Banks In Taiwan Research Articles

Financial Determinants of Bank Performance in Taiwan

As the consolidation of financial institutions is one of the highlights in recent financial territory, we examine whether banks being subordinated under the financial holding company (FHCs) outperform to independent banks in Taiwan, covering 15 FHCs banks and 18 independent banks in our sample for the period from 2005 to 2010. Using the CAMEL approach, we also investigate empirically further the financial determinants of banks’ performance regarding FHCs banks and independent banks respectively, and examine whether the financial determinants of banks’ performance differ before and after the financial crisis. Results show that ROA is strongly related to certain CAMEL ratios, such as the total capital ratio, loan loss reserve/gross loans, the burden ratio, and net interest income divided by total assets. Moreover, the positive significant capital adequacy ratio in the post-crisis period in our sample is mainly driven by subordinated banks. Finally, asset quality factor has explaining power for the pre-crisis and post-crisis periods, meaning prevention safety net built predominantly in refraining from external shocks.

Dynamic modeling of the development of the DRAM industry in Taiwan

After nearly 30 years of development, Taiwan's DRAM industry has become the third largest in the world with a production value approaching US$4 billion in 2009. However, with the rapidly changing market business cycle during the last few years and the impact of the global financial crisis of 2008 to 2009, Taiwan's DRAM industry has found itself thrown into a crisis management scenario. In fact, the development of Taiwan's DRAM industry is a complex and dynamic process. Taiwan's government, banks, DRAM manufacturers and technical partners play important roles in the long-term accumulation of capital, technology and capacity. In this study, we used system dynamics to explore the system structure for the development of Taiwan's DRAM industry. Our simulation indicates that the effect of the government policy of direct investment in the aftermath of the financial crisis cannot effectively help the long-term development of Taiwan's DRAM industry.

Explaining Bank Efficiency Differences Between China and Taiwan by Meta-Frontier Cost Function

The purpose of this paper is to employ the Meta-Frontier Cost Function to compare the efficiencies of banks in China and Taiwan over the period 2003–2009. Different from previous literature using loans and securities as the output variables in evaluating banking efficiency, we propose two new variables: interest income on loans and nonperforming loans, to identify whether the banks are both cost and profit efficient and to control the quality of loans. Evidence is found that the average cost efficiency of China's banks leads the Taiwanese banks with a significant gap. Some policy implications are provided accordingly.

Examining Dimensions of Electronic Service Quality for Internet Banking Services

Internet banking is one of the increasingly important businesses in electronic commerce worldwide. Delivering effective electronic service quality (e-SQ) is essential to becoming, and remaining, competitive in internet banking service. From the banks perspective, to remain competitive, banks should try to make customers satisfied with their services and offerings, and this can be achieved by measuring and improving dimensions of internet banking e-SQ. Use of e-SQ instruments, such as E-SERVQUAL, to determine dimensions of e-SQ for internet banking require researchers to review variables proposed in the instruments in term of their content and constructs validities in different context of services and countries. Thus, this study examined the use of E-SERVQUAL scale to determine dimensions of e-SQ for internet banking services in Malaysia. It reviewed main theories and instruments of e-SQ and findings of the previous studies on the e-SQ dimensions used to measure internet banking in USA, Hong Kong, Taiwan, Sweden, Iran and UK. Based on these reviews, a conceptual model of eight dimensions – efficiency, fulfilment, system availability, privacy, responsiveness, contact, assurance, and website aesthetic – was developed to measure e-SQ for internet banking. The first six dimensions were adapted from E-SERVQUAL scale and the other two was added to the model as a result of review of e-SQ dimensions used for internet banking and discussion with e-SQ experts. The primary data of e-SQ was gathered from 265 internet banking users of a commercial bank in Malaysia using convenience sampling procedure. The finding revealed that dimensions of e-SQ for internet banking are assurance-fulfillment, efficiency-system availability, privacy, contact-responsiveness, and website aesthetics and guide. The result calls for reinterpretation and reorganization of E-SERVQUAL dimensions and items when they are used in examining dimensions of e-SQ for internet banking. This paper extends the use of E- SERVQUAL and the understanding on construct of e-SQ to examine dimensions of Malaysia's internet banking e-SQ.

