scholarly journals An Analysis of Non-Traditional Activities at German Savings Banks – Does the Type of Fee and Commission Income Matter?

2019 ◽  
Vol 52 (2) ◽  
pp. 253-289
Author(s):  
Matthias Köhler
Keyword(s):  
Jel Classification ◽  
Z Score ◽  
Bank Profitability ◽  
Savings Banks ◽  
Interest Income ◽  
Interest Margins ◽  
Business Income ◽  
Payment Services ◽  
Securities Business

Abstract In this paper, we use a fully anonymized dataset provided by the German Savings Banks Association (DSGV) to analyse which savings banks have expanded into fee-producing activities more quickly. In addition, we investigate whether their profitability and stability is correlated with the share of their fee and commission income. Notably, we examine whether the effect on bank profitability differs depending on the type of fee and commission income. Our results support the view that savings banks with low net interest margins are under greater pressure to expand into fee-producing activities. They further suggest that savings banks with a higher share of fee and commission income, in particular from payment services and securities business, also have a higher profitability. The Z-score also correlates positively with the share of securities business income, possibly because it responds to different shocks than net interest income and, therefore, offers a large diversification potential. Zusammenfassung In diesem Paper verwenden wir einen vollständig anonymisierten Datensatz des Deutschen Sparkassen- und Giroverbands (DSGV), um zu untersuchen, welche Sparkassen ihr Provisionsgeschäft schneller ausgebaut haben. Außerdem analysieren wir, wie stark die Profitabilität und Stabilität dieser Banken mit dem Anteil des Provisionseinkommens am gesamten operativen Einkommen korreliert sind. Zu beachten ist, dass wir dabei nach der Art des Provisionseinkommens unterscheiden. Unsere Ergebnisse stützen die Hypothese, dass Sparkassen mit einer hohen Zinsmarge unter geringerem Druck stehen, ihr Provisionsgeschäft auszubauen. Sie lassen ferner darauf schließen, dass Sparkassen mit einem Anteil an Provisionseinkommen aus dem Zahlungsverkehr und dem Wertpapiergeschäft eine höhere Profitabilität haben. Der Z-Score korreliert ebenfalls positiv mit dem Anteil an Provisionseinkommen aus dem Wertpapiergeschäft, möglicherweise weil es anderen Schocks ausgesetzt ist als das Zinseinkommen und deshalb ein großes Diversifikationspotential birgt. JEL Classification: G20, G21, G29

Diversification of Bank Profitability and Bankruptcy Risk in ASIA

2021 ◽  
Vol 1 (1) ◽  
pp. 47-52
Author(s):  
Jatmika Yudha Utama ◽  
◽  
Budi Sasongko
Keyword(s):  
Financial Crisis ◽  
Generalized Method Of Moments ◽  
Bank Profitability ◽  
Bankruptcy Risk ◽  
Subprime Mortgage ◽  
Interest Income ◽  
Mortgage Crisis ◽  
Banking Business ◽  
Interest Margins ◽  
Cash Inflow

This study aims to determine the bank interest margin and non-interest income in 25 countries in ASIA in the study period 1993 and 2020. This study uses the quantitative method Generalized Method of Moments (GMM). Prudence in developing the banking business by banking business actors is essential in preventing a systemic financial crisis in the future, such as the experience of the Asian financial crisis in 1997 and the subprime mortgage crisis in 2008. Bank interest margins and non-interest income are both required in maintaining bank cash inflow.

Experiential Marketing to Increase Net Marketing Contribution Margin (NMCM) through Customer Value

2017 ◽  
Vol 2 (4) ◽  
pp. 36-42
Author(s):  
Khusnul Khotimah
Keyword(s):  
Customer Value ◽  
Jel Classification ◽  
Communication Strategy ◽  
Full Potential ◽  
Marketing Communication ◽  
Experiential Marketing ◽  
Contribution Margin ◽  
Business Income ◽  
A Company ◽  
Positive Effect

Objective - Experiential Marketing may have a positive effect on both the formation of customer value and in the generation of profits for a company. Methodology/Technique - This study examines the calculation of the Net Marketing Contribution Margin (NMCM) in achieving a company's return. The survey shows an increase in total business income in 2014 by IDR 3.59 trillion, and in 2015 by IDR 3.8 trillion. However, the scheduled passenger income has decreased by 20.61%. Findings – The findings show that the ratio of promotions, tickets, and sales expenses to the total number of sales fluctuated between 2009 and 2015. This is contrary to the revenue generated through Experiential Marketing, which continued to increase from year to year. Novelty - The study shows that, without a strong communication strategy, a company may not be able to reach its full potential. Type of Paper - Empirical. Keywords: Customer Value; Experiential Marketing; Net Marketing Contribution Margin (NMCM); Marketing Communication. JEL Classification: M30, M31, M41.

