Governance, social responsibility and the banking sector

Banks in both the developed and undeveloped world remain at the core of financial systems and have the unique ability to write cheques against themselves. In light of the essential culture of credit at the heart of banking operations then the structures of corporate governance should especially reflect the supervision and management of risks and credit. This means that committee and management structures as well as staffing commitments revolve around credit and other risks.

Productivity and efficiency analysis of Australia banking sector under deregulation

This paper conducts productivity and efficiency analysis of banks operating in Australia since the deregulation of the Australian financial system in early 1980s. Applying data envelopment analysis (DEA), with a moving window, the Malmquist indices are determined in order to investigate the levels of and the changes in the efficiency of Australian banks over the period from 1983 to 200 I. The DEA window analysis is adopted in order to relieve the small sample problem that in previous studies has proved problematic in the study of the Australian banking sector. The pal1icular window used in this case has been carefully designed to ensure the robustness of the efficiencies scores to changes in the window width. A second-stage regression is conducted by using the unconditional bootstrap approach suggested by Xue and Harker (1999) to overcome the dependency and heteroskedasticity of DE A efficiency scores. The empirical results demonstrate the effect of deregulation on the performance of individual banks, banks of different organizational types and the entire Australian banking sector.

EBanking adaptation and dot.com viability : a comparison of Australian and Indian experiences in the banking sector

With the advent of widely-accepted eBusiness activities, many banks have floated dot.com entities to create a presence on the Internet and take advantage of its power and reach. Like many other businesses, banks expected an increase in market capitalisation as a result of their dot.com floats, perceived broadly as a measure of growing profitability. Despite the negative publicity that the recent spate of dot.com crashes has generated, banks seem to continue floating online spin-offs. Our exploratory study investigates this phenomenon, studying the drivers for change in the evolution of the banking sector, and the move towards electronic banking. We focussed on two economies – Australia and India – to aggregate the major factors in this evolution from the perspective of two disparate economies.

The paper describes our qualitative, document-based investigation of the Australian and Indian banking sectors, and subsequent quantitative analysis of the impact of dot.com floats on market capitalisation within this market sector. We then describe the effect of applying both Transaction Cost Economics to our findings, which indicates that the cost of transacting business has been reduced overall by the creation of dot.com entities; and “catch-up, fall-behind, forge ahead” theory to gain an economic perspective. The paper provides both practical assistance for banks in making decisions regarding e-portfolios, as well as for policy makers in the economies reviewed; and has the potential to contribute to academic research into eBanking more generally.

Directors' remuneration and performance in the Australian banking sector

This paper explores the links between directors' pay and performance within the Australian banking sector using panel data for the 1993-2004 period. The links between CEOs' pay and performance is investigated also. Several earnings models are estimated and different estimation techniques are used. The results indicate that there is no link between directors' pay and firm performance with a one year lag. However, there is a more distant payperformance link, with directors' pay influenced by shareholders' returns with a three year lag. The other key determinants of directors' pay in the Australian banking sector are bank specific managerial policies, lags in the administration of pay, bank size and board composition. A clear and strong positive and direct association between CEO remuneration and performance is established.

Is the efficient market hypothesis day-of-the-week dependent? Evidence from the banking sector

In this article, we propose a new hypothesis: that the efficient market hypothesis is day-of-the-week-dependent. We apply the test to firms belonging to the banking sector and listed on the NYSE. We find significant evidence that the efficient market hypothesis is day-of-the-week-dependent. Overall, for only 62% of firms, the unit root null hypothesis is rejected on all the five trading days. We also discover that when investors do not account for unit root properties in devising trading strategies, they obtain spurious profits.

E-Commerce, human resource strategies, and competitive advantage: two Australian banking case studies

Service organizations need to consider in depth the human resource management (HRM) strategies that will enable them to achieve sustained competitive advantage in the e-commerce era. This paper analyzes the HRM strategies developed to accommodate the changing customer service practices associated with B2C e-commerce in the retail banking sector. Based on case study data, it describes how two banks in Australia, one large, the other small, have linked their e-commerce strategies with their overall business strategy, and the extent to which their HRM strategies have helped them to utilize their e-commerce capability to achieve sustained competitive advantage.

Implemetation of electronic commerce and human resource strategies in an Australian retail banking context

As organisations deploy eCommerce and internet technologies for competitive advantage and to satisfy increasingly demanding customers, they will need to develop human resource (HR) strategies that prepare their employees to work with these technologies effectively. Little systematic investigation has been undertaken to discover how companies manage their HR functions to achieve these outcomes. In the retail banking sector these issues have become very important with increased competition, industry changes and heightened competition. This paper examines HR management strategy in one Australian bank as it moves towards online service provision and adopts other eCommerce applications. The paper draws on theoretical insights from Porter’s (2001) views of competitive advantage from the internet and writers discussing the informational society (Castells, 2001) and post-fordist organisations (Clegg, 1990). An analysis of interview data from this case study shows the issues that one bank is dealing with as it seeks competitive advantage from its customer service offerings while it revises its HR strategies.

