Financial Structure And Bank Profitability

Author : Asl? Demirgüç-Kunt,Harry Huizinga
Publisher : World Bank Publications
Page : 30 pages
File Size : 55,5 Mb
Release : 2000
Category : Bank profits
ISBN : 8210379456XXX

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Financial Structure and Bank Profitability by Asl? Demirgüç-Kunt,Harry Huizinga Pdf

Countries differ in the extent to which their financial systems are bank-based or market-based. The financial systems of Germany and Japan, for example, are considered bank-based because banks play a leading role in mobilizing savings, allocating capital, overseeing investment decisions of corporate managers, and providing risk management vehicles. The systems of the United States, and the United Kingdom are considered more market-based. Using bank-level data for a large number of industrial and developing countries, the authors present evidence about the impact of financial development, and structure on bank performance. They measure the relative importance of bank or market finance by the relative size of stock aggregates, by relative trading or transaction volumes, and by indicators of relative efficiency. They show that in developing countries, both banks and stock markets are less developed, but financial systems tend to be more bank-based. The richer the country, the more active are all financial intermediaries. The greater the development of a country's banks, the tougher is the competition, the greater is the efficiency, and the lower are the bank margins, and profits. The more under-developed the stock market, the greater are the bank profits. But financial structure per se does not have a significant, independent influence on bank margins, and profits.

Author : Asli Demirgüç-Kunt
Publisher : Unknown
Page : 24 pages
File Size : 47,7 Mb
Release : 2016
Category : Electronic
ISBN : OCLC:1290704940

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Financial Structure and Bank Profitability by Asli Demirgüç-Kunt Pdf

For countries with underdeveloped financial systems, a move toward a more developed financial system reduces bank margins and profitability. Controlling for both bank and market development, financial structure per se - the development of banks relative to that of markets-appears to have no independent effect on bank performance.Countries differ in the extent to which their financial systems are bank-based or market-based. The financial systems of Germany and Japan, for example, are considered bank-based because banks play a leading role in mobilizing savings, allocating capital, overseeing investment decisions of corporate managers, and providing risk management vehicles. The systems of the United States and the United Kingdom are considered more market-based.Using bank-level data for a large number of industrial and developing countries, Demirguc-Kunt and Huizinga present evidence about the impact of financial development and structure on bank performance. They measure the relative importance of bank or market finance by the relative size of stock aggregates, by relative trading or transaction volumes, and by indicators of relative efficiency.They show that in developing countries both banks and stock markets are less developed, but financial systems tend to be more bank-based. The richer the country, the more active are all financial intermediaries.The greater the development of a country's banks, the tougher is the competition, the greater is the efficiency, and the lower are the bank margins and profits.The more underdeveloped the stock market, the greater are the bank profits. But financial structure per se does not have a significant, independent influence on bank margins and profits.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study financial structure and development. The study was funded by the Bank's Research Support Budget under the research project Financial Structure and Economic Development (RPO 682-41). The authors may be contacted at [email protected] or [email protected].

Author : Asli Demirgüç-Kunt,Harry Huizinga
Publisher : Unknown
Page : 24 pages
File Size : 40,9 Mb
Release : 1999
Category : Banks and banking
ISBN : OCLC:1066405778

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Financial Structure and Bank Profitability by Asli Demirgüç-Kunt,Harry Huizinga Pdf

Author : Asl? Demirgüç-Kunt,Harry Huizinga
Publisher : World Bank Publications
Page : 52 pages
File Size : 52,6 Mb
Release : 1998
Category : Bancos comerciales
ISBN : 8210379456XXX

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Determinants of Commercial Bank Interest Margins and Profitability by Asl? Demirgüç-Kunt,Harry Huizinga Pdf

March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.

