Banking reform in Vietnam

Vietnam’s banking sector is expected to have one of the highest growth rates in Asia during the next few years due to the country’s continued economic expansion, rising household incomes, and relatively low penetration of existing banking services. Over the past two decades, the Vietnamese government has undertaken a series of reforms to strengthen and modernize the sector as part of the country’s move towards a more open and marketoriented economy. Many of these reforms have also been motivated by Vietnam’s growing participation in international agreements and ongoing efforts to adopt international standards such as the Basel capital framework. Key reforms include a restructuring of the banking system, a gradual opening to foreign investment, the partial privatization of state-owned banking institutions, and measures to strengthen the capitalization of Vietnamese banks. This Asia Focus report provides an overview of Vietnam’s banking sector, reviews significant developments since the mid 1980s, and highlights key challenges to reform implementation.Banks and banking - Vietnam

Dynamics of banking technology adoption: an application to internet banking

This paper is concerned with examining behaviour of firms (banks) and consumers (banks’ customers) in the event of a new technology (internet banking) introduction. The determinants of consumer adoption of internet banking are characterised using survey data from Korea in both static and dynamic framework. I find evidence that adoption of internet banking is influenced by sex, age, marital status, degree of exposure to internet banking, and the characteristics of the banks. A duration analysis shows no evidence of first mover advantage (order effects) in internet banking whilst the largest bank (rank effects) in commercial banking remains dominant in internet banking. The results imply that the internet banking adoption is dominated by social norm effects

Are the causes of bank distress changing? can researchers keep up?

Since 1990, the banking sector has experienced enormous legislative, technological and financial changes, yet research into the causes of bank distress has slowed. One consequence is that current supervisory surveillance models may no longer accurately represent the banking environment. After reviewing the history of these models, we provide empirical evidence that the characteristics of failing banks has changed in the last ten years and argue that the time is right for new research employing new empirical techniques. In particular, dynamic models that utilize forward-looking variables and address various types of bank risk individually are promising lines of inquiry. Supervisory agencies have begun to move in these directions, and we describe several examples of this new generation of early-warning models that are not yet widely known among academic banking economists.Bank failures ; Bank supervision

Decomposition of the efficiency of the Chinese state-owned commercial banks at the provincial level

This study adopts a bank production function approach to the measurement of banking efficiency at the provincial level in the Chinese state-owned commercial banking sector from 1998 to 2003. Applying Data Envelopment Analysis and efficiency decomposition analysis, this paper has revealed a significant level of pure technical input inefficiency and, to a lesser extent, scale inefficiency across the provincial branches of all the banking groups. The study has also uncovered the extent of inefficiency in individual banking inputs and provincial branches. Finally, the provincial-level efficiency is further decomposed into within-banking-group and between-banking-group effects

Internet banking : from the perspective of Malaysian bankers

The electronic revolution in the Malaysian banking sector is now more noticeable as banks are trying to keep abreast with information,communication and technology (ICT). Internet banking is a new delivery channel that offers a one-stop service and information unit to gain competitive advantage in the banking sector. While it promises enormous benefit both to consumers and bank,what do bank managers,as providers perceive internet banking? This article seeks to examine the perceptions of bank managers on internet banking with respect to strategic,operational,customer-related and technological issues. A total of 54 responses were received from questionnaires distributed to bank managers in the Northern region of Malaysia. Interestingly, they provide conflicting views. While internet banking enhances customer service,it is perceive to have reduced human resource and banker-customer relationships. Hence, this finding suggests that the management should continue to offer personalised services to its customers.Internet banking should be used as an information and transactional tool to complement and enhance banking operation

Shadow Banking and Systemic Risk in Europe and China

We compare the European and Chinese shadow banking systems. While the European shadow banking system is better developed than the Chinese shadow banking system, herd behavior and other factors in European markets create systemic risk, which contributed in part to the financial crisis. Dispersion of risk across the "under-developed" shadow banking system in China has led to some cases of localized, concentrated risk, but not to systemic risk. We discuss proposed European shadow banking regulation and its implications for systemic risk, and discuss what lessons China might glean from such policies. We also discuss what lessons China's diverse and systemically uncoordinated shadow banking sector might provide for Europe

The Financial Modernization Act: evolution or revolution?

The Gramm-Leach-Bliley Act (GLBA) removed the barriers that separated commercial banking from investment banking, merchant banking, and insurance activities. Did this legislation revolutionize the financial services industry by allowing Financial Holding Companies (FHCs) to exploit revenue efficiencies and cost economies, or did it merely formalize an evolutionary process of deregulation that was already well underway? Our evidence refutes the notion that the GLBA was a revolutionary event, at least in the short run. Using a combination of market and accounting data, we find that, to date, FHC status has had little effect on bank performance. We do find, however, limited evidence that FHCs that were Section 20 affiliates before passage of the GLBA were able to further exploit the synergies between investment banking and commercial banking.Gramm-Leach-Bliley Act ; Banking law - United States ; Bank holding companies

Financial system reform in Thailand

In 2004 Thailand began to implement the Financial Sector Master Plan (FSMP), a long-term reform program aimed at creating a more efficient, transparent, and internationally competitive financial sector that can serve a larger proportion of the Thai population. With the first phase of the FSMP completed in 2009, Thailand announced that a second phase of financial sector reforms will begin in 2010. This Asia Focus report provides an overview of the FSMP’s development, highlights key reform measures completed under Phase I, and describes measures proposed under Phase II and some of the challenges regulatory authorities may face during implementation.Banks and banking - Thailand ; Financial market regulatory reform ; Financial services industry - Asia

What does the Federal Reserve’s economic value model tell us about interest rate risk at U.S. community banks?

The savings and loan crisis of the 1980s revealed the vulnerability of some depository institutions to changes in interest rates. Since that episode, U.S. bank supervisors have placed more emphasis on monitoring the interest rate risk of commercial banks. One outcome developed by economists at the Federal Reserve Board of Governors was a duration-based Economic Value Model (EVM) designed to estimate the interest rate sensitivity of banks. ; We test whether measures derived from the Fed’s EVM are correlated with the interest rate sensitivity of U.S. community banks. The answer to this question is important because bank supervisors rely on EVM measures for monitoring and scoping bank-level interest rate sensitivity. ; We find that the Federal Reserve’s EVM is indeed correlated with banks’ interest rate sensitivity and conclude that supervisors can rely on this tool to help assess a bank’s interest rate risk. Our results are consistent with prior research that finds the average interest rate risk at banks to be modest, though we do not consider the potential interaction between interest rate risk and other risk factors.Community banks ; Risk management ; Interest rates