TARAZI Amine

Bank liquidity shortages during the global financial crisis of 2007-2009 led to the introduction of liquidity regulations, the impact of which has attracted the attention of academics and policymakers. In this paper, we investigate the impact of liquidity regulation on bank lending. As a setting, we use the Netherlands, where a Liquidity Balance Rule (LBR) was introduced in 2003. The LBR was imposed on Dutch banks only and did not apply to other banks operating elsewhere within the Eurozone. Using this differential regulatory treatment to overcome identification concerns and a difference-indifferences approach, we find that the LBR increased the volume of lending by Dutch banks relative to other banks located in the Eurozone. Increased equity, an inflow of retail deposits and subsequent increase in balance sheet size allowed Dutch banks to increase lending despite having to meet the LBR requirements. The LBR also affected loan composition (with corporate and retail lending increasing more than mortgage lending) and the maturity profile of loan portfolios. Our results have relevance for policymakers tasked with monitoring the impact of liquidity regulations on banks and the real economy.

This paper investigates whether the risk-taking of Islamic banks is differently affected by corruption compared to conventional banks. Indeed, the presence of Shari'ah supervisory boards (SSBs), as a cornerstone of Islamic banking, is expected to deter the influence of corruption on risk-taking for Islamic banks. We consider a matched sample of 70 Islamic and conventional banks operating in 10 OIC (Organization of Islamic Cooperation) countries over the 2012-2017 period. We find consistent evidence that higher levels of corruption are associated with higher bank risk for both conventional and Islamic banks. However, this association is stronger for conventional banks. Furthermore, for Islamic banks, the impact of corruption on risk-taking is significantly reduced with higher representation of females in Shari'ah supervisory boards and higher academic qualifications of board members. The role played by such board members in mitigating the impact of corruption on risk-taking is more effective for Islamic banks than for conventional banks.

We examine the influence of economic policy uncertainty on bank stability post-2007-2008 global financial crisis. We rely on the economic policy uncertainty (EPU) index introduced by Baker et al. (2016). We use 176,477 quarterly observations for US commercial banks over the period from 2011Q1 to 2020Q3 and find consistent and robust evidence that bank stability decreases as the level of economic policy uncertainty increases. We specifically control for demand-side effects which indicates that the decrease in bank stability not only originates from borrowers' and customers' conditions but also from a change in bank behavior. A deeper investigation shows that the negative impact of policy uncertainty on bank stability is stronger for larger banks, and weaker for highly capitalized banks as well as for more liquid banks. Our findings have important implications particularly for the COVID-19 policy implementations.

In this paper, we investigate the impact of liquidity requirements on bank risk. We take advantage of the implementation of the Liquidity Balance Rule (LBR) in the Netherlands in 2003 and analyze its impact on bank default risk. The LBR was imposed on Dutch banks only and did not apply to other banks operating elsewhere within the Eurozone. Using this differential regulatory treatment to overcome identification concerns, we find that following the introduction of the LBR, the risk of Dutch banks declined relatively to counterparts not affected by the rule. Concomitantly, despite the lower cost of funding driven by the LBR, the profitability of Dutch banks decreased in comparison with other banks in Europe, as a result of a decrease in income accruing from interest-bearing activities. Our findings also indicate that relatively to unaffected banks, Dutch banks might not have actively tried to offset their loss in interest income by increasing interest rates of loans. However, better financing conditions allowed Dutch banks to increase the shares of deposits and capital on the liability side of their balance sheets.

This paper investigates the relationship between an individual's saving and borrowing practices and his/her propensity to use fintech services. More particularly, we examine whether having multiple saving and borrowing channels increases a person's likelihood to participate in online funding platforms, and use robo-advisors. Using a sample of over 2000 respondents to a survey we conducted in Malaysia, our main results indicate that individuals who save and borrow via multiple channels, and through external conduits, are more likely to use fintech services than their counterparts. This is consistent with the view that individuals who use multiple saving and borrowing conduits are more likely to perform mental accounting, a concept which is commonly used by fintech companies to facilitate personal wealth management. Further, our findings reveal that among respondents with multiple saving channels, those who put less importance on trust in financial products, and consider financial returns essential, are the most likely users of fintech services. Overall, our findings offer new insights by providing a better understanding of the factors that foster the use of fintech services.

This paper explores whether the impact of economic uncertainty on credit growth differs for Islamic vs. conventional banks. Using a sample of 416 banks (58 Islamic and 358 conventional) in 12 countries, the findings indicate that an increase in economic uncertainty significantly decreases the credit growth of conventional banks but does not have any significant impact on Islamic banks' credit growth. Our results are robust to alternative specifications and addressing endogeneity concerns using GMM estimators. We further observe that our findings are stronger for the following countries: (1) countries with explicit deposit insurance protection system for Islamic banks, (2) lower foreign dominance, and (3) countries with a higher share of deposits and assets in Islamic banks.

We examine the relationship between trust and financial development using detailed regional data in Turkey. We distinguish different forms of trust (i.e., generalized, narrow, and wide) and investigate whether varying degrees of generalized and narrow trust, as well as wide and narrow trust imply different financial development outcomes. Moreover, we assess how different forms of trust and their combination affect financial development in the presence of ethnically fragmented populations. We use instrumental variable (IV) estimations to address endogeneity issues and the potential reverse causality between trust and financial development. Our main results indicate that wide trust has a significantly positive impact on financial development. Moreover, in regions where narrow trust is relatively high, we find financial development benefits from increasing generalized trust. Our findings also highlight that whereas wide trust leads to more developed financial markets in more ethnically fragmented regions, generalized trust plays a stronger role in less fragmented ones. Further, we also analyze the impact of trust on the proportion of credit backed by stable funds such as deposits. Our findings show that generalized trust plays an important role in mitigating the adverse effects that ethnic fractionalization have on the availability of deposits or stable sources to fund loans. On the whole, our study highlights the importance of distinguishing the impact of different forms and combinations of trust. Generalized trust, which is the focus of most studies, is not an all-encompassing one-size-fits-all solution to enhance economic performance.

In this paper, we explore whether economic uncertainty differently affects the default risk of Islamic and conventional banks. Using a sample of 568 banks from 20 countries between 2009 and 2018, we take advantage of the World Uncertainty Index (WUI) proposed by Ahir et al. (2018) to conduct a study based on a comparable measure across countries. Our findings indicate that, while economic uncertainty increases the default risk of conventional banks, Islamic banks' default risk is not affected. To shed light on why economic uncertainty differently influences the default risk of Islamic and conventional banks, we explore the influence of religiosity, institutional factors and bank-level heterogeneity. We observe that Islamic banks' default risk is immune to uncertainty in all types of countries but that such a difference with conventional banks mainly holds for banks with higher non-interest income and larger size, and for banks which are publicly traded. Moreover, our findings show that conventional banks suffer more from uncertainty in terms of stability in countries with higher religiosity. Our results are robust to alternative estimation techniques to deal with endogeneity and to alternative variable measurements.

