Competitive Financial Market Research Articles

ANALISIS KINERJA KEUANGAN BANK PEMBANGUNAN DAERAH DALAM PERSAINGAN PERBANKAN

Regional Development Bank (RDB) as part of banking industry is still needed to support financing for regional developmet. Due to tighted financial sector competition, Regional Development Bank should achieve market share in their playing field. Meanwhile, rigidity of regulation in banking sector, Regional Development Bank should also increase their business performance to maintain their standing position and increasing profitability, as well. This qualitative research uses analysis method of financial ratios and trend analysis of profit growth, as well. Data used in this research is financial data of banking industry from 2012 to 2016. This research summerizes that generally financial performance of Regional Dvelopment bank is good in 2012 to 2016. But, due to tight competition in financial market, the RDB could not compete with big private bank and state-owned bank where those banks have already been categorized as BUKU 3 and BUKU 4 category. On the other hand, most RDB are still categorized as BUKU 1 and BUKU 2 that have limited covering business, contrast to BUKU 3 and BUKU 4. Due to this condition, BPD should maintain its business stability and achieve excellent financial performance by obeying all regulations by managing asset and credit productively and profitably, implementing good corporate governance (GCG), as well as business transformation of RDB. Moreover, RDB should develop their infrastruktures to increase financial service for their debitor and customer in the future.
 Keywords: Regional Development Bank, bank, financial performance, National Authority for Financial Sector (OJK).

Sex and credit: Do gender interactions matter for credit market outcomes?

Abstract This paper studies the effects of gender interactions on the supply of and demand for credit using data from a large Albanian lender. We document that first-time borrowers assigned to officers of the opposite sex are less likely to return for a second loan. The effect is larger when officers have little prior exposure to borrowers of the other gender and when they have more discretion to act on their gender beliefs, as proxied by financial market competition and branch size. We also find that first-time borrowers matched with opposite-sex officers pay higher interest rates and receive smaller and shorter-maturity loans, but do not experience higher arrears. Our results are consistent with the existence of a gender bias and learning effects that lead to the disappearance of the bias.

Where You Live Matters: The Impact of Local Financial Market Competition in Managing Online Peer-To-Peer Loans

In the past decade, the proliferation of online marketplace lending has been disrupting the consumer credit market, especially personal loans used for debt consolidation. These lenders, for example, Lending Club, transcend the geographic boundaries within which local banks operate and offer homogeneous access and terms to borrowers. However, the ultimate benefits borrowers derive from marketplace lending can differ significantly because local alternatives may be used to replace marketplace loans when they are available and favorable. Correspondingly, if local bank competition drives the substitution of an existing marketplace loan with a traditional bank loan, the promise of equal benefits to all borrowers from marketplace lending is unlikely to fully materialize. This competitive dynamic also has implications for policy making, particularly in judging the ramifications of bank mergers and acquisitions (M&As). We utilize data from Lending Club, a major peer-to-peer (P2P) lending platform, to study whether local market structure drives heterogeneous incentives of traditional banks to convert borrowers of marketplace lending to conventional bank loans. The results indicate that a borrower who resides in a more competitive market is more likely to pay off her P2P loan early by making a large, one-time payment compared with a borrower from a less competitive market. Thus, borrowers from different markets do not benefit equally from online marketplace lending disrupting the consumer credit market. Our study has implications for online marketplace lending, other FinTech based markets, and the consumer credit market in general.

BANCASSURANCE UNDER FINANCIAL MARKETS' GLOBALIZATION IN UKRAINE

Urgency of the research. The topicality of research is motivated by the necessity to study the mechanism of bancassurance in the conditions of financial market development in Ukraine and by increasing the role of banks and insurance companies in the economy. Target setting. The peculiarities of the mechanism of bancassurance in the modern conditions of financial market development are under the study. The aim is to study the influence factors (motivators and deterrents). Actual scientific researches and issues analysis. I. O. Shkolnik, O. O. Shakura, S. M. Kozmenko, L. S. Zakharkina, N. E. Avanesova, I. B. Dzedzyk, K. I. Rusanenko, Yu. P. Makarenko paid their attention to the role of bancassurance and the ways of its development. Uninvestigated parts of general matters defining. The issues of the effective cooperation of commercial banks and insurance companies, their impact on each other in the competitive financial market regarding the influence of variables were not studied enough. Task. The task is two-fold: to study the mechanism of bancassurance in the modern conditions of financial market development and to systematize the influence factors in the context of the factor analysis of the services bancassurance provides. The statement of basic materials. The mechanism of bancassurance is studied in the present research, the factor analysis is conducted and the connection between the studied objects is determined. Regressive and correlative analysis helps the understand the setting of the credit limit and insurance bonuses on the bancassurance development. The calculated taxonomic coefficient synthetically characterizes the changes of features of the investigated objects or actions. Conclusions. The effective cooperation of banks and insurance companies increases the investment potential of the country and facilitates the economic development. Bancassurance is the integral part of economic growth and its role is to create such cooperation model of banks and insurance companies that gives the competitive advantages for both sides and provides the stable development of banking and insurance sectors of economy.

