Nature Of Banks Research Articles

MONETARY CIRCULATION AND BANKS IN THE INTERPRETATION OF THE MAIN ECONOMIC SCHOOLS

The topicality of the research lies in the fact that the long-term evolution of financial markets, reinforced by global transformations, has led to the development of convergent processes in banking activities in the presence of significant paradigmatic differences between the major banking systems of the world. The existing peculiarities in the mechanisms and methods of regulation of the banking sector within individual countries have caused drastic changes in views on the nature of the bank and its activities. The traditional view of banks as institutions of financial intermediation, providing the exchange of monetary assets between the owners of savings and borrowers, does not provide for the creation of new money. Instead, proponents of the alternative viewpoint emphasize that in today's world banks finance borrowers mainly through the mechanism of money emission. Both points of view are present to varying degrees in various theoretical and conceptual approaches to understanding the essence of the bank as an institution of financial intermediation. The current economic realities require a detailed study of national banking systems, which largely developed historically, and methodological aspects of their evolution in the context of global transformations. The research subject. In the process of evolution of theoretical and conceptual approaches to the definition of the essence of money, banks, the banking system, the prevailing point of view on this issue has not yet taken a definite form. Nevertheless, the recognition of the effectiveness of banks as a factor of economic growth brings together the positions of competing schools of economic theory. Banks become a factor in the investment process even in the theoretical models of the neoclassical school, which traditionally denies the dependence of economic growth on the money supply. Endogenous growth models recognize the role of banks primarily as a factor in accumulating capital and increasing savings, as well as a mediator between owners of savings and borrowers. Although the Keynesian school of thought initially gave little weight to the functioning of the banking system, neo-Keynesian models have attempted to explain the importance of confidence in the banking system and the need for sound regulatory constraints. The above-mentioned has urged us to carry out this research. The methodological framework of the research is based on an analysis of research on the global debate about the nature of banks in the economy and the architecture of monetary policy. A wide range of theoretical and empirical research methods were used: systematic analysis, synthesis and generalization to formulate conclusions. The aim of the research is to generalize and systematize the evolution of perspectives on money in the interpretations of today’s main economic schools. Conclusion. The findings consist of a conceptualization views' evolution on money, the banking sector in a more open economy to capital flows, and our firm belief that the banking system and the related process of money issuance affect income levels cyclically and over the long term.

Contradictory Nature of Banks and its Overcoming in Conditions of Today’s Cash System

Topicality of the article can be explained by internal contradictory nature in today’s banking system structure, which impedes economic development of the country and thus should be overcome. Now the banking system belongs simultaneously to different structural parts of market. On the one hand, it forms an immanent element of the cash system, within the frames of which there can be no competition. On the other hand, it is included in national economy, where competitive relations are inalienable. The goal of the research is to identify this contradiction and to show the way of its overcoming in conditions of today’s cash system. The article used methods from general to particular, deduction and induction, unity of historical and logical and others. As a result the author came to the conclusion that contradictory nature of banks impeding the economic development of the country can be overcome by differentiating them in those, which will form the constitutional element of the cash system of the country and those, which will function as ordinary companies competing with each other in different lines and striving for growth by gaining profits.

Determinants of capital structure of banks: evidence from the Kingdom of Saudi Arabia

PurposeThe purpose of this study is to investigate the most important factors that affect the capital structure of commercial banks in the Kingdom of Saudi Arabia.Design/methodology/approachThis study uses annual data of 11 Saudi commercial, national banks listed on the tadawul Saudi stock exchange for the period 2010–2017. Data was collected from the banks financial statements, tadawul annual publications and Saudi Arabian Monetary Authority. By constructing a balanced panel, this study uses pooled ordinary least squares regression along with fixed effects and random effects to examine the relationship between the bank’s book leverage as the dependent variable and bank-specific explanatory variables that include profitability, tangibility, earnings volatility, growth opportunities and bank size, while controlling for macroeconomic conditions.FindingsThe findings of this study suggest that banks in Saudi Arabia are highly leveraged, endorsing the fact that the nature of banks’ business is different from non-banking firms. Earnings volatility, growth and bank size show positive and significant relations with book leverage. Profitability and tangibility are negatively related to the book leverage. Empirically, the explanatory variables profitability, earnings volatility, tangibility, growth and bank size have material effects on the capital structure decisions of Saudi commercial banks. In summary, the determinants of capital structure for Saudi banks are the same as those of non-financial firms but are distinctive in nature.Research limitations/implicationsAn extensive study on all the banks operating in Gulf Cooperation Council (GCC) countries is suggested.Practical implicationsThe findings have practical implications for bank managers, which will help them to identify the bank-specific factors affecting the capital structure and choose the values enhancing optimal capital structure. The results of this study can assist regulatory agencies to formulate an effective regulatory framework. Moreover, the findings lay a foundation for the development of financial sector under the umbrella of the Vision 2030 program in the Kingdom.Originality/valueTo the best of the authors’ knowledge, this is the first study to explore the factors affecting the capital structure choices of commercial banks operating in the Kingdom of Saudi Arabia. Moreover, the findings of the study would prove useful in detailed studies of capital structure in the GCC countries as well.

