Felix Rioja, Fernando Rios-Avila and Neven Valev
While the literature studying the effect of banking crises on real output growth rates has found short-lived effects, recent work has focused on the level effects showing that…
Abstract
Purpose
While the literature studying the effect of banking crises on real output growth rates has found short-lived effects, recent work has focused on the level effects showing that banking crises can reduce output below its trend for several years. This paper aims to investigate the effect of banking crises on investment finding a prolonged negative effect.
Design/methodology/approach
The authors test to see whether investment declines after a banking crisis and, if it does, for how long and by how much. The paper uses data for 148 countries from 1963 to 2007. Econometrically, the authors test how banking crises episodes affect investment in future years after controlling for other potential determinants.
Findings
The authors find that the investment to GDP ratio is on average about 1.7 percent lower for about eight years following a banking crisis. These results are robust after controlling for credit availability, institutional characteristics, and a host of other factors. Furthermore, the authors find that the size and duration of this adverse effect on investment varies according to the level of financial development of a country. The largest and longer-lasting decrease in investment is found in countries in a middle region of financial development, where finance plays its most important role according to theory.
Originality/value
The authors contribute by finding that banking crisis can have long-term effects on investment of up to nine years. Further, the authors contribute by finding that the level of development of the country's financial markets affects the duration of this decrease in investment.
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Rexford Abaidoo and Elvis Kwame Agyapong
This paper aims to evaluate how strands of differing investments influence stability in the banking industry using data from 37 countries in Sub-Sahara Africa from 2000 to 2018.
Abstract
Purpose
This paper aims to evaluate how strands of differing investments influence stability in the banking industry using data from 37 countries in Sub-Sahara Africa from 2000 to 2018.
Design/methodology/approach
Empirical analyses in the study were carried out using a two-step system Generalized Method of Moments estimation methodology.
Findings
Empirical results suggest that generally, growth in investments by governments, foreign investments and private domestic investments have a significant positive impact in stabilizing the banking industry. The empirical estimates further suggest that macroeconomic conditions such as macroeconomic uncertainty adversely affects the liquid reserve position of banks even during periods of appreciable growth in investments.
Originality/value
The authors present a different approach to the banking industry discourse. Instead of surmise the relationship with the direction of impact often emanating from the banking industry to other variables of interest or conditions, this study rather examines how investment dynamics among economies influence the stability of the banking industry overtime. In contrast to related studies, this study examines how strands of investment variables influence the stability of the banking industry. Specifically, this study is modeled to examine the extent to which variability in investment growth (using different investment variables) affect stability in the banking industry.
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Yoon‐Young Lee and Stephanie Nicolas
Following a spate of corporate scandals, the bursting of the “Internet bubble,” and media revelations of research analyst bias at the nation’s largest investment banks, regulators…
Abstract
Following a spate of corporate scandals, the bursting of the “Internet bubble,” and media revelations of research analyst bias at the nation’s largest investment banks, regulators launched a series of investigations and rulemaking initiatives that culminated in the adoption of extensive new rules regarding the conduct of research analysts and in the April 2003 global settlement (“Global Settlement”) of enforcement actions against 10 firms relating to research and investment banking conflicts. Although the Global Settlement by its terms only applies to the settling firms, as a practical matter, its reach will be much broader because state regulators and other third parties are looking to it to define a set of “best practices” to supplement the new rules. Although the new rules and the Global Settlement are intended to address the same concern ‐ i.e., conflicts of interest between research analysts and investment banking personnel at multi‐service brokerage firms ‐ their approaches to handling these conflicts reflect different assumptions and result in regulatory regimes that differ in such basic respects as the universe of persons who are deemed to be “research analysts.” These differences are not surprising. The new rules are the product of a lengthy, iterative rulemaking process that was open to the public and in which a diverse range of interested parties participated. In contrast, the undertakings detailed in the Global Settlement were the result of an enforcement action, concluded through bi‐lateral negotiations between the regulators and the 10 firms and without the opportunity for other interested parties to provide input or contribute to the process. However, for firms that seek to comply with both sets of requirements, the overlapping, and at times inconsistent, terms create a confusing and costly environment.
