The transnational comparative study on the potential risks and efficiency of commercial banks based on the weight-limited DEA model

2018 ◽  
Vol 8 (4) ◽  
pp. 441-452 ◽  
Author(s):  
Hao Wang ◽  
Yu Wang ◽  
Shuang Zhao ◽  
Lan-ping Wang ◽  
Hui An
Keyword(s):  
Real Estate ◽  
Financial Market ◽  
Commercial Banks ◽  
Real Estate Market ◽  
Real Economy ◽  
Bank Efficiency ◽  
Content Type ◽  
The Real Estate ◽  
Asset Portfolio ◽  
Potential Risks

Purpose The purpose of this paper is to calculate the bank efficiency of removing potential risks that are hidden from the extreme portfolio of bank’s assets and further compare the differences and causes of bank’s efficiency and potential risk level between China’s representative banks and OECD representative banks in 2011-2015. Design/methodology/approach Based on the weight-limited DEA model, this paper calculates the bank’s efficiency and further compares the differences between China’s representative banks and OECD representative banks by using commercial banks’ transnational data. Findings By analyzing US representative banks’ data, the authors find that the excessive expansion of the scale of banks’ investment for the non-real economy shrinks after the bubble burst and would not improve the efficiency of banks immediately. The OECD representative banks rather prefer to extreme asset portfolio so that the potential risks gradually increase, while there is a diminishing effect on investments in non-real economies to improve bank efficiency. On the other hand, China’s representative banks have the signs of reducing investment in the real estate market, but the existence of the bubble in the market led to a lagged effect on the impact of adjustment of bank asset portfolio on efficiency. Research limitations/implications This paper has practical significance for commercial banks to improve efficiency and reduce credit risks. This is conducive to the implementation of targeted supervision by the banking supervision department. Practical implications Based on the lesson that the financial crisis created by the real estate bubble burst in the USA in 2008 and the financial market active guidance of the developed economies, faced with the reality of Chinese real estate market bubble rising and the continuous improvement of Chinese financial market, this paper compares the differences between representative banks in China and OECD, and explores the causes by using the cross-country data of commercial banks. Originality/value By adjusting the weight of the input variables in the efficiency measurement, quantifying the risk is often overlooked by the changes in bank efficiency. This potential risk is caused by the bank’s investment preferences in the non-real economy represented by real estate and tradable financial assets.

scholarly journals Central bank’s supervision on commercial banks’ credit business an exploratory post-epidemic-based research

2021 ◽  
Vol 235 ◽  
pp. 03064
Author(s):  
Tingen Li ◽  
Huan Fang ◽  
Yanting Zhang
Keyword(s):  
Monetary Policy ◽  
Real Estate ◽  
Central Bank ◽  
Commercial Banks ◽  
Real Estate Market ◽  
Real Economy ◽  
The Real ◽  
Bank Of China ◽  
The Real Estate ◽  
Reference Index

The epidemic of COVID-19 broke out, domestic economy suffered a heavy setback, the Central Bank of China launched a series of policies against this backdrop, aiming to stimulate the economy. However, some investors speculate from the loose loans in real estate, which makes the funds policy originally used for stimulating the real economy to be artificially drained into the real estate market, further resulting in the imbalance of social supply. To solve this problem, from the perspective of the central bank and with the use of literature research and other methods, this paper makes research on analyzes the central bank’s credit supervision on commercial banks. Study shows that information collection and monetary policy are the problems with central bank. Through big data technology and monetary policy into the new reference index two angles to try to solve the problem. It aims to effectively strengthen the efficiency and level of central bank’s supervision. Meanwhile it can provide corresponding theories and references for subsequent research. The limitation of this study is that there is no specific application supporting the analysis. Otherwise the paper would be more applicable in practice. Therefore, this problem needs to be further studied and solved.