CONDUCTING FINANCIAL AND ECONOMIC EXAMINATIONS RELATED TO BANK FAILURE

According to experience of the banking system existence of Ukraine it is obvious that every year an increasing number of banks are negatively affected by the financial crisis, which is the result of a wave of liquidation and bankruptcy of banking institutions.
 Recently, a large number of requests have been sent to forensic institutions for conducting forensic economic examinations on the issues of a comprehensive analysis of the financial and economic activities of banks as well as on establishing features of concealing bankruptcy, fictitious bankruptcy or leading to bankruptcy. This is primarily due to the need to establish the possibility or impossibility of paying off monetary obligations including on deposits in the bank; analysis of the impact of certain management policies on the financial condition of banks; search for directions for optimizing costs and income of banks etc.
 While performing a forensic examination on concealing bankruptcy, fictitious bankruptcy or bringing bankruptcy within the scope of his competence, a forensic
 expert shall give an opinion on the presence or absence at the enterprise of economic signs of fictitious bankruptcy, leading to bankruptcy or concealment of bankruptcy on the basis of the criteria defined in Guidelines No. 14. The calculation of these indicators for a bank is impossible due to the fact that there are differences in the determination of insolvency of the bank and the business entity due to the economic and legal nature of banks and the procedural steps for determining such insolvency.
 Currently, there is no legislatively approved methodology for determining the economic signs of bankruptcy, fictitious bankruptcy, hidden bankruptcy specifically for banks, which makes it impossible to calculate such financial and economic indicators of the bank as bankruptcy, fictitious bankruptcy, hidden bankruptcy.

أحكام الودیعة النقدیة البنكیة لدى البنوك التقلیدیة والبنوك الاسلامیة

This essay tackles definition of Cash Deposit Bank and their types and effects on allConventional Banks (usury) and Islamic Banks through two sections. By considering,Cash Deposit Bank is the primary source of funds and the resource of this latest.Whatever its duration, form and standard used in its classification.When a valid contract entered into, howsoever its forms, Cash Deposit Bank resultslegal consequences for its parties as other contracts. Also Cash Deposit contract resultsengagements and rights for both depositor and depository.With account, the nature of Bank, we’re dealing with Conventional or Islamic Bank.That’s why, the nature, principle, and method of its work play a big role to define theeffects resulted from a concluded contract.

Were Banks Special? Contrasting Viewpoints in Mid-Nineteenth Century Britain

In 1853 a Royal Commission was set up to investigate whether laws related to limited liability in Britain needed to be modified. As part of its evidence gathering the commission issued a questionnaire that included a number of questions on whether banks should be subject to the same liability laws as other types of commercial enterprises. This paper analyses the responses to the questions about banks to understand whether banks were seen as a special case. Support for modifying the law to make limited liability more easily available to banks was lower than for enterprises in general. Banks were seen as a special case because of the risk of bank runs and because their creditors were not able to assess accurately the riskiness of banks. But the special nature of banks caused others to favour limited liability because it made banks’ capital levels more transparent. These arguments echo wider debates during the nineteenth century and are similar to contemporary theories for why banks are regulated.

