Bank Subsidiaries Research Articles

Macroprudential policy spillovers in international banking groups.Beggar-thy-neighbour and the role of internal capital markets

Beggar-thy-neighbour in macroprudential policy? This paper studies the impact of macroprudential policies - specifically OSII buffers - on banking groups and their cross-border operations. Using granular data from three confidential databases, we present the first evidence on how banking groups respond to changes in capital requirements. Our findings reveal that: (i) consolidated parent banks constrained by OSII buffers cut back on debt and equity holdings in their foreign subsidiaries, altering global financial structures; (ii) subsidiaries with reduced funding and equity from their parent show a notable decline in lending to non-financial corporations; and (iii) overall, cross-border subsidiaries of OSII-constrained banks exhibit reduced lending and risk-taking towards non-financial corporations, hinting at a role of these subsidiaries in propping up the group’s consolidated capital buffers. While higher capital buffers enhance financial stability by curbing excessive risk-taking, they also constrain the funding and lending capacities of foreign subsidiaries, disrupting local credit markets and creating a “beggar-thy-neighbor” problem. Policymakers need to balance these impacts with the benefits of financial integration.

Main Trends in the Chinese Banks` Activities in Russia at the Beginning of the 14th Five-Year Plan

The article analyzes the Chinese banks` activities in Russia in the first years of the 14th Five-Year Plan (2021–2025). Four subsidiaries of state-owned commercial banks (ICBC, Bank of China, Agricultural Bank of China, China Construction Bank), and two representative offices of China Development Bank and Export-Import Bank of China respectively, operate in the Russian market. The banks provide a full range of banking products and services primarily to companies doing business with China, including lending, accounts opening and maintaining, foreign exchange and financial transactions, and letters of credit business. The author notes a significant increase of Chinese four subsidiaries` assets during 2022–2023. Regarding the liabilities, there was also a growth in the category "amounts due to credit organizations" (other banks` LORO accounts` transactions, interbank operations), which is associated with the necessity of an increased number of client payments due the increasing volume of Sino-Russo trade turnover and restrictions on settlements on USD and EUR. These trends have contributed to the growth of both the client base and profits of Chinese subsidiaries that charge commissions for account maintenance, settlements, and, moreover, had a positive impact on the increase in the volume of settlements in national currencies. The article analyzes the structure of settlements under foreign trade contracts and draws a conclusion about the growing predominance of national currencies. The author notes that in general, Chinese financial institutions pursue a cautious credit policy, focusing on maintaining stability and leveling various risks.

The role of diversification in stabilizing bank credit over the business cycle

AbstractWe investigate whether diversification stabilizes bank lending cyclicality on a sample of 25 conventional and 18 Islamic banks from Malaysia spanning 2008 to 2021. Our findings reveal that both bank types are nonlinearly procyclical during economic expansions, with Islamic banks also exhibiting countercyclical behavior during economic contractions. Diversification is positively associated with credit growth in conventional banks and Islamic bank subsidiaries, and it amplifies procyclicality across all Islamic bank types. Conversely, loan concentration stabilizes credit in Islamic banks. These results are robust to an alternative credit measure. Further analyses indicate that public and foreign banks are procyclical during booms and countercyclical during busts. At the same time, diversification heightens procyclicality in private, local, and foreign banks, whereas concentration mitigates it in public and local banks.

International Expansion of Nigeria Banks: Constructing the Winning Business Model in Sierra Leone-A Case Study of Guaranty Trust Bank

