36,984 research outputs found
Are small rural banks vulnerable to local economic downturns?
No full textA potentially troubling characteristic of the U.S. banking industry is the geographic concentration of many banks’ offices and operations. Historically, banking laws have prevented U.S. banks from branching into other counties and states. A potential adverse consequence of these regulations was to leave banks—especially small rural banks—vulnerable to local economic downturns. If geographic concentration of bank offices leaves banks vulnerable to local economic downturns, we should observe a significant correlation between bank performance and the local economy. Looking at Eighth District banks, however, we find little connection between the dispersion of a bank’s offices and its ability to insulate itself from localized economic shocks. County-level economic data are weakly correlated with bank performance. Two policy implications follow from this finding. First, a priori, little justification exists for imposing more stringent regulatory requirements on banks with geographically concentrated operations than on other banks. Second, county-level labor and income data do not appear to be systematically useful in the bank supervision process.Rural areas ; Banks and banking ; Economic conditions - United States
PROFITABILITY AND RISK OF U.S. AGRICULTURAL BANKS
No full textStudy of profitability and risk of agricultural banks is very important in assessing the ability to adequately finance agricultural production and rural development. A recursive system of profitability and risk equations is estimated to compare the performance of agricultural with nonagricultural banks and to identify factors which affect performance. A linear regression model which measures risk-adjusted profitability confirms the results from the recursive system. Results show that agricultural banks perform better than nonagricultural counterparts on average even after controlling for risks and other factors. Further, off-balance-sheet business is found to be negatively related to the risk-adjusted profitability of agricultural banks.Financial Economics,
Financial condition of community banks
No full textThis article examines the condition of the banking industry in the United States, with an emphasis on community banks. In spite of the recent recession, the condition of the banking industry is substantially better than during the recession of 1990-91. There has been an increase in problem loans at both large and small banks during recent quarters, and nonperforming loans have risen relative to the allowance for loan and lease losses. Among the banks in each of the size groups in this article, however, ratios of equity to total assets in recent quarters are at about their highest levels since the early 1990s. Output of an early warning model of bank distress, which converts individual measures of bank condition into an index number, indicates a substantial improvement in the condition of community banks and larger banks after the early 1990s. While the median probability of failure has been higher for community banks than for larger banks during recent quarters, the difference is very small. Trends in the ratings that supervisors have assigned to the banks examined during recent quarters are not consistent with the view that examiners have been detecting a systematic deterioration in the condition of community banks.Community banks ; Bank supervision
Universal Banks and Relationships with Firms
No full textSome of the most widely expressed myths about the German financial system are concerned with the close ties and intensive interaction between banks and firms, often described as Hausbank relationships. Links between banks and firms include direct shareholdings, board representation, and proxy voting and are particularly significant for corporate governance. Allegedly, these relationships promote investment and improve the performance of firms. Furthermore, German universal banks are believed to play a special role as large and informed monitoring investors (shareholders). However, for the very same reasons, German universal banks are frequently accused of abusing their influence on firms by exploiting rents and sustaining the entrenchment of firms against efficient transfers of firm control. In this paper, we review recent empirical evidence regarding the special role of banks for the corporate governance of German firms. We differentiate between large exchange-listed firms and small and medium sized companies throughout. With respect to the role of banks as monitoring investors, the evidence does not unanimously support a special role of banks for large firms. Only one study finds that banks’ control of management goes beyond what non-bank shareholders achieve. Proxy-voting rights apparently do not provide a significant means for banks to exert management control. Most of the recent evidence regarding small firms suggests that a Hausbank relationship can indeed be beneficial. Hausbanks are more willing to sustain financing when borrower quality deteriorates, and they invest more often than arm’s-length banks in workouts if borrowers face financial distress.relationship lending, Hausbank, universal banking, corporate finance, corporate governance
Are Banks Risk-Averse?