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This paper explores whether the impact of economic uncertainty on credit growth differs for Islamic vs. conventional banks. Using a sample of 416 banks (58 Islamic and 358 conventional) in 12 countries, the findings indicate that an increase in economic uncertainty significantly decreases the credit growth of conventional banks but does not have any significant impact on Islamic banks' credit growth. Our results are robust to alternative specifications and addressing endogeneity concerns using GMM estimators. We further observe that our findings are stronger for the following countries: (1) countries with explicit deposit insurance protection system for Islamic banks, (2) lower foreign dominance, and (3) countries with a higher share of deposits and assets in Islamic banks.

The Great Recession of 2007-2009 piqued the interest of policymakers worldwide, prompting various initiatives to stabilize the financial system and advance financial inclusion. However, few studies have considered their interconnectedness or whether any synergies or trade-offs exist between them. This paper investigates how financial inclusion affects the stability of the European banking system. The findings indicate that advancements in financial inclusion through more account ownership and digital payments have a stabilizing effect on the banking industry. A deeper investigation shows that such a stabilizing impact is mainly driven by the targeting of disadvantaged adults who are young, undereducated, unemployed, and who live in rural areas. Hence, along with its known benefits to society as a whole, financial inclusion has the additional benefit of improving the stability of the financial system. Such findings call for policy configurations that are specifically designed to achieve financial inclusion for disadvantaged individuals.

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We see spikes in unemployment rates and turbulence in the securities markets during the COVID-19 pandemic. Governments are responding with aggressive monetary expansions and large-scale economic relief plans. We discuss the implications on banks and the economy of prudential regulatory intervention to soften the treatment of non-performing loans and ease bank capital buffers. We apply these easing measures on a sample of Globally Systemically Important Banks (G-SIBs) and show that these banks can play a constructive role in sustaining economic growth during the COVID-19 pandemic. However, softening the treatment of non-performing loans along with easing capital buffers should not undermine banks' solvency in the recovery period. Banks should maintain usable buffer in the medium-term horizon to absorb future losses, as the effect of COVID-19 on the economy might take time to fully materialise.

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This paper explores whether the impact of economic uncertainty on credit growth differs for Islamic vs. conventional banks. Using a sample of 416 banks (58 Islamic and 358 conventional) in 12 countries, the findings indicate that an increase in economic uncertainty significantly decreases the credit growth of conventional banks but does not have any significant impact on Islamic banks' credit growth. Our results are robust to alternative specifications and addressing endogeneity concerns using GMM estimators. We further observe that our findings are stronger for the following countries: (1) countries with explicit deposit insurance protection system for Islamic banks, (2) lower foreign dominance, and (3) countries with a higher share of deposits and assets in Islamic banks.

This PhD thesis includes three essays on the implementation, and where appropriate the improvement, of financial risk measures and bank risk assessment based on machine learning methods. The first chapter develops an elementary formula, called E2C, for estimating credit risk premiums inspired by CreditGrades, and improves its accuracy with a decision tree forest algorithm. Our results highlight the prominent role played by this estimator and the additional contribution of the financial rating and the size of the firm considered. The second chapter infers a one-sided version of the inequality bounding the probability of a unimodally distributed random variable. Our results show that the unimodality assumption for stock returns is generally admissible, allowing us to refine bounds on individual risk measures, to comment on the implications for extreme risk multipliers, and to derive simplified versions of bounds on systemic risk measures. The third chapter provides a decision support tool grouping rated banks by risk level based on an adjusted version of the k-means algorithm. This fully automated process is based on a very large universe of individual and systemic risk indicators synthesized into a subset of representative factors. The results obtained are aggregated by country and region, offering the possibility to study areas of fragility. They highlight the importance of paying particular attention to the ambiguous impact of bank size on systemic risk measures.

This thesis includes three empirical tests based on data from U.S. commercial banks. It aims to highlight the implications of liquidity risk and fair value accounting on banks' capital structure, lending and stability. Thus, the first chapter examines whether episodes of market liquidity shortages influence the adjustment of banks' capital structure. The results reveal that only small banks respond to such episodes by increasing their capital ratio. They do so by reducing the share of loans in total assets, decreasing the share of assets with a higher risk weight and reducing the size of their balance sheet. These results suggest that liquidity requirements may be redundant for small banks, but appear necessary for large banks. The second chapter analyzes whether the impact of an unexpected flow of deposits on loan creation depends on the degree to which banks are exposed to liquidity risk from the off-balance sheet. The results show that only small banks increase their lending when they are subject to unexpected deposit inflows. This increase in lending depends on their degree of exposure to liquidity risk from their off-balance sheet activities. Smaller banks with greater exposure to liquidity risk tend to make fewer new loans. These results suggest that unexpected inflows of deposits may not be as easily redistributed to borrowers. The third chapter examines the effect of level 2 and level 3 assets held by banks on risk taking and insolvency risk. The results reveal that banks with higher proportions of Tier 2 and Tier 3 assets take on more risk and are more exposed to insolvency risk. These results suggest that the banking system may become more fragile when investors perceive reliability problems with bank assets.

This paper studies the pricing of assets and the franchise value that is embedded in the core deposits and branches of insolvent banks that are sold under the purchase and assumption resolution method of the Federal Deposit Insurance Corporation (FDIC). We analyze 620 acquisitions of solvent and insolvent U.S. banks between 2007:Q1 and 2016:Q3 and find that acquirers pay higher prices for insolvent banks with more branches. However, acquirers with more employees pay lower premiums for assuming core deposits of insolvent banks. We also compare the financial strength of acquirers of failed banks with that of acquirers of healthy banks in non-assisted takeovers. The results show that being financially strong matters more to acquire a solvent bank than a failed bank. Our findings have important implications for policy makers.

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This paper investigates whether interbank network topology influences the impact of monetary policy announcements on bank cumulative abnormal returns (CAR's). Although recent studies have emphasized the channels of non-conventional monetary policy actions and the sensitivity of bank stock prices to "News", how such reaction could be influenced by the shape of bank networks remains an open issue. We look at how banks' interconnectedness within interbank loan and deposit networks affects investors' expectations of future bank performance in response to monetary policy "News". Our sample consists of commercial, investment, real estate and mortgage banks in 10 Euro-zone countries. Our results show that the stock prices of banks with stronger local network positions are less sensitive to monetary policy announcements while those of banks with stronger system-wide positions are more sensitive to them.

