Liability Management Research Articles

Civil Liability Insurance of Companies and Members of Managing Bodies and the Amendment to the Commercial Companies Code

Liability insurance of corporate directors and officers covering actions and omissions related to their performance has almost become a standard insurance product in economic practice. Board members in companies are liable with all their personal assets towards the company, its partners, employees and/or creditors for their managerial performance, mismanagement or nonfeasance. The D&O insurance has been created with the aim of protecting personal property of company managers. Having regard to the changes introduced by the so-called holding law, it seems justified to consider the impact of the new legislation on the principles of liability of company managers as well as the application of the D&O insurance.

Current Situation and Challenges in Indian Banking Sector

Abstract: The Indian banking sector is facing several challenges due to the rapidly changing financial environment. The key issues include the high level of Non-Performing Assets (NPAs), increasing competition from fintech companies and digital payment platforms, difficulty in meeting capital adequacy requirements, concerns about governance and risk management, and challenges in Asset Liability Management (ALM). Addressing these challenges is critical for the Indian banking sector to remain competitive and continue playing a crucial role in the country’s economy. One of the largest in the world and essential to the nation's economy is the Indian banking sector. However, it is currently facing several challenges due to the rapidly changing financial environment. Here are some of the key issues and challenges faced by the Indian banking sector: Non-Performing Assets (NPAs): The high level of NPAs, or bad loans, is one of the main problems Indian banks face. The gross NPA ratio of Indian banks, according to the Reserve Bank of India (RBI), was 7.5% in March 2021. The profitability and capital sufficiency of banks have been under intense strain as a result of this is digital disruption.The traditional banking sector has been impacted by the growth of fintech businesses and digital payment platforms. These new competitors, who can provide customers with speedier, more convenient, and less expensive services, are putting pressure on Indian banks.

Corporate governance and financial inclusion

PurposeThis paper examines the association between corporate governance and financial inclusion in terms of correlation. This paper examines whether countries that have a strong corporate governance environment also experience better financial inclusion outcomes.Design/methodology/approachThe indicators of financial inclusion are automated teller machines (ATMs) per 100,000 adults, bank accounts per 1,000 adults and bank branches per 100,000 adults, while the indicators of corporate governance are extent of corporate transparency index, the extent of director liability index, the extent of disclosure index, the extent of ownership and control index, the extent of shareholder rights index, minority investors protection index and ease of shareholder suits index. The association was analyzed using Pearson correlation analysis and granger causality test.FindingsStrong corporate governance is significantly associated or correlated with better financial inclusion outcomes. The regional analyses show that corporate governance has a significant positive association with financial inclusion in Asian countries and in Middle East countries. However, a positive and negative association was observed between some indicators of corporate governance and financial inclusion in European countries, North American countries, South American countries, African countries and in Middle East and North Africa (MENA) countries, implying that strong corporate governance has a positive and negative association with financial inclusion depending on the indicators of corporate governance and financial inclusion used. There is also evidence of uni-directional granger causality between corporate governance and financial inclusion.Originality/valueLittle is known about the association between corporate governance and financial inclusion. This paper is the first to examine this association.

A case study for unlocking the potential of deep learning in asset-liability-management.

The extensive application of deep learning in the field of quantitative risk management is still a relatively recent phenomenon. This article presents the key notions of Deep Asset-Liability-Management ("Deep ALM") for a technological transformation in the management of assets and liabilities along a whole term structure. The approach has a profound impact on a wide range of applications such as optimal decision making for treasurers, optimal procurement of commodities or the optimization of hydroelectric power plants. As a by-product, intriguing aspects of goal-based investing or Asset-Liability-Management (ALM) in abstract terms concerning urgent challenges of our society are expected alongside. We illustrate the potential of the approach in a stylized case.