Remote sensing of picophytoplankton distribution in the northern South China Sea

By using a global data set (NOMAD), improved algorithms were developed for deducing from ocean color remote sensing data the concentrations of phytoplankton pigments, total chlorophyll a (TChl_a), zeaxanthin (Zea) and fucoxanthin (Fuco), and the associated primary phytoplankton groups, namely, Prochlorococcus, Synechococcus, haptophytes and diatoms, in the oceans. A modified classification for the waters of the world's ocean based on the dominant phytoplankton group was then devised. By using a local data set from the northern South China Sea (NSCS), algorithms were also developed for assessing the cell abundances of picophytoplankton, Prochlorococcus, Synechococcus and pico-eukaryotes, in this region. These algorithms were then applied to the remotely sensed data from the MODerate-resolution Imaging Spectrometer at Aqua sensor (MODIS-Aqua) to study the abundances and the distributional patterns of picophytoplankton in the entire NSCS. The results agreed well with field observations, which were available only from selected locations in the study area. On a basin scale, the results were consistent with expected variations in phytoplankton pigments, phytoplankton community composition, and picophytoplankton biomass, in response to the major known environmental phenomena in the NSCS, such as the progressive increase in biological productivity towards the coast, the runoff from the Pearl River, higher biological productivity in the wintertime, upwelling around the Taiwan Bank, winter upwelling northwest of the Luzon Island, and the transformation and dissipation of internal waves off the Dongsha Atoll. This work represents the first effort in estimating the cell abundances of the principal picophytoplankton groups in the oceans from space. The general application of this approach to the global ocean needs to be further validated and calibrated with a more extensive data base from field observations in other parts of the oceans.

Neuroethics in Taiwan: Could There Be a Confucian Solution?

Latecomers to neuroscience, Taiwanese scientists and humanities scholars have yet to develop a distinctive discourse of neuroethics. It is important to involve the public in the discussion of science policy early on, so the results of a survey of attitudes toward the establishment of a brain bank in Taiwan are used here to explore Taiwanese thinking about the brain. Finally, the possibility of developing a Confucian neuroethic is discussed as an alternative to Western approaches.

Measuring customer satisfaction of Internet banking in Taiwan: scale development and validation

Internet banking is one of the most important e-services in electronic commerce; however, the lack of standardised instrument for evaluating its satisfaction may inhibit the further development of Internet banking. This study aims to develop and validate a standardised measurement regarding customer satisfaction with Internet banking (IBCS). The development process included examinations of user satisfaction literature, expert panels, and pilot studies. Web survey was used for data collection, with subjects of Internet banking customers. The result was a parsimonious 18-item instrument with six subscales (content, accuracy, format, ease of use, timeliness, and safety) tapping into dimensions of IBCS. Further, this study not only affirms that all items in prior user satisfaction studies are still valid in the context of Internet banking, but also reveals that safety issues need to be addressed by banks to improve user satisfaction of Internet banking. Because of this rigorous and systematic study, researchers can use this valid measurement as a standardised instrument for measuring customer satisfaction of Internet banking.

APPLYING A TWO-STEP MAXIMUM LIKELIHOOD METHOD TO EXAMINE THE DEPOSIT INSURANCE PROGRAM OF TAIWAN

This paper examines the deposit insurance program of Taiwan. We adopt Duan et al. [4]'s deposit insurance pricing model, and estimate the deposit insurance premium by the Duan and Simonato two-step maximum likelihood method [5]. Our results show that the maximum likelihood estimates for the deposit insurance premium are considerably higher than the official rates currently charged by the Central Deposit Insurance Corporation (CDIC), the deposit insuring agency of Taiwan, indicating that the CDIC deposit insurance program appears to hand out a substantial subsidy to the banks in Taiwan. Our results also show that the CDIC in fact grants too much capital forbearance to the banks, and that the semiannual bank audits currently mandated by the CDIC are in fact much less frequent than our estimated values. These findings may also explain why the estimated rates for the deposit insurance premium are much higher than the current CDIC rates.

A Bayesian latent variable model with classification and regression tree approach for behavior and credit scoring

A Bayesian latent variable model with classification and regression tree approach is built to overcome three challenges encountered by a bank in credit-granting process. These three challenges include (1) the bank wants to predict the future performance of an applicant accurately; (2) given current information about cardholders’ credit usage and repayment behavior, financial institutions would like to determine the optimal credit limit and APR for an applicant; and (3) the bank would like to improve its efficiency by automating the process of credit-granting decisions. Data from a leading bank in Taiwan is used to illustrate the combined approach. The data set consists of each credit card holder’s credit usage and repayment data, demographic information, and credit report. Empirical study shows that the demographic variables used in most credit scoring models have little explanatory ability with regard to a cardholder’s credit usage and repayment behavior. A cardholder’s credit history provides the most important information in credit scoring. The continuous latent customer quality from the Bayesian latent variable model allows considerable latitude for producing finer rules for credit granting decisions. Compared to the performance of discriminant analysis, logistic regression, neural network, multivariate adaptive regression splines (MARS) and support vector machine (SVM), the proposed model has a 92.9% accuracy rate in predicting customer types, is less impacted by prior probabilities, and has a significantly low Type I errors in comparison with the other five approaches.