This paper investigates the effect of bank competition and financial stability on economic growth by examining panel-data from 38 European countries over 2001 to 2017. Bank competition is measured with the Boone indicator, and bank stability with Z-scores and non-performing loan ratio, all at the country level. This study employs a fixed-effect estimator, as well as a system generalized method of moment (GMM) estimator to control unobserved heterogeneity, endogene-ity, the dynamic effect of economic growth, and reverse causality in its estimation. Results show that bank stability significantly contributes to economic growth in Europe. Economic growth falls during crisis periods (both the global financial crisis and the local banking crisis), highlighting the importance of a resilient banking system during crisis periods. Moreover, empirical outcomes show that lower banking competition supports economic growth and increases financial stability. This study provides a framework for banks and regulators to boost economic growth through the channel of banking stability.

We investigate the implications of government versus private ownership for bank minority shareholders. Specifically, we use unique data to examine whether the stock prices of government-owned and family-owned banks, equally engaged in related lending, differently react to loan announcements. Our empirical findings show that the expected negative market reaction due to minority shareholder expropriation driven by related lending ("grabbing hand" effect), is offset by shareholders' expectations of future support from the government ("helping hand" effect). Positive announcement returns are also larger for new loans to state-owned firms than for those to private firms. Our findings support the view that in countries with weak shareholder protection, shareholders of state-owned banks rationally anticipate expropriation, but are willing to accept it in exchange for higher expectations of government support to state-owned banks and to state-owned firms. JEL Classification: G21, G28.

In this paper, we use U.S. commercial banks' data to investigate whether the effect of unexpected deposit flows on loan production depends on banks' exposure to off-balance sheet funding liquidity risk. We find that lending is sensitive to deposit shocks at small banks but not at large ones. Furthermore, for small banks, the increase in lending explained by unexpected deposit inflows depends on how much they are exposed to funding liquidity risk stemming from their off-balance sheets, as measured by the level of unused commitments. Small banks more exposed to such funding liquidity risk tend to extend fewer new loans. Our results indicate that unexpected deposit inflows from, for instance, the failure of other banks or market disruptions might not as easily be fueled again to borrowers.

Bank liquidity shortages during the global financial crisis of 2007-2009 led to the introduction of liquidity regulations, the impact of which has attracted the attention of academics and policymakers. In this paper, we investigate the impact of liquidity regulation on bank lending. As a setting, we use the Netherlands, where a Liquidity Balance Rule (LBR) was introduced in 2003. The LBR was imposed on Dutch banks only and did not apply to other banks operating elsewhere within the Eurozone. Using this differential regulatory treatment to overcome identification concerns, we investigate whether there is a causal link from liquidity regulation to the lending activities of banks. Using a difference-indifferences approach, we find that stricter liquidity requirements following the implementation of the LBR did not reduce lending. However, the LBR did lead Dutch banks to modify the structure of loan portfolios by increasing corporate lending and reducing mortgage lending. During this period Dutch banks experienced a significant increase in deposits and issued more equity. Overall, the findings of this study have relevance for policymakers tasked with monitoring the impact of post-crisis liquidity regulations on bank behavior.

We empirically investigate how complexity stemming from the type of foreign affiliates and the geographic dispersion of such affiliates affects the parent bank's individual risk and profitability. Our analysis is based on detailed hand-collected data on the worldwide locations of subsidiaries and branches of EU banks. Our results show that being present abroad is beneficial for bank stability as it contributes to lower default risk. Banks that are present abroad through both subsidiaries and branches appear to be more stable than banks that are present under one form only. Being present with branches only is the most effective way to reduce risk-taking. Nevertheless, higher geographic dispersion of affiliates around different world regions is associated with higher volatility of earnings and higher profitability. JEL classification: G21, G28.

The Great Recession of 2007-2009 piqued the interest of policymakers worldwide, prompting various initiatives to stabilize the financial system and advance financial inclusion. However, few studies have considered their interconnectedness or whether any synergies or trade-offs exist between them. This paper investigates how financial inclusion affects the stability of the European banking system. The findings indicate that advancements in financial inclusion through more account ownership and digital payments have a stabilizing effect on the banking industry. A deeper investigation shows that such a stabilizing impact is mainly driven by the targeting of disadvantaged adults who are young, undereducated, unemployed, and who live in rural areas. Hence, along with its known benefits to society as a whole, financial inclusion has the additional benefit of improving the stability of the financial system. Such findings call for policy configurations that are specifically designed to achieve financial inclusion for disadvantaged individuals.

We examine the effect of informal institutional environment on bank capital decisions worldwide as well as within the United States at the state level. Specifically, we focus on individualism and based on a sample of 7,034 banks in 68 countries, we establish three major findings: First, individualism is negatively and significantly associated with bank regulatory capital, an association which is independent of the influence of formal institutional environment per se. Second, effective legal enforcement magnifies the negative effect of individualism on bank regulatory capital. Finally, focusing on a single country, the United States, we also find that banks in individualistic states hold less regulatory capital than banks in collectivist states and the effect of individualism is magnified with effective legal enforcement at the state level. Our findings suggest that individualism serves as a constraint on regulators, as any given regulatory guidelines or formal institutional factors will operate very differently depending on the informal institutional environment.

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The objective of this thesis is to provide an assessment of the importance of banking network characteristics in explaining the decision making of banks under different macroprudential and monetary policy scenarios. This thesis therefore examines the implications of interbank network topology for bank capital and liquidity regulation and monetary policy. The first chapter examines how banks define their liquidity ratios based on the topology of their network in the interbank market. Our results show that taking into account bank connections within a network significantly improves traditional liquidity models. Moreover, we show that banks set a lower liquidity ratio when they have easier access to the interbank market. Our results also highlight that the liquidity behavior of banks of different sizes or banks operating in different banking systems could vary depending on their local or system-wide interbank positions. The second chapter analyzes the response of bank stock prices to monetary policy announcements as a function of their interbank market position. Our results show that taking into account how banks are linked within a network helps explain the reaction of their stock prices to monetary policy announcements. Our results suggest that a strong system-wide network position increases positive reactions to such policy announcements, while a strong local network position reduces them. The third chapter examines how the substitution effects of liquidity on capital are affected by the bank's position in the interbank market. We show that the substitution effect of liquidity on capital is attenuated if banks are highly interconnected in the interbank network. Our results suggest that in times of crisis, large illiquid banks hold a high capital ratio only when they have a weak position in the interbank network at the local or system-wide level, while small illiquid banks strengthen their solvency when they have a larger number of direct borrowers .

Please do not quote without the permission of the authors. Abstract This paper examines the effect of trust on bank lending using a sample of commercial banks in 34 countries around the world. We distinguish between two forms of trust: In-group trust, which we define as the trust in people we know, and Out-group trust, which we define as the trust in people we meet for the first time. We find that that Out-group trust significantly boosts bank lending. A closer look shows that this effect only holds in countries with relatively lower levels of institutional and judicial development. As for In-group trust, we find that it affects bank lending indirectly by favoring the development of informal lending. Overall, this paper provides novel evidence on the importance of trust and the mechanisms by which it influences bank lending around the world. JEL classification: G21, G28, G32.

