American Banking Research Articles

Exploring Profitability in Albanian Banks through Decision Tree Analysis

This study intends to predict Return on Assets (ROA) and assess the significance of several key dependent variables, including Profit per Outlet, Profit per Employee, Natural Logarithm of Assets (ln(assets)), and Loan to Deposits Ratio. In this respect, decision tree regression is employed as the major analytical tool. Within the scope of quarterly data sourced from some leading Albanian banks, such as American Bank of Investments, Banka Kombëtare Tregtare, Credins Bank, Fibank, Intesa Sanpaolo Bank, ProCredit Bank, Raiffeisen Bank, Tirana Bank, and Union Bank, data spanning from January 2016 to December 2022 were taken and used in this analysis. Data collection was done through the website of the Albanian Association of Banks. The following section presents all the relevant information on the selected model, mean squared error (MSE) for training data at 0.5988 and for test data at 0.8912, mean absolute error (MAE) of 0.4764 for the training data and 0.6257 for the test data, and R-squared (R²) at 0.7706 for training data and 0.4244 for test data. All the findings clearly show that decision tree regression is very effective in the prediction of ROA and also helps in elucidating the relative importance of the selected dependent variables within the context of Albanian banking institutions.

Themes and Language Style in Advertising Slogans of Vietnamese Banks and American Banks

Advertising slogans are important in branding companies and attracting customers. Businesses emphasize global thinking but tailor actions to local preferences, initiating advertisers to consider local culture when crafting advertising slogans. However, studies on advertising slogans are not abundant. This study used a qualitative approach to analyze and compare 50 Vietnamese and 69 American banks' advertising slogans in three aspects: themes, vocabulary, and syntax. Unlike previous multimodal studies on advertisements, this research highlighted the impact of culture on advertising, namely the influence of collectivism/individualism and high/low-context culture on advertising themes, vocabulary, and syntaxes. The study identified one similarity and three differences in the themes and pinpointed distinct words and syntax in these two groups of advertising slogans. Hopefully, the research will provide a deeper understanding of cultural influence on advertising so that advertising professionals can avoid potential cultural crashes in multi–national working environments.

Bank financial sustainability evaluation: Data envelopment analysis with random forest and Shapley additive explanations

Ensuring financial sustainability is imperative for a financial institution's overall stability. To mitigate the risk of bank failure amid financial crises, effective management of financial sustainability performance becomes paramount. This study introduces a comprehensive framework for the accurate and efficient quantification, indexing, and evaluation of financial sustainability within the American banking industry. Our approach begins by conceptualizing financial sustainability as a multi-stage, multifactor structure. We construct a composite index through a three-stage network data envelopment analysis (DEA) and subsequently develop a random forest classification model to predict financial sustainability outcomes. The classification model attains an average testing recall rate of 84.34 %. Additionally, we employ SHapley Additive exPlanations (SHAP) to scrutinize the impacts of contextual variables on financial sustainability performance across various substages and the overall banking process, as well as to improve the interpretability and transparency of the classification results. SHAP results reveal the significance and effects of contextual variables, and noteworthy differences in contextual impacts emerge among different banking substages. Specifically, loans and leases, interest income, total liabilities, total assets, and market capitalization positively contribute to the deposit stage; revenue to assets positively influences the loan stage; and revenue per share positively affects the profitability stage. This study serves the managerial objective of assisting banks in capturing financial sustainability and identifying potential sources of unsustainability. By unveiling the “black box” of financial sustainability and deciphering its internal dynamics and interactions, banks can enhance their ability to monitor and control financial sustainability performance more effectively.

