scholarly journals IMPACT OF NON-PERFORMING LOANS ON SMALLER US BANK PROFITABILITY AND VALUE IN THE POST-CRISIS PERIOD

2021 ◽  
Vol 20 (Issue Vol 20, No 2 (2021)) ◽  
pp. 327-349
Author(s):  
Sarah SKORBURG ◽  
Vijay SHENAI
Keyword(s):  
Global Financial Crisis ◽  
Banking Industry ◽  
Market Value ◽  
Capital Adequacy ◽  
Empirical Literature ◽  
Bank Profitability ◽  
The Us ◽  
Asset Portfolio ◽  
Asset Quality ◽  
The Impact

Credit quality is an important constituent of a bank’s asset portfolio. Asset quality and inadequate capital reserves were two significant triggers of the Global Financial Crisis (GFC) in 2009. Since then, there has been substantial regulatory and internal risk management changes within the US banking industry. There are no previous specific studies on smaller US banks. This study reviews the empirical literature on the topic of asset quality, bank profitability and market value along with statistics specific to the US banking industry. The impact on profitability is assessed through the return on equity ratio (ROE) and the impact on market value is assessed through the market to book ratio (MTBR). Along with the non-performing loan ratio (NPL), three other CAMEL ratios were also used as independent variables: capital adequacy (TRWCA), liquidity (LIQ) and management efficiency (MAN) to assess their impact on profitability and market value. Panel data has been collected for fifteen smaller US banks and the Generalised Method of Moments (GMM) of estimation is used robustly to estimate the effects of CAMEL ratios on bank profitability and market value. The link between NPL and other ratios on bank profitability and market value in smaller US banks has been assessed. The importance of the NPL ratio for bank profitability and market value is once again confirmed.

scholarly journals PENGUATAN STRUKTUR MODAL SEBAGAI PEMENUHAN REGULASI DAN PENDUKUNG PENGEMBANGAN BISNIS

2020 ◽  
Vol 12 (1) ◽  
pp. 43-51
Author(s):  
Tedi Setiawan ◽  
Jaja Suteja ◽  
Ellen Rusliati
Keyword(s):  
Capital Structure ◽  
Research Method ◽  
Banking Industry ◽  
Market Competition ◽  
Descriptive Analysis ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Effective Strategies ◽  
Capital Adequacy Ratio ◽  
The Impact

Decision on capital structure have an important role in determinig banking performance.This study aims to find alternative strategies for Bank X in fulfilling the capital requirements and to measure its the effectivities in order to reach the capital requirements of the Bank X to be in accordance with the regulations in 2018. The results of this study are expected to provide useful information related to the importance of strengthening the capital structure of the company, especially in the banking industry in order to maintain the continuity of business and to win in the market competition. The study was conducted at Bank X was located in Bandung. The research method used was survey with qualitative research approaches. While the type of research was explorative descriptive analysis. The results of the study was found three effective strategies to meet the capital needs of Bank X in 2018, namely asset revaluation, reduction in dividend payout ratio (DPR) and the issuance of subordinated bonds. These three strategies could improve Capital Adequacy Ratio (CAR). while alternative simulations need to be carried out to determine the impact of the decision making.

Corporate Debt Vulnerability and Non-performing Assets in India

2020 ◽  
pp. 097215092093575
Author(s):  
K. Dhananjaya
Keyword(s):  
Banking Sector ◽  
Global Financial Crisis ◽  
Corporate Debt ◽  
Sales Growth ◽  
Bank Profitability ◽  
Balance Sheets ◽  
Public Sector Banks ◽  
Bank Balance Sheets ◽  
Asset Quality

This article examines the increasing corporate debt vulnerability and its impact on the asset quality of the Indian public sector banks (PSBs) in the post-global financial crisis (post-GFC) of 2008. The study shows that the stress in both corporate and bank balance sheets has increased in the post-GFC. As a result, there has been a steep increase the proportion of firms with negative profitability. The article finds that the declining profitability has severely affected the debt serviceability of the firms. Consequently, the debt at risk has risen significantly, which in turn has contributed to increase in non-performing assets (NPAs) of the banking sector, particularly, the PSBs. Using the panel regression technique, the study finds that the corporate debt vulnerability is an important determinant of the growth of NPAs along with other factors such as debt concentration, corporate sales growth, lending to sensitive sectors, bank profitability, bank size and the efficiency of banks.

