Does sustainability make banks more cost efficient?

Liang, Lien‐Wen; Chang, Hai-Yen; Shao, Hao-Ling

doi:10.1016/j.gfj.2018.04.005

Cited by 21 publications

(18 citation statements)

References 32 publications

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“…The importance of keeping banks as financial intermediaries in operations over an extended period while minimizing damages to depositors and investors resulting from adverse events cannot be ignored [36]. Therefore, it is critical for banks to strengthen their sustainability through specific performance indicators [8].…”

Section: Linkage Between Sustainability and Financial Performance In mentioning

confidence: 99%

“…These ratios shed light on the level of banks' sustainable development in the protection of consumers and investors [5]. Furthermore, Liang et al [8] provided empirical evidence that banks listed on Dow Jones Sustainability Index (DJSI) have higher cost efficiency than non-DJSI banks, suggesting that the concept and practices of sustainability improve banks' financial performance.…”

Section: Linkage Between Sustainability and Financial Performance In mentioning

confidence: 99%

“…These indicators enable banks to avoid financial troubles such as bank run or insolvencies, which may harm a large number of individual and institutional entities [6,7]. Based on Liang's [8] approach, this study examines the Taiwanese listed banks using a set of financial indicators, which mirrors banks' business sustainability.…”

Section: Introductionmentioning

confidence: 99%

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Business Sustainability Performance Evaluation for Taiwanese Banks—A Hybrid Multiple-Criteria Decision-Making Approach

Lin

Chang

2019

Sustainability

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The Taiwanese government has encouraged bank privatization and the establishment of financial holding companies to improve banking sustainability and consolidate banks, insurance companies, and securities firms. It is important for bank decision makers to set policies that lead to sustainable development. However, the literature remains unclear about the types of banks that achieve greater business sustainability. This paper aims to (1) identify the criteria that affect banks’ business sustainability and (2) determine the most sustainable types of banks. This study uses a hybrid multiple-criteria decision-making approach on eighteen financial criteria for twenty-five Taiwanese listed banks with data from 2012 to 2016. The results show that non-performing loan ratio is the most critical factor. In addition, financial holding companies outperformed non-financial holding companies. Financial holding companies with insurance companies as their largest subsidiaries performed best. Private banks exceeded state-owned banks in sustainability. The results lead to two implications. First, banks should value risk over profitability and diversify financial products. Second, the government should continue to privatize banks. These findings suggest that bank managers implement an enterprise resource planning (ERP) system with a master plan, framework, and guidelines to help them track bank performance indicators to ensure sustainability.

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Section: Linkage Between Sustainability and Financial Performance In mentioning

confidence: 99%

Section: Linkage Between Sustainability and Financial Performance In mentioning

confidence: 99%

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Business Sustainability Performance Evaluation for Taiwanese Banks—A Hybrid Multiple-Criteria Decision-Making Approach

Lin

Chang

2019

Sustainability

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“…that analyzed whether credit ratings, such as Standard and Poor's, take sustainability performance into account;Liang, Chang, and Shao (2018) that, while not analyzing the financial performance of banks using commonly employed variables based on revenue or assets, sought to determine whether sustainable banks are more cost efficient than their counterparts; and Xiao, Wang, van der Vaart, and van Donk (2018) that determined if country-level sustainability can be a moderating variable in the CSP-CFP relationship Hategan et al, 2018;Kim & Lee, 2018;Liang et al, 2018;Shin et al, 2016;Zhao et al, 2018;Adegbite et al, 2018;Cherian et al, 2019;Xie et al, 2018)…”

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confidence: 99%

Sustainable development and economic performance: Gaps and trends for future research

Prado

Piekarski

Luz

et al. 2019

Sustainable Development

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The aim of this paper is to determine the existence of gaps in the literature, by investigating studies that statistically analyzed the relationship between sustainable development and economic performance. A literature review was conducted in the Web of Science and Scopus databases. The study analyzed the authors, publication years, journals involved, methodologies used, and results obtained. The identified gaps and opportunities were (a) opportunity to create or employ different measurements for financial, social, and environmental performance and (b) to use different kinds of control or moderating variables, in order to further explore the relationship between sustainable development and financial performance.

