Explore the vast range of titles available.

Under the traditional “competition-fragility” view, more bank competition erodes market power, decreases profit margins, and results in reduced franchise value that encourages bank risk taking. Under the alternative “competition-stability” view, more market power in the loan market may result in higher bank risk as the higher interest rates charged to loan customers make it harder to repay loans, and exacerbate moral hazard and adverse selection problems. The two strands of the literature need not necessarily yield opposing predictions regarding the effects of competition and market power on stability in banking. Even if market power in the loan market results in riskier loan portfolios, the overall risks of banks need not increase if banks protect their franchise values by increasing their equity capital or engaging in other risk-mitigating techniques. We test these theories by regressing measures of loan risk, bank risk, and bank equity capital on several measures of market power, as well as indicators of the business environment, using data for 8,235 banks in 23 developed nations. Our results suggest that—consistent with the traditional “competition-fragility” view—banks with a higher degree of market power also have less overall risk exposure. The data also provides some support for one element of the “competition-stability” view—that market power increases loan portfolio risk. We show that this risk may be offset in part by higher equity capital ratios.

This paper investigates the drivers of female labour force participation in Europe, as well as the implications of achieving greater gender diversity in senior corporate positions. Re-examining the drivers of women's decisions to work is particularly important in the context of Europe. In many European countries, the process of closing gender gaps in labour force participation has stalled, despite greater gender equality in human capital investment, declining birth rates, changing social norms and equal legal access to employment opportunities.

The structure of banking systems in GCC countries; namely, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, has substantially changed over the past decade, mainly as a result of regional economic integration and banking deregulation. The new banking environment has given banks an incentive to focus on cost and productive efficiency. This study uses a non-parametric frontier approach to compare and contrast the efficiency performance, efficiency and technological change, and productivity growth of banks in GCC countries. The results indicate that banks in Oman, on average, have been the most efficient among GCC countries followed narrowly by banks from Bahrain and to a lesser extent by banks from Kuwait. In contrast, the findings point to a low efficient banking environment in UAE and Qatar, with Saudi Arabia being the least efficient. Additionally, the efficiency measures of banks in Oman and Kuwait has been descending from 1999 to 2004, while at the same time the efficiency scores of banks in Bahrain have been rising. Furthermore, banks from Oman and Bahrain are dominating the common efficient frontier since a larger percentage of banks from these countries lie on the frontier. Examination of return to scale measures provides evidence to indicate that there is very limited opportunity for banks to improve their scale efficiency, given that only a handful of banks are operating at increasing returns to scale. The result of the Malmquist productivity index reveals that banks on average have experienced a decline in productivity due to technological regress and to a lesser extent caused by a decline in overall technological efficiency. [PUBLICATION ABSTRACT]

The recent financial crisis highlights the importance of both regulatory and market discipline. Government reactions to the crisis included expanding deposit insurance coverage and rescuing troubled institutions, including some institutions that might not otherwise be considered too important to fail. These actions may have the unintended consequence of a reduction in market discipline that might otherwise penalize banks for risk-taking behavior. Alternatively, market discipline may have increased during the crisis due to heightened awareness of the risks of bank failures. To address these issues, we first test for the presence of depositor discipline effects in the period leading up to the financial crisis in both the US and the EU. Second, we test whether depositor discipline decreased or increased during the crisis. We find significant depositor discipline prior to the crisis in both the US and EU, but this varies between the US and the EU as well as with banking organization size and with listed versus unlisted status. We also find that depositor discipline mostly decreased during the crisis, except for the case of small US banks.

Throughout the past 30 years or so, the practice of Islamic banking has proved to be a viable alternative and is growing at an estimated annual rate of 15 per cent. Many challenges still lie ahead, however, for Islamic banks to be able to comply with international standards and guidelines. A key issue relates to the implementation of Pillar 1 of the Basel II Accord, or capital adequacy requirements that were originally set to capture different types of risks faced by conventional banks, and that do not cater to the risk specificities of Islamic banks. The objective of this paper is to overview the recent guidelines for risk management and capital adequacy in Islamic banking and to study the implications of applying Pillar 1 to a major Islamic bank. We specifically raise serious issues related to the nature of risks arising from the uses of funds of Islamic financial institutions and their implication on the banking book of the Islamic financial institution. Still other challenges lie ahead of international regulatory bodies in order to cater to other types of risks that are unique to Islamic financial institutions.

The Gulf Cooperation Council (GCC) stock markets have received increased attention from international investors recently. We examine whether a day-of-the-week effect is present in those markets, and investigate whether the occurrence of the month of Ramadan has a special bearing on returns and on the day-of-the-week anomaly. We find a calendar effect that occurs on the last trading day of the week, which occurs on Wednesdays in the leading market of the GCC region. We call this a \"Wednesday effect\", and we find that it is more pronounced in the period leading up to the month of Ramadan rather than afterwards. This return pattern may be consistent with the explanation provided by the \"Investors' Mood Hypothesis.\" However, we do not find that investor behavior is significantly altered during the month of Ramadan and relative to other months of the lunar calendar year. [PUBLICATION ABSTRACT]

The Arab Spring is a clear indicator of the urgency of achieving inclusive growth and ensuring job creation in the Middle East and North Africa (MENA) region, where private sector development is still hindered by limited access to credit. Following Kiyotaki and Moore's (1997) seminal model, we apply a novel methodological approach to a unique data set of MENA firms to estimate credit limits and their impacts on capital accumulation. Notably, we find higher credit limits in countries where the Arab Spring erupted than in other MENA countries and that their marginal effect on capital accumulation has been statistically and economically significant. [PUBLICATION ABSTRACT]

This paper introduces the \"Excessive Liquidity Creation Hypothesis,\" whereby a rise in a bank's core liquidity creation activity increases its probability of failure. Russia experienced many bank failures over the past decade, making it an ideal natural field experiment for testing this hypothesis. Using Berger and Bouwman's (2009) liquidity creation measures, we find that excessive liquidity creation significantly increased the probability of bank failure during our observation period (2000007). This finding survives multiple robustness checks. Our results further suggest that regulatory authorities can mitigate systemic distress and reduce the costs to society from bank failures through early identification and enhanced monitoring of excessive liquidity creators. [PUBLICATION ABSTRACT]

Negative policy interest rates have prevailed for some years in Denmark and are a more recent development in Sweden. Among other potential side effects, negative rates could weaken banksa€™ profitability by reducing net interest income, their main source of earnings. However, an analysis of financial statements at the country rather than the consolidated group level shows that bank margins have been broadly stable. At least to date, lower interest income was offset by reductions in wholesale funding costs and higher fee income. Nonetheless, the impacts on bank health and lending from negative interest rates will need to continue to be monitored closely.

We propose a generic oligopsony-oligopoly model to study bank behavior under uncertainty in developing countries. We derive a pricing structure that acknowledges market power in both the deposit and loan markets and identify two theoretical components to the loan rate: a rent extraction component resulting from the interaction between the choke price of loans and prevailing banking structures, and a markup on deposit funding costs that captures the transformation efficiency of financial intermediation. We then test our structural specification with longitudinal data for 103 non-OECD countries and find that both the market structure under uncertainty and the deposit rate matter significantly in pricing. However, the role played by the rent-extraction share in pricing, on average, dominates funding costs in developing countries, and so underscores the importance of market structure in banks\" pricing power. [PUBLICATION ABSTRACT]