Narrow Results

The Cambodian banking sector has rapidly expanded in recent decades, although there are concerns about the performance of Cambodian banks and the country’s banking sector. A paucity of empirical evidence to clarify the real issues in the banking sector also makes it difficult to formulate effective policy measures to address any potential problems. This study provides empirical evidence by estimating the cost function and efficiencies of 34 commercial banks over the period from 2012 to 2015. We find that the average cost efficiency scores range from 0.60 when measuring bank outputs as loan and deposit amounts, and 0.77 when measuring bank outputs as interest and non-interest income, suggesting that if they are operated more efficiently, they could cut costs by 40% in fund mobilization and 23% in profit making while keeping the same output level. We also find that the Cambodian banks have experienced an improvement in efficiency scores over the period for both aspects of banking activities. Furthermore, we find that expanding a branch network into rural areas is inefficient for bank management, and holding excessive liquidity is associated with higher efficiency, but diversification in bank business operations is negatively associated with cost efficiency of Cambodian commercial banks.

The role of macroprudential policies (MPPs) in influencing bank behavior has expanded significantly in recent years. However, the evidence regarding the impact of MPPs in influencing bank behavior across countries with different Future time reference (FTR) of languages has not been adequately examined. To inform this debate, utilizing bank-level data during 2010–2019, we examine how MPPs affect bank return and risk across countries with varying FTR of languages. The findings show that using MPPs lowers risk in countries with strong FTR. This is manifest in baseline regressions as well as in robustness tests that incorporate additional dimensions of a country’s economic and institutional environment. Over and above, the results show that although borrower- and lender-focused macroprudential measures are equally effective, their efficacy differs, with the former set of instruments being more useful in Emerging Market and Developing Economies (EMDEs). In contrast, the latter holds greater traction in advanced economies.

By the end of the 1990s, the Singaporean government had recognised the need to open up its banking sector so as to remain competitive in the global economy. The Monetary Authority of Singapore (MAS) thus began deregulation of the banking sector in 1999 to strengthen the competitiveness of local banks relative to their foreign competitors through mergers. This paper employs a nonparametric Malmquist productivity index to provide measure of productivity, technological change and efficiency gains over the period 1995–2005. The findings reveal some total factor productivity growth associated with deregulation and scale efficiency improvement largely from mergers amongst the local banks.

Policy discussions are dominated by the view that governmental safety nets offered to banks cause moral hazard and encourage risk-taking. However, [Cordella, T and E Levy Yeyati (2003). Bank bailouts: moral hazard vs. value effect. Journal of Financial Intermediation, 12, 300–330.] proposed that government support offered during crises may increase bank franchise value, resulting in less risk-taking. This paper presents additional theoretical results on the franchise value effect. The franchise value effect can dominate over the moral hazard effect even when there are no specific crisis periods. The franchise value effect dominates if bank shareholders have a weak time preference and if the decision on the intensity of risk monitoring is a long-term choice.

This study examines the relationship between bank-specific variables, macroeconomic variables and non-performing loans (NPLs) in the seven countries of Southeast Asia (Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) during the pre-COVID-19and COVID-19 pandemic. This study adopts panel data regression and distributed lagged regression to examine the impact of bank-specific variables and macroeconomic variables as NPL determinants. The results show that bank-specific variables significantly correlate to NPL, but limited evidence indicates the influence of macroeconomic variables during pre-COVID. Nonetheless, macroeconomic variables are significant to NPL with the emergence of the pandemic, while the bank-specific variables are found to be insignificant. It shows that macroeconomic variables have a greater impact during the turbulent period as they affect most businesses, especially during the pandemic. Furthermore, macroeconomic variables are observed to have a stronger influence on developed countries, but the impact of bank-specific variables is stronger in emerging countries. The results of this study assist policymakers, regulators, banks and governments in identifying the determinants of high NPL as the indicator of a financial crisis. Greater emphasis shall be given to the changes in macroeconomic variables.

This paper examines some of the effects on shareholder wealth of the Korean bank restructuring measures that followed the Korean IMF bailout. The Korean banks are divided into four groups to check for differences in market reactions to FSC restructuring mandates. We find that shareholders of healthy banks benefit when self-rescue or management improvement measures are implemented at distressed banks. Share prices of banks not directly involved in the restructuring process are not significantly influenced by the restructuring. However, shareholders of financially distressed banks suffered significant losses, as much as they would have incurred had the bank closed. Share prices of banks ordered to improve management were influenced as much as share prices of closed banks. We therefore conclude that financially weak banks were significantly affected by restructuring orders, while comparatively sound banks were not significantly influenced.

The Korean crisis has been analyzed for the causal role banks played through the "credit view". Non-bank lenders have grown more important than banks in providing loans, but their role in creating financial instability has been ignored. This paper fills this gap, and demonstrates that non-banks were an important source of dislocation. Moreover, these results offer a counter-argument to proposals for "narrow banking". Narrow banking would separate deposit taking and lending into two enterprises, hopefully reducing vulnerability to panics. The poor performance of non-bank lenders even relative to banks in the Korean episode casts doubt on this model.

Banks are important for mobilizing savings and then channeling those funds to productive investment projects. While providing these and other services that contribute to economic growth and development, banks take on various types of risks with the expectation that the return they receive will compensate for the risks. This paper presents a simple model and tests the extent to which information asymmetry between bank owners and depositors induces risk-shifting behavior that allows for higher bank net interest margins. The empirical results support the hypothesis that the greater the degree of information asymmetry the higher net interest margins base upon a sample of 3,115 banks in 98 countries.

This paper models the effect of bank competition and deposit insurance premiums on the spread between lending and deposit rates. In developing economies, low spreads do not always indicate bank efficiency; they may be the result of high risk taking. This paper shows that imposing upper and lower limits on banks' spreads and adjusting deposit insurance premiums when violation of these limits occurs leads to a more stable but relatively large intermediation costs. In developing economies, such an outcome would be considered more desirable because it insulates existing financial intermediaries and investors against macroeconomic disturbances.

This paper evaluates factors that encourage or impede cross-border mergers and acquisitions in banking. The effects of bank specific features, as well as bank regulatory factors, from both target and acquiring banks' perspectives, are estimated. Three comprehensive databases are combined to provide a unique dataset to study cross-border merger and acquisition activities of banks. Banking sector regulatory variables included make this study among the first to empirically and comprehensively analyze the interrelationship between bank regulation and cross-border bank mergers and acquisitions. The results indicate that both bank characteristics and country specific characteristics are important determinants of banks' cross-border merger and acquisition activities.

Based on my more than 40 years of practical experience in banking and my forward-looking vision as a banker, I would share the five major development trends of banks with the distinguished guests under the theme of “The New Horizon of Banking”, including: (1) ESG as an essential embodiment of contemporary responsible finance; (2) the digital transformation of the banking industry as a long-term evolutionary process; (3) the evolution of payment models and the new state of money; (4) cross-industry alliances between the banking and nonbanking industries; and (5) the increasing importance of regulatory technology, RegTech.

As a banking practitioner and a university adjunct professor of finance, I would like to share my observations on five major trends in financial education under the headline The New Horizon of Financial Education. The trends include (1) ESG as an Essential Embodiment of Contemporary Responsible Finance; (2) Digital Transformation as a Long-Term Evolutionary Process of the Financial Sector; (3) Cross-sector Alliances Between Banking and NonBanking Firms; (4) Total Compliance Mechanism in Risk Management; and (5) The Increasing Importance of Regulatory Technology, RegTech.