Utilization of Soft Information on Bank Performance
Utilization of Soft Information on Bank Performance

Author: Tadanori Yosano

Publisher: Springer

Published: 2019-10-06

Total Pages: 110

ISBN-13: 9789811384714

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This book explores the effects of soft information utilization in the decision process for lenders, especially concerning small and medium-sized enterprises (SMEs) in regional markets. This study is one of the first to use questionnaire survey data from lender representatives, and analyzes the relationship between the financial metrics of a lender’s performance and soft information factors in inter-bank competition. The authors’ empirical results suggest that utilizing soft information allows banks to attain a more precise lending decision. The Financial Services Agency in Japan introduced an action program in 2003 that requires regional banks to shift from transaction banking to relationship lending. Against that background, this book examines the influence of relationship lending on a lender’s performance. This study found that relationship lending allows lenders to charge a higher premium to counteract the high risk involved with SMEs. The book also examines how relationship lending affects lending performance in inter-bank competition. The conclusion is that, even though inter-bank competition has negative effects, a bank in a competitive local market can acquire an informational advantage to limit its own loss. This book categorizes three soft information factors: organizational systems, networks or alliances/partnerships, and business/management leadership based on survey data. The authors’ findings suggest that information production, especially network and business/leadership information, plays an essential role in promoting a bank’s profitability. These effects are strong even when banks face high inter-bank competition. Relationship lending not only improves bankers’ lending techniques, but also fosters and enhances their community knowledge and enables them to survive in a highly competitive market.

Utilization of Soft Information on Bank Performance
Utilization of Soft Information on Bank Performance

Author: Tadanori Yosano

Publisher: Springer

Published: 2019-07-20

Total Pages: 110

ISBN-13: 981138472X

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This book explores the effects of soft information utilization in the decision process for lenders, especially concerning small and medium-sized enterprises (SMEs) in regional markets. This study is one of the first to use questionnaire survey data from lender representatives, and analyzes the relationship between the financial metrics of a lender’s performance and soft information factors in inter-bank competition. The authors’ empirical results suggest that utilizing soft information allows banks to attain a more precise lending decision. The Financial Services Agency in Japan introduced an action program in 2003 that requires regional banks to shift from transaction banking to relationship lending. Against that background, this book examines the influence of relationship lending on a lender’s performance. This study found that relationship lending allows lenders to charge a higher premium to counteract the high risk involved with SMEs. The book also examines how relationship lending affects lending performance in inter-bank competition. The conclusion is that, even though inter-bank competition has negative effects, a bank in a competitive local market can acquire an informational advantage to limit its own loss. This book categorizes three soft information factors: organizational systems, networks or alliances/partnerships, and business/management leadership based on survey data. The authors’ findings suggest that information production, especially network and business/leadership information, plays an essential role in promoting a bank’s profitability. These effects are strong even when banks face high inter-bank competition. Relationship lending not only improves bankers’ lending techniques, but also fosters and enhances their community knowledge and enables them to survive in a highly competitive market.

Substitution Or Complementarity Between 'Soft' Information and 'Hard' Information
Substitution Or Complementarity Between 'Soft' Information and 'Hard' Information

Author: Hervé Alexandre

Publisher:

Published: 2015

Total Pages: 39

ISBN-13:

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The Basel II committee set up directives encouraging banks to use internal scores in order to assess the risk of their customers. This new form of information competes with the existing ones. SMEs are most concerned by these new stakes, due to the lack of transparency. The aim of this paper is to understand the determinants of the choice between substitution and complementarity between the two types of information: 'soft' and 'hard,' to test a potential effect of this choice on the banking performance and to describe which variables are involved in the decision-making process. The originality of this work is to try to quantify the information costs and to use it as a variable which is affecting the adopted choice.

Bank Performance and the Solow Paradox
Bank Performance and the Solow Paradox

Author: Hasan Doluca

Publisher:

Published: 2013

Total Pages: 33

ISBN-13:

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The problem of legacy information technologies in conjunction with the excessive risks associated with the implementation of huge information technologies such as Enterprise Resource Planning systems have a potential to lead to bank failures, and thus, financial instability. Hence, using a unique data-set of 157 U.S. banks from 1993 to 2006, and differentiating between hardware and software technologies operationalized by the investment in Enterprise Resource Planning systems and information technology services operationalized by the information technology expertise of the banks, we assess the effects of information technology investments on bank performance. We find, at first glance, that the usage of Enterprise Resource Planning systems has a negative, direct effect on bank performance, indicating the existence of the commonly-known Solow Paradox. However, we provide an explanation for the existence of this paradox by addressing potential endogeneity problems: by controlling for the endogeneity, our results suggest that Enterprise Resource Planning systems have a positive effect on bank performance. We further show that the effect of Enterprise Resource Planning systems on bank performance may be strengthened by bank size. Regarding information technology services, we show that it has a positive, direct effect on bank performance. Additionally, banks that use Enterprise Resource Planning systems should have high information technology expertise as information technology expertise positively correlates with bank performance and moderates the impact of Enterprise Resource Planning systems. Our results are robust to different measures of performance such as return on assets, return on equity and efficiency measures, computed using Stochastic Frontier Analysis.

