Relations between institutional environment and level of social disclosure in the banking sector: evidence from Latin America

ABSTRACT The aim of this paper is to evaluate the influence of market structure on the competition between banks and to determine whether competition affects their profitability in different countries in Latin America. The study also seeks to compare, between 16 countries in the continent, the levels of concentration, competition, and profitability of the respective banking sectors. This article fills the research gap regarding the structure and market power of banks in emerging countries, by comparing Brazil with the other countries in the continent. The topic is extremely important at a time of debate about the high interest rates in Brazil, the market structure observed, and the alleged effect of this on the high levels of spread between lending and borrowing rates. The research provides evidence for the debate regarding the structure of the banking industry. To evaluate competition, the Panzar-Rosse model was used. Concentration was measured by the Herfindahl-Hirschman index and CR5 ratio. To verify the link between the variables, the hypotheses of the structure-conduct-performance model were tested, via a sample of 16 countries in Latin America, covering the period from 2011 to 2017, using panel data regression. This study, conducted for the banking industry in Latin America, rejected the premises of the structure-conduct-performance (SCP) model, which affirm that concentration reduces competition, causing higher profitability in the sector. In the comparison of the studied variables between the countries in the continent, Brazil presented the lowest competition index. The concentration and profitability assessments, in turn, presented results in line with the mean. The results of the research serve to elucidate the intense debate regarding the structure of the banking market. Moreover, they serve as a scientific basis for regulators’ actions, aiming to incentivize competition and reduce bank spread.

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A FMOLS Analysis of FDI Flows to Latin America

Applied Economics and Finance ◽

10.11114/aef.v6i2.4088 ◽

2019 ◽

Vol 6 (2) ◽

pp. 86

Author(s):

Miguel D. Ramirez

Keyword(s):

Latin America ◽

Latin American ◽

Banking Sector ◽

Public Investment ◽

Panel Cointegration ◽

Ordinary Least Squares ◽

Real Gdp ◽

Institutional Determinants ◽

Cointegration Tests ◽

Investment Spending

This paper estimates a panel FDI investment function that seeks to identify some of the major economic and institutional determinants of net FDI flows to nine major Latin American countries during the 1980-2014 period. First, it utilizes Dunning’s OLI model to identify some of the major economic and institutional determinants of FDI. Second, the paper provides an overview of FDI flows to Latin America during the 1990-2017 period, with particular emphasis on their contribution to the financing of gross fixed capital formation. Third, an economic rationale is provided for the included variables and their expected signs. Fourth, the paper reports estimates for a Fully Modified Ordinary least Squares (FMOLS) panel regression designed to explain the variation in FDI flows to Latin America during the 1980-2014 period. The estimates suggest that real GDP (a proxy for market size), credit provided by the private banking sector, government expenditures on education, and the level of economic freedom as measured by the Fraser Institute have a positive and significant effect. On the other hand, public investment spending, the volatility of real GDP and the real exchange rate have a negative and significant effect on FDI flows. The panel unit root and (Pedroni) panel cointegration tests suggest that there is a stable, long-term relationship among the included variables; i.e., the selected variables in the reported regressions are cointegrated over the relevant time period.

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A structural approach to financial stability: On the beneficial role of regulatory governance

Journal of Governance and Regulation ◽

10.22495/jgr_v2_i1_p1 ◽

2013 ◽

Vol 2 (1) ◽

pp. 7-26 ◽

Cited By ~ 9

Author(s):

Benjamin Mohr ◽

Helmut Wagner

Keyword(s):

Latent Variables ◽

Financial Stability ◽

Structural Equation ◽

Banking Sector ◽

Institutional Environment ◽

Equation Modeling ◽

Regulatory Governance ◽

Economic Statistics ◽

Financial Soundness

This paper examines whether the governance of regulatory agencies – regulatory governance – is positively related to financial sector soundness. We model regulatory governance and financial stability as latent variables, using a structural equation modeling approach. We include a broad range of variables potentially relevant to financial stability, employing aggregate regulatory, banking and financial, macroeconomic and institutional environment data for a sample of 55 countries over a period from 2001 to 2005. Given the growing importance of macro-prudential analysis, we use the IMF’s financial soundness indicators, a relatively new body of economic statistics which focuses on the banking sector as a whole. Our empirical evidence indicates that regulatory governance has a beneficial influence on financial stability. Thus, our findings support the view that the improvement of regulatory governance arrangements should be a building block of financial reform

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Foreign banks’ faith in Mexico will endure

Emerald Expert Briefings ◽

10.1108/oxan-db219829 ◽

2017 ◽

Keyword(s):

Latin America ◽

Commercial Bank ◽

Banking Sector ◽

Foreign Bank ◽

Foreign Banks ◽

Content Type ◽

International Banks ◽

Loan Growth ◽

Double Digit

Subject Mexican banking. Significance On March 10, Japan's Mizuho launched a commercial bank in Mexico, becoming the latest foreign bank to begin operations there. Mexico's banking sector has been one of the fastest-growing and most attractive in Latin America in recent years, with several new players entering and double-digit loan growth. Impacts Major international banks’ continued interest in Mexico shows confidence in an economy and a government under pressure. Banks that are willing to lend heavily will be important for the struggling Mexican economy. Mexican FDI will benefit from investments by foreign banks despite a predicted fall in FDI overall.

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Preventing banking sector distress and crises in Latin America

10.1596/0-8213-3893-5 ◽

1997 ◽

Cited By ~ 3

Keyword(s):

Latin America ◽

Banking Sector

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How the institutional environment affects the banking sector: evidence from BRICS

Journal of Physics Conference Series ◽

10.1088/1742-6596/1141/1/012021 ◽

2018 ◽

Vol 1141 ◽

pp. 012021

Author(s):

N Larionova ◽

J Varlamova ◽

D Rakhmatullina ◽

L Zulfakarova

Keyword(s):

Banking Sector ◽

Institutional Environment

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Toward a Quadruple Bottom Line: Social Disclosure and Financial Performance in the Banking Sector

Sustainability ◽

10.3390/su12104038 ◽

2020 ◽

Vol 12 (10) ◽

pp. 4038

Author(s):

Francesco Manta ◽

Annunziata Tarulli ◽

Domenico Morrone ◽

Pierluigi Toma

Keyword(s):

Financial Performance ◽

Banking Sector ◽

Equal Opportunity ◽

Female Executives ◽

Bottom Line ◽

Positive Performance ◽

Banking Institutions ◽

Good Reputation ◽

And Performance ◽

Social Disclosure

The present study aims to analyze the existence of a possible significant relationship between social disclosure and financial performance in banking institutions. This phenomenon was analyzed by considering the percentage of female executives on boards, and the implementation of the equal opportunity policy when it was applied. We used a sample of 61 banks from European Union countries (between 2015–2017), and sampling was environmental, social, or governance (ESG)-driven in order to capture the effect of non-financial disclosure provided by Bloomberg. A cross-section econometric model was built in order to examine the relationship between the percentage of female directors on boards and the equal opportunity policy. Both the independent variables of banks and performance indicators were adopted as dependent variables. Our study provides empirical evidence that while there is a lack of efficiency and performance when boards are fragmented, the enactments of equal opportunity policies create a good reputation for the firm and the positive performance of staff. The study aims to contribute to the ongoing debate on social sustainability and on the phenomenon of the glass ceiling, and provides political and entrepreneurial implications.

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