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Ritvik Sharma, Prihana Vasishta and Anju Singla
The emergence of green banking (GB) as a pivotal force in fostering environmentally and socially responsible economic practices has gained significant traction in recent years…
Abstract
Purpose
The emergence of green banking (GB) as a pivotal force in fostering environmentally and socially responsible economic practices has gained significant traction in recent years. This paradigm shift within the banking sector advocates for the rise of Green financial technology (Fintech), serving as a catalyst for innovative digital tools promoting environmental, social and governance (ESG) investments and sustainable banking practices. This study aims to investigate the impact of green banking awareness (GBA) on green FinTech adoption (GFA) further affecting ESG investments, perceived profitability (PP) and sustainable banking (SB).
Design/methodology/approach
The study employed a quantitative approach, utilizing partial least squares-structural equation modeling (PLS-SEM) to analyze data collected through an online administered questionnaire. The sample comprised registered users of various FinTech products and services in the North Indian regions, with 196 respondents.
Findings
The study identified a significant positive relationship between GBA and GFA, suggesting that heightened awareness of green banking positively influences the adoption of sustainable FinTech solutions. Additionally, GFA was found to be positively associated with increased ESG investments, perceived profitability and sustainability of personal investment portfolios. These findings underscore the potential of GFA to drive financial empowerment and environmental responsibility.
Originality/value
This research contributes to the concept and application of ESG-driven investments at the individual level. It provides a new discourse and proposes an Eco–Ed nexus framework focusing on strategic insights for stakeholders, guiding the implementation of transformative measures to advance sustainable finance and green economic growth.
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Abdullah Murrar, Bara Asfour and Veronica Paz
In the digital era, the banking sector has transformed into a powerful intermediary, effectively connecting surplus and deficit units. This dynamic landscape empowers savers to…
Abstract
Purpose
In the digital era, the banking sector has transformed into a powerful intermediary, effectively connecting surplus and deficit units. This dynamic landscape empowers savers to secure their finances and generate returns, while simultaneously enabling businesses and individuals to access capital for investment and promoting economic growth. This study explores the relationships among banking development dimensions – represented by primary assets and liabilities, bank capital (core capital and required reserves) and economic growth as measured by components of gross domestic product (GDP).
Design/methodology/approach
The study consolidated monthly balance sheets from digital banks over a 20-year period, resulting in an aggregate monthly balance sheet that reflects the financial position of all digital banks in the Palestinian economy. The research employs both maximum likelihood and Bayesian structural equation modeling to measure the causal pathways of the consolidated balance sheet with the individual components of GDP.
Findings
The results revealed that bank main assets (investments and loans) and liabilities (deposits) collectively explain for 97% of bank capital. Investments and loans demonstrate significant negative correlations with bank capital, while deposits exhibit a positive impact. This leads to a fundamental conclusion that a substantial proportion of retained earnings within the banking sector is reinvested, fueling expansion and growth. Additionally, the results showed a significant relationship between bank capital and various GDP components, including private consumption, gross investment and net exports (p = 0.000). However, while the relationship between bank capital and government spending was insignificant in the maximum likelihood estimation, Bayesian estimation revealed a slight yet positive impact of bank capital on government spending.
Originality/value
This research stands out due to its unique exploration of the intricate relationship between bank sector development dimensions, primary assets and liabilities and their impact on bank capital in the digital era. It offers fresh insights by dividing this connection into specific dimensions and constructs, utilizing a comprehensive two-decade dataset covering the digital banks records.
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Peter W. Turnbull and Theofanis Moustakatos
Examines the marketing of investment banking services and reviews critically the theoretical frameworks provided by the literature in the marketing of services field. Based on…
Abstract
Examines the marketing of investment banking services and reviews critically the theoretical frameworks provided by the literature in the marketing of services field. Based on research interviews with 12 London‐based investment banks, discusses current marketing practices and identifies the critical marketing management issues facing the industry. Suggests a theory of marketing of investment banking services to guide the analysis of marketing practice.
