Ownership, Multiple Blockholders and Performance: A study of the Indonesian Banking Industry

The objective of this study is to provide empirical evidence on how ownership structure and owner’s identity affect performance, in the banking industry by using a panel of Indonesia banks over the period 2000–2009. Firstly, we analysed the impact of the presence of multiple blockholders on bank ownership structure and performance. Building on multiple agency and principal-principal theories, we investigated whether the presence and shares dispersion across blockholders with different identities (i.e. central and regional government; families; foreign banks and financial institutions) affected bank performance, in terms of profitability and efficiency. We found that the number of blockholders has a negative effect on banks’ performance, while blockholders’ concentration has a positive effect. Moreover, we observed that the dispersion of ownership across different types of blockholders has a negative effect on banks’ performance. We interpret such results as evidence that, when heterogeneous blockholders are present, the disadvantage from conflicts of interests between blockholders seems to outweigh the advantage of the increase in additional monitoring by additional blockholder. Secondly, we conducted a joint analysis of the static, selection, and dynamic effects of different types of ownership on banks’ performance. We found that regional banks and foreign banks have a higher profitability and efficiency as compared to domestic private banks. In the short-run, foreign acquisitions and domestic M&As reduce the level of overhead costs, while in the long-run they increase the Net Interest Margin (NIM). Further, we analysed NIM determinants, to asses the impact of ownership on bank business orientation. Our findings lend support to our prediction that the NIM determinants differs accordingly to the type of bank ownership. We also observed that banks that experienced changes in ownership, such as foreign-acquired banks, manifest different interest margin determinants with respect to domestic or foreign banks that did not experience ownership rearrangements.

Banking Regulation in Turkey and Russia: An Economic Analysis

The importance of the banks and financial markets relies on the fact that they promote economic efficiency by allocating savings efficiently to profitable investment opportunities.An efficient banking system is a key determinant for the financial stability.The theory of market failure forms the basis for understanding financial regulation.Following the detrimental economic and financial consequences in theaftermath of the crisis, academics and policymakers started to focus their attention on the construction of an appropriate regulatory and supervisory framework of the banking sector. This dissertation aims at understanding the impact of regulations and supervision on banks’ performance focusing on two emerging market economies, Turkey and Russia. It aims at examining the way in which regulations matter for financial stability and banking performance from a law & economics perspective. A review of the theory of banking regulation, particularly as applied to emerging economies, shows that the efficiency of certain solutions regarding banking regulation is open to debate. Therefore, in the context of emerging countries, whether a certain approach is efficient or not will be presented as an empirical question to which this dissertation will try to find an answer.

Securitization and Special Purpose Vehicles in an International Setting: a Systemic View

The present work tries to display a comprehensive and comparative study of the different legal and regulatory problems involved in international securitization transactions. First, an introduction to securitization is provided, with the basic elements of the transaction, followed by the different varieties of it, including dynamic securitization and synthetic securitization structures. Together with this introduction to the intricacies of the structure, a insight into the influence of securitization in the financial and economic crisis of 2007-2009 is provided too; as well as an overview of the process of regulatory competition and cooperation that constitutes the framework for the international aspects of securitization. The next Chapter focuses on the aspects that constitute the foundations of structured finance: the inception of the vehicle, and the transfer of risks associated to the securitized assets, with particular emphasis on the validity of those elements, and how a securitization transaction could be threatened at its root. In this sense, special importance is given to the validity of the trust as an instrument of finance, to the assignment of future receivables or receivables in block, and to the importance of formalities for the validity of corporations, trusts, assignments, etc., and the interaction of such formalities contained in general corporate, trust and assignment law with those contemplated under specific securitization regulations. Then, the next Chapter (III) focuses on creditor protection aspects. As such, we provide some insights on the debate on the capital structure of the firm, and its inadequacy to assess the financial soundness problems inherent to securitization. Then, we proceed to analyze the importance of rules on creditor protection in the context of securitization. The corollary is in the rules in case of insolvency. In this sense, we divide the cases where a party involved in the transaction goes bankrupt, from those where the transaction itself collapses. Finally, we focus on the scenario where a substance over form analysis may compromise some of the elements of the structure (notably the limited liability of the sponsor, and/or the transfer of assets) by means of veil piercing, substantive consolidation, or recharacterization theories. Once these elements have been covered, the next Chapters focus on the regulatory aspects involved in the transaction. Chapter IV is more referred to “market” regulations, i.e. those concerned with information disclosure and other rules (appointment of the indenture trustee, and elaboration of a rating by a rating agency) concerning the offering of asset-backed securities to the public. Chapter V, on the other hand, focuses on “prudential” regulation of the entity entrusted with securitizing assets (the so-called Special Purpose vehicle), and other entities involved in the process. Regarding the SPV, a reference is made to licensing requirements, restriction of activities and governance structures to prevent abuses. Regarding the sponsor of the transaction, a focus is made on provisions on sound originating practices, and the servicing function. Finally, we study accounting and banking regulations, including the Basel I and Basel II Frameworks, which determine the consolidation of the SPV, and the de-recognition of the securitized asset from the originating company’s balance-sheet, as well as the posterior treatment of those assets, in particular by banks. Chapters VI-IX are concerned with liability matters. Chapter VI is an introduction to the different sources of liability. Chapter VII focuses on the liability by the SPV and its management for the information supplied to investors, the management of the asset pool, and the breach of loyalty (or fiduciary) duties. Chapter VIII rather refers to the liability of the originator as a result of such information and statements, but also as a result of inadequate and reckless originating or servicing practices. Chapter IX finally focuses on third parties entrusted with the soundness of the transaction towards the market, the so-called gatekeepers. In this respect, we make special emphasis on the liability of indenture trustees, underwriters and rating agencies. Chapters X and XI focus on the international aspects of securitization. Chapter X contains a conflicts of laws analysis of the different aspects of structured finance. In this respect, a study is made of the laws applicable to the vehicle, to the transfer of risks (either by assignment or by means of derivatives contracts), to liability issues; and a study is also made of the competent jurisdiction (and applicable law) in bankruptcy cases; as well as in cases where a substance-over-form is performed. Then, special attention is also devoted to the role of financial and securities regulations; as well as to their territorial limits, and extraterritoriality problems involved. Chapter XI supplements the prior Chapter, for it analyzes the limits to the States’ exercise of regulatory power by the personal and “market” freedoms included in the US Constitution or the EU Treaties. A reference is also made to the (still insufficient) rules from the WTO Framework, and their significance to the States’ recognition and regulation of securitization transactions.

