Does better capitalization enhance bank efficiency and limit risk taking? Evidence from ASEAN commercial banks

2021 ◽  
pp. 100617
Author(s):  
Do Van Anh
Keyword(s):  
Risk Taking ◽  
Commercial Banks ◽  
Bank Efficiency

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.

Does bank governance affect risk and efficiency? Evidence from Islamic banks in GCC countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samir Srairi ◽  
Khawla Bourkhis ◽  
Asma Houcine
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Risk Taking ◽  
Audit Committee ◽  
Governance Structure ◽  
Board Structure ◽  
Islamic Banks ◽  
Bank Efficiency ◽  
Content Type ◽  
Gcc Countries

Purpose The motivation of the study is to shed further light on the question of whether the governance structure of Islamic banks (IBs) has an impact on the efficiency and risk of Islamic banks operating in the Gulf Cooperation Council (GCC) after the global financial crisis and during the period 2010–2018. This study aims to examine the extent of governance structure on the efficiency and risk of IBs as the effect of the financial crisis has been less on IBs. In addition, the authors are interested in the GCC region as it represents the hub of Islamic finance. Design/methodology/approach In this study, the authors examine how the banking governance structure affects the risk-taking and performance of IBs in the GCC countries between 2010 and 2018. The authors construct a banking governance index (CGI) composed of sub-indices for the board structure, risk management, transparency and disclosure, audit committee, Sharia supervisory board and investment account holders. Unlike the majority of previous studies, bank performance is measured with technical efficiency scores using a data envelopment analysis and the authors use a comprehensive CGI. Findings The results show that IBs in GCC countries adhere to 54% of the attributes covered in the CGI. The authors also note a lack of disclosure regarding the investment account holders and the audit committee. As well, the results indicate that bank governance is positively associated with risk-taking and bank efficiency. Banking risk is influenced by the Sharia board and risk management while bank efficiency is affected by the characteristics of the board structure and investment account holders. Originality/value To the best of the authors’ knowledge, this is the first study that has developed a comprehensive governance index for IBs in GCC countries that includes a wide range of governance dimensions. The study contributes to the literature on governance in the banking sector by simultaneously examining its impact on the risk-taking and efficiency of IBs and recognizes the dynamic relation between these three variables for IB.

A study of the relationship between employee wage and commercial banks efficiency in China

2016 ◽  
Vol 7 (2) ◽  
pp. 147-159
Author(s):  
Jiangtao Li ◽  
Jianyue Ji ◽  
Yanxia Wang
Keyword(s):  
Commercial Bank ◽  
Commercial Banks ◽  
Calculated Data ◽  
Wage Structure ◽  
Tobit Regression ◽  
Bank Efficiency ◽  
Content Type ◽  
Per Capita ◽  
The Impact ◽  
The Relationship

Purpose Efficiency of a commercial bank affects both its competitiveness and the role it plays in the process of economic development. Although great efforts have been exerted in developing the various aspects of banking efficiency, there seems to be a lack of research on examining the impact of the bank efficiency from the employee wage perspective. The mechanism of how employee wage affects commercial bank efficiency and the relationship between the two were analyzed in this paper. Based on the growing body of research on efficiency in banking, the aim of this paper is to examine if competitiveness of employee wages at any commercial bank has any impact on the bank efficiency score. Design/methodology/approach The method used was quantitative analysis, which was based on comparing the evaluated efficiencies of the banks with employee wages published in the bank reports. The empirical data in this paper were based on 16 Chinese listed commercial banks from 2004 to 2012. The per capita wage of commercial banks was selected as the wage indicator, and the efficiency value obtained by the slack-based measure (SBM) model was selected as the efficiency indicator. According to the calculated data, the Tobit regression model was built to analyze the relationship between employee wage and commercial bank efficiency. Findings The research results show that employee wage is the key variable that influences the efficiency of Chinese commercial banks, and the inverted U-shaped relationship between employee wage and commercial banks efficiency shows up. Practical implications The wage structure data of the composition of basic pay and bonus were not available at the time of conducting the research. Per capita wages were used instead to reflect the employee wage levels of Chinese banks. Originality/value This study can provide some help for the banking industry by analyzing the wage levels from the perspective of efficiency and also further enriches the theoretical system of the relationship between employee wage and bank efficiency.

scholarly journals Risk-taking behavior, earnings quality, and bank performance: A profit frontier approach

2020 ◽  
Vol 23 (4) ◽  
pp. 285-304
Author(s):  
M. Pilar García-Alcober ◽  
Diego Prior ◽  
Emili Tortosa-Ausina ◽  
Manuel Illueca
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Risk Taking ◽  
Banking System ◽  
Jel Classification ◽  
Bank Risk ◽  
Bank Performance ◽  
Bank Efficiency ◽  
Savings Banks ◽  
Risk Taking Behavior

After the financial crisis of 2007–2008, some bank performance dimensions have been the subject of debate, two of which are bank efficiency and bank risk-taking behavior. The literature on bank efficiency and productivity has grown considerably over the past three decades, and has gained momentum in the aftermath of the financial crisis. Interest in bank risk-taking behavior, usually focusing on its links to monetary policy, has been relatively low, but has also increased exponentially in more recent years. This article combines these two streams of research. Specifically, we test whether more inefficient banks take greater risks when selecting borrowers, charging interests, and requiring collateral, and whether these links between inefficiency and risk change according to the type of bank. Our analysis centers on the Spanish banking system, which has been severely affected by the burst of the housing bubble and has undergone substantial restructuring. To test our hypotheses, we created a database with information on banks and savings banks, their borrowers (non-financial firms), and the links between them. The study also contributes to the literature by considering a novel profit frontier approach. Our results suggest that more inefficient banks take greater risks in selecting their borrowers, and that this high-taking behavior is not offset by higher interest rates. JEL CLASSIFICATION C14; C61; G21; L50

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