Author : Ms.TengTeng Xu,Kun Hu,Mr.Udaibir S Das
Publisher : International Monetary Fund
Page : 54 pages
File Size : 41,6 Mb
Release : 2019-01-11
Category : Business & Economics
ISBN : 9781484390078

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Bank Profitability and Financial Stability by Ms.TengTeng Xu,Kun Hu,Mr.Udaibir S Das Pdf

We analyze how bank profitability impacts financial stability from both theoretical and empirical perspectives. We first develop a theoretical model of the relationship between bank profitability and financial stability by exploring the role of non-interest income and retail-oriented business models. We then conduct panel regression analysis to examine the empirical determinants of bank risks and profitability, and how the level and the source of bank profitability affect risks for 431 publicly traded banks (U.S., advanced Europe, and GSIBs) from 2004 to 2017. Results reveal that profitability is negatively associated with both a bank’s contribution to systemic risk and its idiosyncratic risk, and an over-reliance on non-interest income, wholesale funding and leverage is associated with higher risks. Low competition is associated with low idiosyncratic risk but a high contribution to systemic risk. Lastly, the problem loans ratio and the cost-to-income ratio are found to be key factors that influence bank profitability. The paper’s findings suggest that policy makers should strive to better understand the source of bank profitability, especially where there is an over-reliance on market-based non-interest income, leverage, and wholesale funding.

Author : Mariarosa Borroni,Simone Rossi
Publisher : Springer
Page : 118 pages
File Size : 53,8 Mb
Release : 2019-04-09
Category : Business & Economics
ISBN : 9783030150136

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Banking in Europe by Mariarosa Borroni,Simone Rossi Pdf

This Palgrave Pivot provides a comprehensive overview of the dynamics that are affecting the profitability of European banks since the recent crisis period. More specifically, it sheds light on the most crucial changes in profit generation and on the consequential changes in banking strategies due to fiercer competition, reduced margin and changing regulation. The work is divided in four main parts. The first section introduces the changes in bank management policies, considering the periods before and since the crisis. In the second section, the authors review the literature on bank profitability and outline the main determinants of profit generation, and in the third section they provide a cross-country analysis of profitability for a wide sample of European banks during the great financial crisis. In the last section, the authors discuss the results of the quantitative analysis under the new regulatory and competitive framework that is progressively affecting the banking sector (fintech, Basel regulations, etc.). This book will be of interest to academics, researchers and students of European banking.

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 46 pages
File Size : 47,7 Mb
Release : 2022-08-16
Category : Business & Economics
ISBN : 9798400218118

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Germany by International Monetary Fund. Monetary and Capital Markets Department Pdf

German bank profitability is low by international standards. Although German banks rank more favorably in risk-adjusted terms, as low profitability is partially compensated by lower volatility of returns, their profitability ratios remain low. On other measures (such as returns on assets, equity, and risk-weighted assets), German banks, on aggregate, rank among the least profitable in Europe. Several factors affect bank profitability, including a complex tiered industry structure with barriers to entry and an explicit mandate of a large part of the banking system – cooperative and savings banks – to maximize welfare of stakeholders rather than profits.

Author : NESRIN ÖZATAÇ,Korhan K. GÖKMENOGLU
Publisher : Springer
Page : 184 pages
File Size : 44,8 Mb
Release : 2017-11-03
Category : Business & Economics
ISBN : 9783319668727

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New Challenges in Banking and Finance by NESRIN ÖZATAÇ,Korhan K. GÖKMENOGLU Pdf

This volume presents current developments in the fields of banking and finance from an international perspective. Featuring contributions from the 2nd International Conference on Banking and Finance Perspectives (ICBFP), this volume serves as a valuable forum for discussing current issues and trends in the banking and financial sectors, especially in light of the global economic challenges triggered by financial institutions. Using the latest theoretical models, new perspectives are brought to topics such as e-finance and e-banking, Islamic banking, international cross-border regulatory cooperation, bank fraud, the global financial crisis, microfinance, and corporate control transactions. Offering an opportunity to explore the challenges of a rapidly changing industry, this volume will be of interest to academics, policy makers, and scholars in the fields of banking, insurance, and finance.

Author : Natalya Martynova,Mr.Lev Ratnovski,Mr.Razvan Vlahu
Publisher : International Monetary Fund
Page : 44 pages
File Size : 51,5 Mb
Release : 2015-11-25
Category : Business & Economics
ISBN : 9781513517582

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Bank Profitability and Risk-Taking by Natalya Martynova,Mr.Lev Ratnovski,Mr.Razvan Vlahu Pdf

Traditional theory suggests that more profitable banks should have lower risk-taking incentives. Then why did many profitable banks choose to invest in untested financial instruments before the crisis, realizing significant losses? We attempt to reconcile theory and evidence. In our setup, banks are endowed with a fixed core business. They take risk by levering up to engage in risky ‘side activities’(such as market-based investments) alongside the core business. A more profitable core business allows a bank to borrow more and take side risks on a larger scale, offsetting lower incentives to take risk of given size. Consequently, more profitable banks may have higher risk-taking incentives. The framework is consistent with cross-sectional patterns of bank risk-taking in the run up to the recent financial crisis.