The More the Merrier? Detecting Impacts of Bank Regulation After the Global Financial Crisis

2019 ◽  
Vol 52 (2) ◽  
pp. 191-212
Author(s):  
Christian Kalhoefer ◽  
Guenter Lang
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Jel Classification ◽  
Operating Costs ◽  
Group Affiliation ◽  
Savings Banks ◽  
The Stability ◽  
The Global Financial Crisis ◽  
The Cost ◽  
Structural Shifts

Abstract Governments worldwide reacted swiftly to the global financial crisis by tougher regulations. This paper investigates the impacts of the regulatory environment on operating costs using panel data of 2,200 German banks over the timeframe from 1999 to 2014. We estimate cost functions with and without proxies for regulation and analyze the results with respect to period, bank size, and group affiliation. Our results show that regulatory costs were peaking in 2001, 2008, and lately since 2012. Most interesting, however, is the asymmetry of regulation: Whereas the cost effects were symmetric for all banks until 2003, the last ten years were different. Larger institutions and savings banks could neutralize the impacts of increasing regulation on operating costs. In contrast, smaller banks, especially if they are cooperative banks, were facing significant cost increases. We therefore expect unintended structural shifts like a reduction in the diversity of banks, which are negative for competition, service quality, and for the stability of the financial system. Zusammenfassung Weltweit wurde als Folge der globalen Finanzkrise die Regulierung des Finanzsektors verschärft. Dieser Beitrag geht der Frage nach, welche Konsequenzen diese Regulierungsmaßnahmen für die operativen Kosten im Bankengeschäft haben. Auf der Basis von Paneldaten von 2,200 in Deutschland aktiven Banken über den Zeitraum von 1999 bis 2014 schätzen wir Kostenfunktionen mit und ohne Proxies für Regulierung und werten die Ergebnisse nach Beobachtungsjahr, Bankengröße, und Gruppenzugehörigkeit aus. Unsere Ergebnisse zeigen Kostenspitzen in den Jahren 2001, 2008, und zuletzt seit 2012. Am interessantesten sind jedoch die asymmetrischen Effekte der Bankenregulierung: Während unsere Modelle bis einschließlich 2003 nahezu gleichmäßige Kostenbelastungen anzeigen, änderte sich dies deutlich mit dem Jahr 2004. Im Gegensatz zu großen Institute und Sparkassen, die die Regulierungskosten nahezu neutralisieren konnten, sahen sich kleine Institute und Genossenschaftsbanken mit deutlichen Kostensteigerungen konfrontiert. Als Folge dieser asymmetrischen Kostenwirkungen staatlicher Bankenregulierung erwarten wir unbeabsichtigte Strukturveränderungen wie z.B. Konzentrationsprozesse, die sich negativ auf Wettbewerb, Dienstleistungsqualität, und letztendlich auch negativ auf die Stabilität des gesamten Finanzsystems auswirken werden. JEL Classification: G21, G38

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

scholarly journals LEVERAGE INDUCED FINANCIAL DISTRESS OF MANUFACTURING FIRMS IN BANGLADESH: A COMPARISON BETWEEN LISTED MNCS AND DOMESTIC FIRMS BY APPLYING ALTMAN’S Z SCORE MODEL

2021 ◽  
Vol 5 (2) ◽  
pp. 28-43
Author(s):  
Syed Mohammad Khaled Rahman ◽  
Md. Khairul Islam ◽  
Md. Mofazzal Hossain
Keyword(s):  
Financial Distress ◽  
Business Performance ◽  
Secondary Data ◽  
Jel Classification ◽  
Grey Zone ◽  
Z Score ◽  
Industrial Sectors ◽  
Total Debt ◽  
Z Scores ◽  
Domestic Companies

Financial distress arises from excessive debt capital. The purpose of the study was to determine Altman's Z score and analyze as well as compare the effect of debt on Z scores of listed MNCs & domestic companies of Bangladesh over 24 years (1996-2019). The study was based on secondary data. Seven local companies and seven MNCs were selected as a sample from six manufacturing industrial sectors. It was found that on average one local firm was in the grey zone and the rest 13 firms were in the safe zone (Z scores>2.99). MNCs’ Z scores were significantly higher than that of domestic companies. The grand mean of the Z score of MNCs was 5.398 while that of domestic companies was 4.155. In the case of domestic companies, Z score changes by 0.01 or 0.24% for a 1% change of total debt in opposite direction. MNCs’ Z score decreases by 0.005 or 0.073% for a 1% increase of total debt. Domestic companies should increase Z score by redesigning the capital structure and improving basic earning power. The study has practical implications for corporate managers, policymakers, investors, and government because future strategy, policy, and business performance depend on the zone in which the firms are situated. JEL Classification Codes: G30, G32, G39.  

scholarly journals Measuring credit risk in family firms

2020 ◽  
pp. 234094442094185
Author(s):  
Isabel Abinzano ◽  
Pilar Corredor ◽  
Beatriz Martinez
Keyword(s):  
Credit Risk ◽  
Default Risk ◽  
Family Firms ◽  
Risk Measure ◽  
Jel Classification ◽  
Z Score ◽  
Market Data ◽  
Black Scholes ◽  
Best Fit ◽  
Practical Implications

