1,721,041 research outputs found
Bank Capital and Profitability: Evidence from a Global Sample
Full text linkThis study employs bank-level data for a global sample of 125 countries to examine the relationship between capital and profitability for a period of 19 years (2000-2018) that includes both normal and crisis time. Our evidence suggests that bank capital is positively related to bank profitability, although the estimated impact is relatively weak. The relationship depends on environmental conditions as well as bank size. It is typically stronger in crisis periods, in lower and middle income countries and for larger banks (but not for Global Systemically Important Banks, or GSIBs). Finally, for banks operating in more corrupt environments, the same increase in capital is associated with more profitable institutions compared with banks based in countries with lower corruption levels. Our findings are robust to different specifications of the baseline model, and carry useful implications for policy reforms aimed at ensuring stability to the banking sector globally
Emerging Issues in Banking
Full text linkResearch in banking and finance is being profoundly shaped by recent crises and events. This paper offers a synopsis of the trends in global uncertainty over the past twenty years and provides a review of the most recent literature for each of the emerging topics in banking covered in the six studies that are included in our Review of Corporate Finance Special Issue. Our main findings suggest that the challenging scenarios posed by new geopolitics, high uncertainty and rising inflation will provide new research opportunities on a variety of relevant themes, from how to sustain bank performance and resilience to the need to identify the bank business models of the future. The paper also emphasises how, going forward, more research is needed on the disruptive role and risks posed by FinTechs and on the critical and unique role of banks in the transition to green finance
Large EU banks' capital and liquidity: Relationship and impact on credit default swap spreads
Full text linkThis paper explores the interrelations between bank capital and liquidity and their impact on the market probability of default. We employ an unbalanced panel of large European banks with listed credit default swap (CDS) contracts during the period 2005-2015, which allow us to consider the impact of the recent financial crisis. Our evidence suggests that bank capital and funding liquidity risk as defined in Basel III have an economically meaningful bidirectional relationship. However, the effect on CDS spread is ambiguous. While capital appears to have a relatively large impact on CDS spread changes, liquidity risk is priced only when it falls below the regulatory threshold
What affects bank market power in the euro area? A country-level structural model approach
Get PDFIn this study we explore market power in 13 euro area banking sectors for the years 2007 to 2019 by means of a structural model framework with demand and supply equations, where the mark-up of price over marginal cost is parameterized as a measure of banks’ conduct that depends on selected factors. Our evidence indicates that EU banks enjoy a significant degree of market power, which shows a decreasing trend over time and some difference across countries. More competition is associated with higher bank density, lower bank capitalization, more efficient and stable banking systems, better macroeconomic conditions, and the establishment of the SSM. Finally, a clear convergence pattern emerges in the behaviour of EU banks
Financial fragmentation and SMEs’ access to finance
Full text linkThis paper focuses on the impact of financial fragmentation on small and medium enterprises (SMEs)’ access to finance. We combine country-level data on financial fragmentation and the ECB’s SAFE (Survey on the Access to Finance of Enterprises) data for 12 European Union (EU) countries over 2009-2016. Our findings indicate that an increase in financial fragmentation not only raises the probability of all firms to be rationed but also to be charged higher loan rates; in addition, it increases the likelihood of borrower discouragement and it impairs firms’ perceptions of the future availability of bank funds. Less creditworthy firms are even more likely to become credit rationed, suggesting a flight to quality effect in lending. However, our study also documents a potential adverse effect of increasing bank market power resulting from greater integration. This suggests that financial integration could impair firms’ financing, if not accompanied by policy initiatives aimed at maintaining an optimal level of competition in the banking sector
Banking in Italy
No full textThis chapter provides an overview of the evolution of the banking industry in Italy and examines the current structural features, strategic challenges and concerns in the aftermath of the financial crisis. In essence the Italian banking industry appears to be dominated by polyfunctional groups oriented to relationship lending, and operates according to a banking law allowing banks to act as firms just from the 1990s. Such a framework opens new current issues such as the large amount of non-performing loans affecting Italian banks and the need for further reforms especially for cooperative banks
Ownership, diversification and cost advantages: Evidence from the Italian leasing industry
No full textUsing Greene's (2005) random parameter cost frontier model and a unique hand-collected dataset, this paper provides novel evidence on the cost advantages of Italian leasing companies over 2002-2008, focusing on ownership structures and diversification strategies. Results suggest that cost efficiency and economies of scale have decreased significantly over the period analyzed. Bank-related, independent and domestic leasing companies are more able to control costs than their captive and foreign counterparts. Diversification strategies can be crucial in determining the cost effectiveness of leasing firms. Nonetheless, smaller, independent and less diversified leasing firms appear to benefit from higher economies of scale and greater technological advancements. © 2012 Elsevier B.V
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