Bank Behavior Research Articles

A Review of Research on Blockchain Empowered Supply Chain Financing in China

To promote theoretical and empirical research on blockchain-enabled supply chain finance in China, this article provides an overview of relevant studies in China. Currently, research related to blockchain-enabled supply chain finance in China primarily focuses on three aspects: the underlying mechanisms of blockchain-enabled supply chain finance (including decentralization and consensus mechanisms, distributed storage, tamper resistance, and anti-denial features, as well as smart contracts), the positive effects of blockchain-enabled supply chain finance (including comprehensive effects, credit transmission, risk management) and the application scenarios of blockchain-enabled supply chain finance, and the impact mechanisms of blockchain on supply chain finance gaming behaviors (including the influence of blockchain on supply chain finance decision-making, risk assessment, and the supply chain financial system). Overall, research in China on the positive effects of blockchain-enabled supply chain finance (such as cost and benefit analysis, micro-level efficiency) is relatively limited. Additionally, studies on the factors affecting the adoption of blockchain in supply chain finance and the behavior of banks and small and medium sized enterprises (SMEs) in blockchain adoption within supply chain finance are relatively scarce. Given the backdrop of financial technology, further research is needed to deepen our understanding of various aspects related to blockchain-enabled supply chain finance in China.

Implication of Organizational Citizenship Behaviour in Nepalese Commercial Banks

Organizations serve people by working with and for them. Both organizations and their employees are interdependent on each other. Organizational Citizenship Behavior (OCB) plays a vital role in the success of any organization. It encompasses discretionary behaviors exhibited by employees that go beyond their formal job descriptions, contributing to the overall effectiveness and functioning of the organization. This study focused on examining the perspective of employees regarding OCB in the banking industry of Nepal. The study adopted a quantitative research approach through a survey design to sample 40 employees from the banks. With the use of several statistical methods, including means, standard deviations, frequencies, and correlation analysis- data gathered from the questionnaire was analyzed and interpreted, and utilized for the analysis of the research objectives and hypotheses stipulated by the study. The study found that there is no direct proportional relationship between demographic variables and OCB.

Nonperforming loans and related lending: Evidence from Ukraine

This study examines bank-specific factors that determine nonperforming loans (NPLs) in Ukraine. Analysis of an unbalanced sample of 207 banks from 2008 to 2020 reveals that the NPLs of banks increase with related lending, suggesting that related lending is detrimental to the soundness of bank loans owing to the standard information advantage that can be offset by the bank's conflict of interest in banking relationships. Moreover, a positive shock to NPLs causes a substantial increase in related lending. These results highlight the importance of close monitoring of banks' lending practices to related parties for suppressing excessive risk-taking behavior of banks.

Rethinking moral hazard: government protection and bank risk-taking

Why do firms take excessive risks that result in failure? Moral hazard theorists argue that the answer lies in the risk-boosting effects of the government safety net, which insulates firms from market discipline. We revisit this conventional wisdom by examining how exposure to government protection has contributed to recent trends in bank risk-taking in the USA. Drawing from insights from economic sociology, we highlight an additional way that exposure to government protection can shape organizational behavior: by reducing resource-based profitability pressures that can spur risky behavior. Using panel data analysis of risky US bank behavior between 1994 and 2015, we find that bank exposure to government protection was more often associated with less risk-taking than more of it. This pattern contradicts the predictions of moral hazard theory but aligns with the predictions of our own institutional-resource theory. We discuss implications for economic sociology and financial economics.

The endogeneity of monetary policies of emerging market economies

ABSTRACT We analyse the responses of the monetary policy of five (Brazil, Chile, Mexico, India, and South Africa) emerging market economies (EME) to domestic and external (U.S.) shocks. We argue that the domestic policy rate is sensitive to risk premiums, financial markets, and the world economy, showing that Taylor’s Rule can benefit from the inclusion of these variables to understand the behaviour of the monetary authority. Therefore, our results suggest the following: i) policy rates are affected by risk premiums, ii) domestic monetary policy is affected by exchange rates, stock markets, and the U.S. and iii) there is heterogeneity in the factors explaining the behaviour of central banks.

