International Commercial Banks Research Articles

Valuation Specialists and Value Relevance of Fair Value Measurements: Evidence from International Banks

ABSTRACT This study examines the impact of engaging valuation specialists on the value relevance of Level 3 fair value measurements (FVMs) within the auditing process. Through an analysis of a sample of international commercial banks over the period from 2016 to 2019, this study reveals that both Level 1 and Level 2 FVMs are generally value relevant, regardless of the involvement of valuation specialists in the auditing process. However, the value relevance of Level 3 FVMs appears to be contingent upon the auditor’s utilization of valuation specialists during the audit of these measurements. The findings of this study indicate that, notwithstanding the concerns highlighted in prior research, investors tend to hold the conviction that valuation specialists can make a substantive and positive impact on the auditing process, thereby enhancing the value relevance of Level 3 FVMs. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G21; M41; M42.

Comments on Taiwan's Draft Amendment to Article 65-2 of Financial Holding Company Act and Article 133-2 of the Banking Act: Starting from the Case of Mega International Commercial Bank Co., Ltd. Was Fined $180 Million by the New York State Department of Financial Services

Comments on Taiwan's Draft Amendment to Article 65-2 of Financial Holding Company Act and Article 133-2 of the Banking Act: Starting from the Case of Mega International Commercial Bank Co., Ltd. Was Fined $180 Million by the New York State Department of Financial Services

FINANCIAL PERFORMANCE OF HOUSING FINANCE COMPANIES IN INDIA

Housing not only provides physical shelter but also has significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self- confidence and human dignity. Housing finance development, therefore, plays a role in boosting equitable economic growth and reducing poverty through helping households build assets, improving living conditions, empowering the middle- and lower-income population, and strengthening communities. The House Building Finance Corporation (HBFC), which has traditionally dominated the housing finance sector, is now a declining player, in part because of decreasing government support, and in part because of its history of operational ineffectiveness. In its place, domestic and international commercial banks and a few new specialised institutions have entered the market, and have a significant potential for growth. This paper has examined the financial operations of Housing Finance Company in India from the year 2018 to 2022. Some selected parameters like liquidity, solvency, valuation and profitability ratios has been used for analysing the financial viability of some selected housing finance Companies listed in recognized stock exchanges for the period from 2018 to 2022. Keeping the focus on above points in mind, the researcher has made an effort to study the financial performance of selected housing finance companies and offer suggestions for the improvement of efficiency in the selected Housing Finance Companies.

Transformational leadership and employee performance in international commercial banking industry in Malaysia: The role of self‑efficacy as a mediator under BRI

Transformational leadership and employee performance in international commercial banking industry in Malaysia: The role of self‑efficacy as a mediator under BRI

The multiple dimensions of bank complexity: Effects on credit risk-taking

Abstract This paper examines the multi-dimensional concept of bank complexity and its relationship with credit risk for Italian banks using data at the bank-firm level. The different aspects of bank complexity are identified through the use of a factor analysis on a large set of bank-level variables. Bank complexity is well described by four factors: exposure to international commercial banking activities, geographic diffusion over the domestic territory, integration of market trading activities and fee income diversification. Our main result is that geographic diversification is associated to a decrease in the supply of lending to riskier firms; access to many local credit markets might provide banks with more chances to expand their loan supply by targeting safer borrowers. On the contrary, we document a positive relationship between banks’ fee income diversification and the amount of credit granted to riskier borrowers, but only when the latter hold multiple bank credit relationships. This evidence might point out that competition fosters banks’ risk-taking incentives on loan origination to sell additional financial services.

Global Banks and Latin American Dictators, 1974–1982

This article examines the relationship between international commercial banks and military regimes in South America. The focus is on how military regimes in the Southern Cone of Latin America and Brazil in the 1970s became heavily dependent on foreign capital provided by international banks based in Britain and France. It makes use of previously unavailable archival evidence to examine the interactions between international banks and South American governments, showing how these interactions intensified once military rule was established. It shows that international capital was used for a wide variety of purposes, including arms imports. When global banks cut loans once the debt crisis erupted in 1982, they aggravated the economic crisis but also fostered democratic change.

