PurposeBased on the resource-based view (RBV) and the signaling theory, this paper examines the effect of media reputation on financial performance as well as the moderating role of bank characteristics (risk management and financial capacities) in this relationship, using Vietnamese commercial bank data for the period 2007–2018.Design/methodology/approachWe rely on the agenda-setting theory to measure the media reputation of banks. Return on average equity (ROE) is used as a proxy of financial performance. We regress financial performance on media reputation with fixed effects to control unobserved variables. In addition, the instrumental variable (IV) method is applied to deal with the endogeneity problem. We use the change in bank logo as an IV for media reputation.FindingsWe find that media reputation has a positive effect on financial performance. This effect becomes prominent for large banks, listed banks or banks that demonstrate good risk management capacities, and is particularly strong when we control for endogeneity bias. The effect of media reputation on financial performance is transmitted through the non-performing loan (NPL) channel.Research limitations/implicationsThe research findings further endorse the positive impact of media reputation on financial performance in the low-quality institutional settings. Moreover, these findings expand the existing knowledge regarding the relationship between media reputation and financial performance by affirming two strategies which could be used to leverage the contribution of media reputation including improving banks' risk management capacities and raising financial capital.Originality/valueThis is the first known paper to examine the effect of media reputation on financial performance in commercial banks in an underdeveloped institutional setting while exploring the moderators in this relationship. This study, therefore, provides insightful implications for different bank segments in managing NPL and taking advantage of media reputation as a potential resource of financial performance.
We develop a New Keynesian model featuring Calvo price setting and Calvo wage setting to quantify the welfare consequences of shifting trend inflation in Vietnam. To capture the characteristics of the Vietnamese economy, we use the Simulated Method of Moment and calibrate parameters jointly to match the important selected moments of Vietnamese data. The results show a severe consequence of a constant positive trend inflation and an exogenous shock to trend inflation, especially when a central bank sets a high level of inflation target. Among staggered price and wage contracts, the latter play a vital role in transmitting the adverse impacts of constant and shifting trend inflation into the economy. Based on our analyses, raising inflation targets would seem to be a bad policy prescription in Vietnam.
We study welfare costs of the uncertainty about monetary policy in the economy featuring shifting trend inflation. We follow Ruge-Murcia (J Econ Dyn Control 36: 914-938, 2012) to employ the SMM approach to fit the model to the US data (1979Q1-2015Q1). We find that the monetary policy uncertainty affects economic welfare through different dimensions. On the one hand, the policy uncertainty itself distorts the economic welfare negligibly, not only by increasing volatilities of consumption and leisure, but also by decreasing their average levels. A higher level of trend inflation then signifies these changes to produce greater welfare costs. Furthermore, the adverse impacts of policy uncertainty on the economy, documented by the impulse response functions of macroeconomic variables to policy uncertainty shock, become larger when central banks raise their inflation targets. On the other hand, the costs of exogenous variations in trend inflation are larger if there is policy uncertainty.
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