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The recent crisis has spurred the use of stress tests as a (crisis) management and early warning tool. However, a weakness is that they omit potential risks embedded in the banking groups' geographical structures by assuming that capital and liquidity are available wherever they are needed within the group. This assumption neglects the fact that regulations differ across countries (e.g., minimum capital requirements), and, more importantly, that home/host regulators might limit flows of capital or liquidity within a group during periods of stress. This study presents a framework on how to integrate this risk element into stress tests, and provides illustrative calculations on the size of the potential adjustments needed in the presence of some limits on intragroup flows for banks included in the June 2011 EBA stress tests.

The article analyzes changes in the business models of Ukrainian banks using the author's method of structural and functional groups of banks (SFGB). The method’s basis is the processing, systematization, and visualization of the system’s values of banks’ financial indicators using Kohonen’s self-organizing map (SOM). Depending on the level distribution of a large number of indicators that characterize the structure of assets, liabilities, income, expenses, and other qualitative indicators that describe the business models of each bank on successive reporting dates, homogeneous groups of banks are formed. The purpose of this study is to compare the key features of the banking system as of January 1 and September 1, 2022, and the corresponding changes in business models.Over the eight months of 2022, the number of banks with corporate lending increased slightly, but the resource base of these banks gradually changed. The number of banks with retail financing decreased at the expense of banks with current resources. During an increase in the discount rate and in the price of refinancing loans, banks’ business model that attracts resources on the interbank market and places them in securities has shrunk. At the same time, the number of banks with an increased level of securities in assets and corporate financing increased. The quality of the portfolio indicates the increased credit risks of the respective large state banks.The drawback of the proposed method is the dependence of conclusions on official banks 'statements that do not always reflect nuisances of financial position. Within small banks, we can sometimes observe that current changes in clients' account balances affect the position in SFGB. The SFGB method can be applied to analyze trends and estimate the probability of subsequent structural changes. For each bank, one can observe the trajectory change on the map and investigate the reasons for the change in business strategy.

A method of identifying banks’ business models and studying the features of their risk profile, considering the system of indicators featuring the structure of assets, liabilities, income, expenses, and other qualitative indicators based on monthly statistical reporting. Kohonen's self-organizing maps (SOM) are used to process large data sets, revealing objects’ hidden features by forming homogeneous groups according to similar values of a large system of indicators. The choice of the system of indicators that play the most significant role in describing the business models of modern banks is substantiated. The proposed method makes it possible to group banks with homogeneous characteristics into so-called structural-functional groups and studies the change in the characteristics of groups of banks over time to compare their behavior during periods of active development of the system and during a crisis. That approach is useful for studying the banking system at the macro level, as it provides a quantitative measure of its financial stability. The more banks are in groups with negative values of parameters, increased risks, and unprofitable performance, the worse the general state of the system. The method also allows studying the features of each structural and functional group and the business models’ features at the meso-level. The number and composition of banks inherent in any group change dynamically, which characterizes the features of the relevant business model in a particular period. The averages of each group reflect the objective changes in the banking system structure. In addition, the SOM trajectory can be built for each individual bank determining the development of its strategy, features of a particular business model, and risk profile. At the micro-level, it allows comparing the features of individual banks within the SFGB and models ways to improve efficiency and financial stability by forecast values for SOM. An extensive system of indicators used to form structural and functional groups of banks allows to quickly respond to changes in the banking system, identify areas of increased risk and explore the adequacy and effectiveness of banks’ business models.

The collapse mechanism of dual-structure vegetation riverbanks at different water levels is unclear. A method for calculating the critical collapse width of a dual-structure vegetation bank under different failure modes that consider the variations in river and groundwater levels and the influence of vegetation roots is proposed. Combined with the influence of flow lateral erosion and slope toe accumulation, a calculation model of riverbank stability was established. The results show that shear failure is the main failure mode when the cohesive soil layer on a dual-structure bank is thick, and the critical collapse width of the bank with root soil is higher than that of the soil bank. The critical collapse width of the bank varied with the water level during different water level periods. Compared with a soil riverbank, a rooted soil riverbank can significantly prolong the bank collapse time. The collapse width of a soil bank without vegetation roots is smaller than that of a rooted soil bank, and the cumulative collapse width is related to calculation time. The greater the thickness of rooted soil, the slower the decay rate of bank stability under water flow erosion.