Banking system and its role in Kosovo’s economic development

Developing a sustainable banking system is a prerequisite for developing an economy. The purpose of this paper is to extract all the important factors in the nature of banks and their direct role in economic development. This market study aims to analyze the banking system in Kosovo by determining and then analyzing its structure, the degree of concentration of commercial banks in the banking market, their behavior towards price, number of participants, banks operating in this market, types Of the products and services they provide, in order to assess the level of competition of this sector, in accordance with the right of competition. For this purpose, the study describes the functioning of the banking system as a whole and its special segments, regulatory supervisory instruments and their role not only in the functioning of the banking system but also in effective competition. Since the beginning of the operation of commercial banks, which is over 16 years old, the market still dominates high interest rates on loans, which, to some extent, is a burden on economic entities, and thus the economy as a whole.

Effect of Diversity on Top Management Team to the Bank's Innovation Ability-based on the Nature of Ownership Perspective

In this paper, upper echelons theory as the basis, 16 banks which was listed during the years of 2006 to 2015 as the research object, to research how the Top Management Team diversity (hereinafter referred to as “TMT”) influence on the banks innovation ability under the nature of ownership. The results show: the different nature of banks, the role of TMT diversity on the banks of innovation ability to play is not identical. In the “state-owned banks”, the age, the level of education and functional experience diversity significantly affect the bank's ability to innovate; but in the “non-state-owned banks”, the age and level of education diversity significantly affects its ability to innovate, and functional experience diversity is no longer significant. Conclusions of this study support during the different nature of the bank, the TMT diversity to enhance banks have different effects on innovation, thereby strengthening the team building for the different nature of the Bank for the bank training and development innovation ability, the team structure change provide new evidence.

Regulatory Challenges of Islamic Banking in Pakistan

This research investigated the regulatory challenges faced by Islamic banking from the perspective of Islamic bankers in Pakistan. The data were collected through crosssectional survey using a questionnaire from 152 bankers, selected through stratified convenient sampling, working at different Islamic banks of Lahore. The mean scores for overall 68 statements as well as for its sub-dimensions, namely, ‘Scope of Regulatory Authorities,’ ‘Development Issues with Regulatory System,’ ‘Licensing and Authorization,’ ‘Shari‘ah Supervision,’ ‘Supervisory Framework,’ ‘Institutional Harmonization,’ ‘Information Disclosure,’ ‘Market Development’ and ‘Capacity Building’ indicated the agreement of Islamic bankers with pre-formulated list ofregulatory challenges for Islamic banking. There was no statistically significant difference in bankers’ perceptions with regard to regulatory challenges for Islamic banking based on gender and nature of bank. However, the participants’ qualification, professional experience, and career levels appeared to be correlative of Islamic bankers’ perceptions regarding regulatory challenges for Islamic banking. The findings are helpful for policy makers to make strategic decisions for the development and growth of IB in Pakistan. This study comprises pragmatic insights of Islamic bankers and benefits both Islamic as well as other conventional banks adopting Islamic banking in order to increase their business opportunities. In addition, the results of this study may assist the policy makers and regulators in policy formulation regarding Islamic banking in Pakistan.

Bank Guarantees in Iranian Law

<p>This paper aims at investigating bank guarantees in <em>Iranian law</em> and exploring new and different bases for the nature of bank <em>guarantees</em> that create liabilities and make accepting this legal action simpler for community members. In other words, we have been in a position to answer these questions: What is the nature of bank g<em>uarantees</em>? In other words, do bank g<em>uarantees </em>include <em>civil or </em>commercial guarantees? Finally, according to the proposed principles and introduced ideas, it seems that bank guarantees cannot act as a Civil or Commercial <em>Guarantee.</em> It should also be acknowledged that bank guarantee letter<em> </em>is an innovative financial tool that is very important in commercial contracts and in particular international contracts, because they minimize economic risk of the contract and are strong executive guaranty. In general, no contract can be executed or take effect without bank guarantees and insurance.</p>

Nonmaturity deposits and banks’ exposure to interest rate risk: issues arising from the Basel regulatory framework

Because publicly available measures of deposit runoff risk are scarce, regulators' models to measure interest rate risk in the banking book are based on very coarse assumptions about the allocation of non-maturity deposits within the regulatory maturity ladder. Using well-established statistical approaches, we address this issue by developing a methodology that considers deposits' actual behavior in terms of both price sensitivity to changes in market rates and volume stability over time. Our model extends the current knowledge of public measures of interest rate risk and can be applied to publicly available data in a manner replicable by those outside of banking institutions. The use of different allocation criteria affects not only the size of the risk indicator but also the nature of banks' risk exposure and determines the risk inversion phenomenon, that is, banks exposed to an increase in interest rates can experience a reduction in their equity economic value if interest rates decrease. Overall, our results confirm the importance of accurate modeling of non-maturity deposits for estimating interest rate risk in the banking book.

