The relationship between exchange rates, interest rates and Australian bank returns

Although there has been significant research on US financial intermediaries' stock returns and sensitivity to interest yields, there has only been limited research on Australian bank stock returns and key macro variables, such as interest rates and exchange rates. The aim of this article is to examine this relationship for four major Australian banks, namely the Australia New Zealand bank (ANZ), the Commonwealth Bank of Australia (CBA), the National Australia Bank (NAB) and the Westpac Banking Corporation (WBC). We use the EGARCH model and examine the relationship using monthly data covering the period 1992 to 2007. The results suggest that for all four banks: (1) there is a similar and statistically significant negative relationship between interest rates and stock returns; and (2) there is evidence of an increase in returns during the period of appreciation of the Australian dollar.

Impact of policy changes on the efficiency and returns-to-scale of Japanese financial institutions: an evaluation

This paper examines the impact of FSA's (Financial Services Agency) recent policy changes on the efficiency and returns-to-scale (RTS) of Japanese financial institutions including banks, securities companies and bank holding companies. Three kinds of efficiency are investigated namely, technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) using the non-parametric methodology named data envelopment analysis (DEA). The DEA analysis shows a substantial improvement in the overall efficiency of Japanese banks, albeit a significant difference of efficiency scores between the major/city banks and the regional banks. Results are robust to alternative specifications of efficiency and scale changes.

An empirical investigation of customer satisfaction and loyalty across two divergent bank segments

Customer satisfaction is an important indicator for customer loyalty, and numerous studies have identified the benefits that customer loyalty delivers to an organisation. Nevertheless, research also suggests that satisfied customers still defect. This study investigated the relationship between customer satisfaction and loyalty intentions within the Australian banking industry for two distinct customer segments, retirees and university students. Results indicate no significant difference in the satisfaction levels of either group; however, there were differences with respect to two of the five behavioural intentions dimensions: loyalty and switch. Satisfaction was found to have a significant impact on three of the five behavioural intentions dimensions: loyalty, pay more and external response, suggesting that management should initiate service policies aimed at securing improvements in customer satisfaction. However, there are also other constructs at work aside from satisfaction in determining future behavioural intentions.

Norm diffusion within international organizations: a case study of the World Bank

Constructivists often argue that International Organizations (IOs) diffuse norms throughout the international system. This article asks the question: if IOs promote and diffuse specific norms within world politics, where do these norms come from? In particular, this analysis seeks to formulate how IOs' identities emerge in issue areas where rationalist theories give limited explanation, such as the environment. This article posits that IOs interact with and consume norms from non-state actors such as transnational advocacy networks, a process overlooked by the constructivist analysis of institutions. This is examined through a case study of the World Bank's environmental identity where transnational advocacy networks played an important role in the Bank's shift towards sustainable development, through processes characterized here as direct and indirect socialization. This article demonstrates that the Bank's shift was more than instrumental as a result of this interaction, and that constructivists therefore need to examine the role of IOs as norm consumers as well as norm diffusers.

Corporate governance failure and its impact on National Australia Bank's performance

The National Australia Bank (NAB) is the largest financial services institution listed on the Australian stock exchange and is within the 30 most profitable financial services organisation in the world. In January 2004, the bank disclosed to the public that it had identified losses relating to unauthorised trading in foreign currency options amounting to AUD360 million. This foreign exchange debacle was classified as operational risk, the risk of loss resulting from inadequate or failed processes, people, or systems and reiterated the importance of corporate governance for banks. Concurrent issues of National Australia Bank’s AUD4.1 billion loss on US HomeSide loans in 2001, the degree of strength of their risk management practices and lack of auditor independence, were raised by the US Securities and Exchange Commission in 2004, reinforcing the view that corporate governance had not been given the priority it deserved over a number of years. This paper will assess and critically analyse the impact of corporate governance failure by management and Board of Directors on NAB’s performance over the years 2001-2005.

Diminishing and negative welfare returns of economic growth : an index of sustainable economic welfare (ISEW) for Thailand

Thailand has achieved remarkable levels of economic growth over the last three decades. This sustained economic growth has played a major role in reducing absolute poverty levels from nearly one third of the population in 1975 to presently less than 10%, thus increasing the welfare of many Thais. This performance ranks Thailand as one of the world's most successful economies during this period. However, an increasing number of studies have begun to find that at a certain point achieving economic growth stops improving welfare and actually begins to diminish it due to the hidden and traditionally unreported costs of associated with this growth. With one exception, these new studies have focussed on high-income countries. This study will estimate an index of sustainable economic welfare (ISEW) for a developing country, Thailand, over a 25-year period, 1975–1999. This paper concludes that even low–middle income countries are beginning to approach the point in which economic growth produces both diminishing and, at times, negative welfare returns as the costs of achieving economic growth begin to outweigh the benefits. These results are important for policy makers and highlight the importance of implementing alternative welfare enhancing interventions that must be considered in place of simply achieving economic growth. The emphasis of this paper is not on the methodology of estimating the ISEW for Thailand, but rather on the policy implications for developing countries of diminishing and negative welfare returns brought about through the achievement of economic growth.