Coordination and the fight against tax havens

The success or failure of the fight against tax havens is the outcome of a many player coordination game between a tax haven and its potential investors. Key determinants are the costly international pressure and the size of the haven country's revenue pool. The latter is determined endogenously by the decisions of many individual investors. Our analysis suggests a non-standard market model that explains why haven countries would ever comply with international standards of transparency despite the large empirically observable returns in the tax haven business. It also alludes to why service fees in tax havens can be positive despite a competitive financial market with multiple tax havens. Furthermore, we identify a trade-off between the fight against tax havens and high tax rates. Finally, low fines for disclosed offshore tax evasion, e.g. in special programs for tax evaders who voluntarily report their offshore wealth, strengthen haven countries against international pressure.

Information, insurance and the sustainability of sovereign debt

In an influential paper, Bulow and Rogoff (1989) prove that in a competitive financial market, the threat of credit exclusion alone cannot sustain repayment of sovereign debt, as the defaulting government can still enter cash-in-advance insurance contracts. However, their result relies on an important assumption: symmetric information. This paper shows that if a debtor government has some private information about the underlying distribution of future economic shocks, then debt repayment is sustainable in equilibrium. This is true even if there is only one period with private information, and even if default does not have a spillover effect to any other relationship. The intuition is that a default is a signal of a bad distribution of future shocks, leading to higher risk premia on future financial contracts.

The EU Ban on Uncovered Sovereign Credit Default Swaps: Assessing Impacts on Liquidity, Volatility, and Price Discovery

During the recent financial crisis, regulatory authorities banned short positions in various financial markets in attempts to moderate pressure from what were felt to be unfavorable, unwarranted, and largely speculative, price changes. Suppression of undesirable price moves was extended to the realm of sovereign debt in November 2012, when the European Union prohibited “naked” purchases of credit default swaps (CDSs) on sovereign bonds. Buying CDS protection is deemed to be naked if the buyer is not doing so to protect an existing long position in the underlying bonds. Academic theory, and empirical evidence from similar bans on short sales in other markets, suggests that such interference in a competitive financial market generally doesn’t work very well: Market participants find ways around the rule; liquidity is reduced in the constrained market; information flow is degraded and prices can become biased because investors with unfavorable beliefs are eliminated from the market; and volatility may increase. Using a “diff-in-diffs” strategy of contrasting the effect on CDS spreads in the 28 affected countries with those in the 56 unconstrained countries as this regulation went into effect, Silva, Vieira, and Vieira show that credit-spread volatility was reduced by the ban, but liquidity was hurt as bid–ask spreads widened and open interest declined. They also find that price informativeness was reduced, in particular by lengthening the time it took for negative information to enter CDS spreads.

Interest rate and commercial banks’ lending operations in Nigeria: A structural break analysis using chow test

This study used the classical least squares method to empirically examine interest rate deregulation effect on the lending operations of Nigerian commercial banks for the period 1970 to 2013. The period was divided into two policy regime periods; the regulated interest rate era spanning 1970-1986 and the deregulated period 1987-2013. The Chow test was applied to examine if there was any significant difference in the relationship between interest rate and commercial banks’ lending for the two periods. The empirical result obtained for the interest rate regulation era showed that interest rate spread and statutory liquidity ratio had negative and significant effect on the volume of commercial banks’ loans, while fixed exchange rate had negative and insignificant impact on banks’ loans and advances. It was found that Monetary Policy Rate (MPR) and inflation rate exert a positive and significant impact on banks’ loans for the period. For the deregulation era, the result showed that MPR and the exchange rate had significant impact on banks’ loans and advances. While the former exerted a negative impact, the later had a positive influence on loans and advances. Interest rate spread, statutory liquidity ratio and inflation rate were found not to have significantly impacted on commercial banks’ loans and advances for the period. The chow test result confirms the impact of deregulation on volume of commercial banks loans and advances due to the deregulation of interest rate. The study submits that, there exist a relatively inelastic relationship between interest rate spread and banks’ loans at the deregulated interest rate era. This was largely attributed to imperfections as well as the under-developed nature of the financial market. The study suggests that the monetary authority should evolve a guided interest rate deregulation regime with MPR increasingly used to regulate the activities of commercial banks in the area of loans and advances. In order to deepen the financial sector, there is the need to improve financial infrastructure which will enhance commercial bank operations resulting in a more competitive financial market and an improved investment climate in the country. Keywords : Interest rate, bank lending, Deregulation, chow test