Dynamic credit risk transmissions among global major industries: Evidence from the TVP-VAR spillover approach

We examine the dynamics of credit risk connectedness by analyzing credit default spreads in four major sectors (banks, transportation, manufacturing, electricity) across three global regions (Asia, Europe, North America) using the TVP-VAR spillover methodology from 2007 to 2024. We have identified significant findings regarding credit risk spillovers among them. First, there are consistently high levels of credit risk spillovers between sectors, indicating underlying economic factors influencing the transmission of credit risk shocks. Second, notable regional findings include a substantial increase in credit risk connectedness for Asian banks during the global financial crisis (GFC). European manufacturing sectors also displayed significantly high connectedness levels during both the GFC and the COVID-19, while North American banks saw a notable surge due to the collapse of Silicon Valley Banks (SVB) in March 2023. In addition, during the RU-war, the electricity and manufacturing sectors in Europe had high CDS connectedness. Lastly, a distinct observation emerged concerning the Asian transportation sector. These findings have practical implications for policymakers and portfolio managers. For instance, they can help policymakers assess the effectiveness of their policies by revealing global industry credit risk interconnections. Additionally, the dynamic credit risk linkages provide strategies for hedging credit risk.

The Use of Virtual Reality in the Countries of the Central American Bank for Economic Integration (CABEI)

In recent years, virtual reality (VR) technologies have become one of the teaching tools with the greatest training potential in higher education. Thus, the study of factors that influence the adoption and valuation of VR by the educational agents involved is a fruitful line of research, because it can provide keys to promote its incorporation. This article compares the assessments of VR as a teaching technology in higher education given by professors from countries that are members of the Central American Bank for Economic Integration (CABEI) with those of professors from countries in the Latin American region that are not members of CABEI. For this purpose, a validated questionnaire on the perception of VR use was administered to a sample of 1246 professors from the entire Latin American region, and their responses were statistically analyzed. As a result, it was found that professors from CABEI countries give better ratings to the usability dimensions of VR and report a lower number of disadvantages in its use than professors from countries outside CABEI. However, the increase in the digital competence of professors in CABEI countries is more than twice as high as the increase in the valuation of VR. It follows that there is still much room for the integration of VR in higher education in CABEI countries. Furthermore, in CABEI countries there is a more pronounced gap between professors from private and public universities with respect to the above-mentioned ratings than in non-CABEI countries. As a consequence, some implications and suggestions derived from the results are reported.

Profitability Determinants and Performance Analysis of Latin American Banks: A Pre-COVID19 Period

Profitability Determinants and Performance Analysis of Latin American Banks: A Pre-COVID19 Period

Risk Analysis of American Banking and Regulatory Systems Based on Silicon Valley Banking Events

Risk Analysis of American Banking and Regulatory Systems Based on Silicon Valley Banking Events

Shelter in Uncertainty: Evaluating Gold and Bitcoin as Safe Havens Against G7 Stock Market Indices During Global Crises

This paper investigates the hedging and safe haven capacity of gold and Bitcoin against the G7 stock market indices during the COVID-19 pandemic, the Russia-Ukraine military conflict, and the Silicon Valley Bank collapse. Using a novel Quantile-VAR connectedness approach, the results show that, at the median quantile, both gold and Bitcoin act as effective hedges during normal market conditions and strong safe-haven assets during the three crises. Gold emerges as the most prominent safe haven asset, outperforming Bitcoin, especially during the war and the SVB collapse. Among the G7 stock market indices, the Japanese and the American stocks may be used as risk diversifiers during crises. As for the rest of the G7 stocks, they are regarded as “risk-on” investments. Next, we assessed the robustness of our results at various quantiles. We found them to be generally consistent with the outcomes obtained at the median quantile, with one exception related to the S&P500.The results show that the repercussions of the COVID-19 pandemic and the war are much stronger than the American banking crisis.

Wells Fargo Circles the Wagons: Communicating during a Crisis

In October 2016, Timothy Sloan, the newly appointed CEO of American banking giant Wells Fargo, faced a massive public-relations crisis. A few weeks earlier, a United States government agency had announced the results of its regulatory review of the bank and exposed a shocking practice common in the retail division, in which aggressive community bankers had created more than a million fraudulent accounts and credit card applications on behalf of unaware customers for the past several years. Over the next few weeks, the bank—and Sloan's predecessor, John Stumpf, in particular—suffered from harsh criticism from politicians, journalists, and former employees alike, ultimately forcing Stumpf's resignation. As Sloan sought to minimize the public-image backlash and restore general trust in Wells Fargo, he struggled to construct the best communication strategy for the bank's next chapter.

