Does ownership always matter? Evidence from the Indian banking industry

Existing empirical evidence on the ownership-performance issue is weighted towards the property rights hypothesis that private enterprises are superior to public enterprises. However, very few studies examine a developing country in which the strong link between the market for corporate control and the efficiency of private enterprises assumed by the property rights hypothesis may not be satisfied. Our study of the Indian banking industry confirms our expectation that, in the absence of well-functioning capital markets, there may not be significant differences in the performance of private and public enterprises. Our analysis highlights the importance of creating appropriate institutions prior to pursuing privatization in developing countries.

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

This study employs Stochastic Frontier Analysis (SFA) to analyse 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 generalized Malmquist productivity index. On average, Malaysian banks experience moderate scale economies and annual productivity change of 2.68%, with the latter driven primarily by Technical Change (TC), 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 TC, 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 costreducing effect in 1998, the crisis triggered a long-lasting negative impact by increasing the volume of nonperforming loans.

Efficiency in Islamic and conventional banking:an international comparison

The paper investigates the efficiency of a sample of Islamic and conventional banks in 10 countries that operate Islamic banking for the period 1996 to 2002, using an output distance function approach. We obtain measures of efficiency after allowing for environmental influences such as country macroeconomic conditions, accessibility of banking services and bank type. While these factors are assumed to directly influence the shape of the technology, we assume that country dummies directly influence technical inefficiency. The parameter estimates highlight that during the sample period, Islamic banking appear to be associated with higher input usage. Furthermore, by allowing for international differences in the underlying inefficiency distributions, we are also able to demonstrate statistically significant differences in efficiency across countries even after controlling for specific environmental characteristics and Islamic banking. Thus, for example, our results suggest that Sudan and Yemen have relatively higher inefficiency while Iran and Malaysia have lower estimated inefficiency. Except for Sudan, where banks exhibits relatively strong returns to scale, most sample banks exhibit very slight returns to scale, although Islamic banks are found to have moderately higher returns to scale than conventional banks. However while this suggests that Islamic banks may benefit from increased scale, we would emphasize that our results suggest that identifying and overcoming the factors that cause Islamic banks to have relatively high input requirements will be the key challenge for Islamic banking in the coming decades.

The relative influence of organisational commitment and job-satisfaction on service quality of customer-contact employees in banking call centres

An inter-disciplinary approach is adopted to provide a deeper understanding of the human resource-service quality relationship. The paper tests the relationships organisational commitment and job satisfaction have with service quality of customer-contact employees. Hypotheses are constructed by reviewing literature in the areas of human resource management and services marketing. A study comprising 342 employees was conducted in four telephone call centres of a major UK retail bank. Investigates how different forms of organisational commitment and job satisfaction influence the service quality delivered by contact employees. Findings indicate that job satisfaction and organisational commitment of employees have a significant impact on service quality delivered. The affective component of commitment was found to be more important than job satisfaction in determining service quality of customer-contact employees.

Comparing methods to separate treatment from self-selection effects in an online banking setting

The literature discusses several methods to control for self-selection effects but provides little guidance on which method to use in a setting with a limited number of variables. The authors theoretically compare and empirically assess the performance of different matching methods and instrumental variable and control function methods in this type of setting by investigating the effect of online banking on product usage. Hybrid matching in combination with the Gaussian kernel algorithm outperforms the other methods with respect to predictive validity. The empirical finding of large self-selection effects indicates the importance of controlling for these effects when assessing the effectiveness of marketing activities.