Competition and the growth of nations: International evidence from Bayesian model averaging

I apply Bayesian model averaging (BMA) and complementary approaches to international data for the time span 1988–2007 in order to find out whether competition in the economic and political arenas is a robust determinant of aggregate growth, and whether there exists jointness among competition variables versus other growth determinants. Several indicators of competition are used, and I control for a range of other factors potentially affecting growth. My results provide some support for the importance and positive impact on growth of financial market competition. No other competition area emerges as robust growth driver. The jointness analysis suggests a moderate degree of complementarity between financial market competition and important growth determinants, implying manageable policy complexity.

Information, Insurance and the Sustainability of Sovereign Debt

In an influential paper, Bulow and Rogoff (1989) prove that in a competitive financial market, the threat of credit exclusion alone cannot sustain repayment of sovereign debt, as the defaulting government can still enter cash-in-advance insurance contracts. However, their result relies on an important assumption: symmetric information. This short paper shows that if a debtor government has some private information about the underlying distribution of future economic shocks, then debt repayment is sustainable in equilibrium. This is true even if there is only one period with private information, and even if default does not have a spillover effect to any other relationship. The intuition is that a default is a signal of a bad distribution of future shocks, leading to a higher risk premium on future financial contracts.

An Optimum Cluster Size Identification for k-Means using Validity Index for Stock Market Data

Clustering is one of the data mining techniques widely used in various application areas. It is a process of assigning data objects in different groups so that data objects in the same group have similar behaviour towards each other and be different from other objects in the other groups. It is also known as an unsupervised technique in which class label is not available. Clustering is one of the most popular data mining techniques used in various financial domains. In today's competitive financial market, investors want to earn profit from their investments. This paper shows detailed analysis of k-means clustering method using the Davies–Bouldin index to find the optimum number of clusters which is very difficult for this method. These clusters can be used in further investment analysis.

Intelligent Web Content Filtering through Neuro-Fuzzy Approach

In today's competitive financial market, individuals want to earn profit from their investments. Stock market is a public market where an individual can buy/sell a share at some level of risk and earn maximum profit from the investments. There are various data mining techniques available, like classification, association rule mining, clustering and outlier analysis. Clustering is one of the data mining techniques used in various financial domains. The objective of this research paper is to construct clusters of Nifty companies for better investment. This paper shows analysis of Nifty companies using k-means algorithm. The k-means algorithm is one of the famous clustering techniques that generate clusters based on some investment criteria. In this paper, price per earnings ratio was considered as an investment criteria. These clusters guide the investors to invest their funds in different securities.

An Analytical Study of Customer’s Satisfaction Level of Different Gender from CRM Process and Customer Care Cell in Banks.

Customer satisfaction from banking services plays crucial role in building a loyal customer base for in all types of banks. So it is very important to study the satisfaction level of the customers from the Customer Relationship Management process of the bank through which they deal. People of different gender have different psychology and perception. Thus, it becomes necessary for every bank to know their customer's satisfaction level to survive in the competitive financial Indian market. This research paper emphasize on the degree of satisfaction of male and female banking customers from the services under Customer Relationship Management process in the banks where they operate. The paper also aims at finding out the satisfaction of customers of banking industry from the service of customer care cell with respect to solution to their queries.

Understanding customer‐specific factors underpinning internet banking adoption

PurposeThe purpose of this paper is to deepen our understanding of customers' actual internet banking behaviour by combining the construct of technology readiness with the technology acceptance model and demographics, such as age and gender, into one integrated framework.Design/methodology/approachThe customer‐specific internet banking acceptance model (CSIBAM) is validated through 435 UK internet banking users.FindingsThe results indicate the importance of customer‐specific factors in predicting actual behaviour. Technology readiness, age and gender moderate the beliefs‐intention relationship. Customers with varying levels of technology‐related views and demographics hold different beliefs about technology. The relationship between usefulness and behaviour was stronger for younger males with high levels of optimism and innovativeness (explorers and pioneers), whilst the relationship between ease of use and behaviour was stronger for older females with a high level of discomfort (paranoids and laggards).Practical implicationsIn today's highly competitive financial services market, knowledge of key customer‐specific factors can help banks to enhance customer experience by focusing more on each segment's particular needs. This knowledge would also help managers to decide about the extent to which technology‐based systems can be used, the appropriate type of these systems, the pace of implementation, and the type of customer support required.Originality/valueA distinctive contribution of this study is that it does not rely on self‐reported intention or usage, but instead it employs actual behavioural data. Greater understanding of seemingly established relationships could improve the design of the service and the development of differential marketing strategies aimed at driving adoption and allaying rejection.

