Financial Innovation, Basel Accord III, and Bank Value

Wang, Mu-Shun

doi:10.2753/ree1540-496x5002s202

Cited by 19 publications

(14 citation statements)

References 48 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Even though the banks listed on the Warsaw Stock Exchange significantly differ among each other in size, in the international context they might be considered relatively small. In this light, an apparent positive correlation of banks' size on their charter values is consistent with the arguments of De Nicoló (2000) and Wang (2014). It seems that larger banks might be perceived by the investors as being more capable of exploiting the benefits arising from economies of scale and operational diversification.…”

Section: The Literature Reviewsupporting

confidence: 87%

An empirical evaluation of selected accounting-based value drivers in the Polish banking sector

Bolibok

2016

CJFA

View full text Add to dashboard Cite

The paper aims at empirical evaluation of selected accounting-based value drivers in the Polish banking sector. Using the analyses of correlation and regression, the study investigates the associations between banks' charter values, proxied by Tobin's Q, and a set of explanatory variables including size, operating efficiency, profitability, net cash flow generation capacity, leverage, asset liquidity, and risk management efficiency, each proxied by a measure based on the data available in the annual financial reports of banks. The examined sample covered all domestically-based banks listed on the Warsaw Stock Exchange over the period 1997-2014. The empirical evidence indicates a statistically significant positive impact of operating efficiency, profitability and risk management efficiency on charter values. In turn, the influence of size and leverage, although also positive, appears to be so weak, that it becomes irrelevant when combined with other explanatory variables. Additionally, no statistically significant impact was found for net cash flow generation capacity nor asset liquidity. The above findings suggest that equity investors in the Polish banking sector perceive performance and risk management efficiency as the key value drivers, practically neglecting the issues related to banks' financial stability like the liquidity of assets or degree of leverage, thus presumably relying on the too-big-to-fail principle.

show abstract

Section: The Literature Reviewsupporting

confidence: 87%

An empirical evaluation of selected accounting-based value drivers in the Polish banking sector

Bolibok

2016

CJFA

View full text Add to dashboard Cite

show abstract

“…This means that these banks have a large technical gap between the metafrontier and group-specific frontiers. Chang et al, 2012;Fukuyama and Matousek, 2011;Fukuyama and Weber, 2010;Holod and Lewis, 2011;Liang et al, 2008 Desirable outputs (y 1 ) Amount of loans (unit: thousands NT$): the sum of short-term, medium and long-term loans Chang et al, 2012;Chen, 2012;Chen and Yang, 2011;Drake et al, 2009;Fukuyama and Matousek, 2011;Fukuyama and Weber, 2010;George Assaf et al, 2013;Hsiao et al, 2010 (y 2 ) Non-interest incomes (unit: thousands NT$): comprises service fees, commission incomes and other incomes Chen, 2012;Chen and Yang, 2011;Hsiao et al, 2010;Matthews, 2013 (y 3 ) Investment revenues (unit: thousands NT$): the amount of revenues earned on total other earning assets minus deposits Chen, 2012;Chen and Yang, 2011;Fukuyama and Matousek, 2011;Fukuyama and Weber, 2010 Undesirable outputs (y 4 ) Allowance for loan losses (unit: thousands NT$): a valuation account used to estimate the part of a bank's loan portfolio that will ultimately be uncollectible Chang, 1999;Drake and Hall, 2003;Fung and Cheng, 2004;Wang, 2014 The source of metafrontier inefficiency can be broken down into PTGI g and PTI g or OTGI g and OTI g . For instance, bank 6's MPE and MOE are 0.678 and 1.145, whereas the inefficiencies of MPE and MOE are 1-0.678 = 0.322 and 1.145-1 = 0.145.…”

Section: Results and Analysismentioning

confidence: 99%

Exploring the source of metafrontier inefficiency for various bank types in the two-stage network system with undesirable output

Chiu

Chen

et al. 2016

Pacific-Basin Finance Journal

View full text Add to dashboard Cite

“…An adjusted business model is the answer (Nucu, 2011). Consequently, banks are now engaging in activities that generate earnings through non-interest revenue but bearing the associated risks, effectively moderating the intermediating function (Wang, 2014). We are of a similar view that banks should counter the stated effects by generating non-interest income without bearing the equivalent risk as in the case of generating interest income.…”

Section: Literature Reviewmentioning

confidence: 99%

Using Risk-Weighted Assets to Generate Risk-Weighted Fees to Counter the Effects of Basel III on Revenue Generation

Nkwaira¹

2018

JFBM

View full text Add to dashboard Cite

Basel III, a regulatory reform, aimed at strengthening the financial resilience of banks and the commensurate stability of the financial sector, has the potential to slow down revenue generation capacity of the same banks that it intends to strengthen and stabilize. We demonstrate the viability of using the risk-weights as espoused in risk-weighted assets (RWA) to generate non-interest revenue through fees based on deliberate cancellation of insurance on physical assets held by borrowers during the tenure of the loan. Instead of employing the risk-weights to determine the quantities of capital required, we deploy them in an effort to generate proportionate fees that can serve to alleviate banks from the downward pressure on net income emanating from the application of Basel III regulatory pillars-Capital adequacy, liquidity requirement and the leverage ceiling. We document and illuminate the requirements and the massive income resulting in categorizing assets in terms of their risk weights in order to determine fees associated with monthly cancellations or lapse of insurance contracts that are meant to provide mitigation measures for the protection of those assets.

show abstract

Financial Innovation, Basel Accord III, and Bank Value

Cited by 19 publications

References 48 publications

An empirical evaluation of selected accounting-based value drivers in the Polish banking sector

An empirical evaluation of selected accounting-based value drivers in the Polish banking sector

Exploring the source of metafrontier inefficiency for various bank types in the two-stage network system with undesirable output

Using Risk-Weighted Assets to Generate Risk-Weighted Fees to Counter the Effects of Basel III on Revenue Generation

Contact Info

Product

Resources

About