The Role of Asset-Liability Management on Financial Stability in Malaysia

Financial stability in the Malaysian Islamic banking sector is a popular issue that should be given attention by all financial service practitioners, including bank management, regulators, and popolicymakersIn this regard, Islamic banking institutions are stable not only in terms of their ability to be resilient, but also in their financial stability when it concerns their smooth functioning as effective intermediaries. However, to achieve the goals for stability, the Islamic banking sector often faces a mismatch between assets and liabilities, which may contribute to financial instability. Based on the above-mentioned issues and problems, the objective of this study is to describe the asset and liability management practices in Malaysian Islamic banking institutions. To achieve these objectives, the study used methods of estimation on a panel data set (a combination of time series and cross-section) which contains 211 observations from 16 Islamic banks (full-fledged Islamic banks) in Malaysia from 1997 to 2016. The model estimation results showed that the profitability of Islamic banking is influenced by various factors such as asset quality, liquidity, financing, credit risk, deposit ratio, zakat, other liabilities, and capital adequacy. The study found that the asset quality ratio variable has a positive relationship with the profitability of Islamic banking, while the total asset ratio variable has a negative relationship. The liquidity ratio variable, on the other hand, has a positive relationship with the profitability of Islamic banking. The article concludes that these findings have implications for the management of assets and liabilities in Islamic banking, particularly in terms of maintaining high asset quality and liquidity while managing credit risk and capital adequacy.

Revolutionizing the Future : A Paradigm Shift in Banking Management Systems

Bank management governs various concerns associated with banks in order to maximize profits. The concerns broadly include liquidity management, asset management, liability management and capital management. But still there might be some flaws in this system. These flaws may be holes in rules and regulations, bribery, excuses of lunch, bank’s slow server, employees’ attitude towards work, long waiting times in customer services etc. So, these issues can be solved by an interface connected directly to the bank’s administration through which a person can do their daily minimal banking jobs not through an ATM but through their smartphone. Here comes our project BMS which is a CLI program scripted through python, and data managed by DBMS. The user can perform transactions between accounts of the same bank, check balance, create or delete accounts, deposit or withdraw amounts.

Preface to the Special Issue on Multidimensional Finance, Insurance, and Investment

In the literature, many researchers have investigated methods and procedures designed to solve problems in finance, insurance, and investment, formulated through analytical operational research models in a multidimensional framework that takes into consideration multiple conflicting and incommensurable decision objectives. To promote the development of multidimensionality within these research fields, the International Transactions in Operational Research has devoted a special issue to this subject. Topics of interest covered by this volume include: Multi-attribute portfolio selection, Multi-criteria decision aid in finance, Multiple objective programming in finance, Stochastic programming in finance, Option pricing, Portfolio analysis, Asset and liability management, Financial economics, Interest rate models, Bank management, Capital budgeting, Finance applications, Corporate governance, Insurance applications, Fuzziness and uncertainty in finance, Financial planning, and Financial engineering. This special issue attracted much interest and many submissions. After a rigorous peer review and selection process, we proudly announce that twenty-four papers have been included in this volume, covering a wide diversity of financial problems, application areas ranging from finance to insurance and investments, modelling, and solution methodologies. With more details, the following topics have been presented and discussed: volatility transmission analysis across international equity markets using multivariate fractional models; health insurance risk assessment using cognitive mapping and multiple criteria decision analysis; investment rating in commercial real estate; information game modelling in financial markets with multi-agent systems; efficiency of SRI and conventional mutual funds by a diversification-consistent DEA model; dynamics of social credit determinants using fuzzy cognitive mapping and system dynamics; measurement of multiscale dependence between Saudi and selected foreign stock markets using wavelets; volatility models using DEA; optimal strategies of contract-farming supply chain under the cooperative mode of bank-insurance; credit scoring methods in a decision support system of investment for peer-to-peer lending; the role of commodity futures in portfolio diversification; efficient frontier approximation with low-cardinality portfolios in the presence of the risk-free asset; penalty decomposition algorithms with greedy improvement for mean-reverting portfolios with sparsity and volatility constraints; bank performances under COVID‒19 using the inverse DEA efficiency approach; efficient credit portfolios under IFRS 9; firm ranking based on financial and diversity performance using multiple-stage un-weighted TOPSIS; sustainability efficiency and profitability efficiency in corporate social responsibility; omega portfolio models with dynamic return thresholds; multi-objective reference point techniques to optimize profitability-growth-risk in the non-life insurance industry; geometric compromise programming in portfolio selection; attractiveness index for foreign direct investments; crypto-assets in portfolio selection; augmented Lagrangean algorithms for optimal portfolio liquidation with market impact; and portfolio selection problem with real-world constraints under value-at-risk measure. We thank all colleagues and researchers who submitted their work for consideration and the anonymous reviewers whose work and suggestions were instrumental for completing the peer-review process and guaranteeing the quality of the accepted papers.