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We investigate how bank charter value affects risk for a sample of OECD banks by using standalone and systemic risk measures before, during, and after the global financial crisis of 2007-2008. Prior to the crisis, bank charter value is positively associated with risk-taking and systemic risk for very large " too-big-too-fail " banks and large U.S. and European banks but such a relationship is inverted during and after the crisis. A deeper investigation shows that such a behavior before the crisis is mostly relevant for very large banks and large banks with high growth strategies. Banks' business models also influence this relationship. In presence of strong diversification strategies, higher charter value increases standalone risk for very large banks. Conversely, for banks following a focus strategy, higher charter value amplifies systemic risk for very large banks and both standalone and systemic risk for large U.S. and European banks. Our findings have important policy implications and cast doubts on the relevance of the uniform more stringent capital requirements introduced by Basel III.

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Using quarterly data of U.S. commercial banks, we investigate the impact of market liquidity shortages on banks' capitalization and balance sheet adjustments. Our findings reveal that an acute liquidity shortage leads small U.S. commercial banks, but not large ones, to positively adjust their total capital ratio. Small banks adjust their total capital ratio by downsizing, by restricting dividend payments, by decreasing the share of assets with higher risk weights and specifically by extending less loans. Furthermore, the positive impact on total capital ratios is stronger for small banks which are more reliant on market liquidity and small banks operating below their target capital ratio.

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This paper investigates whether interbank network topology influences the impact of monetary policy announcements on bank cumulative abnormal returns (CAR's). Although recent studies have emphasized the channels of non-conventional monetary policy actions and the sensitivity of bank stock prices to "News", how such reaction could be influenced by the shape of bank networks remains an open issue. We look at how banks' interconnectedness within interbank loan and deposit networks affects investors' expectations of future bank performance in response to monetary policy "News". Our sample consists of commercial, investment, real estate and mortgage banks in 10 Euro-zone countries. Our results show that the stock prices of banks with stronger local network positions are less sensitive to monetary policy announcements while those of banks with stronger system-wide positions are more sensitive to them.

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The research work carried out is mainly in the field of banking, monetary and financial economics and is organized around three empirical perspectives. The first perspective is microeconomic and is located at the level of the banking firm. The research conducted analyzes the provisioning behavior of banks for credit losses and evaluates the risk profiles of banks. The second perspective is macroeconomic and is situated at the country level. The research focuses on the procyclicality of credit activities on the one hand, and the occurrence of banking crises on the other. The third perspective introduces an international dimension and thus complements the microeconomic and macroeconomic approaches previously used. The research conducted analyzes the effects of banking regulation and the consequences of the 2007-2008 financial crisis on international banking and financial activities.

In this paper, we extend the literature on the discipline imposed by depositors to banks by disentangling the impact of macro risk and micro risk. We also take advantage of a unique dataset in which depositors are split into different categories of deposit size in different types of banks (bank ownership structure). We consider the Banking Stability Index, which is used by the Indonesia Deposit Insurance Corporation as a dashboard to monitor the banking stability at the country level as well as individual stability measures such as the Z-score. Using monthly data from 2005 to 2013 our findings show that both macro and micro levels of risk are considered by depositors to discipline banks. Large uninsured depositors are more effective in disciplining banks highlighting the credibility of the insurance system in place. Bank ownership type also matters in explaining the difference in market discipline by depositors.

This paper extends prior literature on the link between consolidation and stability in banking using a single country setting. From a sample of Indonesian commercial banks over the 2010-2015 time span, we construct the Lerner index as a measure of bank market power due to consolidation. Our empirical results document that higher bank market power tends to reduce insolvency risk and increase capital ratios. A deeper analysis however reveals that higher market power is detrimental for financial stability in state-owned banks and small private-owned banks. We therefore highlight that although consolidation among state-owned banks reduces cost inefficiency as in Hadad et al. (2013), further efforts to reduce state-owned banks' market power are necessary after consolidation. This paper also suggests that strengthening market power in large private-owned banks, but encouraging competition in small private-owned banks to reduce market power, are of particular importance for financial stability. JEL Code: G21, G28.

Frictions prevent banks to immediately adjust their capital ratio towards their desired and/or imposed level. This paper analyzes (i) whether or not these frictions are larger for regulatory capital ratios vis-à-vis a plain leverage ratio. (ii) which adjustment channels banks use to adjust their capital ratio. and (iii) how the speed of adjustment and adjustment channels differ between large, systemic and complex banks versus small banks. Our results, obtained using a sample of listed banks across OECD countries for the 2001-2012 period, bear critical policy implications for the implementation of new (systemic risk-based) capital requirements and their impact on banks' balance sheets, specifically lending, and hence the real economy.

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We investigate the influence of the institutional environment on bank capital ratios. Using a sample of 149 banks operating in the Middle East and North Africa region for the period 2004 to 2014, we find that, when stock markets have little presence, institutional variables significantly affect risk-weighted regulatory capital ratios but not leverage ratios. Conversely, when stock markets are more developed, only leverage ratios are influenced by institutional factors. Our results also indicate that institutional variables affect non-weighted equity-to-asset ratios of banks that are listed on a stock exchange. Our findings contribute to the bank capital structure literature and have important policy implications for developing countries.

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This thesis aims to contribute to the debate on systemic risk and its negative consequences on the real economy, and to the debate on the implementation of an effective macro-prudential regulation (systemic effects) for the banking industry aiming at financial stability. To this end, this work contributes to the existing literature through several aspects. In the first chapter of this thesis, on a sample of OECD banks, we study how the value of the franchise affects bank risk before, during and after the global financial crisis of 2007-2008, using individual and systemic risk measures. We re-examine the bank franchise value hypothesis and its disciplining role with respect to risk-taking and expansion at systemic risk before, during and after the financial crisis. We show that before the crisis, the value of the bank franchise positively impacts risk taking and systemic risk not only of the very large "too-big-too-fail" banks but also of the large European and American banks. However, our results show that during and after the crisis, this effect is reversed. Considering the pre-crisis period, we further investigate the relationship between franchise value on the one hand and risk-taking and systemic risk exposure on the other, taking into account the effects of differences in risk-taking cultures, bank size and banking strategies. The second chapter analyzes the dynamics of banks' capital structure as a function of their level of internal targeted and/or external imposed capital. Specifically, it examines several characteristics. (i) whether market frictions and capital adjustment costs are more significant when adjusting regulatory capital ratios relative to a simple leverage ratio (ii) the adjustment mechanisms used by banks to adjust their capital ratios. (iii) how the speed of adjustment and the adjustment mechanisms differ between large and complex systemic banks on the one hand and less systemic banks on the other. The results suggest that banks are more flexible and faster in adjusting their leverage ratios than in adjusting their regulatory capital ratios. While systemically important banks (SIFIs) are less responsive than other banks in adjusting their target leverage ratio, they are nonetheless faster in reaching their regulatory target ratios. Other investigations show that SIFIs may be more reluctant to change their capital base by issuing or repurchasing shares and prefer a larger reduction or faster expansion of their size. In the final chapter, we analyze how the international organizational structure and geographic expansion of 105 listed European banks with subsidiaries around the world might affect their systemic importance over the period 2005-2013. We also examine how the peak of the 2008-2009 global financial crisis and the magnitude of the 2010-2011 European sovereign debt crisis might have affected these relationships. We show that internationalization and organizational complexity are important drivers of banking systemic risk, particularly during the 2008-2013 financial stress years.