Comparing the Influence of Green Credit on Commercial Bank Profitability in China and Abroad: Empirical Test Based on a Dynamic Panel System Using GMM

This study establishes a dynamic panel model for 12 Chinese-listed commercial banks and seven international commercial banks. More specifically, it examines the impact of green credit on the profitability of commercial banks and the differences between China and other countries while using the generalized method of moments. The research shows that the Equatorial Principles project-financing ratio of international banks positively affects bank profitability, while the ratio of green credit for Chinese commercial banks is inversely related to their profitability. Further, a comparative study of China and other countries highlights that the green credit business is at significantly different stages in China and the rest of the world. This study also finds that the profitability of China’s banking sector is positively affected by asset size, management expense ratio, cash ratio, and GDP growth rate, in addition to the common influencing factor of non-performing loan ratio, whereas asset size and capital adequacy ratio negatively affects the international banking sector. Drawing on these empirical conclusions, this study offers suggestions for the further development of green credit in Chinese commercial banks.

Financial Incentives and Loan Officer Behavior: Multitasking and Allocation of Effort under an Incomplete Contract

We investigate the implications of providing loan officers with a nonlinear compensation structure that rewards loan volume and penalizes poor performance. Using a unique data set provided by a large international commercial bank, we examine the main activities that loan officers perform: loan prospecting, screening, and monitoring. We find that when loan officers are at risk of losing their bonuses, they increase prospecting and monitoring. We further show that loan officers adjust their behavior more toward the end of the month when bonus payments are approaching. These effects are more pronounced for loan officers with longer tenures at the bank.

Measuring Efficiency Of Commercial Banks In The Gambia

The long-term sustainability of commercial banks depend largely on how efficiently they are managed. This study explores the relative efficiency of commercial banks in the Gambia, by examining the banks’ operational characteristics on efficiency measures. The study critically examines the efficiency levels of seven commercial banks (six conventional banks and one Islamic bank) in The Gambia from 2005 to 2009 using the Data Envelopment Analysis (DEA) methodology to examine selected banks’ relative efficiency levels. Also, using Tobit regression model, the study examines the relationship between banks’ specific characteristics (i.e banks size, profitability and market power) and efficiency measures - Technical Efficiency (TE), Pure Technical Efficiency (PTE) and Scale Efficiency (SE). The results from DEA exhibit that the majority of Gambian banks are fully efficient under the assumption of VRS. The findings showed that Trust Bank Ltd (TBL) was the most efficient bank while International Commercial Bank (ICB), the least efficient bank during the period. The results of Tobit Regression Model showed only bank size is significantly and positively related to TE and SE, while both profitability and market power were negatively associated with TE and SE, indicating no relationship between profitability and market power with efficiency measures in Gambian banking industry.

Multi-criteria analysis of decision-making by international commercial banks for providing shipping loans

ABSTRACTThis research investigates the underwriting attitude of international commercial banks in lending shipping loans. By adopting the analytic hierarchical process methodology, the underwriting attitude is captured to understand how bankers would deal with shipping loans in response to the current lengthy recession. We find that bankers focus on the criteria of corporate recourse (CR) in their decision-makings. Of the CR factors, the financial strength of shipowner is the most important factor, followed by the shipowner’s business history and the bank–firm relationship. With the current underwriting attitude, the shipping sector may have limited access to shipping loans of international commercial banks due to low corporate ratings caused by the long recession and the nature of industry itself: volatility, fragmentation, capital intensity, high leverage, etc.

Reschedulings as the Groundwork for the Secondary Market in Sovereign Debt

The secondary market in the debt of less developed countries, now known as the ‘emerging markets’, has been newsworthy throughout the 1990s because of its explosive growth and the profitability of some investments in these markets. However, few appreciate how the strategy of repeated reschedulings in the 1980s laid the groundwork for the subsequent rapid development of this market. This little known role of the reschedulings is the focus of this article. The first response of the international commercial banks to the debt crisis in 1982 was to reschedule the current debt of the less developed countries, as the ‘emerging markets’ were then known, and extend fresh loans to permit the payment of interest upon the rescheduled debt. This remained the standard response throughout the 1980s and received the imprimatur of the U.S. government in the Baker Plan.