Herding Behaviour of Syariah Banks Stocks in Indonesia

Herding behavior is deemed as anomaly in the capital market. This behavior indicates a group of investors that might not be confidence enough in their investment performance that led them to mimic other investors' strategy of investments. In this regard, herding behavior is then considered as irrational action in which the investors are not able to utilize the available information and further use it to achieve the expected capital gain. The investors are reactive and most likely sensitive to rumors than valid information available to public. As this rumor is widely spread among investors, the related corporate news tends to drive them in making either buying or selling actions without any fundamental considerations. Pervious studies in this theme of study have proven the herding behavior in conventional approach. However, not many studies consider to put religion comprehension. Thus, we position religion comprehension as a mediating factor in investigating the relationship between our main variable of interests. The outcome of empirical study indicates that (i) there is a positive relationship between stock return and herding behavior in syariah banks, (ii) Trading volume and herding behavior at Islamic Banks in Indonesia are positively related; (iii) The level of religion comprehension and herding behavior at Islamic Banks in Indonesia is also positively related. However, even though all the variables studied show a positive relationship, the same relationship pattern does not apply if the intervening variable is included in the form of a mediation model. Thus, it can be inferenced that the level of religion comprehension (haj quota) cannot mediate the relationship among main variable of interests. Keywords: Herding behaviour, Return, Trading volume, religion comprehension

Behavioural implications of risk–return associations based on the adjusted thermal optimal path method: Large versus small banks

AbstractThis article investigates the impact of bank size and business model on bank risk‐taking within the framework of the prospect theory. To fulfil this objective, we use the adjusted thermal optimal path model. The results suggest that conventional banks adopt the same risk‐taking behaviour for performance measures, regardless of their size. However, the size mainly influences the attitudes of managers towards Islamic banks. On the other hand, small Islamic banks, whether under‐ or over‐performing, take excessive risks. This behaviour is mainly explained by loss aversion. However, large Islamic banks that situated above the target are risk‐averse, since they adopt defensive behaviour. The results reveal that for risk measures and for both small and large banks, a bank's business model does not affect managers' attitude to risk. Therefore, small (large) banks adopt excessive risk‐taking (risk‐averse) behaviour and an offensive (defensive) strategy. The study has important implications for GCC banking regulators, supervisors, and market participants. Thus, our findings imply that understanding the impact of the bank size and business model on the risk‐taking behaviour of Islamic and conventional banks can help them reduce their risk and mitigate moral hazard and regulatory arbitrage behaviour.

Faiz Oranı Marjının Belirlenmesinde Belirsizliğin Banka Davranışı Üzerindeki Etkisi

The behavior of banks in setting interest rate margins has been in the interest of a variety of groups including management, shareholders, and policymakers. On this basis, the literature has employed a wide range of micro and macroeconomic factors in analyzing the interest rate margin. This study focuses more on uncertainty and investigates the role of uncertainty on bank interest margin setting in Turkey. The analysis shows that higher uncertainty is associated with higher interest rate margins both in the short term and long term.

Gambling bank behaviour, incentive mechanism, and sanctions: A two-stage model

This article analyses the optimal punishment structure set by a regulator in banking markets under asymmetric information. Relying on a theoretical model, we analyse whether a decreasing, constant, or increasing sanction scheme deters potentially repeated offences in banking. We find that an increasing punishment structure is efficient in reducing gambling bank behaviour. This holds if and only if the regulator’s detection probability is low or the amount gambled by the bank, if it would cheat, is high. With this paper, we provide justification for the current policy practice.

Excess cash or excess headache? Demonetisation and bank behaviour in India

PurposeSudden and unannounced policy changes by the government that provide banks with windfall deposits creates a challenge in terms of resource deployment. In the process, there is an impact on their risk and returns. Using data on domestic Indian commercial banks, this study aims to examine the impact of such an announcement – the 2016 demonetisation episode – on bank behaviour.Design/methodology/approachUsing data on domestic Indian commercial banks during 2010–2020, the paper investigates the effect of a sudden and unannounced policy change on their risk and returns. Using the demonetisation undertaken in November 2016 as a natural experiment, the paper applies the difference-in-differences methodology to tease out the causal impact.FindingsThe findings reveal a decline in risk and an increase in returns of state-owned banks, consistent with a flight-to-safety. The response differed in terms of market and accounting measures and across state-owned banks with differing levels of capital and asset quality.Originality/valueAlthough several aspects of the demonetisation episode have been well analysed, its impact on banks – the main conduits of the exercise – and in particular on their risk and returns, is an unaddressed area of research. Viewed from this standpoint, this is one of the early studies to undertake a comprehensive empirical analysis on this aspect.

Shareholding relations between banks and insurance companies in Algeria: an overview

Purpose. This study aims to analyze the overlap of shareholding between banks and insurance companies in Algeria, whose commercial activities are not necessarily the same, but functional complementarities exist. The method used in this paper is an inventory of cases where a financial institution is a shareholder of another, following several reforms applied to this market since the 1990s.
 Results. Regarding the shareholding matrices between financial institutions in Algeria, it was found that the intervention of the public sector is the most dominant, unlike the private and foreign sector. The study also showed that the behavior of banks and insurance companies in terms of capital participation is mainly linked to the legal measures introduced in Algeria after the opening of the banking and insurance market to private and foreign operators, essentially aimed at the development of the country. As well as the economic interest of complementarity, since bank financing is usually provided by an insurance guarantee, in addition to the introduction of bancassurance, which allows marketing of insurance products through the cash desks of banks.
 Scientific novelty. The literature review has shown that the subject of shareholder relations between financial institutions refers to a new perspective of the market vision, the core of which is the bank. The analysis is carried out from the perspective of building an updated picture of the capital structure of these financial institutions in Algeria.
 Practical value. The development of shareholding matrices between banks and insurance companies in Algeria, helps to understand the nature of the functional complementarity between these financial institutions, and also explains their strategic behavior with respect to the market.