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In an economic environment still weakened by the Great Recession, SMEs appear to be a key driver of activity and employment. In this thesis, I examine the determinants and consequences of SMEs' financial constraints afin order to identify the forms of bank financing best suited to their situations. The first chapter analyzes the effects of banking business models on SME financing and shows that trading banks increase short-term credit constraints as well as financing costs. More importantly, the negative externality of trading on the availability of short-term credit is even stronger for highly capitalized banks that are dependent on derivatives. The second chapter focuses on the beneficial effet of the banking relationship for SMEs. We show that relationship lenders charge higher rates during growth periods and lower rates during crisis periods. However, by including single-banked firms in our analysis, we find that this insurance mechanism depends on firms' ability to diversify their borrowing from multiple banks. Infin, the third chapter focuses on the actual effects of financial constraints. My results highlight the crucial importance of short-term financing for SME investment through the working capital channel. Firms that have investment opportunities cannot seize them because cash credit constraints force them to allocate more cash flow to financing working capital.

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Using a sample of banks operating in 24 countries, we provide robust evidence that stronger creditor rights are associated with higher capital adequacy ratios of conventional banks but not of Islamic banks. Such results are more effective on bank core capital, suggesting that bank managers tend to increase pure equity to signal better monitoring efforts and avoid losing control in an environment characterized by strong creditor protection. Except in less religious countries with less competitive markets, Islamic banks appear to be less affected by creditor protection possibly because of the profit loss sharing (PLS) principle that considers depositors as investors who agree to share profits and losses with the bank, thus making the effect of creditor protection weaker or irrelevant in an Islamic banking context.

Using a sample of banks operating in 24 countries, we provide robust evidence that stronger creditor rights are associated with higher capital adequacy ratios of conventional banks but not of Islamic banks. Such results are more effective on bank core capital, suggesting that bank managers tend to increase pure equity to signal better monitoring efforts and avoid losing control in an environment characterized by strong creditor protection. Except in less religious countries with less competitive markets, Islamic banks appear to be less affected by creditor protection possibly because of the profit loss sharing (PLS) principle that considers depositors as investors who agree to share profits and losses with the bank, thus making the effect of creditor protection weaker or irrelevant in an Islamic banking context. JEL classification: G21, G28, G32, K22.

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This paper examines the impact of market competition on the stability of Islamic and conventional banks in countries where these banks operate alongside one another. To investigate this issue, we use a sample of 100 Islamic and 390 conventional banks from 19 countries. Our baseline result shows that competition in a dual market erodes banks' stability. The heightened competitive pressure in a dual market encourages banks to engage in excessive risk-taking that can jeopardize their stability. However, the effect of competition is missing for Islamic banks, suggesting their superiority in having religious clients. Although our overall results support the 'competition-fragility' hypothesis, we find that competition can be beneficial for banks, especially at a low to medium competition level. Last, we also find that the adverse impact of competition can be reduced by having high capitalization, especially in the case of a conventional bank. Some policy implications are discussed in the paper.

European banks have experienced significant changes in the type of entity that owns them (another bank, an individual or a family, a non-financial company, an institutional investor, a government, a foreign entity, a domestic entity…). In this paper, we look at the influence of ownership type changes on performance. Working with a panel of commercial banks from 17 European countries, we find that although banks that experience a change in ownership type do not exhibit lower or higher risk or profitability than other banks, their risk and profitability is significantly affected after the change takes place. The type of the acquirer plays a significant role in explaining the observed changes. When the acquirer is a non-financial company, the state or an institutional investor, the level of risk increases after the change while the level of profitability remains unchanged. Conversely, when the acquirer is a bank, we find that the level of risk-adjusted profitability decreases. Banks acquired by a different type of owner during the global financial crisis do not perform better or worse than they did before.

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We investigate the influence of the institutional environment on bank capital ratios. Using a sample of 149 banks operating in the Middle East and North Africa region for the period 2004 to 2014, we find that, when stock markets have little presence, institutional variables significantly affect risk-weighted regulatory capital ratios but not leverage ratios. Conversely, when stock markets are more developed, only leverage ratios are influenced by institutional factors. Our results also indicate that institutional variables affect non-weighted equity-to-asset ratios of banks that are listed on a stock exchange. Our findings contribute to the bank capital structure literature and have important policy implications for developing countries.

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This thesis examines three important issues in the banking industry, namely risk, capital and credit. It includes three empirical essays. The first chapter analyzes the impact of the "Arab Spring" and the global financial crisis of 2007-2008 on the stability of the banking sector in the MENA region. The results show that the "Arab Spring" did not have a negative effect on the stability of banks, while the global financial crisis significantly reduced their stability. The second chapter examines the role played by the institutional environment in the establishment of capital buffers by regulators or by banks internally. The results suggest that for regulatory capital ratios to be effective, the institutional environment should not be neglected when setting up these ratios. The third chapter studies the different effects of consumer and creditor rights on the cost of lending. The results show that the cost of lending increases in the presence of strong consumer protection laws, while increasing creditor rights reduces this cost.

Frictions prevent banks to immediately adjust their capital ratio towards their desired and/or imposed level. This paper analyzes (i) whether or not these frictions are larger for regulatory capital ratios vis-à-vis a plain leverage ratio. (ii) which adjustment channels banks use to adjust their capital ratio. and (iii) how the speed of adjustment and adjustment channels differ between large, systemic and complex banks versus small banks. Our results, obtained using a sample of listed banks across OECD countries for the 2001-2012 period, bear critical policy implications for the implementation of new (systemic risk-based) capital requirements and their impact on banks' balance sheets.

We investigate the impact of global and local crises on bank stability and examine the effect of owning bank subsidiaries in other countries. We consider banks from MENA countries which experienced both types of crises during our sample period. Our findings highlight a negative impact of the global financial crisis of 2007-2008 on bank stability but, on the whole, no negative impact of the 'Arab Spring'. A deeper investigation shows that owning subsidiaries outside the home country is a source of increased fragility during normal times, yet a source of higher stability during the 'Arab Spring' but not during the global financial crisis. Moreover, owning foreign subsidiaries in one or two world regions is insufficient to neutralize the 'Arab Spring' crisis, while being present in three or more regions is more stabilizing during the 'Arab Spring' but also more destabilizing during the global financial crisis. Our findings contribute to the literature examining bank stability and have several policy implications.

