Determinants of the sustainable internationalization and risk‐taking factors in public commercial banks

2021 ◽  
Author(s):  
Saleha Ashfaq ◽  
Rashid Maqbool ◽  
Yahya Rashid
Keyword(s):  
Risk Taking ◽  
Commercial Banks

scholarly journals Employment Protection and Banking Power: Evidence from Adoption of Wrongful Discharge Laws

2021 ◽  
Vol 13 (4) ◽  
pp. 1635
Author(s):  
Desheng Yin ◽  
Xinting Zhen
Keyword(s):  
Risk Taking ◽  
Commercial Banks ◽  
Vital Role ◽  
Sustainable Growth ◽  
Employment Protection ◽  
Labor Costs ◽  
Bank Efficiency ◽  
Exogenous Shock ◽  
Wrongful Discharge ◽  
Cost Inefficiency

Human capital and labor costs are crucial for the sustainable growth of organizations, and take a vital role in affecting bank efficiency and banking power. This research empirically investigates whether labor employment protection affects banking power. The analysis exploits the staggered adoption of Wrongful Discharge Laws (WDLs) as a quasi-exogenous shock to employment protection. A Difference-In-Difference research design is implemented to study the impacts of WDLs on banking power, and the main results show that there exists a decline of banking power for commercial banks headquartered in states that adopt employment protection. This study further tests the main mechanism through which WDLs affect banking power and finds that the impaired banking power is primarily due to cost inefficiency but not profit inefficiency. Moreover, the adoption of wrongful discharge laws increases commercial banks’ labor costs and induces bank risk-taking.

scholarly journals Market structure, institutional quality and bank capital ratios: evidence from developing countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Oyebola Fatima Etudaiye-Muhtar ◽  
Zayyad Abdul-Baki
Keyword(s):  
Market Structure ◽  
Risk Taking ◽  
Commercial Banks ◽  
Institutional Quality ◽  
Bank Capital ◽  
Content Type ◽  
Regulatory Quality ◽  
Capital Ratios ◽  
Excessive Risk Taking ◽  
Excessive Risk

PurposeThis paper investigates the role of market structure and institutional quality in determining bank capital ratios in developing economies.Design/methodology/approachThe generalised methods of moment technique is used to control for auto-correlation and endogeneity in a sample of 79 publicly listed commercial banks. The study period is between 2000 and 2016.FindingsResults show that market structure (proxied with bank competition) as well as institutional quality (regulatory quality) lowers bank capital in the sampled banks. This suggests that banks operating in less competitive markets with good regulatory quality do not need to engage in excessive risk-taking activities that would necessitate holding increased level of capital. Furthermore, the interaction of competition and regulatory quality reinforces the main findings, suggesting the importance of the two variables in determining bank capital ratio.Research limitations/implicationsResearch has limitation in that the study investigated publicly listed commercial banks, the findings may not be applicable to non-listed banks.Practical implicationsTaking into cognisance the developing nature of the banking system in Africa, the findings from this study imply that the maintenance of an improved regulatory quality in an environment where healthy competition exists would encourage banks to hold capital ratios appropriate for their level of banking activities, that is, the banks would not engage in excessive risk-taking activities.Originality/valueThis is one of the first papers that examine the effect of market structure and institutional quality on bank capital ratios in developing countries that have bank-based financial systems.

scholarly journals An Incentive for Risk Taking: The Case of Banks in ASEAN 6

2020 ◽  
Vol 11 (5) ◽  
pp. 129
Author(s):  
Thanh Phu Ngo
Keyword(s):  
Credit Risk ◽  
Technical Efficiency ◽  
Risk Taking ◽  
Commercial Banks ◽  
Small Banks ◽  
Bank Risks

Incorporating credit risk into technical efficiency to investigate possible effects of the risk on efficiency for a sample of 276 unique ASEAN commercial banks over the period 2000 -2015, we find a striking U-shaped effect of credit risk on both risk-free efficiency and risk-adjusted efficiency. The U-shaped relationship exists in both large banks and small banks. This finding is new and raises a concern for bank regulators in monitoring and controlling bank risks since banks have an incentive to become more efficient by following greater risk-taking strategies.

scholarly journals Executive Compensation and Business Policy Choices at U.S. Commercial Banks

2013 ◽  
Vol 48 (1) ◽  
pp. 165-196 ◽  
Author(s):  
Robert DeYoung ◽  
Emma Y. Peng ◽  
Meng Yan
Keyword(s):  
Risk Taking ◽  
Chief Executive Officers ◽  
Commercial Banks ◽  
Chief Executive ◽  
Growth Opportunities ◽  
Business Policy ◽  
Policy Choices ◽  
History Of ◽  
Executive Officers ◽  
Contractual Risk

AbstractWe show that contractual risk-taking incentives for chief executive officers (CEOs) increased at large U.S. commercial banks around 2000, when industry deregulation expanded these banks’ growth opportunities. Our econometric models indicate that CEOs responded positively to these incentives, especially at the larger banks best able to take advantage of these opportunities. Our results also suggest that bank boards responded to higher-than-average levels of risk by moderating CEO risk-taking incentives; however, this feedback effect is absent at the very largest banks with strong growth opportunities and a history of highly aggressive risk-taking incentives.

Sign in / Sign up

Export Citation Format

Share Document