Author : Asl? Demirgüç-Kunt,Ross Levine
Publisher : World Bank Publications
Page : 73 pages
File Size : 40,9 Mb
Release : 1999
Category : Bancos
ISBN : 8210379456XXX

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Bank-based and Market-based Financial Systems by Asl? Demirgüç-Kunt,Ross Levine Pdf

Author : Edith Klein
Publisher : Nova Publishers
Page : 224 pages
File Size : 41,6 Mb
Release : 2005
Category : Business & Economics
ISBN : 1594541914

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Capital Formation, Governance and Banking by Edith Klein Pdf

This new volume presents leading international analyses of some of the most dynamic issues in the financial sector. Venture capital in the Singapore as well as the evolution of family firms are examined. The potential conflict of banks as shareholders is scrutinised as well. Other topics here include: interest rates and their predictability and smoothing, e-banking services, ownership of financial institutions and its potential impact on profitability. In addition, the predominance or lack thereof of foreign banks and the effect of them is viewed from an economic perspective.

Author : Philip Bourke
Publisher : Unknown
Page : 144 pages
File Size : 48,5 Mb
Release : 1988
Category : Business & Economics
ISBN : UIUC:30112047197246

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International Comparisons of Bank Profitability by Philip Bourke Pdf

Author : Donald P. Jacobs,H. Prescott Beighley,John H. Boyd,John Henry Boyd
Publisher : Unknown
Page : 68 pages
File Size : 51,6 Mb
Release : 1975
Category : Bank holding companies
ISBN : STANFORD:36105036452543

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The Financial Structure of Bank Holding Companies by Donald P. Jacobs,H. Prescott Beighley,John H. Boyd,John Henry Boyd Pdf

Author : Musa Gün
Publisher : Livre de Lyon
Page : 120 pages
File Size : 50,5 Mb
Release : 2020-12-25
Category : Business & Economics
ISBN : 9782382360699

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Financial Service: Banking and Finance by Musa Gün Pdf

Finance and banking sector has had to adopt a new customer-oriented approach and go beyond traditional practices in the face of rapid changes in technology and increasing competition. Technological development, which is the pioneer of change, brings the financial system to a new level as in every field of economy. Written in these directions, this book includes current debates in the field of banking and finance. Especially the rapid entry of blockchain technology into all areas of life has caused serious changes in corporate governance mechanisms. In this context, the content of the book answers the question of why corporate governance matters a problem for the banking sector with theoretical aspects. And at the same time, it empirically discusses measures of the potential market value effects of the blockchain systems integration into corporate governance procedures. Along with these, the banking sector, which constitutes an important part of the financial system, has become more significant after the global mortgage crisis. The evaluation of the banking sector, which is structurally different from other sectors, requires a separate approach. The content of the book draws an overall picture that can be used for banks in terms of valuation methods. Additionally, the determinants of the financial performance of banks, which are the main components of the financial system, are analysed specifically in the Turkish banking sector. On the other hand, financial problems such as portfolio optimization, which is one of the important topics of financial decisions, and its applications are examined specifically for the Turkish stock market. Approaches and new methods of optimization are tested.

Author : Morten Balling,Frank Lierman,Andy Mullineux
Publisher : Routledge
Page : 304 pages
File Size : 43,8 Mb
Release : 2006-04-18
Category : Business & Economics
ISBN : 9781134173778

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Competition and Profitability in European Financial Services by Morten Balling,Frank Lierman,Andy Mullineux Pdf

Financial services firms play a key role in the European economy. The efficiency and profitability of these firms and the competition among them have an impact on allocation of savings, financing of investment, economic growth, the stability of the financial system and the transmission of monetary policy. This collection of research contributions includes evaluations of trends in the European financial service industry and examinations of the driving forces of efficiency, competition and profitability of financial firms and institutions in Europe. The papers have been written by leading academics and researchers in the field, who specialize in strategic, systematic and policy issues related to the European financial services industry. This edited collection will be will be essential reading for students and academics but will also be of interest to financial practitioners and government officials interested in acquiring a deeper understanding of this complex issue.