Godrej properties: valuation using the capital cash flow technique

2020 ◽  
Vol 10 (3) ◽  
pp. 1-23
Author(s):  
Rajni Kant Rajhans
Keyword(s):  
Real Estate ◽  
Cash Flow ◽  
Structural Changes ◽  
Real Estate Market ◽  
Firm Valuation ◽  
Free Cash Flow ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
The Real Estate Market

Learning outcomes The case is focused to meet the following learning objectives: the readers will be able to recall basic cash flow estimation concepts; and the readers will be able to explain various features of capital cash flow (CCF). The participants will be able to implement the CCF model in real estate firm valuation. The participants will be able to compare CCF and free cash flow to the firm (FCFF) models. The participants will be able to evaluate the benefits of CCF over FCFF. The readers will be able to construct the CCF valuation model for firm valuation. Case overview/synopsis On 19th April 2019, Mr Kai, an analyst tracking real estate firms was excited to present to his team a new robust technique of firm valuation suitable for real estate companies, namely, the CCF technique and was also keen to deliberate on its application. Though the investment scope using this technique could be located in Godrej properties (GP), a reputed brand and the largest listed real estate developer by sales in 2018, yet, he was concerned about the assumptions of growth of real estate industry in India, in general, and the GP in particular. Importantly, this was because the real estate market in India was undergoing many structural changes. For instance, the buyers’ preferences were changing and unsold inventory in the industry was at its peak. Under these market conditions, an announcement was made by GP about a target return on equity of 20% in 2018–2023 expecting a dominant place in the real estate market in India, which also carried the threat of jeopardizing the reputation of GP, if under any circumstance the target was not accomplished. Complexity academic level Masters program. Supplementary materials Teaching notes are available for educators only. Subject code CSS: 11 Strategy.

scholarly journals Impacts of digitization on real estate sector jobs

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Daniel Piazolo ◽  
Utku Cem Dogan
Keyword(s):  
Real Estate ◽  
Weighted Average ◽  
Real Estate Market ◽  
Real Estate Industry ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Employment Agency ◽  
Real Estate Sector ◽  
Substitution Probability

PurposePrevious research on automation and job disruption is only marginally related to the real estate industry and its characteristics. This study investigates the effects of digitization on jobs in German real estate sector, in order to assess the proportion of jobs threatened to be replaced by automation. Since Germany is the largest EU economy insights for the German real estate market allow a first approximation for Europe.Design/methodology/approachAn extensive database of the German Federal Employment Agency containing job definitions and occupation titles is matched with real estate criteria to create a subset with the relevant real estate occupations. This data is combined with a database of the German Institute of Employment Research reflecting to what extent tasks within jobs can be automated by current technical capabilities.FindingsFor the 286 identified occupations within the real estate sector a weighted average of 47 percent substitution probability through current technological capabilities is derived for tasks within the examined occupations.Practical implicationsThis contribution indicates the extent of the structural change the real estate sector has to face due to digitization: One out of two real estate jobs will have to be re-created.Originality/valueThis research quantifies the magnitude of the job killer aspect of digitization in the real estate sector.

UAE real estate market will likely recover in 2019

2018 ◽  
Keyword(s):  
Real Estate ◽  
United Arab Emirates ◽  
International Investment ◽  
Real Estate Market ◽  
Content Type ◽  
The Real Estate ◽  
Regional Conflict ◽  
Real Estate Sector ◽  
Real Estate Projects ◽  
Regulatory Measures

Significance After three difficult years, the United Arab Emirates (UAE) real estate market appears to be finding a floor, with several property consultancies and management firms cautiously optimistic over the prospects of a turnaround. New regulatory measures and a delay in some planned real-estate projects aim to support prices. Impacts The importance of the real-estate sector to Emirati non-oil GDP will rise further, magnifying its impact on growth. Dependence on international investment and public-sector spending will expose the sector to volatility in case of regional conflict. The UAE will increasingly look towards Asian countries as property buyers, especially India, China and Pakistan.

How do institutional pension managers consider real estate

2017 ◽  
Vol 35 (1) ◽  
pp. 26-43 ◽  
Author(s):  
Jon R.G.M. Lekander
Keyword(s):  
Real Estate ◽  
Asset Allocation ◽  
Pension Funds ◽  
Real Estate Market ◽  
Organizational Capabilities ◽  
Future Research ◽  
Allocation Decision ◽  
Content Type ◽  
The Real Estate ◽  
Allocation Process

Purpose The asset allocation decision for a pension portfolio needs to consider several, sometimes conflicting, aspects. Most pension managers use models and processes that are developed for the traditional asset classes for analyzing this problem. The purpose of this paper is to investigate how real estate is included in this process, for what purpose and how the real estate portfolio is constructed. Design/methodology/approach Seven individuals responsible for the asset allocation process were interviewed, and their responses were analyzed with regards to organizational options and their real estate strategy. Findings It was found that real estate is held for three different purposes, risk diversification, inflation hedging/liability matching and return enhancement and that the allocation has increased over time. The allocation strategy has evolved at least in part in conjuncture with the organizational structure set in place to overcome real estate market frictions. Research limitations/implications The interviews were geographically limited to pension funds domiciled in Sweden and Finland. Practical implications It is concluded that the organizational capabilities of the pension fund of handling real estate is an important consideration for the ensuing real estate portfolio. Originality/value The originality of this paper lies in that it is based on interviews with individuals who are responsible for the asset allocation decision at large pension funds. The findings of the paper identify areas of interest for future research.