State-dependent effects of the unconventional monetary policy in stock markets

This study analyzes the state-dependent effect of the Bank of Japan (BoJ)’s intervention in stock markets from 2013 to 2017. A causal inference on such intervention is difficult because of the self-selective behavior of central banks. To address this problem, I apply the propensity score method in a time series context, exploiting stock price information of a single day. The key finding is that the effects are state-dependent and stronger during market downturns.

A Digital Twin System of Capacitive DC Bank Using Rogowski Coil to Monitor Individual Capacitors

The reliability of dc link capacitors is closely related to the operational safety of the whole power electronic system. To meet the application requirements, it is usually necessary to use a series or parallel structure of multiple capacitors to increase the capacity and withstand voltage, which also makes it difficult to monitor the individual capacitors in the capacitor bank. This article proposed a digital twin system for dc-link capacitor banks with PCB integrated Rogowski coils as sensors. The system uses highly integrated Rogowski coils to obtain the operating currents of individual capacitors in order to realize parameter correction of the digital twin system and ensure that the digital twin system can accurately reflect the electrothermal behavior of the dc-link capacitor bank. In addition, the effect of operating temperature on capacitor parameters is also considered, and the capacitor parameters and the operating temperature monitored by the digital twin system simultaneously are used to standardize the parameters. The standardized parameters are used as indicators to realize the health status assessment of each capacitor in the capacitor bank, which further provide an important basis for operation and maintenance.

Promoting intrapreneurial behavior in banking: the role of high-performance work systems, knowledge management processes, and supervisor support

Intrapreneurship is one of the keys to survival and competitiveness for service companies in knowledge-intensive sectors such as banking. This paper analyzes the role of high-performance work systems, knowledge management processes, and supervisor support in promoting intrapreneurial behavior. The results indicate that the relationship of high-performance work systems and intrapreneurial behavior is positive and significant. However, this relationship is mediated by knowledge management processes. Supervisor support moderates the relationships between high-performance work systems and intrapreneurial behavior and between high-performance work systems and knowledge management processes. However, this moderating effect is contrary to the expected effect for the second of these relationships. These findings offer guidance for practitioners to promote intrapreneurship in service sectors, where human-related service innovations, which are central to intrapreneurship, strongly affect customer satisfaction.

Interest rate pass-through and bank risk-taking under negative-rate policies with tiered remuneration of central bank reserves

We identify the effects of negative rates on bank behavior using difference-in-differences identification. First, we find that going negative can interrupt not only the pass-through from policy to deposit but also to mortgage rates. To preserve their deposit franchise, banks finance negative deposit with increased mortgage spreads, the more the bigger their market power. Second, negative rates on reserves induce banks to cut some reserves without replacement and replace others with riskier assets. Together with increased mortgage spreads, balance sheet restructuring preserves profits but risk-taking increases. Third, pass-through interruption and risk-taking can be reduced through tiered remuneration.

Market discipline and the risk‐taking behaviour of banks in India

AbstractAfter the financial crisis, the Indian banking system has accumulated a mountain of bad loans which has crippled the banking sector and halted the credit flow to the industry. Several immediate causes for the bad loan crisis have been pointed out. However, poor market discipline, the ultimate root cause of the bad loan crisis, has not been paid adequate attention. This study seeks to investigate how effectively the market disciplinary forces, captured through information disclosure, interbank deposits, concentration and ownership structure, incentivise the Indian banks to adopt prudential risk management by enhancing their risk‐weighted capital ratio. The findings of the study show that information disclosure and interbank deposits do not induce prudential risk behaviour among banks in India. However, with increasing concentration in the banking sector, a higher level of information disclosure effectively induces banks to maintain higher capital ratios, but inter‐bank deposits do not have any significant effect on bank capital. We also observe that government banks maintain lower capital ratios as compared to private banks indicating government banks' higher expectation of government bailout.

Do election cycles, political stability, and government effectiveness matter for the risk of banks? Evidence from Indian banks

We examine whether parliamentary elections, political stability, and government effectiveness affect banks’ risk in one of the largest democracies – India. We employ four measures of bank risk – net and gross Non-Performing Loans (NPL), the extent of loans restructured, and lending to the priority sector. Using dynamic panel data with a two-step system GMM approach, we find that NPL and lending to the priority sector increase during the years parliamentary elections are held. A stable political environment reduces net NPL, while an effective government increases NPL and lending to the priority sector. Further, we document meaningful differences in the behavior of state-owned and private banks around parliamentary elections. Credit market competition and moral hazard channels drive the relationship between bank risk and elections.