An investigation into the acceptance of online banking in Saudi Arabia

Although a regional leader, Internet banking in Saudi Arabia is yet to be fully utilised as a value-adding tool to improve customer relationships and achieve cost advantages. The aim of this study was to identify the factors that encourage customers to adopt online banking in Saudi Arabia. The research constructs were developed based on the technology acceptance model (TAM) and incorporated some extra important control variables. The model was empirically verified to examine the factors influencing the online banking adoption behaviour of 400 customers. The findings of the study suggests that the quality of the Internet connection, the awareness of online banking and its benefits, the social influence and computer self-efficacy have significant effects on the perceived usefulness (PU) and perceived ease of use (PEOU) of online banking acceptance. Education, trust and resistance to change also have significant impact on the attitude towards the likelihood of adopting online banking. The implications of the findings are discussed and suggestions for future research are presented.

Corporate governance and accounting conservatism:evidence from the banking industry

Research Question/Issue: In this paper, we empirically investigate whether US listed commercial banks with effective corporate governance structures engage in higher levels of conservative financial accounting and reporting. Research Findings/Insights: Using both market- and accrual-based measures of conservatism and both composite and disaggregated governance indices, we document convincing evidence that well-governed banks engage in significantly higher levels of conditional conservatism in their financial reporting practices. For example, we find that banks with effective governance structures, particularly those with effective board and audit governance structures, recognize loan loss provisions that are larger relative to changes in nonperforming loans compared to their counterparts with ineffective governance structures. Theoretical/Academic Implications: We contribute to the extant literature on the relationship between corporate governance and quality of accounting information by providing evidence that banks with effective governance structures practice higher levels of accounting conservatism. Practitioner/Policy Implications: The findings of this study would be useful to US bank regulators/supervisors in improving the existing regulatory framework by focusing on accounting conservatism as a complement to corporate governance in mitigating the opaqueness and intense information asymmetry that plague banks.

Service employee clusters in banking:exploring Ind's typology considering behaviour, commitment and attitude about leadership

Purpose: Ind suggests front line employees can be segmented according to their level of brand-supporting performance. His employee typology has not been empirically tested. The paper aims to explore front line employee performance in retail banking, and profile employee types. Design/methodology/approach: Attitudinal and demographic data from a sample of 404 front line service employees in a leading Irish bank informs a typology of service employees. Findings: Champions, Outsiders and Disruptors exist within retail banking. The authors provide an employee profile for each employee type. They found Champions amongst males, and older employees. The highest proportion of female employees surveyed were Outsiders. Disruptors were more likely to complain, and rated their performance lower than any other employee type. Contrary to extant literature, Disruptors were more likely to hold a permanent contract than other employee types. Originality/value: The authors augment the literature by providing insights about the profile of three employee types: Brand Champions, Outsiders and Disruptors. Moreover, the authors postulate the influence of leadership and commitment on each employee type. The cluster profiles raise important questions for hiring, training and rewarding front line banking employees. The authors also provide guidelines for managers to encourage Champions, and curtail Disruptors. © Emerald Group Publishing Limited.

Brand orientation and brand values in retail banking

This exploratory study seeks to provide an appreciation of brand orientation in retail banking. Through in-depth interviews at head office and branch level, we explore managers' brand mind-set. We also surface managers' views about the relationship between market and brand orientation. Further, we examine managers' perceptions about the role of brand values as resources in creating a brand orientation. In a large-scale study of front-line employees, we examine the level of agreement with brand values, and describe differences in brand buy-in across employee clusters. © 2013 Copyright Westburn Publishers Ltd.

The value of risk reporting:a critical analysis of value-at-risk disclosures in the banking sector

This paper critically reviews the evolution of financial reporting in the banking sector with specific reference to the reporting of market risk and the growing use of the measure known as Value at Risk (VaR). The paper investigates the process by which VaR became 'institutionalised'. The analysis highlights a number of inherent limitations of VaR as a risk measure and questions the usefulness of published VaR disclosures, concluding that risk 'disclosure' might be more apparent than real. It also looks at some of the implications for risk reporting practice and the accounting profession more generally.

Duties and discretions in banking law

Duties owed in banker customer relationships, with reference to Greenwood duty, duty to inform customers of new accounts and services, duty of confidentiality, drawing cheques on insufficient funds and restricting lender's discretion.