The Nexus of climate crisis and asset liability management in frontier economies

Climate change is a pressing issue that is disrupting the economic systems through financial and monetary impairment. The extent is more severe in the frontiers markets and compliance with the COP26 agenda is the only recourse for low-income economies. The banks play a critical role in such countries to finance business operations and incorporating sustainability practices in asset liability management can ensure financial resilience. In this paper, we assess if climate change has any impact on the mortgage portfolio and deposit mobilization of the banking sector. Using a comprehensive sample of 175 banks across twenty-three frontier markets and employing data between 2011 and 2021, we found that climate risk is negatively associated with mortgage exposure and deposit growth. We argue that the impact on mortgages is via physical risk while for deposit mobilization the pressure emanates from transitional factors. The results remained robust even after differentiating the banks into big and small categories suggesting that climate change is bringing in risks that will impact the financial sector without any discrimination. The paper has important implications for both transitional and physical risks related to climate change.

Deep treasury management for banks.

Retail banks use Asset Liability Management (ALM) to hedge interest rate risk associated with differences in maturity and predictability of their loan and deposit portfolios. The opposing goals of profiting from maturity transformation and hedging interest rate risk while adhering to numerous regulatory constraints make ALM a challenging problem. We formulate ALM as a high-dimensional stochastic control problem in which monthly investment and financing decisions drive the evolution of the bank's balance sheet. To find strategies that maximize long-term utility in the presence of constraints and stochastic interest rates, we train neural networks that parametrize the decision process. Our experiments provide practical insights and demonstrate that the approach of Deep ALM deduces dynamic strategies that outperform static benchmarks.

Impact of Reinsurance Agreements on Assets and Liabilities Management of Property and Casualty Insurance Companies Applied in the Egyptian Insurance Market

Impact of Reinsurance Agreements on Assets and Liabilities Management of Property and Casualty Insurance Companies Applied in the Egyptian Insurance Market

Bank-Specific as Basis of Banking Sector Development: An ARDL Approach

This study aims to examine the bank-specific factors and banking sector development in Nepal by using the ARDL approach technique with economic time series data ranging from 1995 to 2020. The study employed the Autoregressive Distributed Lag (ARDL) model to avoid the spurious regression problem in the construction of contemporary time series econometrics. The study depends on the co-integration analysis to find out the long-run equilibrium relationship among the variables of the model. Banking sector development is measured by the arithmetic average of the normalized values of banking depth, banking efficiency, and banking stability. This study reveals that banking trade has positive and significant influenced the banking sector development in line with theoretical predictions. Electronic banking and liquidity have a positive and statistically significant role to explain banking sector development in Nepal. In addition, it demonstrates that non-performing loans has a negatively and significantly influenced banking sector development whilst branch network has a marginally negative but insignificant impact on banking sector development. This study reveals implications for policymakers as it sheds light on the importance of raising deposits and lending policies and focused on electronic banking. The authorities of a financial institution should be implied to build systems and skills in liquidity management, assets and liability management, and branch networking management to enhance the banking sector's development.

Analysis of the Core Competitiveness of Chinese Banks Based on Financial Statements

China adapts to market trends and improves its financial system, unified large-scale commercial banks, joint-equity commercial banks, agricultural banks, and other commercial banking systems to create a competitive market. Increasing competition in the banking industry has driven all commercial banks to focus on improving their key skills. This paper analyses Bank of China's fundamental skills through financial statements and makes development-related insights. Core competences help organizations maximise earnings and sustain a competitive advantage, according to this paper. The paper analyses Bank of China's background and external environment, then its balance sheet, income statement, and cash flow statement. Industrial and Commercial Bank of China, Agricultural Bank of China, and China Merchants Bank are used as comparative objects to analyse Bank of China's operation from multiple perspectives. The study says Chinese banks are extremely liquid but less profitable than competitors. Bank of China's strengths include its liability management and worldwide diversification, but it also has a poor resource allocation, a single capital structure, unstable operating cash flows, and considerable external impact.