Empirical Studies of Corporate Law and Governance

2017 ◽  
Author(s):  
Michael Klausner
Keyword(s):  
Corporate Governance ◽  
Empirical Studies ◽  
The United States ◽  
Corporate Law ◽  
Empirical Literature ◽  
Related Literature ◽  
Takeover Defenses ◽  
The Us ◽  
Governance Quality ◽  
The Impact

This chapter examines the empirical literature on corporate law and governance in the United States. Four areas of the US corporate governance literature are discussed: (i) state competition to produce corporate law, (ii) independent boards, (iii) takeover defenses, and (iv) the use of corporate governance indices. The chapter concludes that these areas of research reflect varying degrees of success. The literature on state competition has been a major success. We know much more in this area as a result of empirical analysis in this area than we did on the basis of theory alone. At the other extreme is the literature on takeover defenses and the related literature that uses governance indices as measures of governance quality. Those empirical literatures are plagued by misunderstandings of how takeovers and takeover defenses work, and many results are therefore not as informative as they appear to be. In between is the literature on the impact of an independent board. Here, empiricists faced perhaps insurmountable challenges in proving causation, but nonetheless exposed informative associations.

The macroeconomic impact of shocks to bank capital buffers in the Euro Area

2019 ◽  
Vol 20 (1) ◽  
Author(s):  
Derrick Kanngiesser ◽  
Reiner Martin ◽  
Laurent Maurin ◽  
Diego Moccero
Keyword(s):  
Euro Area ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Decomposition Analysis ◽  
Bank Lending ◽  
Empirical Literature ◽  
Bank Capital ◽  
Macroeconomic Impact ◽  
The Global Financial Crisis ◽  
The Impact

Abstract While the global financial crisis revealed a need for macroprudential policy tools to mitigate the build-up of risk in the financial system, the impact of such policies on the banking sector and the macroeconomy remains largely uncertain. We contribute to the empirical literature that estimates the impact of shocks to bank capital buffers on bank lending and the macroeconomy by estimating a Bayesian VAR model identified with sign restrictions. We use bank-level data for large euro area listed banks to construct an aggregate bank capital buffer for the euro area, which is included as another variable in the model. We estimate three shocks affecting the euro area economy, namely a demand shock, a monetary policy shock and a shock to bank capital buffers. We find that banks curtail lending and reduce their relative exposure to riskier assets in response to a shock to the bank capital buffer. Historical shock decomposition analysis shows that shocks to bank capital buffers have contributed to impair bank lending growth and to widen bank lending spreads, hence depressing economic activity.

scholarly journals Does competition only impact on insolvency risk? New evidence from the Chinese banking industry

2017 ◽  
Vol 13 (3) ◽  
pp. 332-354 ◽  
Author(s):  
Yong Tan ◽  
John Anchor
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Banking Industry ◽  
Liquidity Risk ◽  
Empirical Literature ◽  
Content Type ◽  
Insolvency Risk ◽  
Chinese Banking Industry ◽  
The Impact ◽  
Chinese Banking

Purpose The purpose of this paper is to investigate the impact of competition on credit risk, liquidity risk, capital risk and insolvency risk in the Chinese banking industry during the period 2003-2013. Design/methodology/approach This study uses a generalized method of moments system estimator to examine the impact of competition on risk. In particular, translog specifications are used to measure the competition and insolvency risk. Findings The results show that greater competition within each bank ownership type (state-owned commercial banks, joint-stock commercial banks and city commercial banks) leads to higher credit risk, higher liquidity risk, higher capital risk, but lower insolvency risk. Originality/value This paper is the first piece of research testing the impact of competition on different types of risk in banking industry and it further contributes to the empirical literature by using a more accurate competition indicator (efficiency-adjusted Lerner index) and a more precise insolvency risk indicator (stability inefficiency).

Effective regulatory regimes: a comparative analysis of GCC financial regulators

2015 ◽  
Vol 23 (1) ◽  
pp. 2-17 ◽  
Author(s):  
Mohamed Aly Ramady
Keyword(s):  
Global Financial Crisis ◽  
International Standards ◽  
Capital Adequacy ◽  
Content Type ◽  
Regulatory Policies ◽  
Cross Border ◽  
Financial Soundness ◽  
The Impact ◽  
Capital Injections ◽  
Border Surveillance

Purpose – The purpose of this study is to investigate the effects of the global financial crisis on Gulf Cooperation Council (GCC) bank regulation and the impact on the region and the policies adopted by the regulators to avoid financial panic and contagion. Design/methodology/approach – The author examines GCC countries’ financial soundness indicators in terms of capital adequacy, non-performing loans and provisioning rates, including central bank liquidity support, deposit guarantees, capital injections and monetary easing and policies to mitigate risk assessment, and the monitoring and elimination of practices promoting excessive risk. GCC compliance regimes through multinational organizations and the exposure of the region to cross-border financial linkages to test for financial soundness are assessed. Findings – Overall, results indicate that comprehensive regulatory oversight exists in the GCC in conformity with international standards, and Basel capital adequacy requirements, and that the GCC regulators have acted prudently to establish high coverage in all measures but that gaps exit concerning cross-border surveillance and a need for imposition of capital surcharges on banks deemed high systemic risk. The supervision of Islamic financial institutions and a lack of inter-GCC liquidity support mechanism for this segment are highlighted. Practical implications – The paper shows that the GCC regulators need to address cross-border surveillance, as local banks branch internationally and foreign banks operate in the region. Originality/value – The author is not aware of any similar work that compares the regulatory policies of the GCC.