The U. S. Commercial and Investment Banks, the Eurocurrency Markets, and the International Economy: from the Late 1970s Through the Start of the 1980s

This article, through the case study of Merrill Lynch and Lehman Brothers, investigates the role of U. S. commercial and investment banks in the development of the Eurocurrency markets from the 1970s to the start of the new decade, as well as the investment activities of U. S. financial institutions in the new financial environment of the 1980s based on the appearance of new financial actors and instruments. The first purpose is to frame the investment activities of American banking in the Eurodollar and other non resident markets against the backdrop of changing market pressures on the dollar from the first oil shock through to the monetary and financial consequences of combined second oil crisis and the historic decision by the newly appointed Chairman of the Board of Governors of the Federal Reserve System Paul A. Volcker to raise interest rates at unprecedented highs since 1980. Therefore, this article links the investment behaviour of American banks to the trajectory of U. S. dollar in the foreign exchange markets between the two oil crises of the 1970s. Secondly, this contribution pinpoints the variety of financial activities of American bankers during this period, which went way beyond the Eurodollar markets and involved, at least by the mid-1970s, a wide array of financial instruments both overseas and on domestic markets, from government securities to commercial paper assets. In the third instance, the aim is, as much as possible, to shed some preliminary lights on how the process of securitising, typical of the 1980s, was on the investment portfolios of American investors by the start of this decade. At the outset of this three-fold research target, the final objective is to make sense of the limited role of Eurodollar dealings and offerings in the context of trading and investment activities of U. S. financial institutions during the time frame considered, and particularly since the start of the new decade. In turn, this article suggests the multi-fold scope of financial activities of American banks in the context of macroeconomic and monetary transformations following the end of fixed exchange rates, the tottering of the dollar in the foreign exchange markets, and the meteoric rise of unregulated money markets since the 1970s, as well as the rise of securitisation since circa the year 1980.

U.S. monetary policy shocks and bank lending in Latin America: evidence of an international bank lending channel

ABSTRACT We examine the impact of U.S. monetary policy shocks on bank lending in five major Latin American countries where large U.S. banks have limited presence. Our analysis covers annual balance sheet data from 2000 to 2021 for all banks in these nations, utilizing a recently developed measure of U.S. monetary policy shocks by Bu et al. Our findings reveal the existence of an international bank lending channel, with a one-percentage-point increase in the Fed funds rate resulting in an average 80.6 basis-point reduction in domestic bank loan growth in these countries. Liquidity and solvency emerge as crucial factors driving variations in lending behaviour among Latin American banks, with banks exhibiting stronger liquidity and solvency profiles experiencing higher loan supply growth rates.

Secrets to successful bank and FinTech partnerships for credit and deposits

This paper aims to provide a road map to a successful long-term partnership between traditional financial institutions (FIs) like banks and credit unions with a financial technology (FinTech) platform. This is a summary of lessons learned from developing and launching over 200 bank/credit union partnerships with a FinTech lending platform. Drawing on experience with financial institutions of all shapes and sizes, this paper details best practices to create a scalable way of providing custom solutions to the problems faced by the modern depository institution. This includes a particular focus on lending/ credit products, and how the effect of FI and FinTech lending programmes can add value while mitigating risk. The paper focuses on depositories domiciled in the USA and the American banking system’s regulatory environment, but many of its themes will be applicable to international organisations.

The Comparison of the Chinese Banking System and US Banking System--- Taking Monetary Policy as Example

Banking systems play a crucial role in any economy, supporting financial intermediation and facilitating economic growth. As globalization continues to reshape the world, comprehending the similarities and distinctions between these banking systems becomes increasingly crucial. The Chinese banking system operates within centralized governance and state control, with state-owned banks dominating. In contrast, the banking system in the US is characterized by a more decentralized approach and a mix of privately owned banks, including a substantial number of commercial banks. By exploring these differences and similarities, this essay aims to provide insights into the distinctive features of the Chinese and American banking systems and their implications for economic growth and stability in these global economic powerhouses.