The research study is aimed at examining the degree to which Business Model adopted impact corporate performance particularly in a low-income economy, identify the Business Model variables and suggest the best Business Model to operate in Sierra Leone. Exploratory research was conducted on Guaranty Trust Bank (SL) Ltd with findings compared and contrasted with that of notable competition, United Bank for Africa and Zenith Bank. The aim of the research was to facilitate understanding of the factors responsible for the successes recorded by the subsidiaries of Nigerian banks in one location and how these success factors could be replicated in other subsidiary locations. The research entailed gathering of qualitative data from the senior executives of these banks and quantitative data from the financial performances of the banks over a three-year period. The analyses of the qualitative and quantitative data were used to test the viability of the Business Models adopted by the sampled multinational banks based on identified features inherent in a viable Business Model. The study found that the competitive advantage of case study bank was due to the effectiveness of its Business Model in terms of alignment with the goals of the organization, reinforcement, virtuousness, and robustness. The study also revealed that the characteristics of an organization and inherent resources could be evaluated and assessed from the Business Model features and structured to deliver optimal results. The study demonstrated that a well-crafted Business Model is capable of providing a competitive advantage even in low-income economy and aid the replication of success in one location to another. The research findings provide practical implications to guide businesses in the designing of the most appropriate Business Model for optimal performance. The research study can help business leaders to develop a template for driving performances in their organizations, communicate performance actions and monitor performance objectives.

The Impact of Emotional Work And Work Stress On The Work-Life Balance of Employees In Private Banking Subsidiaries

Emotional labor is an integral part of many jobs, especially those that involve interactions with other people. Employees who perform emotional labor are required to manage their emotions and display emotions that are appropriate to the demands of the job. This research aims to analyze the impact of emotional labor on employees' work-life balance. This research uses quantitative research. The data collection technique used was a questionnaire. The data that has been collected is then analyzed in the validity test, reliability test, normality test, and regression test. The results showed that emotional labor and work stress affect employees' work-life balance. Employees who do emotional labor and work stress are more likely to experience fatigue, and difficulty separating work life and personal life. Companies need to overcome these negative impacts, including with various social support company policies that support work-life balance can help employees overcome the negative impacts of emotional labor and work stress.

Risk Transmission of Foreign Subsidiary in ASEAN Emerging Countries

Research Originality: To the best of our knowledge, this study is the first to investigate the impact of home country parent bank risks on destination country subsidiaries in an ASEAN setting. Moreover, this study adds to the previous literature by using the post-global financial crisis period in ASEAN countries, various types of risks, and dynamic panel data.Research Objectives: This study aims to examine the association between parent and foreign subsidiary banks. The study also examines how bank regulation, national governance, and financial deepening in host countries affect the association.Research Methods: This study uses dynamic panel data of 43 foreign banks operating in ASEAN emerging countries during the period 2010-2018.Empirical Results: The findings indicate a significantly positive association between parent and subsidiary bank risk, particularly for credit and liquidity risks. National governance and bank regulation mitigate the risk transmission. In contrast, financial deepening amplifies the transmission of risks between parent and subsidiary banks.Implications: This finding has important implications, in terms of policy interventions and regulatory mechanisms that national governments can deploy to lower risk exposure of subsidiary banks, while at the same time encouraging foreign investments into the financial services sectors in ASEAN countries.JEL Classification: F30, G21, G32How to Cite:Karyani, E., & Agusman. (2024). Risk Transmission of Foreign Subsidiary: Evidence from ASEAN Emerging Countries. Etikonomi, 23(1), 129 – 146. https://doi.org/10.15408/etk.v23i1.32703.

Sharia and legal evaluation of the lease-to-own contract as carried out by subsidiaries of conventional banks in Jordan

Sharia and legal evaluation of the lease-to-own contract as carried out by subsidiaries of conventional banks in Jordan

Identification and Ranking of Business Intelligence Components Using the Fuzzy TOPSIS Technique

Objective: The primary objective of this research is to identify and prioritize the components of business intelligence within subsidiaries of the National Bank by employing the fuzzy TOPSIS technique. This endeavor aims to establish a foundation for presenting a scientific approach to enhance business intelligence capabilities. Methodology: This study adopts a mixed-methods approach, initially gathering qualitative data through semi-structured interviews with senior managers from the bank's subsidiaries, followed by quantitative data collection using questionnaires. The fuzzy TOPSIS method was employed to handle the inherent ambiguity and uncertainty in the data, with linguistic variables used to represent the acceptability of each business intelligence component. Findings: Final model was including the dimensions of technical factors (components of information tools, characteristics of information and data, and analysis), business factors (components of stakeholders, economic and financial factors, and customer orientation), and intangible factors (including components of human capital and organizational capital) and 27 indicators. Subsequently, the identified components were ranked using the fuzzy TOPSIS technique, ultimately selecting "information confidentiality", "data reliability", and "high profit margin" as the most important indicators. Conclusion: It can be concluded that the dimensions of innovation in online advertising and its implications in digital marketing are interpretable, and legal supports for innovation in online advertising through the enforcement of laws, enactment and amendment of specific laws and regulations for digital marketing, removal of legal barriers to investment, revenue generation, and clarification of legal ambiguities and definitions in digital marketing are effective.