Research on the Compensation Incentive System of Independent Directors in Chinese Listed Companies

The independent director system is one of the important components of modern corporate governance. The huge liability of independent directors in the Kangmei Pharmaceutical case in 2021 has once again become a hot topic of discussion. In the exploration of the causes of the failure of the independent director system, the motivation of independent directors to perform their duties and their incentives are also worth considering. Based on the relevant theories of independent director incentives, this paper conducts a comparative analysis of the incentive models of independent directors in China and other countries and concludes that the legislative level of incentives for independent directors in China is relatively low, and the remuneration forms, standards, and payment subjects are unreasonable and lack implementation. In addition, the establishment of independent directors’ associations and the gradual construction of independent directors’ reputation incentives were proposed.

Directors’ Duties and Climate Change in Africa: Evidence from Kenya, Nigeria and South Africa

This paper investigates the extent to which, if at all, corporation law in select African jurisdictions obligates company directors to take into account climate-related risks and commit to mitigation and adaptation actions. The paper analyses provisions of the law relating to corporations law (Company Law) in select Commonwealth common law jurisdictions namely Kenya, Nigeria and South Africa within the new and varied context of emergent knowledge and climate attribution science, with a view to distilling any legal duties and potential liability of company directors. Applying the shareholder value approach of corporate governance, the paper argues that while corporate law has for the most part been concerned with governance of a company as a vehicle for profit making, largely informed by the shareholder primacy theory, this narrow construction of the company and directors’ duties is no longer tenable in light of actual and potential climate-related risks posed to companies and society alike.

What’s next after carbon accounting? Emissions liability management

Abstract We propose a method to internalize the externality of greenhouse gas emissions built on the foundation of greenhouse gas emissions accounting, whereby firms match long-duration emissions liabilities with duration-matched removal assets. This method drives a simple decision rule: only emit greenhouse gases if the value created exceeds the cost of reversing the emissions. This approach will drive capital allocation to enhance at-risk natural capital, expand investment in technology-based carbon dioxide removals and reductions, rationalize fraught carbon markets and provide auditable and transparent net zero claims and guidance for transition pathways.

Bank capital regulation and the Modigliani-Miller Theorem: a Post-Keynesian perspective

This paper challenges the validity for bank regulation of the Modigliani-Miller (MM) Theorems. We argue that the Modigliani–Miller analysis cannot be applied to banks because when lending creates deposits the asset side of banks varies together with the liability side and equity behaves more like a sticky variable. Hence, from an endogenous money point of view and Minsky’s Financial Instability Hypothesis (FIH), much of the debate on bank capital adequacy rules is misleading because: First, it is not at a bank’s discretion to decide the mix of its funding when it provides credit. Secondly, bank liability management might have implications for financial stability as far as it reduces the liquidity in the economy. Bank regulation in the lines of MM Theorems misses both points as long as it disregards the endogenous process of money supply and the effects of financial fragility. In this sense, refutation of the validity of MM Theorems for bank regulation lends support to a Minskian cash-flow oriented bank regulation for the detection of Ponzi finances.

Efeitos da responsabilidade tributária de gestores na relação entre autuação e agressividade fiscal