Identity Construction in Website News Discourse: A Corpus-assisted Comparative Study of Top 10 American and Chinese Banking Corporations

The post-COVID-19 period has witnessed the fierce trade war between America and China as the two supreme world powers in the global economic meltdown. Under these circumstances, it is essential that banking corporations due to their significant role in economic transformation and resuscitation should construct a strategic identity in the global market. In light of this, this research aims to find out what key attributes of corporate identity are projected for American banking corporations (hereinafter referred to ABCs) and for Chinese banking corporations (hereinafter referred to CBCs) in website news discourse and to highlight their similarities and differences so as to offer insight into future development. To achieve this, this research adopted monologic perspectives and two corpora were built; following MIP, a detailed systematic cognitive metaphor analysis was carried out by application of Wmatrix to examine how the three metaphors in the pyramid hierarchy (concrete metaphors, conceptual metaphors, abstract conceptual keys) collaborate with each other for semantic representation. The findings show that Both ABCs and CBCs attach strategic significance to metaphorical representation of corporate identity, whose different frequency and distribution of concrete metaphors in the semantic field THE BODY AND THE INDIVIDUAL in accordance with USAS demonstrates different attributes of corporate identity; that there is one shared abstract schema: BANKING CORPORATIONS ARE ORGANISMS; that while ABCs are constructed kings who enjoy highest social reputation and projected as doctors who can diagnose their own symptoms, CBCs are constructed as hunks who have saved many people’s lives in emergency and projected as patients who have gone into therapy due to serious illness. The paper also offers empirical and theoretical implications for future research.

Innovation Framework for Financial Excellence: Banks, FinTech and the Regulators

Financial innovations like peer-to-peer payment and digital currency, mostly introduced by FinTech companies, are perceived as disruptions to Financial Institutions (FIs). For banks, transformation to digital banking helps initially but quickly intensifies the challenge to change with speed and scale given the diversity of such disruptions. Who are banks competing with? What will banking be competing on? Interesting questions like these, which were not even relevant a decade ago, are pushing banks to innovate about the products, services, branches, and operations, if not the very core model of banking. For example, applying pay cuts into the profit margin but emerging innovation of Blockchain raises the questions of whether banks should accept Bitcoin or re-invent the trade finance service. Consumers do seem to benefit initially as competition encourages banks to lower the service fees and design new products in the quest of enhancing customer experience. Nevertheless, all come with a price, for instance digital frontier becomes a fertile ground for fraud and Regulators may jump in at calculated moment. This helps to level the competition or curtail intrusion into the space of customer privacy. Reluctantly, however, regulators, FinTech companies and banks now enter the impossible trinity, or what economists call the trilemma, which is the core issue our research focuses on. This paper develops an empirical framework for banks to embrace disruptive innovation from FinTech start-ups and associated legal or regulatory changes and to create competitive advantage through strategic use of enterprise data that are originated in the bank or acquired by the bank. Lab works in multiple North American banks have been first anonymized to protect the interest of all engaged parties and then harmonized to mature the empirical models based on first-hand evidence in three directions: Customer Experience Enhancement, Digital Product Design and Fraud Management. Foundation of the framework, however, builds on research works in digital banking, social engineering, data science, decision modeling, fraud detection algorithms, digital currency, and regulations adaptive to societal transformations enabled by application of artificial intelligence and Internet of Things. Rather than locking in rigid industry trend, often heavily depend on hence limited by technology, the framework focuses on translating theory or strategy into product and actionable steps that have direct and measurable impact. Data is the key enabler. Data monetization is a good example. Results from Banking Labs work are the proof, and the value will be even more pronounced as expected results come by to validate and optimize the framework and its implementation.

Latin American Banks and Euromarkets: A View on the Process of Early Bank Globalization from the Periphery

Abstract Global banks and interconnected national banking sectors have been a main characteristic of the modern international financial systems over the last half century. After a sluggish wake up in the early postwar years, international banking took off in the 1970s as the Euromarkets gained traction and strongly developed in the lead up to the international debt crisis of 1982. This article examines the birth of bank globalization in Latin America, a region of the developing world at the centre of global finance and Euromarket developments during this period. It shows that, like their counterparts in industrial countries, leading banking institutions from the region also went international, expanding their presence overseas and their participation in the Euromarkets. The world leading financial centres of London and New York were the main destinations, but they also settled in offshore centres in the Caribbean and other US financial districts from where they conducted international business on their own or in collaboration with other banks. The presence in Germany along with the joint business between Latin American and German banks in the Euromarkets are explored as well. While assessing the extent and scope of early Latin American bank globalization for the first time, the article also provides insights on the evolution and changing nature of this process over the following period.

