Why do US banks borrow from the Fed? A fresh look at the ‘reluctance’ phenomenon

The role of several theoretical factors in determining the demand of US banks for borrowed reserves from the Fed is empirically investigated. The main objective is to isolate the candidate(s) most likely responsible for the recent observed phenomenon of banks reluctance to borrow from the Fed, particularly since the mid-1980s. The results indicate that the declining number of banks due to mergers and consolidations holds much of the weight for explaining the weakened demand for borrowed reserves since the mid-1980s. Consistent evidence is found suggesting that US banks may have been unlawfully exploiting the discount window service for profit-taking purposes. This finding proves credible and suggests the need for further loan scrutiny at the Federal discount window.

Anomalous magnetic susceptibility values and traces of subsurface microbial activity in carbonate banks on San Salvador Island, Bahamas

Pure limestones beneath the paleosols on San Salvador Island, Bahamas, contain strong positive magnetic susceptibility anomalies, although the iron content is generally very low. These magnetic phenomena differ from those associated with disconformities, which are marked by accumulation of paramagnetic airborne dust deposits with relatively high iron content. The strength and characters of the magnetic response in these subsurface zones correspond to the presence of magnetite, particularly small single-domain magnetite crystals of microbial origin. These crystals are not present elsewhere in the intergranular rock pores or microvugs. They are preferentially concentrated in capillary microborings, which developed concurrently with formation of calcite cements that have soil-related C and O isotope compositions. These magnetic zones occur several meters below the overlying soil horizons. Very thin and long linear microborings may be attributable to cyanobacterial microborers. The single-domain magnetites in these micrometer-size tunnels plugged by calcite appear to result from later occupation of these tiny holes by magnetotactic bacteria. Inorganic origin of the magnetite seems unlikely. Numerous traces that suggest subsurface microbial activity provide evidence that may be used to develop possible scenarios for subsequent biological studies of the precise bacteria involved.

Bryophyte propagule banks in a feldmark on subantarctic Macquarie Island

Subantarctic Macquarie Island has substantial areas of feldmark on its plateau above 200 m altitude. Samples of the substrate (5.5 cm in depth) from bare areas of feldmark contained viable propagules of bryophyte species found at adjacent and distant sites on the island. In laboratory conditions propagules of 15 bryophyte taxa germinated, allowing interpretation of reasons for bare patches in feldmark: bryophytes were successful at colonizing stable ground but when surface movement was present, burial and/or damage of propagules and young plants prevented colonization. Spherical moss polsters found in cryoturbatic areas in feldmark, however, represent a growth form that can tolerate surface movement. A conceptual model illustrating processes associated with colonization dynamics of bryophytes on feldmark terraces is presented. Ten of the 15 germinated taxa were nonlocal taxa which currently grow in plant communities at lower and hence warmer altitudes on Macquarie Island. The presence of viable propagules of these taxa provide an immediate and constant potential for dramatic vegetation change with climate change.

A note on the modelling the efficiency of top Arab banks

The major aim of this research is benchmarking top Arab banks using Data Envelopment Analysis (DEA) technique and to compare the results with that of published recently in Mostafa (2007a,b) [Mostafa, M. M. (2007a). Modeling the efficiency of top Arab banks: A DEA–neural network approach. Expert Systems with Applications, doi:10.1016/j.eswa.2007.09.001; Mostafa M. M. (2007b), Benchmarking top Arab banks’ efficiency through efficient frontier analysis, Industrial Management & Data Systems, 107(6) 802–823]. Data for 85 Arab banks used to conduct the analysis of relative efficiency. Our findings indicate that (1) the efficiency of Arab banks reported in Mostafa (2007a,b) is incorrect, hence, readers should take extra caution of using such results, (2) the corrected efficiency scores suggest that there is potential for significant improvements in Arab banks. In summary, this study overcomes with some data and methodology issues in measuring efficiency of Arab banks and highlights the importance of encouraging increased efficiency throughout the banking industry in the Arab world using the new results.

