Narrow Results

Taking into account only financial factors does not provide complete information on performance. This paper takes into consideration of both financial and non-financial performances when evaluating 35 sampled publicly traded commercial banks in Taiwan. The performance of banks is measured using an indexing method consisting of financial and non-financial measures. Banks are classified into two categories according either to the year founded, or to the type of major stockholders of a bank when founded.

The results show that privatized government-owned/old banks are larger than private/new banks, respectively. Moreover, privatized government-owned banks have significantly higher financial performance index than private banks but both types of banks are not significantly different from each other in non-financial performance index. New and old banks are not significantly different from each other in both financial and non-financial performance indexes.

With relatively large scale, higher profitability and better management, banks will perform relatively better among competitors in the following year. Furthermore, non-financial factors are important predictors of future financial and total performance indexes, though individual factor may not be consistently significant.

More branch offices, better capital structure and solvency, and higher rates of growth in deposits and loans all result in more profits, and lead to higher customer satisfaction and more efficient management. Providing better technology to customers is an efficient way in promoting customer services, which in turn produces more profits and results in efficient management. CEOs, on average, have plans for better management and more profits.

Among the factors that have direct and positive impacts on profitability, increasing the efficiency of management is the most efficient way. On the contrary, adding more branch offices contributes the least profits. Therefore, to increase bank profits, CEOs should aim to improve bank management, capital structure and solvency, rather than to add more branch offices.

Using returns of 4,916 stocks from 22 developed countries and 15 developing countries, this study examines the relative magnitude of conditional volatility and the international market systematic risk of stock prices in countries at different developmental stages and in various geographical areas. Consistent with the finding of Bekaert et al. (2008), the results of non-parametric Mann-Whitney tests suggest that the stock prices in emerging markets are riskier than the ones in developed countries, measured by both conditional volatility and global beta. Our empirical findings also support the geographical variation in stock risks. Specifically, the equity values in Southeast Asia, South Europe, and Latin America are more volatile than the rest of the world. Similar results can be found in the country-level tests. The time-series analysis suggests that the stock returns in high risk countries tend to be less volatile but the conditional volatility of stock return in less risky countries leans to increase.