The Repository of Soft Information Within Bank Organizations
The Repository of Soft Information Within Bank Organizations

Author: Masazumi Hattori

Publisher:

Published: 2017

Total Pages:

ISBN-13:

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We examine who is the repository of soft information within bank organizations. Inconsistent with the conventional view of loan officers as the sole repository, we find that branch managers have the most soft information. We also find the repository at a higher hierarchical level at smaller banks. Furthermore, our evidence suggests that branch managers themselves actively collect soft information, especially at smaller banks. These findings suggest the need for a more nuanced view beyond the conventional emphasis on loan officers, and call for studies on the equilibrium design of the collection, processing, and use of soft information within bank organizations.

Does IT Help?
Does IT Help?

Author: Toni Ahnert

Publisher:

Published: 2022

Total Pages: 0

ISBN-13:

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"This paper provides novel evidence on the importance of information technology (IT) in banking for entrepreneurship. To guide our analysis, we build a parsimonious model of bank screening and lending. The model predicts that IT in banking can spur entrepreneurship by making it easier for startups to borrow against collateral. We empirically show that job creation by young firms is stronger in US counties that are more exposed to IT-intensive banks. Consistent with a strengthened collateral channel, entrepreneurship increases by more in IT-exposed counties when house prices rise. Regressions at the bank level further show that banks' IT adoption makes credit supply more responsive to changes in local house prices, and reduces the importance of geographical distance between borrowers and lenders. These results suggest that IT adoption in the financial sector can increase dynamism by improving startups' access to finance."--Abstract.

The International Handbook of Competition
The International Handbook of Competition

Author: Manfred Neumann

Publisher: Edward Elgar Publishing

Published: 2013-01-01

Total Pages: 431

ISBN-13: 1849806063

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ÔThis comprehensive Handbook demonstrates that academic thinking, new and old, has a role to play in shaping modern competition policy.Õ Ð Gunnar Niels, Oxera This indispensable Handbook examines the interface of competition policy, competition law and industrial economics. The book aims to further our understanding of how economic reasoning and legal expertise complement each other in defining the fundamental issues and principles in competition policy. In specially commissioned chapters the book provides a scholarly review of economic theory, empirical evidence and standards of legal evaluation with respect to monopolization of markets, exploitation of market power and mergers, among other issues. The International Handbook of Competition Ð Second Edition will be accessible to a wide audience including students of economics and law, public administrators, lawyers, consultants, and business executives.

Political Economy of Financialization in the United States
Political Economy of Financialization in the United States

Author: Kurt Mettenheim

Publisher: Routledge

Published: 2021-09-23

Total Pages: 230

ISBN-13: 100044967X

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Combining balance sheet analysis with historical institutional analysis, this book traces the evolution of social sector financial balance sheets in the US from 1960 to 2018. This innovative historical-institutional approach, ranging from the micro level of households to the macro level of the federal government, reveals that the displacement of households by banks has been a long-term process. This gradual compounding of financialization is at odds with widely accepted views about financialization, contemporary banking theory, financial intermediation theory, and post-Keynesian and endogenous money approaches. The book returns to time-tested traditional principles of banking and taps unexpected affinities about market failures in transaction cost economics, financial intermediation theory, and core ideas in classic modern political and social economy about economic moralities and social reactions of self-defense against unfettered markets. This book provides an alternative explanation for the rise of finance and new ways to think about averting financialization and its devastating consequences. This book marks a significant contribution to the literature on financialization, social economics, banking, and the American political economy.

Financial Systems in Troubled Waters
Financial Systems in Troubled Waters

Author: Alessandro Carretta

Publisher: Routledge

Published: 2013-05-07

Total Pages: 342

ISBN-13: 1136232230

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This collection considers the financial crisis from a managerial perspective, focussing on the business implications for the financial industry. Topics examined include governance, information needs and strategy of financial intermediaries and investors. The contributions build on the existing literature and present some unique insights on governance, credit quality evaluation and performance measurement. In a fast growing or steady market, it is possible for even an inefficient financial system to satisfy investors’ and firms’ needs. However, the current financial crisis has brought into sharp relief the limits of the inefficient practices adopted by the market, and made clear the importance of developing more effective governance mechanisms, more detailed and complete information databases and new strategies. The crisis has also brought to the fore issues about the governance of financial intermediaries that had not been previously addressed. These include board diversity, internal monitoring procedures and the existence of interlocking directorates. More broadly, the financial crisis has radically altered the international framework, with an increasingly consolidated financial sector, and the rise of new markets (such as China) that now play a predominant role in the worldwide market. Studies on the competition and on the performance in this new scenario are essential in order to understand the implications of recent events.