scholarly journals TRANSMISI DAMPAK MELALUI JARINGAN PERDAGANGAN: PENDEKATAN ASIAN-IO

2014 ◽  
Vol 16 (4) ◽  
pp. 339-372
Author(s):  
Ibrahim Ibrahim ◽  
Tri Winarno ◽  
Melva Viva Grace ◽  
Yan Fitri
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Value Added ◽  
Jel Classification ◽  
Input Output ◽  
Asian Countries ◽  
Production Chain ◽  
The Us ◽  
Similar Point ◽  
The Impact

Global financial crisis which began in the US in the latter part of 2008 hit a lot of countries in both trade and finance. In trade aspect, the crisis spread widely; in Indonesia, the total export value in 2009 dropped to 14,3%. Therefore, the economy of China, tightly linked with Asian countries including Indonesia, which rapidly rose before the crisis but slowed after it should be monitored as this condition, could indirectly hold down Indonesia’s GDP. Applying RAS method to update Asian IO data, this research has attempted to describe the trade structure of Asian countries in 2010. Also, it implemented a simulation of the impact of US and China’s GDP decline and US exports on Indonesia’s GDP, both at aggregate and sector levels. The result of the mapping shows that Indonesia is getting more dependent on China. Generally, the link between Indonesia’s exported products and global production chain is weak. Indonesia’s export commodities which are mostly of intermediate goods have low contribution towards value added. Moreover, the result of the simulation shows that 1% decrease in China’s GDP has greater impact on Indonesia’s GDP (0,14%) than that of the US (0,05%) and EU (0,07%) though with similar point.  Keyword: Trade Interactions, Input Output Model JEL Classification : F16, R15

scholarly journals Regulation, Competition and Bank Risk: Evidence from China

2017 ◽  
Vol 2 (1) ◽  
pp. 42 ◽  
Author(s):  
Yachen Liu
Keyword(s):  
Banking Industry ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Annual Data ◽  
Bank Stability ◽  
Operating Stability ◽  
Capital Adequacy Ratio ◽  
Set Up ◽  
Fierce Competition ◽  
The Impact

This paper uses the semi-annual data of 16 listed banks from the fourth quarter of 2005 to the second quarter of 2016 as the research sample to study the impact of supervision and competition on the listed bank's risk in China. The results show that the higher level of bank holdings (capital adequacy ratio and core capital adequacy ratio) can significantly reduce the combined risk of banks and increase bank stability. Increased liquidity (liquidity ratio and deposit-loan ratio) can reduce bank risk, but this effect is not significant. The more fierce competition among banks (the smaller CR) will not only increase the proportion of weighted risk assets in total assets, but also increase the bank's bankruptcy probability and reduce the overall operating stability of the bank. It is necessary for authorities of policy to strengthen supervision of banking industry, especially the capital adequacy ratio and core capital adequacy ratio regulation and keep the competition of banks under the appropriate interval. It is also necessary for regulators to comply with the latest regulations of Basel III to set up more reasonable liquidity regulatory indicators to meet liquidity risk management.

scholarly journals Financial performance after the Spanish banking reforms: A comparative study of 19 commercial banks

2014 ◽  
Vol 4 (2) ◽  
pp. 70-82 ◽  
Author(s):  
Pison F. Irene ◽  
Cibrán F. Pilar ◽  
Lious Agbor Tabot Ntoung
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Research Database ◽  
Banking Reforms ◽  
The 2008 Financial Crisis ◽  
Asset Quality ◽  
The Impact

A diagnostic review of the Spanish financial system during the 2008 financial crisis reveals the emergency need for banking reform in the sector. In an attempt to evaluate the impact of the Spanish reform, the present study examines the bank´s performance before/after the reform was adopted, using data of 19 Spanish commercial banks extracted from the Global Vantage research database (Standard and Poor’s) over the period 2006 to 2013. This study uses multivariable regression method to investigate the impact of the CAMELS rating system: capital adequacy, asset quality, management quality, liquidity and sensitivity to market risks on the bank´s performance such as earnings efficiency. The time-line of the study is essential because it helps us to determine the financial performance of Spanish commercial banks before the banking reforms during the financial crisis and an important set in terms of mergers and acquisition in the banking industry. The empirical results have found strong and positive evidence that Capital Adequacy, Management Capacity, Liquidity and Sensitivity to Market Risk are useful predictors of banks performance (earnings efficiency), thus, any reform pilot toward this banking indicators will eventually have a positive impact on banking performance. Base on the present study, the Spanish reform was so vital for better banking performance. Therefore, this study serves not only to academics but also to policy makers.

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