Can corporate social responsibility bias lending decisions?

ABSTRACTRecent research suggests that the effect of Corporate Social Responsibility performance (CSRp) on firm value is conditional on its ability to influence stakeholders through customer awareness. This study extends previous research using an experiment to investigate whether the impact of CSRp ratings on lending decisions is moderated by the level of customer awareness. Results using experienced loan officers from an international commercial bank indicate that lending decisions are likely to be biased since CSRp ratings are interpreted as a signal for superior financial performance regardless of the level of customer awareness. Our findings suggest that loan officers are susceptible to further training in the correct interpretation of CSRp.

УГОЛЬНАЯ ГЕНЕРАЦИЯ В УСЛОВИЯХ НОВОГО ИНДУСТРИАЛЬНОГО РАЗВИТИЯ

The role of coal as the driver of innovative electricity generation for the new industrial development is complicated. On the world industrial agenda, coal continues to dominate global power generation due to its nature – significant reserves and well-distributed deposits, stability of production, flexibility of delivery, comparatively easily predicted prices and supply. A significant drawback of coal generation that is connected with the emission of toxic particulars (CO2, sulphur dioxide, nitrogen oxide, etc.) can be eliminated by new technologies, i.e. ultra-supercritical, integrated gasification combined cycle, carbon capture and sequestration. Technological inertia and capital-intensive innovation processes determine the power generation as industry with medium-low R&D expenditures, which are roughly 1–2% of the net sales of power companies. World strategic innovators in power industry build up the technological trends of coal generation, however, recent public and private spending on R&D represents only a small fraction of capital, needed for wide scaled deployment of new coal-fired power generation technologies. Plus to that, the significant cash flow from international commercial banks has been directed to finance new coal-fired plants based on traditional old-fashioned technologies with low efficiency and weak environmental standards. Most governments in the world support traditional fossil fuels suppliers by means of energy subsidies. Emerging financial initiatives – green bonds, new financial metric – are aimed at redirecting cash flow towards innovative technologies in power industry. But up to the moment, the amount of money reallocation is small and the pace of training high quality engineers and scientists is slack. Nevertheless, the intensified international cooperation between the largest coal users such as the USA and China makes quite possible the optimistic scenario for the future of a new coal generation. Education, finance and technology are the main factors of strengthening bilateral or multilateral cooperation. Russia has obtained up to the moment, by experts’ judgments, well-educated engineers, valuable traditions of scientific schools and research practice in the field of coal power. That bestows Russia good premises for making up international technological consortium with other, rich in coal countries, first of all, China and India.

Efficiency and Risk in Commercial Banks – Hybrid DEA Estimation

The hybrid DEA model can solve the difference between radial inputs and non-radial inputs and evaluate efficiency. This is a pioneering study that uses the hybrid DEA model, evaluating the proportionate inputs with a radial measure and the non-proportionate inputs with a non-radial measure, in order to examine the impact of non-performing loans (NPLs) on the efficiency of Taiwan's banking sector from 2006 to 2010. In summary, this research demonstrates the following: (1) Only nine banks remained in the top efficiency list during these years: China Development Industrial Bank, Mega International Commercial Bank, Chinatrust Commercial Bank, Cathay United Bank, Bank of Kaohsiung, Industrial Bank of Taiwan, Taiwan Cooperative Bank, Land Bank, and Bank of Taiwan. (2) Risk is an important factor that should be taken into consideration when evaluating banking efficiency. (3) From the hybrid DEA model, we find that most of the inefficient banks have an inefficiency factor caused primarily by too many NPLs (risk). (4) The efficiency of Taiwan's large-scale banks is significantly better than the small-scale bank. By looking at the inefficiency index, the large-scale bank's inefficiency is caused by NPLs. For the small-scale bank, both radial variables and non-radial variables have equal importance in improving its efficiency.