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This paper extends prior literature on the link between consolidation and stability in banking using a single country setting. From a sample of Indonesian commercial banks over the 2010-2015 time span, we construct the Lerner index as a measure of bank market power due to consolidation. Our empirical results document that higher bank market power tends to reduce insolvency risk and increase capital ratios. A deeper analysis however reveals that higher market power is detrimental for financial stability in state-owned banks and small private-owned banks. We therefore highlight that although consolidation among state-owned banks reduces cost inefficiency as in Hadad et al. (2013), further efforts to reduce state-owned banks' market power are necessary after consolidation. This paper also suggests that strengthening market power in large private-owned banks, but encouraging competition in small private-owned banks to reduce market power, are of particular importance for financial stability. JEL Code: G21, G28.

This paper investigates the interplay of abnormal loan growth, credit reporting system and systemic risk in banking. Based on a sample of publicly traded banks in Asia from 1998 to 2012, higher abnormal loan growth leads to higher systemic risk one year ahead. A closer investigation further suggests that better credit information coverage and private credit bureaus can stem the buildup of bank systemic risk one year ahead due to higher abnormal loan growth. Eventually, this paper offers some supports to strengthen macro-prudential regulation to limit abnormal loan growth. This paper also advocates the importance of strengthening credit information coverage and the role of private credit bureaus in Asian countries to mitigate the negative impact of abnormal loan growth on bank systemic stability.

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Frictions prevent banks to immediately adjust their capital ratio towards their desired and/or imposed level. This paper analyzes (i) whether or not these frictions are larger for regulatory capital ratios vis-à-vis a plain leverage ratio. (ii) which adjustment channels banks use to adjust their capital ratio. and (iii) how the speed of adjustment and adjustment channels differ between large, systemic and complex banks versus small banks. Our results, obtained using a sample of listed banks across OECD countries for the 2001-2012 period, bear critical policy implications for the implementation of new (systemic risk-based) capital requirements and their impact on banks' balance sheets, specifically lending, and hence the real economy.

We investigate how bank charter value affects risk for a sample of OECD banks by using standalone and systemic risk measures before, during, and after the global financial crisis of 2007-2008. Prior to the crisis, bank charter value is positively associated with risk-taking and systemic risk for very large " too-big-too-fail " banks and large U.S. and European banks but such a relationship is inverted during and after the crisis. A deeper investigation shows that such a behavior before the crisis is mostly relevant for very large banks and large banks with high growth strategies. Banks' business models also influence this relationship. In presence of strong diversification strategies, higher charter value increases standalone risk for very large banks. Conversely, for banks following a focus strategy, higher charter value amplifies systemic risk for very large banks and both standalone and systemic risk for large U.S. and European banks. Our findings have important policy implications and cast doubts on the relevance of the uniform more stringent capital requirements introduced by Basel III.

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From a sample of Islamic banks around the world from 1997 to 2012, this paper examines whether loan loss provisioning in Islamic banks is procyclical. Our empirical findings highlight that loan loss provisioning in Islamic banks remains procyclical, although the " expected " loan loss model (E-LLM) has been implemented for Islamic banks in several countries. A closer investigation further documents that Islamic banks also use loan loss provisions for discretionary managerial actions, especially related to capital management in which loan loss reserves and provisions are inflated when bank capitalization declines. Eventually, this paper highlights that higher capitalization can mitigate the procyclicality of loan loss provisions in Islamic banks. In other words, loan loss provisioning becomes countercyclical for Islamic banks with higher capitalization. This paper therefore casts doubts on the adoption of the E-LLM for Islamic banks to promote countercyclical effects, because the E-LLM may be influenced by managerial discretion, including opportunistic capital management using loan loss provisions that may undermine the importance of maintaining sufficient bank capitalization.

This paper investigates the impact of non-interest income businesses on bank lending. Using quarterly data on 8,287 U.S. commercial banks over 2003-2010, we find that the non-interest income activities of banks with total assets above $100 million ('non-micro' banks) influence credit risk. In particular, banks that have higher income from fiduciary activities have lower credit risk. The impact is more pronounced during the post-crisis period. Our findings suggest that fiduciary activities induce managers to behave more prudently in lending because such activities are found to increase banks' franchise value. Other non-interest income activities that may be thought to have an influence on lending - such as service charges on deposit accounts - do not appear to have any robust relationship with the quality of credit extended. Moreover, we find little evidence of income or price cross- subsidization between traditional intermediation and non-interest income activities, except for fiduciary activities after the crisis. Furthermore, we find that micro banks suffer from diseconomies in joint production of non-interest income activities and lending.

The Basel III Accord imposes minimum liquidity standards on bank balance sheets that are already constrained by minimum capital standards. It is not clear whether or how banks' behaviors will change in this new joint-constraint regime. To gain some insight, we study the balance sheet liquidity behavior of U.S. banking companies in response to negative equity capital shocks prior to the implementation of Basel III. Our 1998-2012 data indicate that banks treated regulatory capital and balance sheet liquidity (e.g., net stable funding ratios, core deposits-to-loans, liquid assets-to-assets) as substitutes rather than complements. This main finding is limited to so-called 'community banks' with assets less than $1 billion. equity capital and liquidity were neither substitutes nor complements at larger banks. In the course of rebuilding their capital ratios, shocked community banks substituted away from loans and loan commitments and reduced their dividend payouts, actions that resulted in greater balance sheet liquidity. Thus, in the state of nature that has traditionally most concerned bank regulators (i.e., stress to bank equity capital), community banks increase their liquidity buffers. Given that these lenders do not pose systemic risk, and that they have historically exceeded the Basel III liquidity minimums by wide margins, our findings suggest that imposing minimum liquidity thresholds on small banks will likely yield little prudential benefit.

The Basel III Accord imposes minimum liquidity standards on bank balance sheets that are already constrained by minimum capital standards. It is not clear whether or how banks' behaviors will change in this new joint-constraint regime. To gain some insight, we study the balance sheet liquidity behavior of U.S. banking companies in response to negative equity capital shocks prior to the implementation of Basel III. Our 1998-2012 data indicate that banks treated regulatory capital and balance sheet liquidity (e.g., net stable funding ratios, core deposits-to-loans, liquid assets-to-assets) as substitutes rather than complements. This main finding is limited to so-called 'community banks' with assets less than $1 billion. equity capital and liquidity were neither substitutes nor complements at larger banks. In the course of rebuilding their capital ratios, shocked community banks substituted away from loans and loan commitments and reduced their dividend payouts, actions that resulted in greater balance sheet liquidity. Thus, in the state of nature that has traditionally most concerned bank regulators (i.e., stress to bank equity capital), community banks increase their liquidity buffers. Given that these lenders do not pose systemic risk, and that they have historically exceeded the Basel III liquidity minimums by wide margins, our findings suggest that imposing minimum liquidity thresholds on small banks will likely yield little prudential benefit.

