The performance effects of board heterogeneity: What works for EU banks?

We examine the impact of board heterogeneity on the performance of EU listed banks in the wake of the global financial crisis. In a comprehensive set-up, we consider standard board features (type, tenure, size, and age of board members) as well as board diversity features (gender diversity, employee representation, internationalisation, and age diversity). We propose a diversity index, which summarises the different dimensions of diversity and control for unobserved heterogeneity and reverse causality. Our analysis uncovers a complex relationship between board heterogeneity and bank performance, which is influenced by market conditions and by national culture. Overall board diversity does not seem to affect bank performance, but it does decrease performance variability during the Eurozone crisis and in countries culturally more open to diversity. Different board and diversity features have a positive impact on bank performance (size, tenure, and employee representation); the relationship is non-linear, with the effect of diversity being more relevant when there is a significant proportion of minority representatives. While substantial board internationalisation has a negative impact on bank performance, the presence of foreign directors appears to be less detrimental during the Eurozone crisis and in countries that are more welcoming towards diversity

Capital and liquidity ratios and financial distress. Evidence from the European banking industry

Using a large bank-level dataset, we test the relevance of both structural liquidity and capital ratios, as defined in Basel III, on banks' probability of failure. To include all relevant episodes of bank failure and distress (F&D) occurring in the EU-28 member states over the past decade, we develop a broad indicator that includes information not only on bankruptcies, liquidations, under receivership and dissolved banks, but also accounts for state interventions, mergers in distress and EBA stress test results. Estimates from several versions of the logistic probability model indicate that the likelihood of failure and distress decreases with increased liquidity holdings, while capital ratios are significant only for large banks. Our results provide support for Basel III's initiatives on structural liquidity and for the increased regulatory focus on large and systemically important banks

Post-crisis regulatory reforms and bank performance: lessons from Asia

Based on a large dataset from eight Asian economies, we test the impact of post-crisis regulatory reforms on the performance of depository institutions in countries at different levels of financial development. We allow for technological heterogeneity and estimate a set of country-level stochastic cost frontiers followed by a deterministic bootstrapped meta-frontier to evaluate cost efficiency and cost technology. Our results support the view that liberalization policies have a positive impact on bank performance, while the reverse is true for prudential regulation policies. The removal of activities restrictions, bank privatization and foreign bank entry have a positive and significant impact on technological progress and cost efficiency. In contrast, prudential policies, which aim to protect the banking sector from excessive risk-taking, tend to adversely affect banks cost efficiency but not cost technology

substrate induced effects in thin films of a potential magnet composed of metal free organic radicals deposited on si 111

We deposit a paramagnetic pyrene derivative of the nitronyl nitroxide radical on Si(111). The molecules experience a strong chemical interaction with the substrate that influences the film growth. We also study the time evolution of the nitronyl nitroxide radical under a micro-focused soft X-ray beam, observing a stable radical as a product. This result hints at the possibility of using this class of materials in dosimeters and sensors

Does Basel compliance matter for bank performance?

The global financial crisis underscored the importance of regulation and supervision to a well-functioning banking system that efficiently channels financial resources into investment. In this paper, we contribute to the ongoing policy debate by assessing whether compliance with international regulatory standards and protocols enhances bank operating efficiency. We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). The relationship between bank efficiency and regulatory compliance is investigated using the Simar and Wilson (2007. J. Econ. 136 (1), 31) double bootstrapping approach on an international sample of publicly listed banks. Our results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters, has no association with bank efficiency

Bank fragility and contagion: Evidence from the bank CDS market

Understanding how contagion works among financial institutions is a top priority for regulators and policy makers who aim to foster financial stability and to prevent financial crises. Using bank credit default swap (CDS) data, we provide a framework for the evaluation of contagion among banks in different countries and regions during a period of prolonged financial distress. We measure contagion in terms of return spillovers, following a Generalized VAR (GVAR) approach. In addition, we propose an innovative framework to distinguish between two types of contagion: systematic (linked to global factors), and idiosyncratic (linked to bank specific factors). We find evidence of both types of contagion, although the spillover dynamics changed over time. Our measure of systematic contagion is always greater than the idiosyncratic component, thus highlighting the importance of common factors in the propagation of risk spillovers. This indicates that international linkages among banking markets are central to the transmission of shocks

Magnetic and axial vector form factors as probes of orbital angular momentum in the proton

We have recently examined the static properties of the baryon octet (magnetic moments and axial vector coupling constants) in a generalized quark model in which the angular momentum of a polarized nucleon is partly spin $\langle S_z \rangle$ and partly orbital $\langle L_z \rangle$. The orbital momentum was represented by the rotation of a flux-tube connecting the three constituent quarks. The best fit is obtained with $\langle S_z \rangle = 0.08\pm 0.15$, $\langle L_z \rangle = 0.42\pm 0.14$. We now consider the consequences of this idea for the $q^2$-dependence of the magnetic and axial vector form factors. It is found that the isovector magnetic form factor $G_M^{\mathrm{isovec}}(q^2)$ differs in shape from the axial form factor $F_A(q^2)$ by an amount that depends on the spatial distribution of orbital angular momentum. The model of a rigidly rotating flux-tube leads to a relation between the magnetic, axial vector and matter radii, $\langle r^2 \rangle_{\mathrm{mag}} = f_{\mathrm{spin}} \langle r^2 \rangle_{\mathrm{axial}} + \frac{5}{2} f_{\mathrm{orb}} \langle r^2 \rangle_{\mathrm{matt}}$, where $f_{\mathrm{orb}}/ f_{\mathrm{spin}} = \frac{1}{3}\langle L_z \rangle / G_A$, $f_{\mathrm{spin}} + f_{\mathrm{orb}} = 1$. The shape of $F_A(q^2)$ is found to be close to a dipole with $M_A = 0.92\pm 0.06$ GeV.Comment: 18 pages, 5 ps-figures, uses RevTe

Bank business model migrations in Europe: determinants and effects

In response to post-crisis regulatory reforms, the European banking sector has undergone significant changes that have led banks to reconsider their strategies, structures and operations. Based on a sample of over 3,000 banks from 32 European countries during the period 2010–2017, we identify banks’ business models based on cluster analysis and track their evolution.We then apply a logistic regression and find that banks with higher risk and lower profitability are more likely to change their business model. Employing a propensity score matching approach, we investigate the effect of migration on bank performance and find that changing the business model affects banks positively (i.e. migrating banks increase their profitability, stability and cost efficiency). The effect of migration differs depending on the target business model. When switches are a consequence of being acquired or motivated by regulatory compliance, the positive impact remains

Integration, productivity and technological spillovers: Evidence for eurozone banking industries

In the context of the current debate on increased integration of eurozone banking markets following the global financial and sovereign debt crises, this paper evaluates the impact of regulatory reform, starting from the inception of the Single Market in 1992, on bank productivity and assesses the cross-border benefits of integration in terms of technological spillovers. We utilise a parametric meta-frontier Divisia index to estimate productivity change and identify technological gaps. We then assess the extent to which productivity converges within and across banking industries as a result of technological spillovers. Our results suggest that productivity growth has occurred for eurozone countries, driven by technological progress, both at the country and the supra-country level, although the latter slows or in some cases reverses since the onset of the crisis. Technological spillovers do exist, and have led to progression toward the best technology. However, convergence is not complete and significant long run differences in productivity persist. Improvements in technology are increasingly concentrated in fewer banking industries