Depositor discipline and the bank ' s incentive to monitor

Purpose – The aim of this paper is to examine the question of the specialness of banks by addressing concerns raised in the recent studies and deriving policy implications for the future of banking. The specialness of banks has been well documented in the finance literature. More recent research, however, calls into question the special nature of banks. Design/methodology/approach – We use event study methodology to study 423 bank loan announcements from 1988 to 1996 and examine the returns relative to proxies for the bank ' s monitoring incentives and skill using ordinary least squares (OLS) regressions. Findings – Our results indicate borrower abnormal announcement returns are positively related to proxies for the bank ' s monitoring incentives and skill as measured by: the ratio of uninsured deposits to total loans; a risk-adjusted measure of recovered charge-offs; and the relative bank-to-borrower capital ratio. Research limitations/implications – The results reveal how the fragile nature of the bank ' s structure improves the bank ' s incentives to monitor borrowers. Practical implications – Our results can inform the current debates in the Fed and in Congress surrounding reapplying the Glass-Steagall Act and limiting the size of banks. We show that banks were special before the Gramm-Leach-Bliley Act and when fewer banks belonged to the too-big-to-fail category. This suggests that reregulating banks to re-establish their fragile nature will re-establish them as information-generating intermediaries instead of just transactional institutions. Originality/value – Our findings have not previously been documented but are broadly consistent with models developed by Calomiris and Kahn (1991) and especially Diamond and Rajan (2001).

Global Trends in the Bank Regulatory and Supervisory Environment

Recent changes in the nature of banking and costly banking crises in countries around the world have focused attention on the adequacy of bank regulation and supervision. Policy makers have struggled with questions about the most appropriate regulatory regime to adopt, and the supervisory practices best suited to implement and enforce the regime. Several countries, in this regard, have recently transferred regulation and supervision to a separate agency from the central bank, with China being the most recent to do so in April 2003. Many countries have also recently taken actions to improve their prudential regulations and supervisory practices governing the activities of banks, a process that is likely to receive added impetus when the new Basel Capital Accord comes into effect. This paper provides an overview of key global trends in bank regulation and supervision. The study draws on recent research and detailed cross-country data, including data from a recent World Bank survey of bank regulation and supervision worldwide, to focus on some of the underlying reasons for and implications of developments in a variety of areas. These include the following: the nature and changing role of banks in promoting economic growth, development and stability; restrictions on the scope of banking activities and allowable ownership arrangements in which to conduct them; the structure and scope of bank regulatory and supervisory schemes; supervisory practices to promote safe and sound banks; market discipline and corporate governance in banking; deposit insurance schemes; offshore banking, and potential disputes in banking arising from World Trade Organization membership.

Nature of Bank Deposit in Finland

Nature of Bank Deposit in Finland

Nature of Bank Deposits in China

The main purpose of banks is to provide a safe custody for people to keep their money or their other securities. The nature and types of banks in the world prior to the 20th century was quite different than what we see as banks today. Those were private institutions having a profit motive, which acted as safe keepers of the money of public in lieu of payments made to them for such rendering of service. However the nature of those banks being private, in case they went bust the creditors had no claim over that money. A considerable number of Banks in each country have become commercialised Banks which are controlled by one central bankof that country. Thus Banks are more properly structured, organised and reliable financial institutions in the 21st century offering a varied amount of services to the public, including deposit services. Bank deposits are in the form of different accounts like savings account, current account, fixed deposit accounts which allows the customer to deposit a sum of money in the bank and he can withdraw it also at a point of time depending on the type of account he holds. In this assignment the nature of bank of deposits of China has been discussed. The data has been collected from the various banks, which has been footnoted. The various banks of China provide a varied amount of deposit service thus catering to the diverse needs of people.