Ethics and Banking: Do Banks Divest Their Kind?

A growing group of institutional investors use divestment strategically to deter misconducts that are harmful for the climate and society. Based on Kantian ethics, we propose that divestment represents investors’ universal and absolute moral commitment to socially responsible investing (SRI). Following categorical and hypothetical imperatives and reciprocity as a norm, we hypothesize how institutional investors’ commit to SRI through a divestment strategy against ethically reprehensible behaviour of banks, especially when these investors represent banks themselves. Using a hand-collected database of the revelation dates of enforcement actions on banks, we find evidence that banks are less likely to divest equity holding on banks with misconduct (fined banks) than their non-bank institutional investors peers. Banks that commit to invest responsibly by signing for the Principles for Responsible Investment (PRI) are not significantly more likely to divest on fined banks stocks than non-signatory banks. Moreover, divestment of fined banks whose own legitimacy to operate is in question is not significantly different from non-fined banks divestment. We find that European banks are more inclined to sell their holdings permanently on fined banks than their United States peers. Therefore, bank’s moral commitment to SRI via divestments is influenced more by cultural and reciprocity norms than their moral commitment to participate in the PRI.

Examine the level of environmental, social and governance disclosure in sustainability report – a study of the Indian banking sector

Purpose Sustainable development (SD) is widely acknowledged as the center around which all development efforts should revolve. Banking is a crucial component of SD, and the adoption of sustainable banking practices by various banking institutions is a powerful catalyst for its achievement. This paper aims to investigate the level of adoption of environmental, social and governance (ESG) indicators in India and the extent to which financial institutions use these strategies. In addition, the banks have been classified according to their sustainable banking performance and showing a relationship between ESG and sustainability. Design/methodology/approach An ESG framework has been developed for the Indian banking system that focuses on the behavior of banks. The evaluation of literature helps to identify the gaps in particular frameworks for analyzing sustainable banking practices in developing nations because of the variation in economic criteria between developed and developing countries. An attempt to construct a common framework for measuring the banking sector’s sustainable efforts has been done in the past. Specifically in India, where the social and environmental dimensions of sustainability are of equal importance to governance indicators, these studies fall short of providing relevant indicators. Multiple financial reports, nonfinancial reports, corporate social responsibility reports and business responsibility reports of this sector were analyzed using content analysis techniques against ESG indicators for sustainability attainment. Findings The result of this study shows that both the sectors are disclosing their environmental indicators more as compared to other dimensions. While the analysis says that private companies are going better than public companies in terms of disclosing their ESG indicators. As compared to the international banking sector, adoption of Global Reporting Initiatives standards, United Nations Environment Programme Financial Initiatives (UNEP FI), Green Credit Policy and Equator Principles (EP) is near to the ground in India. IDFC bank is the only entity that started implementing EP practices and Yes bank also is doing a wonderful implementation of the green policies and is the signatory to UNEP FI. Practical implications The current state of sustainable banking in India is reflected in the implementation of the proposed framework. To better integrate sustainability problems into banking, this study provides helpful information for banks and other stakeholders. In addition, this study corrects the lack of research in the Indian context on sustainable banking. Originality/value To the best of the authors’ knowledge by far, this is one of the prime studies to inspect the degree of ESG disclosure by the Indian banking sector in their sustainability report.

Research on strategies to enhance the effectiveness of financial information dissemination under the background of rural revitalization

This paper aims to put forward optimization strategies for the shortcomings of rural financial information dissemination, so as to improve the effectiveness of financial information dissemination in rural areas，so as to form a win-win situation of two-way financial information interaction between rural commercial banks and farmers, stimulating rural development. Under the background of rural revitalization, financial information dissemination can help financial enterprises establish brand image and promote financial products and services, which plays a significant role in getting through the "last mile" of Inclusive finance. At present, facing the dual effects of policy environment and market environment, banks and other financial institutions are altering their focus and continuously increasing the dissemination of rural financial information. However, due to the influence of multiple factors such as regional environment and audience characteristics, related products, services and financial knowledge have not been fully, sufficiently and effectively disseminated. This paper takes the communication behavior of farmers and rural commercial banks in Jiangsu as the research object.In order to integrate into consumers' life and understand consumers' exposed or potential needs, we analyze the characteristics of information communication and audience in rural areas in the form of questionnaire and written interview, and put forward targeted optimization strategies according to the problems and difficulties existing in the current actual communication, so as to improve the effectiveness of financial information communication.The innovative feature of this paper is to carry out interdisciplinary research, cross integrate the theories of Journalism and communication and finance, and apply the information communication theory in journalism and communication to the field of finance.