International Transmission of Monetary Policy through Local Money Market Activity by Global Bank Subsidiaries

International Transmission of Monetary Policy through Local Money Market Activity by Global Bank Subsidiaries

Government guarantees and bank liquidity creation around the world

Governments provide bank guarantees, such as deposit insurance. While risk effects are well researched, impacts on bank output remain largely unexplored. We investigate bank output effects using data from 75 countries/regions on bank liquidity creation, a comprehensive bank output measure. We address reverse causality, examining home-country guarantee effects on liquidity creation by subsidiary banks in foreign host nations, and mitigate omitted-variables concerns with host country × year fixed effects and home country controls. Findings suggest home-country guarantees decrease subsidiary bank liquidity creation up to 10%, and hold prior to, during, and after the Global Financial Crisis.

Psychological constraint on unethical behavior in team-based competition.

A growing body of research contributes to our knowledge about unethical behavior. However, very little is known about how group-based competition shape members' unethical behavior. Building on social learning theory, we conducted three studies to reveal how group-based competition may affect individual's unethical behavior for their team. Study 1 and 2 are laboratory experiments in which participants were randomly assigned into groups of three members and engaged in group-based competition (or engaged in individual-based competition in an individual context) with monetary incentives. Different from individual-based competition where mean number of unethical behaviors for the self in the losing condition was larger than that in the winning condition, in group-based competition mean number of unethical behaviors in favor of group between the winning and the losing condition was not significantly different. Both studies also showed that there are less unethical behaviors in the group-based competition than in the individual-based competition. Study 2 further revealed that collective efficacy negatively associated with mean number of unethical behaviors in group-based competition. Study 3 was a field study with employees from bank subsidiaries working as teams, and results from their self-reported data confirm the relationship between collective efficacy and unethical behaviors observed in Study 2. Together, these results suggest that collective efficacy has the effect of curbing unethical behavior in group-based competition, thus contributing to the understanding of group-based experience on unethical behaviors.

The Effect Of LDR, ROA, PER, DER, NPL On Stock Prices In Banking Sub-Sector Companies In 2019-2021

The purpose of this work is to analyze the impact of financial indicators on the stock prices of bank subsidiaries in 2019–2021. This study focuses on five ratios which are Loan to Deposit (LDR), Return on Assets (ROA). , price/earnings ratio (PER), debt/equity ratio (DER) and non-performing loans (NPL). The research method is panel regression analysis, which uses secondary information obtained from the financial statements of listed banking companies. The research sample consists of several banking companies of a certain period. The results of this study show that LDR, ROA, PER, DER and NPL significantly affect the stock prices of bank subsidiaries. LDR, ROA and PER have a positive effect on stock prices, while DER and NPL have a negative effect. This indicates that investors tend to pay attention to these financial ratios when evaluating a company and setting stock prices. This study helps to understand the factors affecting stock price of banking companies. The results of this study can be used as benchmarks for investors, corporate management and regulators in making investment decisions and policies related to banking.