Information Sharing and the Volume of Private Credit in Transition: Evidence from Ukrainian Bank-Level Panel Data

The effect of lenders' information sharing on the volume of credit is ambiguous in theory and underexplored empirically. Departing from the scant existing literature, which draws on country-level aggregate data, we study the impact of information sharing on the volume of private credit by examining unique bank-level panel data from Ukraine, a transition economy where information sharing among banks is only a recent phenomenon. Employing the fixed-effects framework and dynamic panel methods to address endogeneity due to the non-exogenous nature of banks' choice to participate in information sharing, we find no credit volume effect of information sharing when information sharing takes place through the central bank-administered public credit registry. In contrast, information sharing through private credit bureaus is associated with an increase in the volume of bank lending, in particular when a bank is partner of multiple private credit bureaus. This effect is robust and non-negligible in magnitude.

Does ownership form in community banking impact profitability?

PurposeThe purpose of this paper is to examine the profitability of different ownership forms of banks. The two ownership forms are corporations that elect to be taxed as a Subchapter S corporation (limited to 100 shareholders) as opposed to those corporations that do not make this election. The impact this election has on the dividends paid to the investors is examined.Design/methodology/approachThis paper uses Call Report Data on Wisconsin banks as collected by SNL Securities as its database. The research methodology uses two measures of performance: dividend ratio and accounting return on assets (ROA). The dividend ratio is defined as dividends as a percentage of net income (dividends/net income). Accounting return on investment is net income as a percentage of total assets (net income/total assets) and is a measure of profitability. A number of regressions were created with these as the endogenenous variables and a heteroskedasticity‐corrected ordinary least squares (OLS) model was used.FindingsSubchapter S banks were found to be more profitable (as measured by ROA). However, when taxes are taken into account, there is no practical difference in profitability between the two types of corporate structure.Research limitations/implicationsBy limiting the analysis to Wisconsin, a single state, confusion that may be caused by both state laws (personal and corporate) and local corporate cultures is avoided.Practical implicationsThe practical implications of this research can guide the federal government in determining whether this form of stock ownership is a device that reduces or increases federal tax revenues. It can also provide insight to the stockholders of these banks into the differences in profitability these corporate forms offer.Originality/valueWhile earlier literature has reviewed the concept of Subchapter S corporations and its theoretical impact, little research has been conducted that tests the actual results. Due to the private nature of the corporate form (these types of corporations are often not publicly traded and have no incentive to reveal private financial records), this original research is the result of the public nature of banks that provide a rich dataset for us to examine.

Procyclicality of Banks - The Indian Experience

Supervisors and policy makers pay increasing attention to the possible procyclical nature of banks’ behaviour. To ensure macroeconomic and financial stability, it is important that regulators understand whether, and to what extent, banks are affected by the macroeconomic and lending cycles. This paper attempts to provide a comprehensive investigation of these issues using a dataset of Indian commercial banking sector over the period 1996-2007. By estimating static panel data model, it tries to investigate whether loan loss provisions and non-performing assets show a cyclical pattern. The estimated relations are studied to analyse the sector wise (public sector banks, foreign banks and private sector banks) behaviour of Indian banks to assess the effects of macroeconomic shocks on banks’ balance sheets.

Banks' Riskiness Over the Business Cycle: A Panel Analysis on Italian Intermediaries

Supervisors and policy makers pay increasing attention to the possible procyclical nature of banks' behaviour. Indeed, to guarantee macro and financial stability, it is important to understand whether, and to what extent, banks are affected by the macroeconomy and second round effects occur. This paper provides a comprehensive investigation of these issues using a large dataset of Italian intermediaries over the period 1985-2002. In particular, estimating both static and dynamic models, it investigates whether loan loss provisions and non-performing loans show a cyclical pattern. The estimated relations may be employed to carry out stress tests to assess the effects of macroeconomic shocks on banks' balance sheets.

Regulating Bank Holding Company Capital

Since 1970 the nature of bank holding companies has undergone marked change. Prior to 1970, the holding company parent essentially confined its operations to holding the stock of one or more banks. It generally refrained from either direct or indirect participation in nonbanking activities and issued little or no debt. Since the passage of the 1970 amendments to the Bank Holding Company Act, many holding companies have moved aggressively into a variety of nonbanking activities, such as mortgage banking, consumer finance, leasing, insurance and data processing. Also, since 1970 holding company parents have become important financing vehicles for both their bank and nonbank affiliates.