to two questions: What are the most common financing practices? Can the…
Abstract
Purpose
This paper aims to analyse the economics of financing banking supervision and attempts to respond to two questions: What are the most common financing practices? Can the differences in current financing practices be explained by country‐specific factors, using a path‐dependence approach?
Design/methodology/approach
The paper performs an empirical analysis that identifies the determinants of the financing structure of banks' prudential supervision using a sample of 90 banking supervisors (central banks and financial authorities).
Findings
The paper concludes that supervisors in central banks are more likely to be publicly funded, while financial authorities are more likely to be funded via a levy on the regulated banks. The financing rule is also explained by the structure of the financial systems. Public funding is more likely in bank‐oriented structures. Finally, the geographical factor is also significant: European bank supervisors are more oriented towards the private funding regime.
Practical implications
In general, the paper does not find evidence of the role of the political factor, the size of the economy, the level of development and the legal tradition.
Originality/value
The paper analyses the financial governance of banking supervision in a sample of 90 countries world‐wide. The empirical analysis focuses on the financing rules and identifies factors that explain the differences between supervisory authorities.
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This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.
Abstract
Purpose
This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.
Design/methodology/approach
This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.
Findings
The European Union is to consider imposing legally enforceable quotas for women on corporate boards. Is such positive discrimination a necessary step to ensure that boardroom composition better reflects society as a whole? Or is it demeaning and counter‐productive? There are no easy answers to a question which is not confined to European businesses.
Practical implications
The paper provides strategic insights and practical thinking that have influenced some of the world's leading organizations.
Originality/value
The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to digest format.
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Carmen Álvarez-Nieto, Laura Parra-Anguita, Cristina Álvarez-García, Eva Maria Montoro Ramirez, María Dolores López-Franco, Sebastián Sanz-Martos and Isabel María López Medina
In light of the world’s accelerating march towards a sustainable future, the education for sustainable healthcare must be sufficiently acknowledged in health professions…
Abstract
Purpose
In light of the world’s accelerating march towards a sustainable future, the education for sustainable healthcare must be sufficiently acknowledged in health professions curricula. Early integration of these competences into nursing degree programme emphasizes its importance and applicability. This paper aims to investigate the effectiveness of an educational sustainability intervention in higher education to change nursing students’ attitudes towards sustainability and climate change, and environmental awareness.
Design/methodology/approach
A quasi-experimental study was performed with repeated measures between September 2019 and May 2023. Undergraduate students were introduced to sustainability and climate change in the context of healthcare using scenario-based learning and augmented reality over the courses in nursing degree. Participants' attitudes and awareness were collected by online questionnaires.
Findings
The educational intervention showed effectiveness in significantly improving attitudes towards climate change and sustainability, and the environmental awareness for changing their clinical practice (p < 0.01). However, students struggled to apply sustainability and address unsustainable practices in healthcare settings.
Originality/value
This study shows an effective model of curricular sustainability that can be implemented in other universities and health disciplines. The findings highlighting the importance of sustainability education in nursing and its potential to drive positive change in healthcare practice and society at large. Embedding key topics aligned with sustainable development goals in the curriculum prepares nursing or health workforce to address planetary health and implement sustainable practices that provide climate-smart care.
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Rubén Martínez-Alonso, María J. Martínez-Romero and Alfonso A. Rojo-Ramírez
This paper aims to examine the influence of family involvement in TMTs on product innovation efficiency and the contingent role of technological collaborations, combining insights…
Abstract
Purpose
This paper aims to examine the influence of family involvement in TMTs on product innovation efficiency and the contingent role of technological collaborations, combining insights from the resource-based view and the behavioral agency model.
Design/methodology/approach
This study empirically develops and tests the hypotheses using a longitudinal sample of 3,852 firm-year observations from Spanish manufacturing firms over the period 2006–2016.
Findings
The results reveal that family involvement in TMTs positively influences product innovation efficiency. The results also show that such positive effect is weakened as technological collaborations increase, and varies according to the partner type with whom the cooperation agreement is established. Specifically, the findings indicate that collaboration with suppliers appear to be the least detrimental for product innovation efficiency in family firms, followed by collaborations with customers and research organizations.
Practical implications
Family firms should consider appointing family members to their TMT to improve product innovation efficiency. Moreover, to enhance the effect of family management on product innovation efficiency, family managers should carefully select their technological partners.
Originality/value
This study is one of the first studies to theoretically explain and empirically demonstrate that family involvement in TMTs is a critical antecedent of product innovation efficiency and that technological collaborations moderate such link. Moreover, this study goes further in revealing that distinct types of partners have a differential moderating influence on the family involvement in TMTs-product innovation efficiency relationship. The results can be used to help managers and practitioners to boost innovation performance as well as to assist policymakers to design firm-level innovation policies to improve family firms' competitiveness.
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Rubén Martínez-Alonso, María J. Martínez-Romero and Alfonso A. Rojo-Ramírez
The aim of this study is to investigate the relationship between heterogeneous collaborative networks and firm performance, using the resource-based view (RBV) and its extension…
Abstract
Purpose
The aim of this study is to investigate the relationship between heterogeneous collaborative networks and firm performance, using the resource-based view (RBV) and its extension through the knowledge-based view (KBV) as theoretical lens. Moreover, the authors examine family management and intellectual property rights (IPRs) as contingent factors that enhance the effectiveness of heterogeneous collaborative networks in achieving superior firm performance.
Design/methodology/approach
The hypotheses are developed and checked by using a panel data sample of 10,985 firm-year observations from 1,766 Spanish manufacturing firms over the period 2007–2016.
Findings
The results indicate that heterogeneous collaborative networks positively influence firm performance. Furthermore, the positive impact of these innovation networks on firm performance is reinforced by high levels of family management, and such effect is even stronger when there exists high levels of IPRs.
Originality/value
This research is the first, to our knowledge, to provide important new insights into the manner in which the effect of both family management and IPRs have the potential to amplify the performance gains attained from heterogenous collaborative networks.
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Virginia Hernández, María Jesús Nieto and Alicia Rodríguez
In this chapter, the authors study how external knowledge contributes to the innovation results of firms in transition economies. Specifically, the authors distinguish between…
Abstract
In this chapter, the authors study how external knowledge contributes to the innovation results of firms in transition economies. Specifically, the authors distinguish between product and process innovations and identify the geographical origin of external knowledge – from the home country or from abroad. Theoretically, the authors discuss the innovation systems of transition economies and the effects of foreign and national external knowledge on product and process innovations in these under-researched contexts. Using a sample of firms from 19 countries from wave V of the Business Environment and Enterprise Surveys, the authors find that foreign and national external knowledge both contribute to the achievement of product and process innovations. However, the two types of external knowledge exert different effects depending on the innovation outcome analyzed. Firms in transition countries that incorporate foreign external knowledge are more likely to achieve product innovations than those that acquire national external knowledge. In contrast, both types of knowledge are equally useful for achieving process innovations.