Using a unique sample of commercial loans and mergers between large banks, we provide micro-level (within-county) evidence linking credit conditions to economic development and find a spillover effect on crime. Neighborhoods that experience more bank mergers are subject to higher interest rates, diminished local construction, lower prices, an influx of poorer households, and higher property crime in subsequent years. The elasticity of property crime with respect to merger-induced banking concentration is 0.18. We show that these results are not likely due to reverse causation, and confirm the central findings using state branching deregulation to instrument for bank competition.

This paper estimates the value of the too-big-to-fail (TBTF) subsidy. Using data from the merger boom of 1991–2004, we find that banking organizations were willing to pay an added premium for mergers that would put them over the asset sizes that are commonly viewed as the thresholds for being TBTF. We estimate at least $15 billion in added premiums for the eight merger deals that brought the organizations to over $100 billion in assets. In addition, we find that both the stock and bond markets reacted positively to these TBTF merger deals. Our estimated TBTF subsidy is large enough to create serious concern, particularly since the recently assisted mergers have effectively allowed for TBTF banking organizations to become even bigger and for nonbanks to become part of TBTF banking organizations, thus extending the TBTF subsidy beyond banking.

The ability of a country and its businesses to grow is tightly related to the possibility of exporting and penetrating into foreign markets. The aim of this article is to study whether bank support can help small businesses (SBs) exporting at the extensive as well as the intensive margin. We address this issue by using a large database on small Italian firms. We provide an empirical analysis of the role of bank support in affecting the firms' export decisions. Our results show that among the exporting SBs those using bank services to support their exports have a higher probability of being better placed in both the intensive and the extensive margin. Moreover, these positive impacts on export are statistically significant only when the main bank of the firm is an internationalized bank. These results have relevant policy implications as well as consequences for the business models of internationalized banks.

We study the effects of deposit insurance and observability of previous actions on the emergence of bank runs by means of a controlled laboratory experiment. We consider three depositors in the line of a bank, who decide between withdrawing or keeping their money deposited. We have three treatments with different levels of deposit insurance which reflect the losses a depositor may incur in the case of a bank run. We find that different levels of deposit insurance and the possibility of observing other depositors' actions affect the likelihood of bank runs. When decisions are not observable, higher levels of deposit insurance decrease the probability of bank runs. When decisions are observable, this need not to be the case. These results suggest that (i) observability might be considered as a partial substitute of deposit insurance and (ii) the optimal deposit insurance should take into account the degree of observability.

Purpose Using system theory, this paper aims to interrogate the impact of Boko-Haram on bank administration. The paper explains how death, injury and property destruction caused by terrorism affect banking supervision and structures. Design/methodology/approach With the aid of a mixed research method, this paper conducted 47 interviews. It extracted secondary data from the Central Bank of Nigeria database, the National Deposit Insurance Corporation publications, Enhancing Financial Innovation and Access Survey, the World Bank database and the Global Terrorism Index. Descriptive, content and regression analysis was used in this research. Findings With a significant regression model (p-value < 0.05), the analysis shows that terrorism accounts for 84.02% variation in banking administration. The impact of Boko-Haram on banking administration is negatively significant, especially in the areas like on-site supervision of Money Deposit Banks/Micro-finance Institutions and citizens’ accessibility to financial systems. Originality/value This paper generates new knowledge in the thematic area, which is still grey. The influence of terrorism on financial institutions as an element of economic governance is less researched. Hence, the strategic linkage of the impact of Boko-Haram on banking administration as a component of financial institutions. Therefore, this paper contributes to the existing body of literature on terrorism and economic governance.