Short- and long-term impacts of merger activities in the banking industry: evidence from an emerging market

PurposeThis study aims to examine in depth the impact of merger activities on banks in Saudi Arabia.Design/methodology/approachEvent study, financial ratio and efficient frontier analyses with a mixture of parametric and non-parametric tests are used for the sample period 2016Q1–2022Q4.FindingsEvent study analysis shows that merging banks (bidders) have higher positive cumulative abnormal returns than merged banks (targets), indicating that investors believe that bidding banks will benefit the most from the merger strategy. It was also found that the efficiency measures of the combined banks of Saudi British Bank and Alawwal Bank deteriorated, while they improved for the combined banks of National Commercial Bank and Saudi American Bank in the post-merger period, confirming investors' views.Research limitations/implicationsAlthough the study focuses on the Saudi banking sector, its findings could be generalized to other banks in the region, as the Saudi banking sector is one of the largest in the Middle East region and is expected to grow further in the future.Practical implicationsThe mere act of merging two banks does not guarantee the realization of cost synergies or efficiency gains. This research shows that mergers are not automatically cost-effective and that their success depends on good integration and restructuring strategies.Originality/valueTo the best of the author's knowledge, this is the first study to provide a comprehensive analysis of the short- and long-term impacts of merger activities in the Saudi banking sector.

The Effects of a Short-Term Corporate Social Impact Activity on Employee Turnover: Field Experimental Evidence

Short-term corporate social impact activities, wherein employees participate in firm-sponsored prosocial initiatives, are becoming increasingly common. However, it remains unclear whether short-term social impact activities affect employee behavior in a manner of relevance to the firm. Theoretically, arguments could be made in favor of or against the likelihood that such short-term activities would increase firm-benefitting employee behavior. We utilized data from a randomized field experiment implemented at a large Latin American bank to examine whether a short-term social impact activity can be beneficial for firms, focusing on one important outcome: turnover. Newly hired employees were randomly assigned to a short-term social impact activity as part of the new employee onboarding process or not. Notably, we find causal evidence that a day-long, short-term engagement reduced employee turnover almost a year later. We explore potential mechanisms behind this effect and find that employees’ perceptions of organizational justice help to explain the effects of the intervention on turnover. We also explore heterogeneous treatment effects and find more substantial effects for male, rather than female, employees. This paper advances the literature on the implications of corporate social responsibility (CSR) practices by shedding light on the causal mechanisms through which a theoretically underexplored and practically relevant type of CSR activity can benefit organizations and their employees. This paper was accepted by Lamar Pierce, organizations. Funding: The authors acknowledge funding from NSF through the Learning the Earth with Artificial intelligence and Physics (LEAP) Science and Technology Center (STC) (Award #2019625). Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2022.01517 .

Comparison of Chinese and American Banks' Loan Financing Business

In this article, we aim to compare the banks loan financing business in China and the United States. We will focus on banks' personal lending business, including housing, student, and personal consumption loans. We will analyze the personal loan business of Chinese and U.S. banks separately and compare the personal loan business of both banks. The result of our comparison is that the government controls the lending system in China. China's loan system is formulated by the People's Bank of China, which is less liberal than the US loan system. China's loan laws are also imperfect, and there is a lack of third-party supervision. The United States has a complete system with guarantor agencies that China does not have. The government and the market are Multi-participation, and the Secondary Market is also involved, sharing the risk.

The next digital inflection point for US banks

This paper explores the effect of technology on the American banking landscape in the 21st century. The number of US banks and bank branches has been consistently decreasing in this century, partly owing to technological advances. Existing legacy delivery channels, however, have slowed the rate at which banks in the United States have adopted and deployed the technology available to them. This slower rate of innovation by US banks has resulted in a level of consumer dissatisfaction that has created opportunities in the banking sector for FinTechs and Big Techs, especially since 2009.