DEVELOPMENT OF FACTORING OPERATIONS IN THE RUSSIAN MARKET

The purpose of this study is to assess the level and prospects of factoring development in Russia based on the study of the regulatory framework and key indicators of the Russian factoring market. Materials and methods. The main methods were a comparative analysis of the indicators of the development of the factoring market in the regions of Russia and a retrospective analysis of the total factoring portfolio in the conditions of the Russian economy. Results. Within the framework of this study, the regulatory framework regulating factoring operations is analyzed. The varieties of factoring have been studied and grouped according to the corresponding characteristics. The analysis of key indicators of the Russian factoring market is carried out. As a result, their changes in dynamics are revealed. Analysis of the structure of the factoring portfolio allows us to conclude that the share of assets under contracts without recourse is increasing, which is understandable, since suppliers in a crisis period try to avoid the risk of default of the buyer. Also, the analysis allowed us to state that the main factoring transactions were made between suppliers and buyers from Russia. In addition, geographical features of factoring development in the Russian market are analyzed. It was revealed that it was most widespread in Moscow, the Central and Ural Federal Districts. The varieties of digital platforms for factoring operations have been studied. A comparative analysis of the quality of functioning of online factoring platforms in the Russian market is carried out. Conclusions. The Russian factoring market can be called very promising from the point of view of development within the regions of Russia. Moreover, there is a formation of the factoring market using mainly contracts without recourse. It was also revealed that the largest players in this market are subsidiaries of large domestic banks. This trend will continue in the near future in accordance with the specifics of the Russian factoring market. In addition, the prospects for the development of this market include the active development of online factoring platforms.

The value of reverse knowledge transfer: Case of Austrian Bank subsidiary in Slovakia

This research focuses on reverse knowledge transfer from Central Europe to Western Europe by analyzing the contribution of a specific Slovak subsidiary to MNC knowledge. It explores the first digital bank created in Slovakia, its origin, expectations, results, and expertise transmitted from the daughter company to the Austrian headquarters. The paper analyses the situation of Raiffeisen Bank International, headquartered in Vienna, and its digital daughter company ZUNO founded in Slovakia in 2010. It identifies the learnings transferred to the parent in digital banking, marketing, operational, HR, and strategic management. The authors also study subsidiary integration within MNC, alignment of its structure and processes with the parent and conclude that the new knowledge generation was especially valuable in digital banking, at work with new client segments, in implementing new forms of marketing, working with new technologies, creating new structures, and transferring them to the other foreign markets.

Legal Regulation of Banking in the New Regions of the Russian Federation

In October 2022, 4 new constituent entities were admitted to the Russian Federation: the Donetsk People’s Republic, the Luhansk People’s Republic, the Zaporozhye and Kherson regions, which put on the agenda the issue of integrating their banking business into the federal legal field. The study focuses on the following questions: how this process is going and what impact it makes on the national banking system as a whole. According to the results of the study, it is revealed that the legal regulation of the banking system of new constituent entities of the Russian Federation is undergoing a transitional period characterized by the effect of the norms adopted in these regions before they entered into the Russian Federation, as well as acts of emergency legislation. The author determines the factors influencing banking activity in the new constituent entities of the Russian Federation: the need for legal transformation, implementation of the special military operation, unfriendly actions on the part of the United States and foreign states and international organizations that have joined them. Extremely low availability of banking services in these constituent entitties of the Russian Federation makes it necessary to open branches and subsidiaries of Russian banks. To sum up, taking into account conclusions made about the nature of integration, the author proposes measures aimed at supporting the banking system not only in the new regions, but also in the Russian Federation as a whole: increasing limits on cash withdrawals; writing off loans the collateral for which was lost during hostilities for individuals and legal entities located in new regions; resumption of the work of exchange offices; acceleration of the process of introducing a non-bank payment service provider to the banking market; creation of a fund for settlement of losses in the banking sector; development of a mechanism for parliamentary control over acts of emergency regulation adopted by the Bank of Russia, the President of the Russian Federation and the Government of the Russian Federation.

Strategi Pemasaran Produk Kpr BTN Syariah Sejahtera iB Bagi Masyarakat Berpenghasilan Rendah


 The Sharia State Savings Bank (BTN) is a business unit that receives FLPP funds from the government, BTN Syariah is also a subsidiary of Conventional BTN Bank, which has become the second best bank in implementing the Subsidized Mortgage Program in Indonesia after Bank BTN Conventional. Bank BTN Syariah is the best Islamic bank that supports and implements programs provided by the government, namely the Housing Financing Liquidity Facility (FLPP) and the Ministry of Public Housing (KEMENPERA) which are intended for low-income communities and non-fixed income communities. This study aims to find out what the problems are and what solutions and strategies are used by Bank BTN Syariah Kcps Cibinong in carrying out the marketing of its superior product, namely subsidized mortgages aimed at MBR (low-income people). The results of this research have identified Internal and External Problems, internal problems and solutions consist of Funding (poor funding, funds provided, profit sharing), Marketing (business network, digital, product creativity), Performance (target target, time spent on marketing). real, sales). External problems and solutions consist of Covid (inflation, buying behavior, income), Developer (high selling price, house quality, location), Government (lack of supervision, funding support, policies).
 Keywords: marketing strategy, subsidized mortgages, low-income people