This paper investigates the impact of interbank network topology on bank liquidity ratios. Whereas more emphasis has been put on liquidity requirements by regulators since the global financial crisis of 2007-2008, how differently shaped interbank networks impact individual bank liquidity behavior remains an open issue. We look at how bank interconnectedness within interbank loan and deposit networks affects their decision to hold more or less liquidity during normal times and distress times and depending on the overall size of the banking sector. Our sample consists of commercial, investment, real estate and mortgage banks established in 28 European countries. We conduct instrumental variable estimations to examine the relationship between interbank network topology and bank liquidity. Our results show that taking into account the way that banks are linked to each other within a network adds value to traditional liquidity models. Our findings have critical implications with regards to the implementation of Basel III liquidity requirements and bank supervision more generally.

This paper investigates the interplay of abnormal loan growth, credit reporting system and systemic risk in banking. Based on a sample of publicly traded banks in Asia from 1998 to 2012, higher abnormal loan growth leads to higher systemic risk one year ahead. A closer investigation further suggests that better credit information coverage and private credit bureaus can stem the buildup of bank systemic risk one year ahead due to higher abnormal loan growth. Eventually, this paper offers some supports to strengthen macro-prudential regulation to limit abnormal loan growth. This paper also advocates the importance of strengthening credit information coverage and the role of private credit bureaus in Asian countries to mitigate the negative impact of abnormal loan growth on bank systemic stability.

No summary available.

This paper investigates the relative importance of Islamic banks, alongside their conventional counterparts, in relation to banking and financial development and economic welfare. Using a sample of 22 Muslim countries, with dual-banking systems, during the period 1999–2011, this paper reports some significant positive relationship between the market share of Islamic banks and the development of financial intermediation, financial deepening and economic welfare, particularly in low income or predominantly Muslim countries, and countries with a comparatively higher uncertainty avoidance index. Additionally, the results reveal that a greater market share of Islamic banks is associated with higher efficiency of conventional banks.PostprintPeer reviewe.

Using a unique hand-collected dataset of 1,251 European Union banks and their 20,850 foreign affiliates hosted in 154 countries, this paper investigates how both host country and home country regulation affects their decision on how to go abroad to both developed and developing countries. Controlling for various factors, we find that host country banking regulation is an important factor in explaining organizational form (subsidiaries versus branches), but that such a factor is strongly influenced by the level of development of the host country. While banks are very careful in limiting their expansion to the relatively safest world countries, they are more likely to open branches rather than subsidiaries in countries with stringent activity restrictions and capital requirements. especially when they are relatively less efficient. Additionally, retail-oriented banks tend to prefer to operate subsidiaries in the most developed countries and competitive markets.

This paper addresses the issue of competition in dual banking markets by analyzing the determinants of deposit rates in Islamic and conventional banks. Using a sample of 20 countries with dual banking systems over the 2000-2014 period, our results show significant differences in the drivers of Islamic and conventional banks' pricing behavior. Conventional banks with stronger market power set lower deposit rates but market power is not significant for Islamic banks. In predominantly Muslim environments, conventional banks set higher deposit rates and further higher when their market power is lower. Whereas conventional banks are influenced by the competitiveness of Islamic banks, Islamic banks are only affected by their peers in predominantly Muslim countries. Our findings have important implications regarding competition and bank stability in dual banking markets.

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This paper analyses the relationship between market discipline and bank charter value using a panel dataset of publicly-listed domestic banks in Australia and Canada over the 1995-2011 periods, with particular focus on the 2007/2008 global financial crisis (GFC). Overall, our results show a positive relationship between market discipline and bank charter value, although this has reduced in the post-GFC period. Furthermore, our findings reveal that in the presence of market discipline, bank capital, contingent liabilities, and non-interest income are important sources of charter value. These findings have important policy implications related to bank safety and soundness. The results are robust to model specification.

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This paper is the first to examine whether the loan loss provisioning behavior of Islamic banks is procyclical. From a dynamic panel data methodology, the empirical results show that loan loss provisioning in Islamic banks is indeed procyclical, as higher economic growth leads to a decline in loan loss provisions. A closer investigation is also conducted to examine whether capital management, income smoothing, or signaling behavior can alter the procyclicality of loan loss provisions. Specifically, our results document that only capital management behavior can overcome the procyclicality of loan loss provisions. This paper therefore advocates the importance of strengthening discretionary behavior in Islamic banks in terms of capital management using loan loss provisions, particularly during economic boom.

This paper investigates the relative importance of Islamic banks, alongside their conventional counterparts, in relation tobanking and financial development and economic welfare. Using a sample of 22 Muslim countries, with dual-banking systems, during the period 1999–2011, this paper reports some significant positive relationship between the market share of Islamic banks and the development of financial intermediation, financial deepening and economic welfare, particularly in low income or predominantly Muslim countries,and countries with a comparatively higher uncertainty avoidance index. Additionally, the results reveal thata greater market share of Islamic banks is associated with higherefficiency of conventional banks.

No summary available.

We examine market valuation of foreign earnings of US multinational firms in the context of strength of rule of law of countries in which the international subsidiaries are located. Using 12,288 firm-years observations for the period of 1996 to 2013, we find that foreign earnings association with returns are increasing with the average rule of law of countries in which the MNCs have subsidiaries. We find negative returns-foreign earnings association when a firms expand its operations to other countries, but such association turns out positive when the expansion occurs to countries with stronger investor protection. Value relevance of foreign earnings is highest for the firms which have international subsidiaries located to destinations that are strong in rule of law but are not characterized as tax haven. Our results are robust to alternative empirical specifications and to the concern of endogenous relationship between market valuation and multinational choice of foreign location.

This paper investigates the impact of interbank network topology on bank liquidity ratios. Whereas more emphasis has been put on liquidity requirements by regulators since the global financial crisis of 2007-2008, how differently shaped interbank networks impact individual bank liquidity behavior remains an open issue. We look at how bank interconnectedness within interbank loan and deposit networks affects their decision to hold more or less liquidity during normal times and distress times and depending on the overall size of the banking sector. Our sample consists of commercial, investment, real estate and mortgage banks established in 28 European countries. We conduct instrumental variable estimations to examine the relationship between interbank network topology and bank liquidity. Our results show that taking into account the way that banks are linked to each other within a network adds value to traditional liquidity models. Our findings have critical implications with regards to the implementation of Basel III liquidity requirements and bank supervision more generally.

