Risk-adjusted performance measures at bank holding companies with section 20 subsidiaries

This paper examines risk-adjusted performance measures in banking, which are used as a guide for efficient asset allocation, performance evaluation, and capital structure decisions in complex, multidivisional financial institutions. Traditional measures of performance are contrasted with the portfolio-based risk-adjusted measures using a unique detailed micro data set for a sample of domestic bank holding companies (BHCs) that engaged in both commercial banking and investment banking activities between 1990 and 1999. This paper finds evidence that traditional stand-alone performance measures can lead to results substantially different from those of the portfolio models. This study also examines BHCs’ optimal portfolios consisting of traditional and nontraditional banking activities derived from the efficient frontiers. These results show that there are gains from diversification as indicated by the composition of optimal portfolios.Bank holding companies ; Risk management

Crisis' Heritage Management - New Business Opportunities Out of the Financial Collapse

This paper intends to present the opportunities emerging for the national economy, out of the financial crisis. In particular the management of those, which arise from the commercial real estate owned property sector, defined by the author as crisis heritage management. On one hand, as real estate property prices are subject of wide fluctuations, the longer possession of such assets can seriously impact the financial condition of the already shattered financial institutions, but on the on other - with the help of professional and proactive management, and the right kind of attitude by all the stakeholders, the heritage left out of the financial collapse, can not only help stabilize the system - bringing liquidity into it, but can also support its healthy corporate governance in the long-term. The properties themselves (business buildings, warehouses, retail-and-office spaces), being an object of optimization of maintenance costs, re-engineering, intensive marketing, as a result of the crisis, can serve as a solid base for number of new and profitable business and investment opportunities, described in the article, as a proof of the healing effect of the financial crisis and the second chance it gives.Comment: Presented at the 2013 Sofia Business School Master Classes in Global Risks Managemen

Optimization of factorial portfolio of trade enterprises in the conditions of the non-payment crisis

The economic mechanism for factoring management of trade enterprises was improved by applying a tool for refinancing receivables involving third parties, which will contribute to the effective management of fundraising processes from the standpoint of the income approach. The instruments for the implementation of the economic mechanism of factoring management of commercial enterprises, consisting of five blocks were improved (analysis of commercial enterprise debtors’ solvency in order to transfer them to factoring services; analysis of accounts receivable and assessment of its real value; planning of cash flows from factoring operations; factoring implementation assessment; monitoring and control of the repayment of receivables in the process of factoring services), that allows substantiating practical recommendations for improving the level of factoring management. Based on the concept of a portfolio of investments, a factoring model was built to optimize the debtors of the enterprise

Technology payment cards communication with banking institutions in the field of cashless payment

The aim is now used to describe the infrastructure of payment cards, ATMs, now used to describe the infrastructure of payment systems, mainly the payment cards and NFC technology and secure payment throw the internet. In this article, we examine a new technology application which is coming into its own around the world, in association with the revolution in wireless connectivity. Our findings are intended to guide in dealing with the economic aspects of mobile payments, and to help identify some important directions for the research

Agency Theory, Accounting Information, and Corporate Financial Management: A New Framework for Developing Financial Strategies for Banking Companies

Abstract: The objective of this study is to develop a corporate financial optimization model, based on the theoretical foundations of, and for integrating, the crucial issues in accounting and finance such as agency and information asymmetry and the use of accounting information to mitigate the problems, which can give appropriate financial strategies relevant for the contemporary business world. There are a good number of financial models in the existing literature. However, as important issues relevant to financial management for corporations are emerging, it is essential to develop a financial optimization model that can embed and address these emerging issues and can prescribe a set of financial management strategies, which are relevant in the current situations of corporations shaped by these emerging issues. This study formulates an applied integrated financial optimization problem to investigate the extent to which the financial model designs optimal financial strategies that can mitigate agency problems and provide a basis for sound accounting practices, leading to the optimal company value in real life situations. Generally, this study concludes that the integrated financial model can provide economic significance when formulating financial strategies for mitigating agency problems and maximizing company value. It also provides new insights into sound accounting practices should be implemented in an integrated, large-scale real-life financial strategy. This paper contributes to corporate financial modeling by developing a model based on the multidisciplinary literature, including contemporary accounting, agency theory, and management science, by providing a new corporate finance model, which is appropriate for modeling and addressing some crucial contemporary issues in corporate finance in the current world.Abstrak: Tujuan dari penelitian ini adalah untuk mengembangkan model optimasi keuangan perusahaan, berdasarkan pada landasan teoritis, dan untuk mengintegrasikan isu-isu penting dalam akuntansi dan keuangan seperti asimetri agensi dan informasi dan penggunaan informasi akuntansi untuk mengurangi masalah, yang dapat memberikan strategi keuangan yang tepat yang relevan untuk dunia bisnis kontemporer. Ada sejumlah model keuangandalamliteratur yang sudahada. Namun, karena isu-isu penting yang relevan dengan manajemen keuangan untuk perusahaan sedang berkembang, penting untuk mengembangkan model pengoptimalan keuangan yang dapat menanamkan dan mengatasi masalah yang muncul dan dapat meresepkan serangkaian strategi manajemen keuangan, yang relevan dalam situasi perusahaan saat ini. dibentuk oleh isu-isu yang muncul ini. Studi ini merumuskan masalah optimasi keuangan terintegrasi yang diterapkan untuk menyelidiki sejauh mana model keuangan merancang strategi keuangan yang optimal yang dapat mengurangi masalah keagenan dan menyediakan dasar untuk praktik akuntansi yang baik, yang mengarah ke nilai perusahaan yang optimal dalam situasi kehidupan nyata. Umumnya, penelitian ini menyimpulkan bahwa model keuangan terintegrasi dapat memberikan signifikansi ekonomi ketika merumuskan strategi keuangan untuk mengurangi masalah keagenan dan memaksimalkan nilai perusahaan. Ini juga memberikan wawasan baru ke dalam praktik-praktik akuntansi yang baik harus diterapkan dalam strategi finansial kehidupan nyata berskala besar yang terintegrasi. Makalah ini memberikan kontribusi untuk pemodelan keuangan perusahaan dengan mengembangkan model berdasarkan literatur multidisiplin, termasuk akuntansi kontemporer, teori keagenan dan ilmu manajemen, dengan menyediakan model keuangan perusahaan baru, yang sesuai untuk pemodelan dan mengatasi beberapa isu kontemporer yang krusial dalam keuangan perusahaan. di dunia saat ini