ABSTRACT The aim of this research was to assess the moderating role of the joint and several liability of company directors in the relationship between the cumulative value of tax infraction notices and the subsequent level of corporate tax avoidance. Based on agency theory, the literature suggests that penalizing managers is more effective in reducing tax avoidance than penalizing the firm itself. However, this proposition had not been tested in Brazil, where the legislation determines that infraction notices and the consequent penalization of companies are carried out with the joint and several liability of the directors who have acted in excess of their powers or in violation of the law, the articles of incorporation, or the bylaws. The research is relevant because it presents empirical findings on the determinants of tax avoidance in large companies, as well as demonstrating the importance of the establishment of tax liability in controlling tax avoidance. This research has implications for the public debate on the establishment of tax liability, particularly its role in deterring tax avoidance. As a practical implication, it is suggested that the tax authority prioritizes tax audits that provide evidence that could lead to the tax liability of directors. The research consisted of a multiple linear regression analysis using the ordinary least squares (OLS) method on 23,142 observations from 4,560 large companies, covering the period from 2014 to 2020, collected directly from the internal systems of the Brazilian Federal Revenue Office (RFB). The results suggest that the joint and several liability of directors attenuates (intensifies) the positive relationship between the cumulative value of tax infraction notices and tax avoidance, as measured by the book tax difference (BTD) [effective tax rate (ETR)], contributing to the literature by confirming, in relation to current taxes, the theoretical prediction that penalties applied to directors are more effective, from the point of view of the tax authority, in controlling tax avoidance.

Modeli krivične odgovornosti krivičnog učešća u digitalnom okruženju - perspektiva savremenih izazova u italijanskom konstitucionalizmu

The rapid progression and widespread integration of Information and Communication Technology (ICT) have ushered in a new era of sweeping social and legal transformations. Among the many groundbreaking advancements, Artificial Intelligence has emerged as a pivotal force, permeating nearly every facet of our daily lives. From the realms of commerce and industry to healthcare, transportation, and entertainment, Artificial Intelligence technologies have become indispensable tools shaping the way we interact, work, and navigate the world around us. With its remarkable capabilities and ever-expanding reach, Artificial intelligence stands as a testament to humanity's relentless pursuit of innovation and the boundless potential of technology to revolutionize society. While completing all the tasks they are programmed for, Artificial Intelligence systems can perform actions, which could result in crimes if committed by humans. But crimes follow the reserve of law, therefore can be difficult to criminalize such crimes because of the lack of written law. Nevertheless, in modern legal systems, the structure of crimes doesn't only require the commission of a typical fact, but also the determination to do it. In this scenario, being Artificial Intelligence a non-human entity, the reconstruction of criminal responsibility is particularly difficult to theorize. This is mainly true because of the peculiar nature of the environment the machine lives in: the digital environment is made of a digital reality, and many of its actors (for example algorithms, protocols, and programs) are not even human and can only exist in that reality. This means that in this environment, machines can act, determine themselves and possibly commit crimes with or without a human user. This scenario makes it necessary to analyze Artificial Intelligence crimes in the light of common ones, using the ordinary law discipline. This analysis allows users (lawyers, judges, and scholars) to use three traditional liability models: "the perpetration-via-another", "the natural probable consequence", and "the direct liability". Through these models, users can assess whether the machine committed a crime. Nevertheless, the three liability models supra mentioned open the door to a totally modern scenario: the man-machine concurrence (the concurrence between man and Artificial Intelligence algorithm). In fact, if theorizing the liability of the machine comes with challenges, it is even more complicated to adapt to modern Constitutions the concurrence between the living and the digital. Indeed, it is necessary to assess whether a machine can commit crimes (or it is just an instrument), determine how the machine can concur with a human, and how much responsibility can be addressed to it. This paper wants to analyze the peculiarities of Artificial Intelligence, deconstruct three possible Artificial Intelligence liability models, and, finally, theorize the criminal participation man-machine through the lenses of Italian law.

Analiza dinamike likvidnosti bankarskog sektora u Srbiji na bazi TOPSIS metode

The problem of analyzing the liquidity of the banking sector is very challenging, significant, continuously updated and complex. Based on that, this paper analyzes the liquidity of the banking sector based on the TOPSIS method. The results of the TOPSIS method show that the top five years in terms of liquidity of the banking sector in Serbia in the observed time period 2008 - 2022 are in the following order: 2013, 2020, 2014, 2019 and 2015. The worst liquidity was recorded in 2010. It can be safely said that recently the liquidity of the banking sector in Serbia has slightly increased. This was positively influenced by numerous macro and micro factors (economic climate, interest rate, inflation, exchange rate, economic activity, asset and liability management, net working capital management, risk management and others).

Impact of Assets and Liabilities Management on Profitability: Evidence from ICICI bank in India

Impact of Assets and Liabilities Management on Profitability: Evidence from ICICI bank in India