Investor attention for retail and institutional investors: a test on the real estate market

2013 ◽  
Vol 31 (4) ◽  
pp. 314-328
Author(s):  
Gianluca Mattarocci ◽  
Georgios Siligardos
Keyword(s):  
Real Estate ◽  
Institutional Investors ◽  
Real Estate Market ◽  
Investor Attention ◽  
Causality Test ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
The Real Estate Market

PurposeThe paper aims to investigate the relationship between different investor attention proxies for different types of funds (retail vs institutional ones) looking at a sample of real estate funds.Design/methodology/approachThe authors collect data about searching frequency on Google and all the news published in Italian specialized newspapers for a set of real estate funds. Following the approach proposed by Da, Engelberg and Gao, the authors construct a set of attention proxies and they compare the ranking with some summary statistics and evaluate the causality relationship among them using a Granger causality test.FindingsResults demonstrate that online search frequency is relevant for both institutional and retail funds and normally internet data are able to anticipate the news that will be published in the newspapers.Research limitations/implicationsThe analysis proposed is focused only on a small real estate market (Italy) where funds are specialized for the type of investor. A wider database can allow excluding that results achieved are biased by the specific features of the market analysed.Practical implicationsThe role of internet proxies attention measures also for institutional investors demonstrate that the managing companies offering financial instruments reserved to institutional investors should consider both channels of information – newspapers and the internet – to measure any positive or negative sign of investor attention to their products.Originality/valueThe article represents the first analysis of investor attention proxies on the real estate market and the first comparison of investor attention proxies for retail and institutional investors.

scholarly journals Exchange Rate Risk On The Mortgage Market

2015 ◽  
Vol 23 (4) ◽  
pp. 74-84
Author(s):  
Ewa Siemińska ◽  
Małgorzata Krajewska
Keyword(s):  
Exchange Rate ◽  
Real Estate ◽  
Financial Market ◽  
Real Estate Market ◽  
Exchange Rate Risk ◽  
Currency Risk ◽  
The Real ◽  
The Real Estate ◽  
The Real Estate Market ◽  
National Bank

Abstract Strict connections of the real estate market with the financial market are an unquestionable phenomenon at every level of investing, starting from the lowest individual investor, and finishing with national and transnational players. One of the more interesting examples of such a dependency is the problem of the risk of financing the real estate market, which results from numerous macro-, mezo- and microeconomic conditions, including, inter alias, the phenomenon of capital migration, supranational bank regulations or the development of currency exchange rates on world markets. The most recent example of such a dependency is, among others, the decision of the National Bank of Switzerland from the beginning of 2015 to abandon the Swiss franc-euro cap, which will go down in the history of the world financial market. Its global effects will surely be very difficult to assess, while the resulting turbulences and consequences for many (institutional, corporation and individual) market participants cause, on the one hand, awaiting a reaction and actions aimed at helping entities affected by the consequences of the mentioned decision and, on the other, many questions and doubts. The paper will present current selected aspects concerning currency risk in the context of financing the residential real estate market and the directions of actions prepared in reaction to the abovementioned risk. Polish conditions will be presented against the background of examples of foreign solutions. The aim of the work is to present: the essence of currency risk in the context of the current financial situation of the Polish banking sector, the most important directions of proposals for remedial actions aimed at mitigating the effects of the significant increase in the exchange rate of the Swiss franc in relation to the Polish currency, a short overview of selected solutions/regulations regarding the exchange rate risk of mortgages taken out in a foreign currency in other countries. The method employed was the critical analysis of the most-recent reports and recommendations of the National Bank of Poland, Polish Financial Supervision Authority, Polish Banking Union, and other experts on the subject of financing the real estate market, as well as a comparative analysis of solutions regarding currency risk in selected countries.