The privatisation experience in banking and insurance in Australia

The role of ownership in performance of financial institutions is under-examined yet remains a topical issue. Whilst ownership changes in the banking sector have been evaluated in several studies, the link with other sectors has not been a focus of in depth analysis. A controlled comparison of performance between privatising banks and insurance firms in Australia is undertaken via a ‘meso’ approach of pairing privatising with comparator private institutions across the event period. Performance is evaluated using commercial CAMEL indicators and applying Wilcoxon rank tests (Otchere and Chan 2003) which provide statistically robust findings in the small annual data samples available around the privatisation event. Performance of privatising and private institutions is found to be quite similar before and after the event. For the privatising banks, some indicator medians improved to commercial levels (CBA) or were mostly unchanged (Colonial). By contrast one of the privatising insurance institutions (Suncorp) was found to outperform the private insurance comparator while there was little difference for the other (GIO).

The impact of change on employees : what do annual reports say?

As part of the accountability process public companies are required to report annually to stakeholders. Given the substantial investment in human capital, the disclosure of employment related policies, and the impact of changing policies and practices on employees, could be expected. Over the last few decades the UK banking sector has experienced major change. Increased competition, technology, regulation and deregulation have all contributed to changing practices, which have had a significant impact on employees. This paper examines changes in the banking sector, and the employee information reported in the annual reports of a large UK bank, over the period 1980 to 1995. The purpose of this paper is to examine how the changes, and the effects of the changes on employees, were reported in the annual reports.

The ethical and policy implications of profiling 'vulnerable' customers

In the shadow of the global financial crisis, the issue of the marketing of credit has become an increasing concern in the past 12 months. Outstanding personal debt in the UK currently stands at £1479 billion and is rising by £1 million every 10.6 min. In Australia, there is currently $44.6 billion worth of outstanding credit card debt, and in the US, $2596 billion was owed on credit cards in 2008. At present, the banking sector utilizes sophisticated research methods to profile consumers, including those who might be considered financially vulnerable. However, the policy frameworks in most industrialized countries do not account for this form of target marketing when considering how to protect vulnerable groups. This paper is an initial attempt to examine the different methods by which profiling is conducted and the policy implications of this sophisticated form of segmentation and targeting. We argue that current consumer policies are inadequate in protecting vulnerable consumers from these marketing techniques, and recent recommendations from the Federal Reserve Bank of the United States, and the Australian Law Reform Commission to allow banks and lenders to ‘pre-screen’ potential customers will exacerbate personal debt levels, rather than reducing them.

The nature of corporate social responsibility disclosures by the Bangladeshi commercial banks

The Bangladesh Bank is now encouraging corporate social responsibility (CSR) disclosure by banks however the adoption of CSR remains voluntary and not mandatory. The aim in this paper is to determine the nature and extent of corporate social responsibility disclosure in the banking sector in Bangladesh, and to assess the need to improve corporate social responsibility by such organisations. We observe, from our content analysis of the annual reports of three cases studies within the banking industry of Bangladesh, that corporate social responsibility disclosures focus on initiatives undertaken to support two critical two sectors within Bangladesh's economy. agriculture and the SME sector. Further disclosures address contributions and donations made by the banks to support underprivileged sections of Bangladesh society including destitute youth and women. Of the three cases examined in this study, two are relatively new entrants to the banking sector. We observed that the newest firm, incorporated in 1999, made no disclosures in regards to its corporate social responsibility and, as a consequence, conclude that the corporate governance mechanisms in this firm are likely to be unsophisticated.

Corporate sustainability reporting of major commercial banks in line with GRI : Bangladesh evidence

Purpose – This paper aims to examine the tendencies of sustainability reporting by major commercial banks in Bangladesh in comparison with global sustainability reporting indicators outlined in the GRI framework together with banks' predilection toward reporting 16 GRI financial service sector (FSS) specific performance indicators.

Design/methodology/approach – Based on the GRI G3 guidelines, the paper investigated banks' reporting in five broad areas of sustainability, such as environment, labour practices and decent works, product responsibility, human rights and society. The 2008/2009 annual reports of 12 major commercial banks listed on Dhaka stock exchange were analysed and coded using a content-based technique.

Findings – The results show that information on society is addressed most extensively with regard to extent of reporting. This is followed by the disclosures prepared on decent works and labour practices and environmental issues. Furthermore, the disclosures of product responsibility information and the information for human rights are rather scarce in banks' reporting; on the subject of FSS-specific disclosures, only seven items out of 16 are disclosed by all sample banks.

Research limitations/implications – The findings of the study indicate that Bangladeshi commercial banks' social disclosures could develop in this style to become more holistic and over time (in association with the country's central bank involvement) to resemble a type of structured reporting to the point where they are properly labelled per se.

Originality/value – The study contributes to the social disclosure literature, in particular in a developing countries banking sector context, seeing as it disseminates evidence of the standing on social disclosures practices at the level of GRI with developing countries' banks data.