Multiwavelenght study of cluster mergers and consequences for the radio emission properties of galaxy clusters

In the present thesis a thourough multiwavelength analysis of a number of galaxy clusters known to be experiencing a merger event is presented. The bulk of the thesis consists in the analysis of deep radio observations of six merging clusters, which host extended radio emission on the cluster scale. A composite optical and X–ray analysis is performed in order to obtain a detailed and comprehensive picture of the cluster dynamics and possibly derive hints about the properties of the ongoing merger, such as the involved mass ratio, geometry and time scale. The combination of the high quality radio, optical and X–ray data allows us to investigate the implications of the ongoing merger for the cluster radio properties, focusing on the phenomenon of cluster scale diffuse radio sources, known as radio halos and relics. A total number of six merging clusters was selected for the present study: A3562, A697, A209, A521, RXCJ 1314.4–2515 and RXCJ 2003.5–2323. All of them were known, or suspected, to possess extended radio emission on the cluster scale, in the form of a radio halo and/or a relic. High sensitivity radio observations were carried out for all clusters using the Giant Metrewave Radio Telescope (GMRT) at low frequency (i.e. ≤ 610 MHz), in order to test the presence of a diffuse radio source and/or analyse in detail the properties of the hosted extended radio emission. For three clusters, the GMRT information was combined with higher frequency data from Very Large Array (VLA) observations. A re–analysis of the optical and X–ray data available in the public archives was carried out for all sources. Propriety deep XMM–Newton and Chandra observations were used to investigate the merger dynamics in A3562. Thanks to our multiwavelength analysis, we were able to confirm the existence of a radio halo and/or a relic in all clusters, and to connect their properties and origin to the reconstructed merging scenario for most of the investigated cases. • The existence of a small size and low power radio halo in A3562 was successfully explained in the theoretical framework of the particle re–acceleration model for the origin of radio halos, which invokes the re–acceleration of pre–existing relativistic electrons in the intracluster medium by merger–driven turbulence. • A giant radio halo was found in the massive galaxy cluster A209, which has likely undergone a past major merger and is currently experiencing a new merging process in a direction roughly orthogonal to the old merger axis. A giant radio halo was also detected in A697, whose optical and X–ray properties may be suggestive of a strong merger event along the line of sight. Given the cluster mass and the kind of merger, the existence of a giant radio halo in both clusters is expected in the framework of the re–acceleration scenario. • A radio relic was detected at the outskirts of A521, a highly dynamically disturbed cluster which is accreting a number of small mass concentrations. A possible explanation for its origin requires the presence of a merger–driven shock front at the location of the source. The spectral properties of the relic may support such interpretation and require a Mach number M < ∼ 3 for the shock. • The galaxy cluster RXCJ 1314.4–2515 is exceptional and unique in hosting two peripheral relic sources, extending on the Mpc scale, and a central small size radio halo. The existence of these sources requires the presence of an ongoing energetic merger. Our combined optical and X–ray investigation suggests that a strong merging process between two or more massive subclumps may be ongoing in this cluster. Thanks to forthcoming optical and X–ray observations, we will reconstruct in detail the merger dynamics and derive its energetics, to be related to the energy necessary for the particle re–acceleration in this cluster. • Finally, RXCJ 2003.5–2323 was found to possess a giant radio halo. This source is among the largest, most powerful and most distant (z=0.317) halos imaged so far. Unlike other radio halos, it shows a very peculiar morphology with bright clumps and filaments of emission, whose origin might be related to the relatively high redshift of the hosting cluster. Although very little optical and X–ray information is available about the cluster dynamical stage, the results of our optical analysis suggest the presence of two massive substructures which may be interacting with the cluster. Forthcoming observations in the optical and X–ray bands will allow us to confirm the expected high merging activity in this cluster. Throughout the present thesis a cosmology with H0 = 70 km s−1 Mpc−1, m=0.3 and =0.7 is assumed.