Financialisation and development: a case study of Ethiopia

2019 ◽  
Vol 11 (2) ◽  
pp. 138-196
Author(s):  
Anne Löscher
Keyword(s):  
Real Estate ◽  
Financial Development ◽  
Industrial Development ◽  
Real Estate Market ◽  
Economic Research ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
The Real Estate Market ◽  
Debt Levels

Purpose This paper aims to shed light on financial development in Ethiopia and its implications for overall economic development. It does so with particular focus on development understood as industrial development and with special attention drawn on inequality and debt levels as well as the real estate market in Ethiopia. Two research questions are focussed on in particular, where the first serves as prerequisite for the assessment of the second: What kind of financial development took place in Ethiopia in the past quarter of a century? Furthermore, are processes of financialisation visible in Ethiopia, and if so, to what effect? Design/methodology/approach The paper is based on publicly available macro-data and qualitative and quantitative data collected by the author herself during a three months’ research stay in Ethiopia. Findings It is found that despite higher levels of financial inclusion and deepening, industrialisation is on a relative decline. What is more, inequality and debt levels increase, and the recent growth spurts seem to be rooted in the construction sector with prices in the real estate market surging. In can be concluded that despite a flourishing financial sector, the Ethiopian economy is faced with the peril of crises associated with an inflated real estate market, inequality, debt burdens and impeded industrialisation. Originality/value African economies and, in particular, the development and effects of financial markets are still a blind spot in economic research. By combining quantitative and qualitative data on and gathered in Ethiopia, this paper therefore conducts greenfield research.

Investigating the causes of increasing consumer demand for real estate housing in Bangladesh

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mazed Parvez ◽  
Sohel Rana
Keyword(s):  
Real Estate ◽  
Consumer Satisfaction ◽  
Secondary Data ◽  
Real Estate Market ◽  
Sample Size Determination ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Real Estate Sector ◽  
Increasing Demand

Purpose The purpose of this paper is to find out the causes of increasing population in the real estate area. The demographic in information of the respondents and the level of satisfaction was also carried out for this study. Design/methodology/approach The authors use both primary and secondary data. Total 329 respondents were surveyed at the real estate area after completing sample size determination. Secondary data was collected from journals, real estate offices and papers. After that, using regression and correlation analysis, the data was analyzed and finalized. Findings This study identified migration as the most critical variable. The study determined ten hypotheses and only accepted two. By that, this study finds out the causes of the increasing demand of plots and flats in real estate. Originality/value This study will work as a baseline study for the real estate sector in Bangladesh. Most of the research on Bangladesh’s real estate is done mainly on real estate market assessment and consumer satisfaction. Nevertheless, this study will find out the causes of the increasing population in real estate.

Cyclical capitalization and lag vacancy

2017 ◽  
Vol 10 (2) ◽  
pp. 211-238 ◽  
Author(s):  
Maurizio d’Amato
Keyword(s):  
Real Estate ◽  
Market Value ◽  
Real Estate Market ◽  
Mortgage Lending ◽  
Property Market ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
The Real Estate Market ◽  
Valuation Process

Purpose This paper aims to propose a new valuation method for income producing properties. The model originally called cyclical dividend discount models (d’Amato, 2003) has been recently proposed as a family of income approach methodologies called cyclical capitalization (d’Amato, 2013; d’Amato, 2015; d’Amato, 2017). Design/methodology/approach The proposed methodology tries to integrate real estate market cycle analysis and forecast inside the valuation process allowing the appraiser to deal with real estate market phases analysis and their consequence in the local real estate market. Findings The findings consist in the creation of a methodology proposed for market value and in particular for mortgage lending determination, as the model may have the capability to reach prudent opinion of value in all the real estate market phase. Research limitations/implications Research limitation consists mainly in a limited number of sample of time series of rent and in the forecast of more than a cap rate or yield rate even if it is quite commonly accepted the cyclical nature of the real estate market. Practical implications The implication of the proposed methodology is a modified approach to direct capitalization finding more flexible approaches to appraise income producing properties sensitive to the upturn and downturn of the real estate market. Social implications The model proposed can be considered useful for the valuation process of those property affected by the property market cycle, both in the mortgage lending and market value determination. Originality/value These methodologies try to integrate in the appraisal process the role of property market cycles. Cyclical capitalization modelling includes in the traditional dividend discount model more than one g-factor to plot property market cycle dealing with the future in a different way. It must be stressed the countercyclical nature of the cyclical capitalization that may be helpful in the determination of mortgage lending value. This is a very important characteristic of such models.

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