An Insight into Investment and Deposit Products Offered by Islamic Banks in Malaysia

The aim of this paper is to understand the practical application of investment and deposit products in comparison with the guidelines offered by the Islamic Financial Services Act (IFSA). Here, the products’ features and benefits of the banks’ deposit and investment products are highlighted. A performance analysis of both products is conducted among different banks in Malaysia, and their results are used to draw conclusions on the effects of IFSA on banks. The data was based on two banks in Malaysia: one was a fully-fledged Islamic bank, and the other was a subsidiary bank offering Islamic banking products. The information was obtained from the banks’ websites, annual reports, and Bank Negara Malaysia’s (BNM) website. The findings of the research are that the two banks analyzed all conform to the guidelines issued by IFSA. The volumes of investment products have significantly decreased after the introduction of IFSA compared to the volumes of deposit products. Bank Islam and CIMB Islamic both provide items that are suitable for use with an IFSA. Customers have a thorough understanding of the benefits of various types of deposits and investments.

Cultural values of parent bank board members and lending by foreign subsidiaries: The moderating role of personal traits

In this study, we investigate whether the cultural values of a parent bank’s board members affect lending by the bank’s foreign subsidiaries and how this influence is moderated by the board members’ personal traits. Using a new dataset on foreign-owned banks and their parent companies, we find that average individualism, uncertainty avoidance, and indulgence within parent bank boards significantly impact lending by foreign subsidiaries. We establish that different sensitivities of female and male directors modify the relevance of individual cultural dimensions in lending by foreign bank subsidiaries. Moreover, we show that parent bank directors’ cultural values have a stronger impact on lending by the bank’s foreign subsidiaries when those directors have enough time to fulfill their duties and possess higher ownership stakes in the parent companies.

Upravljanje poreskim rizikom u multinacionalnim bankama - pogled iz Srbije

Considering the significant cross-national differences between tax systems, multinational banks are facing a challenge to secure compliance with the tax regulation of each country. In this regard, multinational banks tend to minimize tax risk exposure and the probability that national tax authorities will consider certain tax treatment as illegal. The paper studies the main sources of tax risk for subsidiaries of multinational banks in Serbia. It is pointed out that banks are facing important challenges to secure compliance with the tax regulation, particularly value-added tax and corporate income tax regulation. The paper also shows that subsidiaries of multinational banks in Serbia and neighboring countries disclose the information on the tax risk in notes to the financial statements only to a moderate extent. In addition, multinational banks disclose information on tax risk using different models in different countries, implying that they adapt the disclosure to the assessed level of the tax risk in each country.

Corporate governance and effect in fintech: Evidence from Gulf Cooperation Council banking sector

This study looks at the banking sector in the Gulf Cooperation Council (GCC) from 2013 to 2021 to determine the impact that corporate governance had on financial innovation, as well as the impact that financial innovation had on performance. Thirty (30) commercial banks with 270 annual observations were selected, including 5 banks from each country. In order to quantify the factors at play, we queried databases such as Refinitiv Eikon and Fitch Connect. The research indicates that banks with a greater number of directors with backgrounds in finance or accounting, a higher attendance rate of directors, a higher ratio of independent directors, a higher average director education level, and a greater number of directors with a background in finance or accounting, provide more cutting-edge financial services. Since 2017, corporate governance has been a more significant factor in how banks approach providing new, cutting-edge financial services to their customers. Furthermore, a bank’s profitability and value will rise in direct proportion to the extent to which it provides cutting-edge financial services. Furthermore, the value of financial holding subsidiary banks could rise if they provided more innovative financial services. However, the same action taken by non-financial holding banks could have a negative impact on their profitability.