Russian sanctions and the banking sector

Western allies have imposed restrictive measures on Russian banks and threatened harsher sanctions on the finance sector since after the annexation of Crimea in 2014. However, they did not impede sanctioned banks to report record profits, nor deterred Russia from invading Ukraine on 24 February 2022. Although sanctions’ full effectiveness remains in questions, the impact of Russia’s invasion of Ukraine has not only caused a retreat of foreign banks from mainland Russia but has also ended the international ambitions of the largest Russian banks in Europe and beyond

Banking Sector Performance in Latin America: Market Power versus Efficiency

TSince the mid-1990s the banking sector in the Latin American emerging markets has experienced profound changes due to financial liberalisation, a significant increase in foreign investments and greater mergers activities often occurring following financial crises. The wave of consolidation and the rapid increase in market concentration that took place in most countries has generated concerns about the rise in banks’ market power and its potential effects on consumers. This paper advances the existing literature by testing the market power (Structure-Conduct-Performance and Relative Market Power) and efficient structure (X- and scale efficiency) hypotheses for a sample of over 2,500 bank observations in nine Latin American countries over 1997-2005. We use the Data Envelopment Analysis technique to obtain reliable efficiency measures. We produce evidence supporting the efficient structure hypotheses. The findings are particularly robust for the largest banking markets in the region, namely Brazil, Argentina and Chile. Finally, capital ratios and bank size seem to be among the most important factors in explaining higher than normal profits for Latin American banks.Structure-Conduct-Performance; Efficient Structure; Latin American banking; Data Envelopment Analysis (DEA).

Competition issues in European banking

Purpose - The purpose of this paper is to assess the outcome of European Union (EU) deregulation and competition policies on the competitive conditions of the main EU banking markets. Design/methodology/approach - After a review of deregulation and competitition policies in the EU banking industry, the degree of competition in the largest five EU banking markets using is tessted both structural (concentration ratios and Herfindahl-Hirshman indices) and non-structural (H-statistics and Lerner index) approaches. Findings - Results indicate that EU banking markets are becoming progressively more concentrated and that there is no evidence of an increase in competitive pressure. Country differences are also apparent thereby indicating that despite the sustained regulatory interventions, significant barriers to the integration of EU retail banking markets remain. In line with recent literature, the analysis also seems to provide further evidence that concentration is not necessarily a good proxy for competition. Originality/value - Increased market concentration and its effects on competition are of relevance in a period of renewed EU regulatory efforts to remove the remaining barriers to the integration of financial markets. The evaluation of competitive conditions and market power in EU banking are therefore of interest to policy-makers and regulators. © Emerald Group Publishing Limited

Banking Sector Performance in Some Latin American Countries: Market Power versus Efficiency

The wave of consolidation and the rapid increase in market concentration that took place in most Latin American countries has generated concerns about the rise in banks' market power and its potential effects on consumers. This paper advances the existing literature by testing the market power (Structure-Conduct-Performance and Relative Market Power) and efficient structure (X- and scale efficiency) hypotheses for a sample of over 2,500 bank observations in nine Latin American countries over 1997-2005. We use the Data Envelopment Analysis technique to obtain reliable efficiency measures. We produce evidence supporting the efficient structure hypotheses. Finally, capital ratios and bank size seem to be among the most important factors in explaining profits for these Latin American banks.Structure-Conduct-Performance, Efficient Structure, Banking System in Some Latin American Countries, Data Envelopment Analysis (DEA)

Banking sector performance in some Latin American countries: Market power versus efficiency

The wave of consolidation and the rapid increase in market concentration that took place in most Latin American countries has generated concerns about the rise in banks' market power and its potential effects on consumers. This paper advances the existing literature by testing the market power (Structure-Conduct-Performance and Relative Market Power) and efficient structure (X- and scale effciency) hypotheses for a sample of over 2,500 bank observations in nine Latin American countries over 1997-2005. We use the Data Envelopment Analysis technique to obtain reliable efficiency measures. We produce evidence supporting the efficient structure hypotheses. Finally, capital ratios and bank size seem to be among the most important factors in explaining profits for these Latin American banks

Efficiency, ownership and financial structure in European banking

Purpose – This paper aims to compare the cost efficiencies across bank-and market-based EU countries for the different groups of commercial, savings and co-operative banks; and between listed and non-listed banking institutions. In addition, it attempts to determine any potential implications for bank efficiency originating from differences in financial structure. Design/methodology/approach – Efficiency scores are estimated using the Battese and Coelli's time-varying stochastic frontier approach. The classification of bank- and market-based financial systems is based on the World Bank's Financial Structure Database. Findings – On the whole the results reject the agency theory hypothesis that managers of privately-owned banks are more cost efficient than those of mutual banking institutions because of capital market devices as it is found that mutual banks operating in EU-15 countries are significantly more cost efficient than commercial banks. Furthermore, results are mixed concerning the financial structure hypothesis that in developed financial systems bank efficiency should not be statistically different across bank-vs market-based economies. Research limitations/implications – The analysis suggests that differences in cost efficiency across bank types can often be explained by the prevailing financial system in each economy. Practical implications – The evidence illustrates the national diversity of corporate governance systems in Europe and can be important to policy makers who are concerned with the full integration of the European financial system. Originality/value – To the best of the authors’ knowledge, there are no previous similar empirical works for the EU banking sector. Such a study has important policy implications especially due to the fact that the EU banking sector is experiencing profound structural changes and a full integration has not yet been achieved

ESG issues in emerging markets and the role of banks

We explore the most relevant forces impacting the shift towards more ESG-related strategies in emerging markets. These include the challenges of climate change, social inequalities, and stakeholder-oriented corporate governance. We focus on banks’ role in BRICS countries that are the biggest and fastest growing emerging markets economies over 2009-2020. We also discuss how the ESG agenda has been pushed by the United Nations (UN) and by regulators. Our evidence shows that banks’ specific adoption of international sustainability frameworks and agreements such as the Global Reporting Initiative (GRI) are significant drivers of ESG engagement. Moreover, we find that a stronger ESG regulatory approach enhances banks’ sustainability practices in BRICS countries, especially for those that have lower average ESG scores. Two main implications can be drawn from our study: (i) banks should be encouraged to adopt international frameworks which provide universal minimum standards for corporate responsibility; and (ii) to improve the overall ESG information environment, mandatory disclosure rules should be introduced at country level

Cross-Country Variation in Financial Inclusion: A Global Perspective

Recent years have witnessed a global commitment to advancing financial inclusion as a key enabler for promoting equal opportunity and reducing poverty. In this paper, we use the IMF’s Financial Access Survey data and two different approaches to construct a multidimensional financial inclusion index for a global sample of 95 countries over 2004-15. Results reveal an overall progress in financial inclusion over the period under study, most markedly in the use and access dimensions. Financial inclusion appears to be positively and significantly associated with GDP per capita, employment, bank competition, human development, government integrity, and internet usage. Our evidence also points to the importance of considering the level of national income when designing policies to boost financial inclusion