No full textThe paper investigates, and estimates, banks’ risk aversion that is factored into the spread between the interest rate on time deposits and the interest rate on non-time deposits. The estimation results indicate that the relative risk aversion coefficient estimates of individual banks fall between 0 and 1, but mostly around 0.2, thereby indicating that banks are risk-averse but close to being risk-neutral.Banks, Risk Aversion, Deposit Rate Rigidity
The Bulgarian Banks' competitiveness: the case of Remote banking
No full textThe new information technologies adoption and e-commerce emergence change the role of financial intermediaries in new E-conomy. During the last years, the banks have started an expansion to the web – they offer broad range of traditional bank products and services via Internet. The remote banking becomes one of the main channels for bank services distribution. This paper presents results from a research, which aims to describe actual picture of remote banking products and services offered by Bulgarian banks. They are estimated in accordance with the criteria as: web site availability; information for bank products and services available via Internet; online application forms; online banking application; other online/remote services. In spite of the small number of Bulgarian banks, which offer their products and services via Internet, the research shows that Bulgarian banks as a whole are presented in Internet, as well as indicates that banks estimate the potential and competitive advantages of the new medium.Banks, Internet, Online services, Remote banking, E-commerce, Bulgaria
A specialized inventory problem in banks: optimizing retail sweeps
No full textDeposits held at Federal Reserve Banks are an essential input to the business activity of most depository institutions in the United States. Managing these deposits is an important and complex inventory problem, for two reasons. First, Federal Reserve regulations require that depository institutions hold certain amounts of such deposits at the Federal Reserve Banks to satisfy statutory reserve requirements against customers* transaction accounts (demand deposits and other checkable deposits). Second, some inventory of such deposits is essential for banks to operate one of their core lines of business: furnishing payment services to households and firms. including wire transfers, ACH payments, and check clearing settlement. Because the Federal Reserve does not pay interest on such deposits used to satisfy statutory reserve requirements, banks seek to minimize their inventory of such deposits. In 1994, the banking industry introduced a new inventory management tool for such deposits, the retail deposit sweep program, which avoids the statutory requirement by reclassifying transaction deposits as savings deposits. In this analysis, we examine two algorithms for operating such sweeps programs within the limits of Federal Reserve regulations.Banks and banking ; Retail trade
Universal banks and relationships with firms : [Version Mai 2003]
No full textSome of the most widely expressed myths about the German financial system are concerned with the close ties and intensive interaction between banks and firms, often described as Hausbank relationships. Links between banks and firms include direct shareholdings, board representation, and proxy voting and are particularly significant for corporate governance. Allegedly, these relationships promote investment and improve the performance of firms. Furthermore, German universal banks are believed to play a special role as large and informed monitoring investors (shareholders). However, for the very same reasons, German universal banks are frequently accused of abusing their influence on firms by exploiting rents and sustaining the entrenchment of firms against efficient transfers of firm control. In this paper, we review recent empirical evidence regarding the special role of banks for the corporate governance of German firms. We differentiate between large exchangelisted firms and small and medium sized companies throughout. With respect to the role of banks as monitoring investors, the evidence does not unanimously support a special role of banks for large firms. Only one study finds that banks´ control of management goes beyond what nonbank shareholders achieve. Proxyvoting rights apparently do not provide a significant means for banks to exert management control. Most of the recent evidence regarding small firms suggests that a Hausbank relationship can indeed be beneficial. Hausbanks are more willing to sustain financing when borrower quality deteriorates, and they invest more often than arm´s length banks in workouts if borrowers face financial distress
Foreign banks increase the social orientation of Estonian financial sector
No full textReconstruction of Estonian banking system started twenty years ago. Estonia built up for the market economy a banking oriented financial sector, which is centred on commercial banks. During the two decades less than ten banks remained from more than 50 licensed commercial banks, the rest were not able to continue independently, they merged or have failed. The bad result of such kind of development was also the excessive concentration of banking. Banking sector in Estonia during the transition period was opened to the invasion of foreign banks due to the openness of the economy and excessive risks taken. Two banking crises, selected quickly the very limited number of prosperous banks, and the major commercial banks went into the ownership of Scandinavian banks. The qualitative effects of foreign banks’ entry into the Estonian banking market were new features of competition in banking market and transfer of various knowhow from foreign banks. Better liquidity risk management techniques, information systems, credit policy and personnel policy transfer from foreign banks supported banks to have high profitability and low credit losses rates. These directions are noticeable also by quantitative analyses of banking market development. The takeover of main commercial banks by the large Swedish and Finnish banks was one of important factors in the gradual increase of the social orientation of Estonian banks however the ideas of social responsibility of enterprises are especially popular in Scandinavia. In our paper we analyse also Estonian banks’ practices of supporting the social development of Estonia. --
Profitability of Interest-free vs. Interest-based Banks in Turkey
No full textIslamic banking is consistent with Islamic law and guided by Islamic economics. They are prohibited from charging or paying interest, and can operate only on the basis of the profit-sharing arrangements. Islamic banking has been gaining momentum on a global scale for the last 30 years. It is estimated that the assets of Islamic banks in Turkey will exceed US$25 billion in the next decade and will make up 10% of the total banking system. Therefore, this study compares Islamic banks with interest-based banks to measure their profitability. It also investigates how Islamic financing techniques are used by Islamic Banks.Turkish banks, interest-based banking, interest-free banking, Islamic banking
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