Interest Rate Convergence in Bangladesh

Financial liberalization, a widely-accepted policy paradigm since the 1980s, aims to remove financial repression and thus establish an efficient financial sector as a pre-requisite for financial development. Interest rate convergence is one of the obvious outcomes of the interest rate liberalization, a crucial part of financial liberalization. Uniformity of interest rate should be there in a free and competitive financial market. This paper examines the state of interest rate convergence by measuring the degree of convergence in the financial market of Bangladesh, a success case of financial liberalization initiated in the 1990s.

Sex and Credit:Is There a Gender Bias in Lending?

Abstract: We exploit the quasi-random assignment of borrowers to loan officers using data from a large Albanian lender to show that own-gender preferences affect both credit supply and demand. Borrowers matched to officers of the opposite gender are less likely to return for a second loan. The effect is larger when officers have little prior exposure to borrowers of the other gender and when they have more discretion to act on their gender beliefs, as proxied by financial market competition and branch size. We examine one channel of influence, loan conditionality. Borrowers assigned to opposite-sex officers pay higher interest rates and receive lower loan amounts, but do not experience higher arrears. Together our results imply that own-gender preferences in the credit market can have substantial welfare effects.

THE EFFECT OF FINANCING ON A BUDGET-CONSTRAINED SUPPLY CHAIN UNDER WHOLESALE PRICE CONTRACT

This paper examines the impact of financing on the performance of a two-level supply chain consisting of a supplier and a budget-constrained retailer. To carry out our study, we set up a three-stage Stackelberg game under a wholesale price contract with a financial market. We show that financing from a competitive financial market can create value for both the supplier and the retailer. We also demonstrate that in a competitive financial market with symmetric information on the retailer's initial budget, the retailer's operational and financial decisions could be decoupled. We provide numerical results to shed light on additional managerial insights as well.

LIQUIDITY PROVISION IN CAPACITY-CONSTRAINED MARKETS

We study a competitive dynamic financial market subject to a transient selling pressure when market makers face a capacity constraint on their number of trades per unit of time with outside investors. We show that profit-maximizing market makers provide liquidity in order to manage their trading capacity constraint optimally over time: they use slack trading capacity early to accumulate assets when the selling pressure is strong in order to relax their trading capacity constraint and sell to buyers more quickly when the selling pressure subsides. When the trading capacity constraint binds, the bid–ask spread is strictly positive, widening and narrowing as market makers build up and unwind their inventories. Because the equilibrium asset allocation is constrained Pareto-optimal, the time variations in bid–ask spread are not a symptom of inefficient liquidity provision.

Competition and Transparency in Financial Markets

Is competition sufficient to induce transparency in financialmarkets or is regulation necessary to achieve this? We examine this question taking into consideration that competition in financial markets frequently resembles a tournament, where superior relative performance and greater visibility are rewarded with convex payoffs. We show under fairly general conditions (i.e., model variations) that higher competition for this renumeration often makes discretionary disclosure less likely. In the limit when the market is perfectly competitive, transparency is minimized. This analysis implies that competition might be unreliable as a driver of transparency and self-regulation in financial markets, especially in settings where tournament-style renumeration takes place.

Using Forward Contracts to Reduce Regulatory Capture

A fully unbundled, regulated network firm of unknown efficiency level can undertake unobservable effort to increase the likelihood of low downstream prices, e.g., by facilitating downstream competition. To incentivize such effort, the regulator can use an incentive scheme paying transfers to the firm contingent on realized downstream prices. Alternatively, the regulator can propose to the firm to sell the following forward contracts: the firm pays the downstream price to the owners of a contract, but receives the expected value of the contracts when selling them to a competitive financial market. We compare the two regulatory tools with respect to regulatory capture: if the regulator can be bribed to suppress information on the underlying state of the world (the basic probability of high downstream prices, or the type of the firm), optimal regulation uses forward contracts only.