Special Issue "Banking and the Economy"

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Banking and Finance".

Deadline for manuscript submissions: closed (30 June 2020).

Special Issue Editor

Dr. Yong (Aaron) Tan
Website SciProfiles
Guest Editor
Department of Accountancy, Finance and Economics, University of Huddersfield, Huddersfield, UK
Interests: empirical banking (bank performance, bank stability and bank competition); small businesses and hospitality management

Special Issue Information

Dear Colleagues

In the financial system, the banking sector plays an important role in channeling the funds from one party with extra money to one with investment opportunities, through which economic efficiency has been improved and economic growth has been achieved. The government and banking regulatory authorities pay great attention to the performance and sustainable development in the banking sector. In academia, researchers have comprehensively investigated the issues around the banking industry in order to generate policies implications to further enhance healthy development in the banking industry.

The first area in the evaluation of issues in the banking sector will be around bank performance, without which banks would not be able to function well as a financial intermediary; this will further have a negative influence on economic activity. Therefore, this Special Issue would be interested in studies investigating various aspects of bank performance, including bank efficiency, bank productivity, as well as bank profitability.

Because of the global financial crisis which happened over the period 2007–2009, in an international context, all the countries around the world have been aware of the importance of bank stability. If we say that performance is related to the good function of commercial banks, stability is more related to the banks functioning well long term. Therefore, the current Special Issue would particularly welcome contributions in the area of investigations into stability in the banking sector. In other words, we shall try to answer the following research questions through potential contributions: 1) What is the situation of stability in a specific banking sector? 2) How can we further improve banking sector stability (what are the factors influencing stability in the banking sector)?

It is well known that the banking sector is a very profitable industry compared to other economic sectors and, as argued previously, the government or the regulatory authorities have been aware of the importance of sustainable development in the banking sector. The stability discussed above is one component of sustainability, while other aspects of sustainability focus more on the banks’ return to the society or the economy. In other words, banks should undertake responsible behavior when engaging in different types of businesses. This Special Issue would like to see empirical studies addressing the issues of corporate social responsibility in the banking sector and what the benefits/costs of undertaking this are.

Finally, due to the importance and the special funds channeling character of the banking sector, empirical research should look into not only the microlevel issues within banks or the banking industry, but more attempts should be made to examine the interactions between the banking industry and other sectors of the economy and the interrelationships between the banking industry and the economy. Therefore, this Special Issue would welcome contributions from empirical studies concerning the issues regarding the relationship between banking with small businesses, the relationship between banking and the real estate sector, and the relationships with other industries. Further, at a macroeconomic level, the Special Issue would like to see investigations in terms of the relationships between banking sector and economic growth, the relationship between banking sector and innovation, and the relationship between banking sector with corruption, among others.

In summary, the Special Issue will be focusing on, but not limited to the following topics:

  1. Investigation of bank performance;
  2. Examination of bank stability;
  3. Evaluation of corporate social responsibility/sustainability in banking;
  4. Assessment of the relationship between the banking industry and other sectors of the economy;
  5. Investigation regarding the relationship between the banking industry and the economy.

The Special Issue welcomes empirical banking studies addressing the above issues, and we will also be very interested in looking at studies using advanced operational research methods to investigate the issues above, in particular in the area of bank efficiency and productivity.

If you have any questions, please do contact me at: [email protected].

Dr. Yong (Aaron) Tan
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All papers will be peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1000 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Published Papers (5 papers)