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“…Some other studies focused on the evaluation of competitive conditions or market power in the Chinese banking industry [12][13][14], while this paper opens a new area in the investigation of the Chinese banking industry by assessing the redundancy of bank branches. In the sustainable development of commercial banks, several studies focused on the sustainable development model of banks [15][16][17], some on the performance evaluation of sustainable banks [18][19][20][21], and others on the corporate social responsibility of commercial banks [2,3], but this paper studies the sustainable operation of commercial banks from a new perspective of optimizing the layout of bank branches to reduce the operation cost. Optimizing the layout of existing physical branches and allocating resources reasonably and effectively have become the key issues in promoting the sustainable operation of commercial banks in the context of third-party payment, and help commercial banks fulfill corporate social responsibility earnestly.…”

Section: Literature Reviewmentioning

confidence: 99%

Redundancy Identification and Optimization Scheme of Branches for Sustainable Operation of Commercial Banks

et al. 2019

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With the rapid development of the internet, the number of offline customers in the bank branches decreases, and the existing layout of branches leads to the increase of operation cost, which has an impact on the sustainable operation of commercial banks. Adjusting and optimizing the layout of the physical branches of commercial banks can not only reduce the operation cost of banks and avoid the waste of resources, but is also crucial to the sustainable operation of commercial banks. First, an evaluation index system (deposit; loan; number of vouchers; maintenance, establishment, and modification of customer information; number of counter transactions) is constructed to reflect the operation performance of bank branches. Second, the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) is used to rank the bank branches. Then, a combination of factor analysis and assignment method is used to identify redundant bank branches. Last, cluster analysis is used to find alternative schemes of redundant bank branches. Finally, Shaanxi Rural Credit Cooperatives Union in Hanzhong, Shaanxi Province, China is selected for empirical analysis. The results show that: four redundant bank branches are identified, and alternative combination schemes of the redundant bank branches are determined. The redundancy identification method in this paper is helpful for commercial banks to allocate various resources rationally and reduce operation cost, so as to ensure the sustainable operation of commercial banks. ). Faced with the challenges of internet, it has become an urgent problem for commercial banks to adjust and reconfigure the existing bank branches that cannot adapt to the development of the new economy.Due to the rapid development of the internet, the layout of China's commercial banks' branches has not been adjusted and optimized in time, resulting in a serious decline in the business of physical branches and an increase in the overall operating costs, which poses a serious threat to the sustainable operation of commercial banks. Under the strategy of sustainable development, commercial banks must solve the following problems: how to identify redundant bank branches, how to achieve the same operation performance when eliminating redundant branches, and how to make the limited resources of commercial banks play their maximum economic and social benefits. In addition, the optimized layout plan of eliminating redundant bank branches can significantly reduce operating costs and improve the overall performance of banks [1], so that commercial banks can better fulfill their economic responsibilities to shareholders and investors [2,3]. Furthermore, eliminating redundant bank branches will also reduce the energy consumption and emissions of the operation of physical branches, which will help commercial banks fulfill their environmental responsibilities. Therefore, identifying and eliminating redundant bank branches can enable commercial banks to achieve sustainable economic, environmental and social development, and p...

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Does sustainability make banks more cost efficient?

Cited by 21 publications

References 32 publications

Business Sustainability Performance Evaluation for Taiwanese Banks—A Hybrid Multiple-Criteria Decision-Making Approach

Business Sustainability Performance Evaluation for Taiwanese Banks—A Hybrid Multiple-Criteria Decision-Making Approach

Sustainable development and economic performance: Gaps and trends for future research

Redundancy Identification and Optimization Scheme of Branches for Sustainable Operation of Commercial Banks

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