Reallocating multiple inputs and outputs of units to improve overall performance

All decision-making units (DMUs) in the private or public sector are provided with a set of inputs of different values by their governing decision maker (GDM), and are required to generate a set of outputs. The GDM is able to reallocate the inputs/outputs among the DMUs to estimate the maximum absolute decision making efficiency of the sector. Serial models are presented to manage the interaction between two decision-making levels, GDM and DMUs, to provide the reallocated targets of inputs/outputs for DMUs in the next operating period. The 25 branches of a commercial bank in Taiwan are used as an illustration.

Determinants of user adoption of web ''Automatic Teller Machines': an integrated model of 'Transaction Cost Theory' and 'Innovation Diffusion Theory'

With the initial success of the traditional Internet banking, several banks in Taiwan have been transferring their attention to implementing Web automatic teller machines (Web ATMs). Due to the multi-channel nature of online banking services and the difference in equipment requirement between the traditional Internet banking and Web ATM, users' adoption of traditional Internet banking does not promise their adoption of Web ATM. Thus, this study explores the factors influencing the usage behaviour of Web ATM by integrating the innovation diffusion theory and transaction cost theory. Data collected from 285 respondents in Taiwan are tested against the research model using discriminant analysis. The results indicate that perceived relative advantage, perceived complexity, perceived compatibility, perceived uncertainty, and perceived transaction frequency are salient determinants of user adoption of Web ATM. The findings of this study provide several important implications for Web ATM adoption research and practice.

Evaluation of system reliability of electronic transaction in commercial banks

This article is mainly to utilize the flow network analysis to calculate the system reliability, so as to assess the service quality of electronic transactions conducted by commercial banks. Banks rely on telecommunication networks leased from telecommunication companies for electronic transaction services. The telecommunication company offers the steady telecommunication network, which is one of the key factors of influencing the electronic transaction service of the bank. In this article, one of the top three banks in Taiwan is taken for case study. The multi-state flow network and the recursive sum of disjoint product algorithm are used to calculate the system reliability, and explore its relationship with the remote branches’ demand. The use of multi-state flow network for system reliability analysis to assess the service quality of commercial banks’ electronic transactions can make the important reference indicator of network structure of serving for planning the commercial bank in the future.

Band gaps and localization of surface water waves over large-scale sand waves with random fluctuations

Band structure and wave localization are investigated for sea surface water waves over large-scale sand wave topography. Sand wave height, sand wave width, water depth, and water width between adjacent sand waves have significant impact on band gaps. Random fluctuations of sand wave height, sand wave width, and water depth induce water wave localization. However, random water width produces a perfect transmission tunnel of water waves at a certain frequency so that localization does not occur no matter how large a disorder level is applied. Together with theoretical results, the field experimental observations in the Taiwan Bank suggest band gap and wave localization as the physical mechanism of sea surface water wave propagating over natural large-scale sand waves.

Establishing an evaluation performance measurement model for the financial service sector

The study employs a multiple criteria decision making (MCDM) approach to evaluate the performance of wealth management (WM) banking. We first apply the balanced scorecard methodology to build a framework for WM banking and then provide a framework for the sub-criteria by applying the Delphi method. The empirical results reveal that the performance of WM banks in Taiwan is evaluated by applying the analytic network process (ANP) and grey relational analysis (GRA). Importantly, the proposed model can assist the banking sector in assessing the performance of WM banks, making it highly applicable for bank managers engaged in decision-making as well as financial sector analysts. Key words: Wealth management, balanced scorecard, analytic network process (ANP), grey relational analysis (GRA).