The sensitivity of US banks' stock returns to interest and exchange rate changes

Purpose – The purpose of this paper is to investigate the impact of foreign exchange and interest rate changes on US banks’ stock returns. Design/methodology/approach – The approach employs an EGARCH model to account for the ARCH effects in daily returns. Most prior studies have used standard OLS estimation methods with the result that the presence of ARCH effects would have affected estimation efficiency. For comparative purposes, the standard OLS estimation method is also used to measure sensitivity. Findings – The findings are as follows: under the conditional t-distributional assumption, the EGARCH model generated a much better fit to the data although the goodness-of-fit of the model is not entirely satisfactory; the market index return accounts for most of the variation in stock returns at both the individual bank and portfolio levels; and the degree of sensitivity of the stock returns to interest rate and FX rate changes is not very pronounced despite the use of high frequency data. Earlier results had indicated that daily data provided greater evidence of exposure sensitivity. Practical implications – Assuming that banks do not hedge perfectly, these findings have important financial implications as they suggest that the hedging policies of the banks are not reflected in their stock prices. Alternatively, it is possible that different GARCH-type models might be more appropriate when modelling high frequency returns. Originality/value – The paper contributes to existing knowledge in the area by showing that ARCH effects do impact on measures of sensitivity.

The strategic role of investment banks in the retailer internationalisation process: is this venture marketing?

In recent years the scale and scope of retailer internationalisation activity has grown markedly, mainly through increasing levels of cross-border merger and acquisition activity. This has been particularly prevalent among companies operating in the food retail sector. During this time, and within the context of increased merger and acquisition activity in international markets, the financial institutions have taken an increasingly prominent role in the retail internationalisation process. Explores the nature of the financial institutions’ role in the retailer internationalisation process and, specifically, the extent to which the financial institutions actually inhibit and/or promote retail international activity. A key purpose of this study is to examine some of the drivers and inhibitors of the retailer internationalisation process. Reports the findings from 30 in-depth interviews with food retail analysts of the leading investment banks in the City of London. The findings from this study should help to provide further insights into the nature of the retailer internationalisation process.

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

This study employs stochastic frontier analysis to analyze Malaysian commercial banks during 1996-2002, and particularly focuses on determining the impact of Islamic banking on performance. We derive both net and gross efficiency estimates, thereby demonstrating that differences in operating characteristics explain much of the difference in costs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalised Malmquist productivity index. On average, Malaysian banks experience moderate scale economies and annual productivity change of 2.68 percent, with the latter driven primarily by technical change, which has declined over time. Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. However, our productivity estimates indicate that full-fledged Islamic banks have overcome some of these cost disadvantages with rapid technical change, although this is not the case for conventional banks operating Islamic windows. Merged banks are found to have higher input usage and lower productivity change, suggesting that bank mergers have not contributed positively to bank performance. Finally, our results suggest that while the East Asian financial crisis had a short-term cost-reducing effect in 1998, the crisis triggered a more lasting negative impact by increasing the volume of non-performing loans.

Transfer coefficients over inclined tube banks

The thesis presents experimental results for shell-side transfer coefficients and pressure drops across four different tube banks, using small-scale models, with yawed tubes, as found in many types of heat exchangers, boilers and nuclear reactors. The tube banks investigated have a staggered tube layout on a rotated square pitch, with a 1.25 pitch-to-diameter ratio. The angle of attack was varied between 45o and 90o. An extensive range of Reynolds number, i.e. 0.5. to 12,600, covering so-called laminar, transition and turbulent flows, was investigated. A diffusion-controlled electrochemical mass transfer technique has been employed to measure mass transfer coefficients. The heat transfer coefficients may be then readily obtained from the mass transfer values by applying the well-established Chilton-Colburn analogy. The results for the normal tube bank, which forms the base case for the study on inclined tube banks, show close agreement with previous work. The transfer coefficients and pressure drops of the inclined tube banks are compared with results from the ideal normal tube bank to examine the effect of inclination angle on heat transfer and pressure drop variations. The variation of the transfer coefficients row-by-row and the entrance and exit effects have also been investigated. An auxilary investigation has been carried out on the role of natural convection. A preliminary correlation of transfer coefficients and pressure drops against the variation in the yaw angle has been attempted. The results are discussed in the light of the few existing theoretical treatments and experimental data for these situations, and recommendations made for future work.