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Research

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Open AccessArticle
The Role of Redenomination Risk in the Price Evolution of Italian Banks’ CDS Spreads
J. Risk Financial Manag. 2020, 13(7), 150; https://doi.org/10.3390/jrfm13070150 - 10 Jul 2020
Abstract
The recent financial crisis offered an interesting opportunity to analyze the markets’ behavior in a high-volatility framework. In this paper, we analyzed the price discovery process of the Italian banks’ Credit Default Swap (CDS) spreads through the Merton model, extended with the inclusion [...] Read more.
The recent financial crisis offered an interesting opportunity to analyze the markets’ behavior in a high-volatility framework. In this paper, we analyzed the price discovery process of the Italian banks’ Credit Default Swap (CDS) spreads through the Merton model, extended with the inclusion of a redenomination risk proxy, as to say, the risk that Italy could leave the eurozone. This paper contributes to the literature by integrating the classic Merton model with a political-sensitive market variable able to explain the greatest variance in the Italian banks’ CDS spreads during the most relevant and commonly recognized periods of socio-political and financial distress. Results show that the redenomination risk is progressively becoming the main driver of the process during crises, in particular for the sovereign debt crisis and in 2018. Full article
(This article belongs to the Special Issue Banking and the Economy)
Open AccessArticle
Life after Debt: The Effects of Overleveraging on Conventional and Islamic Banks
J. Risk Financial Manag. 2020, 13(6), 137; https://doi.org/10.3390/jrfm13060137 - 24 Jun 2020
Abstract
It is generally argued that Islamic banks are safer than conventional banks. The prime reason is that their product structure is essentially asset-backed financing, while conventional banks rely heavily on leveraging, which was considered one of the main causes of the 2008 global [...] Read more.
It is generally argued that Islamic banks are safer than conventional banks. The prime reason is that their product structure is essentially asset-backed financing, while conventional banks rely heavily on leveraging, which was considered one of the main causes of the 2008 global financial crisis. This paper examines the riskiness of Islamic and conventional banks during the 2008 global crisis by measuring overleveraging, defined as the difference between actual and optimal debt. This research conducted empirical analysis on the overleveraging of 20 banks (10 conventional and 10 Islamic banks) from five different countries, namely, Bahrain, Kuwait, Malaysia, the United States, and the United Kingdom. The analysis is double-folded: on the one hand, the results in this paper suggest that excess debt, rather than the mere holding of debt, was the reason behind the severe financial meltdown in 2007–2009; on the other hand, this paper shows that Islamic banks, in most of the countries in context, performed better during the recent crisis, but were subject to the second-round effect of the global crisis around the years of 2011–2013. Full article
(This article belongs to the Special Issue Banking and the Economy)
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Open AccessArticle
Microfinance Participation in Thailand
J. Risk Financial Manag. 2020, 13(6), 122; https://doi.org/10.3390/jrfm13060122 - 11 Jun 2020
Abstract
Income inequality is a major problem in Thailand. A key determinant of income inequality in Thailand is the lack of financial access to financial institutions for low-income families. Microfinance institutions (MFIs) play an important role in enabling poor households to access financial resources [...] Read more.
Income inequality is a major problem in Thailand. A key determinant of income inequality in Thailand is the lack of financial access to financial institutions for low-income families. Microfinance institutions (MFIs) play an important role in enabling poor households to access financial resources at a reasonable cost. The purpose of this paper is to investigate factors that affect Thai households participating in microfinance programs in Thailand. A multinomial logit model is used to investigate the factors that impact the Thai households’ access to microfinance. The study employs secondary data from the Thai Socioeconomic Survey (cross-sectional data in 2017) to identify factors affecting Thai household participation in microfinance programs. The results show that the Village Fund (VF) targets low-income rural households and encourages those with older household heads who have lower levels of education, and female household heads, to participate in their program. Larger households are more likely to access the VF. Households with higher dependency ratios are less likely to borrow from the VF. Households with well-educated, young household heads in regional areas are more likely to borrow money from Saving Groups for Production (SGPs). SGP borrower households have higher household incomes than VF borrower households. Our findings indicate that VFs and SGPs are credit sources in the rural credit market; these sources enable rural households to access credit to meet their needs. In addition, rural Thai households borrow from many sources so that they can rotate their loan repayments. Low-income households refinance their loans by borrowing from different sources. Full article
(This article belongs to the Special Issue Banking and the Economy)
Open AccessArticle
Relative Efficiency of Canadian Banks: A Three-Stage Network Bootstrap DEA
J. Risk Financial Manag. 2020, 13(4), 68; https://doi.org/10.3390/jrfm13040068 - 10 Apr 2020
Abstract
In this study, we focus on how banks can enhance their efficiency in the utilization of resources to ensure their economic sustainability. We propose a novel three-stage (production, investment, and revenue generation) network Data Envelopment Analysis (DEA) with bootstrapping to evaluate the performance [...] Read more.
In this study, we focus on how banks can enhance their efficiency in the utilization of resources to ensure their economic sustainability. We propose a novel three-stage (production, investment, and revenue generation) network Data Envelopment Analysis (DEA) with bootstrapping to evaluate the performance of the six big Canadian banks for the period 2000–2017, amid the 2007 financial crisis and the increasing competition level due to new technologies. We identify the best practices in each stage that can be used as benchmarks by other banks to improve their economic sustainability. Our results indicate that the 2007 financial crisis resulted in lower efficiencies in the performance of Canadian banks. This decline was not substantial for the production and investment stages when the revenue generation stage received the greatest hit. In addition, we observed that the individual banks did not have consistent performance in the different stages. Finally, we compared our model with the black box DEA model and concluded that the network DEA provides more insightful and accurate results in terms of banks’ efficiencies. Full article
(This article belongs to the Special Issue Banking and the Economy)
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Review

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Open AccessReview
Regulatory Restrictions on US Bank Funding Sources: A Review of the Treatment of Brokered Deposits
J. Risk Financial Manag. 2020, 13(6), 130; https://doi.org/10.3390/jrfm13060130 - 18 Jun 2020
Abstract
This paper is the first paper to provide a comprehensive review of the US regulatory treatment of a relatively recent and controversial source of funds, namely brokered deposits. To do this, we consider the extent to which banks rely on brokered deposits, as [...] Read more.
This paper is the first paper to provide a comprehensive review of the US regulatory treatment of a relatively recent and controversial source of funds, namely brokered deposits. To do this, we consider the extent to which banks rely on brokered deposits, as well as the impact of these funds on bank performance, bank failures, and bank failure costs. We also consider the changes taking place in technologies and how they continue to affect the way banks obtain funds and provide services to their customers. Our conclusion is that, without sufficient evidence to the contrary, such deposits should be treated no differently from all other deposits and other purchased funds. Full article
(This article belongs to the Special Issue Banking and the Economy)
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