Customer relationship management and customer satisfaction

The understanding of how to manage customer relationship effectively has become an important topic for both academics and practitioners in recent years. However, the existing academic literature on customer relationship management (CRM) strategies of banks does not provide a comprehensive outline of what specifically constitutes CRM phases. This study has three purposes: (1) to conceptualize and operationalize the CRM implementation in commercial banks in Taiwan; (2) to determine whether the CRM implementation is positively associated with customer satisfaction; and (3) to determine key moderators between CRM implementation and customer satisfaction. Findings revealed that CRM implementation is associated with customer satisfaction; and there are significant interactions amongst Information technology (IT) capability, contact rate management and recovery management with customer satisfaction. A regression model was churned to evaluate the criteria to measure the level of CRM implementation on customer satisfaction. Key words: Customer relationship management (CRM), commercial banks, customer satisfaction, organizational characteristics, Eigen value.

Service capabilities and customer relationship management: an investigation of the banks in Taiwan

This study seeks to explain the influence of several individual service capabilities and their interactions on customer relationship management (CRM) performance in the banking industry. Two samples are analysed (bank staff and bank customers) and an empirical study is carried out using a multiple interaction regression approach. The findings show the main effect of human resources, information knowledge and marketing knowledge, and their interactions (the dyadic and conjoint service capabilities) on the effectiveness of CRM performance. The interactions are compared with the main effects, taking an overall view of capability–performance linkage. The main conclusions suggest that the latter are far more important. These findings provide important information for banks, which need to build successful long-term CRM associations with their customers, to adapt in today's dynamic environment.

Measuring the true managerial efficiency of bank branches in Taiwan: A three-stage DEA analysis

This paper aims to explore the true managerial efficiencies of the branches of a case bank in Taiwan. With 123 branches of the case bank comprising the sample, the study finds that, after the adjustment of environmental factors and statistical noise, managerial efficiency values from a three-stage data envelopment analysis (DEA) varies significantly from the traditional DEA model. This finding suggests that environmental variables have significant effect on branch efficiency. Moreover, scale inefficiency is the major cause of operating inefficiency in the case bank, and most branches are operating at the stage of increasing return to scale. With regards the branches’ business scope, those that operate loan and wealth management services have better managerial efficiency than those that focus on wealth management only. In terms of deposit amount, branches with a higher deposit amount generate better managerial efficiency. Finally, the results for regional location show no significant effect on branches’ managerial efficiency in Taiwan.

Effects of a rival's perceived motives on constructive competition within organizations: A competitive dynamics perspective

Previous work on constructive competition has focused on competitors' motives and strategies; however, competition is an interactive process that is affected by both the competitor and the rival. Based on the competitive dynamics perspective and attribution theory, this study examines the impact of a perceived rival's motives on the constructiveness of competition. The results of a survey of 521 employees from 25 companies in the banking and insurance industry in Taiwan revealed that the perceptions of rivals' motives significantly affected the constructiveness of competition. By introducing the perspective of rival analysis to individual‐level competition, the present study provides a more comprehensive understanding of constructive competition within organizations.

A framework for the selection of Six Sigma projects in services: case studies of banking and health care services in Taiwan

This study develops a framework for effectively implementing service Six Sigma projects. The framework is composed of four phases: (1) initial project identification, which deploys candidate projects in accordance with a firm’s strategic goals, (2) project value assessment, which evaluates project’s value based on the financial return, cost, and its impact on employee behavior, (3) project complexity assessment, which examines scope, data availability, and risk associated with the project, and (4) project prioritization, which identifies Six Sigma projects and categorizes them into black belt and green belt categories. Two cases in banking and health care services are discussed to demonstrate the proposed framework.

The Impacts of Financial Reforms on Competition and Consumer Welfare in the Taiwan Banking Industry

This paper analyzes the effects of the two waves of financial reforms implemented between 2002 and 2008 in the Taiwan banking industry. The first financial reform aimed to raise capital adequacy ratio and reduced non-performing loans. The second financial reform encouraged banks to merge. We investigate the impacts of the reforms on market competition and consumers’ welfare. Using a structural model for saving and borrowing demand in a differentiated market, we find that a bank’s capital adequacy rate has a positive impact on the utility of both savers and borrowers. Contrarily, the ratio of non-performing loans has no significant effect. During these reforms, market competition tended to decline while consumers’ welfare also dropped for both savers and borrowers. Nonetheless, when we use counterfactual experiments to isolate the direct effect of reform policies from other factors, we find the first reform actually had little effect on market competition while raised both savers’ and borrowers’ welfare. On the other hand, the second reform reduced market competition, increased savers’ welfare, but decrease borrowers’ welfare.