Financial Incentives and Loan Officer Behavior: Multitasking and Allocation of Effort Under an Incomplete Contract

We investigate the implications of providing loan officers with a compensation structure that rewards loan volume and penalizes poor performance. Using a unique data set provided by a large international commercial bank, we examine the three main activities that loan officers perform: monitoring, origination, and screening. We find that when loan officers are at risk of losing their bonus, they increase monitoring and origination, but not screening effort. On the other hand, having lost a bonus in the previous period does not entail higher effort. We document unintended consequences of the incentive contract showing the incompleteness of such contracts.

Efficiency Evaluation of Web-based Learning on Multinational: A Case Study on Financial Industry

Based on the web-based learning efficiency of Taiwan’s financial industry investing in China in 2010-2012, Data Envelopment Analysis (DEA), Sensitivity Analysis, and Malmquist Productivity Index are integrated to measure the total efficiency (TE), pure technical efficiency (PTE), and scale efficiency (SE) of eleven banks which invested in China for further web-based learning improvement. The empirical results show that Mega International Commercial Bank and Bank of Taiwan present the best total efficiency (1.00), followed by Cooperative Bank (0.93); Mega International Commercial Bank and Bank of Taiwan reveal the best pure technical efficiency (1.00), followed by Land Bank (0.92); and, Mega International Commercial Bank and Bank of Taiwan appear the best scale efficiency (1.00), followed by Cathay United Bank (0.85). From Malmquist Productivity Index, Taiwan Cooperative Bank, Mega International Commercial Bank, and Bank of Taiwan show improvement on pure technical efficiency change that the web-based learning effectiveness is enhanced.

A Comparison between Islamic Banking and Conventional Banking Sector in Pakistan

The Islamic banking system is attaining enormous development. Several modern international conventional banks were also enchanting significant concern and starting Islamic banking branches in their organizations, which work in compliance with the specific Islamic Shariah principles in a number of states of Pakistan. The Islamic banking structure is bizarrely facing gigantic contest by the Islamic banking sector all over the world as well as from the well-known International commercial banks that hold out services and products of IB. It is an attempt for exploration and investigation of the extensive and essential factors, which persuade consumers to choose the Islamic banking or conventional banking and the function of demographic features, which track consumers to the assortment of IB or CB in Pakistan. Sample of 341 respondents has been used in this study mainly focused on non-probability convenience test tool. Pre-institute 5 point likert survey instrument ranging from 5 to 1 was applied to gather data. The conclusion reveals that there are countless factors other than religious perception like employee and customer interactions, convenience, reputation, financial benefits & services, and technology, which are fundamental for the consumers for the assortment of Islamic or conventional banking. The demographic characteristics of the respondents also have a significant impact. The authors expect that the crux of this study will explore new ways for the Islamic banking system to emphasis on specific emerging factors to enhance the efficiency and performance of the Islamic banking system in Pakistan. There will be enormous advantage for executives of IBs & CBs in developing marketing approach.

Management Insights

Management Insights

Los bancos comerciales internacionales y las crisis de deuda externa en América Latina : una perspectiva histórica a la luz de la crisis de los ochenta

This paper offers a historical account and a detailed analysis of the incubation, development and outcome of the Latin American debt crisis of the 1980s. The second part provides a historical perspective based on legal precedents and international law, as well as an account of various historical cases of non-compliance and repudiation of international financial obligations. Further on, the elements of the international financial system and the behavior and structure of international commercial banks that explain the trend towards the external debt crisis are analyzed, with particular emphasis on the one that occurred in the eighties. Finally, recommendations are made to strengthen the international financial system at various levels to avoid major crises in the future.

International diversification and Microfinance

International commercial banks, institutional investors, and private investors have become increasingly interested in financing microfinance institutions (MFIs). This paper investigates whether adding microfinance funds to a portfolio of risky international assets yields diversification gains. By using mean-variance spanning tests with short-sale constraints, we find that investing in microfinance may be attractive for investors seeking a better risk–return profile. Specifically, the analysis suggests that investing in MFIs from Latin America, or microfinance and rural banks yields more efficient portfolios. In contrast, adding MFIs from Africa or microfinance NGOs to a portfolio of international assets is not beneficial for a mean-variance investor.