This article attempts to identify the default risk measure which best reflects the idiosyncratic context of public family firms. Seven accounting- and market-based measures are compared over a sample of 981 US family and non-family firms for the period 2000–2016. The results show that the Black–Scholes–Merton (BSM) measure gives the best fit in both types of firm. However, all the accounting-based measures, especially Altman’s Z-score, come closest to the market-based measures when used to assess the credit risk of family firms. The two types of measures also coincide more closely in their default risk orderings of family than of non-family firms. Useful practical implications can be drawn from these findings, which show that accounting-based measures can be used reliably in the absence of market data for family firms with similar characteristics to those in our sample. JEL CLASSIFICATION: G32; G33; G13; C52; M21; M41

scholarly journals Determinants of Profitability in the Banking Sector: An Analysis of Post-Soviet Countries

Economies ◽  
2018 ◽  
Vol 6 (3) ◽  
pp. 41 ◽  
Author(s):  
Serhat Yüksel ◽  
Shahriyar Mukhtarov ◽  
Elvin Mammadov ◽  
Mustafa Özsarı
Keyword(s):  
Economic Growth ◽  
Financial Performance ◽  
Credit Card ◽  
Fixed Effects ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Annual Data ◽  
Bank Profitability ◽  
Interest Income

The purpose of this paper is to identify the determinants of bank profitability in 13 post-Soviet countries. Within this scope, annual data between 1996 and 2016 is analyzed by using fixed effects panel regression and the Generalized Method of Moments (GMM). It is concluded that loan amount, non-interest income and economic growth are significant indicators of profitability. Moreover, the 2008 global mortgage crisis has a negative influence on bank profitability in post-Soviet countries. According to the estimation results, there is a positive relationship between non-interest income and economic growth with profitability. This result shows that when non-interest income of the banks increases, such as credit card fees and commission, it affects the financial performance of the banks, positively, and contributes to bank profitability. Another result of this study is that economic growth positively influences bank profitability. This result allows us to conclude that higher GDP comes with higher bank profitability for post-Soviet countries. Lastly, there is a negative relationship between loan-to-GDP ratio and profitability of the banks in post-Soviet countries. This means that when the ratio of total loans to GDP increases, it affects financial performance of the banks in a negative way. While considering this result, it is recommended that banks in post-Soviet countries should focus on ways to increase their non-interest income. Additionally, it is also significant for these banks to be careful and risk averse when lending to their customers.

scholarly journals HOUSING FINANCE: IMPACT OF HEAVY INTEREST INCOME TAX

2021 ◽  
Vol 6 (2) ◽  
pp. 102-124
Author(s):  
Igor Semenenko ◽  
Jun Wook Yoo
Keyword(s):  
Real Estate ◽  
Jel Classification ◽  
Fixed Income ◽  
Property Prices ◽  
Interest Income ◽  
Level Data ◽  
Retail Investors ◽  
Real Estate Investments ◽  
Rate Environment

Heavy taxation of interest income becomes a structural driver of property prices in a low-interest-rate environment. Inflation-adjusted price appreciation in 1996-2017 is approximately 200 basis points higher in 14 countries allowing no exemptions on interest income than in 37 countries that tax interest income at favorable rates or provide exemptions. Results for average returns over long-term periods are confirmed in models with annual frequencies, city-level data, and in a sample of 39 OECD countries for which price/rent ratios are available. It appears that investors view direct real estate, a heavily tax-favored asset, as an inflation hedge and/or alternative to fixed income asset. Higher interest income taxation may be fueling demand for direct real estate investments by retail investors. Separately, my empirical findings suggest that easy monetary policy effects can be magnified through the housing channel in countries that do not allow exemptions on interest income. Consequently, we should expect larger investment misallocations due to asset prices departure from fundamentals in some geographies. JEL Classification Codes: E3, E4, F3, G1, G5, H2.

scholarly journals RESPON BURSA SAHAM TERHADAP STRATEGI DIVERSIFIKASI PENDAPATAN PERBANKAN

2020 ◽  
Vol 7 (2) ◽  
pp. 137-145
Author(s):  
Helmi Rafif ◽  
Yosman Bustaman
Keyword(s):  
Panel Data ◽  
Positive Relationship ◽  
Equity Capital ◽  
Bank Failure ◽  
Z Score ◽  
Bank Profitability ◽  
Market Reactions ◽  
Book Value ◽  
Panel Data Regression ◽  
Data Regression

We evaluate how the Indonesian stock market has reacted to the banking diversification revenue strategy in the period of 2009-2016. The market reactions are measured by the ratio of market equity capitalization to its book value equity (MB) and market viability or solvency is proxied by the bank’s market-based Z score. Using panel data regression, we find that the higher the level of diversification of bank revenue response positively by the market indicating by improving on banks’ capitalization ratio and market solvency. It shows that revenue diversification could produce a significant impact on bank profitability and reduce the probability of bank failure. Additionally, our results reveal that the larger size of the bank, the riskier the bank, however,these larger banks could achieve higher market equity capitalization that protects them from insolvency problems. Banks having large book equity capital response positively by the market, it indicates a positive relationship between this variable and Z score.

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