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Terence Y.M. Lam and Malvern Tipping
Sale-and-leaseback has become an increasingly common approach during the last two decades in the investment of high street banks (banking-halls) in the UK. One measure commonly…
Abstract
Purpose
Sale-and-leaseback has become an increasingly common approach during the last two decades in the investment of high street banks (banking-halls) in the UK. One measure commonly used in making property investment decisions is the all risks yield (ARY) which is associated with the level of rental income. Investors and their advisors need to know which factors are likely to result in the highest ARY when assembling investment portfolios of such properties. The purpose of this paper is to identify those yield influences.
Design/methodology/approach
A qualitative multiple-case study was adopted. A literature review generated a hypothesis which was tested by a qualitative study, based upon semi-structured interviews and a questionnaire, to establish the influencing factors. Expert interviews were held with the heads of those three major auction-houses dealing with auctions of all retail bank premises in the Great Britain market, whilst the questionnaire survey involved investment professionals from within the auction-houses.
Findings
The study confirmed that the four factors influencing yields and investors’ decision-making when purchasing retail banking premises were tenant banking company (brand names), regional location (north and south super-regions), lot size (hammer price), and tenure (freehold or leasehold).
Research limitations/implications
This investigation focuses on Great Britain’s geographical and political area which includes England, Scotland and Wales, but excludes Northern Ireland. This research focuses on banking-halls as a sub-class of retail property investment. The findings form a baseline upon which further research can be conducted on other sub-types of retail property such as high street shops and retail parks. The results will also underpin the development of a quantitative yield predictive model based on regression analysis.
Practical implications
To maximize the returns on property investments, investors and their professional advisors can use those factors having the greatest influence on yields to make informed investment decisions for the building of property portfolios.
Originality/value
As a sub-sector, bank premises do not necessarily correlate to the generic retail sector. This research consolidates the broad systematic drivers of retail yields into specific factors influencing the ARY of banking-halls. The findings provide better understanding of an active but sparsely analysed sub-market of banking hall investments, and by so-doing help investors to maximize their investment returns.
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Peter W. Turnbull and Theofanis Moustakatos
Follows the previous article by presenting results of empirical research using a sample of investment banks and their large corporate customers. Focuses on how the banks define…
Abstract
Follows the previous article by presenting results of empirical research using a sample of investment banks and their large corporate customers. Focuses on how the banks define their source of competitive advantage. Compares and contrasts the views of the banks with those of their customers relating to the purchasing of investment bank services and the principal criteria used for selection of those services.
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The purpose of this research is to analyse the Glass‐Steagall Banking Act and the congressional movement to repeal same. Reviews the outcome and ramifications of the Banking Act.
Abstract
The purpose of this research is to analyse the Glass‐Steagall Banking Act and the congressional movement to repeal same. Reviews the outcome and ramifications of the Banking Act.
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The paper seeks to examine whether or not wealth effects and changes in the systematic risk associated with the return structure of the Greek commercial chartered banks, investment…
Abstract
Purpose
The paper seeks to examine whether or not wealth effects and changes in the systematic risk associated with the return structure of the Greek commercial chartered banks, investment firms and insurance companies resulted from the passage of the European Union Banking Directives over the period 1988‐1997.
Design/methodology/approach
Using monthly stock returns from the DataStream database for the period January 1988 to December 1997, the separate effects of each of the EU Banking Directives on Greek commercial chartered banks, investment firms and insurance companies are tested. The “seemingly unrelated regression” methodology is utilized to test three portfolios consisting of an equally weighted banking, investment and insurance index made up of major Greek banks, investment firms and insurance companies respectively. The Greek Market Index serves as a proxy for the market portfolio. All the aforementioned indices were converted to returns using the log difference method.
Findings
Empirical results indicate that the systematic risk dramatically increased for Greek insurance and investment firms and moderately increased for Greek commercial chartered banks through the tabling of the Free Capital Movement Directive in the Greek Parliament. After controlling for systematic risk, the results suggest that the passage of the Free Capital Movement Directive did not create wealth effects for the shareholders of commercial chartered banks, investment firms and insurance companies. Conversely, the results demonstrate that the Second Banking, Investment Services and Capital Adequacy Directives produced no wealth effects for the investment firms and insurance companies, but not for commercial chartered banks' shareholders. The whole wealth effect on the Greek financial sector was neutral.
Originality/value
This article will be of value to academics, bankers, bank regulators, practitioners, and economic policy makers who are interested in the regulatory evolution of the EU banking industry.