Linking eCommerce and human resource strategies: a case study in a large Australian retail bank

The implementation of eCommerce technologies has considerably changed how employees in the banking industry interact with customers. For example, some customers use electronic banking applications to such an extent that they find little or no need to go into a branch. This change has had a significant impact on the way that jobs are designed and the way that employees are being managed. The preliminary findings from the case study of a large bank in Australia indicate that moving customers out of the branch to an online environment has created unforeseen issues for the way employees interact with customers and this in turn has changed the way that they do their jobs. The key challenge for banks in the future is how to form effective relationships with customers without some kind of face-to-face interaction. This impacts how organisations recruit and retain their staff as well as the level and type of skills required for jobs redesigned after the implementation of eCommerce applications. It is also an important factor in employee satisfaction.

Corporate governance failure and its impact on National Australia Bank's performance

The National Australia Bank (NAB) is the largest financial services institution listed on the Australian stock exchange and is within the 30 most profitable financial services organisation in the world. In January 2004, the bank disclosed to the public that it had identified losses relating to unauthorised trading in foreign currency options amounting to AUD360 million. Thisforeign exchange debacle was classified as operational risk, the risk of loss resulting from inadequate or failed processes, people, or systems and reiterated the importance of corporate governance for banks. Concurrent issues of National Australia Bank's AUD4.1 billion loss on US HomeSide loans in 2001, the degree of strength of their risk management practices and lack of auditor independence, were raised by the US Securities and Exchange Commission in 2004, reinforcing the view that corporate governance had not been given the priority it deserved over a number of years. This paper will assess and critically analyse the impact of corporate governance failure by management and Board of Directors on NAB's performance over the years 2001-2005.

Reassessing Grameen Bank's micro credit programme for poverty alleviation in bangladesh : a new perspective

Rural finance has been a mltior policy in alleviating poverty in developing countries. Of specific interest are the micro credit programmes that target the poorest segment of the population. Despite some successes in particular settings, the efficacy of micro credit programmes has been a mltior concern in recent years. This paper evaluates the success of the Grameen Bank, the premier micro credit provider in rural areas in Bangladesh in the context of contemporary development philosophies. Only a few studies have evaluated the performance of the Grameen Bank from a poverty alleviation perspective. Many have evaluated the efficiency of the Grameen Bank's micro credit programmes using attributes such as the repayment rate. In this paper, we add a new dimension to the literature by arguing that if poverty alleviation is the ultimate objective, then the bank's micro credit programme should be assessed from the borrowers' perspective. Rural credit should be conceptualised not as just an input to production but as a mechanism for rural transformation. Our analysis reveals that while Grameen Bank is an efficient provider of micro credit in rural Bangladesh, its programmes fall short of achieving poverty alleviation for a multitude of borrowers and reshaping the process is hence a critical imperative.

Greening political risk: transnational advocacy networks and the World Bank Group

Significant increases in direct private investment in developing countries in recent decades have also led to increased interest in political risk insurance. Of importance to transnational advocacy networks are the environmental and social impacts of guaranteeing loans for private sector projects in developing countries with weak or no social or environmental safeguards. This article examines how transnational advocacy networks have attempted to influence political risk insurers to become sustainable development guarantors through a case study of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA). Analyzing how advocacy networks influenced MIGA’s projects, policies, and accountability institutions enables greater understanding of how to ‘politicize finance.’ It also assesses the likelihood of shaping political risk insurance identities to become sustainable development guarantors. The outcomes of such an analysis however, question the extent to which politicizing finance necessarily leads to further greening of the international development lending process.

Governing employees in the "Bank": a discourse analysis of strategic change

This paper reports the findings from a study of ‘Transform’, a Bank’s strategic change program. The study was carried out by developing and applying a discursive model of strategic change to Transform. Findings are presented about how Transform was constructed from ‘grand discourses’ of business and science that were drawn on by senior management, and how a ‘local discourse’ of the self was formed at the intersection of these grand discourses. This paper is concerned with how senior management has attempted to govern employee identity and practices through the construction of Transform. In this respect Transform can be understood as a discourse which was designed to regulate identity and influence employee practices by constructing and disseminating a particular reality for the Bank and its employees.