Central bank Financial Independence

Central bank independence is a multifaceted institutional design. The financial component has been seldom analysed. This paper intends to set a comprehensive conceptual background for central bank financial independence. Quite often central banks are modelled as robot like maximizers of some goal. This perspective neglects the fact that central bank functions are inevitably deployed on its balance sheet and have effects on its income statement. A financially independent central bank exhibits the adequate balance sheet structure and earnings generation capacity to efficiently perform its functions. From a long term perspective, as far as the demand for banknotes is maintained seignorage waters down any central bank financial independence concern. However, from a short term perspective central bank financial vulnerability may condition its effective independence. Vulnerability may be real or accounting based. However, no matter its origin, institutional solutions are needed to minimize their impact. Adequate capitalization turns out to be a key issue. Alternatively, contingent capital in the form of institutional arrangements to bear central bank losses may be a (second- best) solution. The paper analyses in the context of simple VAR model the interplay between capitalization, accounting rules and dividend distribution. This analysis is preceded by a thorough discussion of the risk return profile of central banks net return on assets. Three main conclusions shape the input to the capitalization model. Central banks return on assets can be very volatile from a short term perspective. From a medium term perspective, natural earnings generation cycles dampen down volatility. On average, central banks net return on assets typically exhibits a discount over government debt financing cost. These observations shape the central bank financing planning problem as follows. Namely, the size of the discount relative to the social costs that would arise in case of a lack of central bank independence, along with central bank exposure to risks and the volatility thereof, determine the incentives of the government to maintain an excess of financial assets in the form of central bank capital. Actually, the working of smoothing mechanisms operating across time on central banks earnings leads to a distinction between short term and medium term capital, i.e. the optimum capital solution is a band. In the same vein, the need to maintain optimal consistence between central bank financial strength and dividends distribution policy leads also to smoothing proposals for pay out policy.Central Banking Capital, Independence, Accounting, Profits

THE OPTIMIZATION OF THE INTERNAL AND EXTERNAL REPORTING IN FINANCIAL ACCOUNTING: ADOPTING XBRL INTERNATIONAL STANDARD

More and more enterprises, especially the listed companies, have adopted newaccounting norms and regulations (IFRS or US GAAP, Bale II and, in perspective, SURFI),manifesting interest for publishing financial reports using a standard format able to considerablyimprove their communication, data collection in the receiving units, control and analysis offinancial information. When switching to the new accounting rules specified in international orregional standards and norms, regulatory and control bodies recommend the XBRL format forfinancial reporting, with recognition of the regional jurisdiction. Our paper makes a review of theliterature, presents the XBRL specific elements and proposes possible solutions for internal andexternal financial reporting of an enterprise. Finally, it concludes on the benefits of adopting XBRLat national level in a potential XBRL Romania project.accounting norms, financial reporting, XBRL, taxonomy, XBRL jurisdiction.

Cross-border Risk Transmission by a Multinational Bank

A model of international banking, with the stress on the specific management human capital (borrower monitoring) and the majority shareholder human capital (manager auditing) is used to study the effects of exogenous shocks in one country on credit creation in the other. I show that the presence of the two named categories of non-transferable skills in the banking technology reduces the role of the standard portfolio diversification motive for cross-border transmission of disturbances. At the same time, this bank-specific market friction creates a separate channel of shock propagation, a function of the bank shareholder and manager incentives. It can even happen that the exogenous shock impact on credit has a different sign in the “relationship“ as opposed to “arm’s length“ banking environment. This phenomenon, caused by the marginal effect of the manager human capital involvement in the bank operation, is present in the bank branches with relatively small loan volumes. When the loan volume is large, the direction of the manager-auditing bank reaction to shocks abroad is the same as that of an arm’s length lender.multinational bank; managerial effort; audit; credit; foreign shock

A dynamic network DEA model for accounting and financial indicators: A case of efficiency in MENA banking

Middle East and North Africa (MENA) countries present a banking industry that is well-known for regulatory and cultural heterogeneity, besides ownership, origin, and type diversity. This paper explores these issues by developing a Dynamic Network DEA model in order to handle the underlying relationships among major accounting and financial indicators. Firstly, a relational model encompassing major profit sheet, balance sheet, and financial health indicators is presented under a dynamic network structure. Subsequently, the dynamic effect of carry-over indicators is incorporated into it so that efficiency scores can be properly computed for these three substructures. The impact of contextual variables related to bank ownership, its type, and whether or not it has undergone a previous merger and acquisition process is tested by means of a stochastic non-linear model solved by differential evolution, which combines bootstrapped Simplex, Tobit, Beta, and Simar and Wilson truncated regression results. The results reveal that bank type, origin, and ownership impact efficiency levels differently in terms of profit sheet, balance sheet, and financial health indicators, although the impact of culture and regulatory barriers seem to prevail at the country level