We examine the roles of information sharing and borrower’s legal rights in affecting the procyclical effect of bank loan loss provisions. Based on a sample of Asian banks, our empirical results highlight that higher non-discretionary provisions reduce loan growth and, hence, non-discretionary provisions are procyclical. A closer investigation suggests that better information sharing through public credit registries managed by central banks, not private credit bureaus managed by the private sector, might substitute for the role of dynamic provisioning systems in mitigating the procyclicality of non-discretionary provisions. We also document that higher discretionary provisions in countries with stronger legal rights for borrowers temper the procyclical effect of non-discretionary provisions. However, these findings hold only for small banks. This suggests that the implementation of dynamic provisioning systems to mitigate the procyclicality of non-discretionary provisions is more crucial for large banks.

We investigate the impact of global and local crises on bank stability and examine the effect of owning bank subsidiaries in other countries. We consider banks from MENA countries which experienced both types of crises during our sample period. Our findings highlight a negative impact of the global financial crisis of 2007-2008 on bank stability but, on the whole, no negative impact of the 'Arab Spring'. A deeper investigation shows that owning subsidiaries outside the home country is a source of increased fragility during normal times, yet a source of higher stability during the 'Arab Spring' but not during the global financial crisis. Moreover, owning foreign subsidiaries in one or two world regions is insufficient to neutralize the 'Arab Spring' crisis, while being present in three or more regions is more stabilizing during the 'Arab Spring' but also more destabilizing during the global financial crisis. Our findings contribute to the literature examining bank stability and have several policy implications. (T. Al Raheb). c Email: amine.tarazi@unilim.fr (A. Tarazi) 2 Local Versus International Crises, Foreign Subsidiaries and Bank Stability: Evidence from the MENA Region. Abstract We investigate the impact of global and local crises on bank stability and examine the effect of owning bank subsidiaries in other countries. We consider banks from MENA countries which experienced both types of crises during our sample period. Our findings highlight a negative impact of the global financial crisis of 2007-2008 on bank stability but, on the whole, no negative impact of the 'Arab Spring'. A deeper investigation shows that owning subsidiaries outside the home country is a source of increased fragility during normal times, yet a source of higher stability during the 'Arab Spring' but not during the global financial crisis. Moreover, owning foreign subsidiaries in one or two world regions is insufficient to neutralize the 'Arab Spring' crisis, while being present in three or more regions is more stabilizing during the 'Arab Spring' but also more destabilizing during the global financial crisis. Our findings contribute to the literature examining bank stability and have several policy implications.

This paper is the first to examine whether the loan loss provisioning behavior of Islamic banks is procyclical. From a dynamic panel data methodology, the empirical results show that loan loss provisioning in Islamic banks is indeed procyclical, as higher economic growth leads to a decline in loan loss provisions. A closer investigation is also conducted to examine whether capital management, income smoothing, or signaling behavior can alter the procyclicality of loan loss provisions. Specifically, our results document that only capital management behavior can overcome the procyclicality of loan loss provisions. This paper therefore advocates the importance of strengthening discretionary behavior in Islamic banks in terms of capital management using loan loss provisions, particularly during economic boom.

This paper investigates the relative importance of Islamic banks, alongside their conventional counterparts, in relation tobanking and financial development and economic welfare. Using a sample of 22 Muslim countries, with dual-banking systems, during the period 1999–2011, this paper reports some significant positive relationship between the market share of Islamic banks and the development of financial intermediation, financial deepening and economic welfare, particularly in low income or predominantly Muslim countries,and countries with a comparatively higher uncertainty avoidance index. Additionally, the results reveal thata greater market share of Islamic banks is associated with higherefficiency of conventional banks.

European banks have experienced significant changes in the type of entity that owns them (another bank, an individual or a family, a non-financial company, an institutional investor, a government, a foreign entity, a domestic entity…). In this paper, we look at the influence of ownership type changes on performance. Working with a panel of commercial banks from 17 European countries, we find that although banks that experience a change in ownership type do not exhibit lower or higher risk or profitability than other banks, their risk and profitability is significantly affected after the change takes place. The type of the acquirer plays a significant role in explaining the observed changes. When the acquirer is a non-financial company, the state or an institutional investor, the level of risk increases after the change while the level of profitability remains unchanged. Conversely, when the acquirer is a bank, we find that the level of risk-adjusted profitability decreases. Banks acquired by a different type of owner during the global financial crisis do not perform better or worse than they did before.

From a sample of Islamic banks around the world from 1997 to 2012, this paper examines whether loan loss provisioning in Islamic banks is procyclical. Our empirical findings highlight that loan loss provisioning in Islamic banks remains procyclical, although the " expected " loan loss model (E-LLM) has been implemented for Islamic banks in several countries. A closer investigation further documents that Islamic banks also use loan loss provisions for discretionary managerial actions, especially related to capital management in which loan loss reserves and provisions are inflated when bank capitalization declines. Eventually, this paper highlights that higher capitalization can mitigate the procyclicality of loan loss provisions in Islamic banks. In other words, loan loss provisioning becomes countercyclical for Islamic banks with higher capitalization. This paper therefore casts doubts on the adoption of the E-LLM for Islamic banks to promote countercyclical effects, because the E-LLM may be influenced by managerial discretion, including opportunistic capital management using loan loss provisions that may undermine the importance of maintaining sufficient bank capitalization.

No summary available.

We estimate the benefits of geographic diversification within states and across states for bank risk and return for all U.S. bank holding companies over 1994 to 2008, and assess whether such benefits depend on bank size.For small banks, only intrastate diversification increases risk-adjusted returns and reduces default risk while for very large institutions only interstate expansions are beneficial but only in terms of default risk. In all cases the relationship ishump-shaped indicating that at some point, the possible agency costs associated with banks getting wider and more geographically diversified outweigh the benefits.Our results indicate that small banks and very large banks could still benefit from further geographic diversification.

No summary available.

From a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank market structure. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. This study also advocates greater reliance on market discipline to promote bank stability.

This paper investigates the determinants of financial deepening across regions in Indonesia after the institutional reforms which brought the country to become more decentralized. Using provincial-level data for 33 provinces from 2004 to 2010, we find that poor local governance significantly impedes financial deepening. Our results also conclude that in the socioeconomically less developed regions, the level of financial deepening is lower than that of more developed regions. Various policy implications are provided. Even though decentralization has been implemented, regional disparity in the form of financial deepening still exists. Improving local governance should be imposed to facilitate favorable business environment. Moreover, regulators have to reconsider regulations that have constrained bank lending.

This thesis consists of three chapters. The first chapter analyzes the impact of shareholding structure and reforms implemented in the 2000s on the efficiency of commercial banks in Vietnam. The results show that efficiency differs according to the type of ownership structure: state-owned banks have lower efficiency levels compared to private banks and banks with foreign shareholders. Since the implementation of stricter minimum capital requirements, bank capitalization has also been an important driver of bank efficiency. The second chapter discusses how banks in Vietnam set their interest margins with a particular focus on banks' ownership structure and central bank regulation of interest rates. The results show that only private and public banks pass on their operational costs to their customers. Bank capitalization, which reflects banks' risk aversion, is a significant determinant for foreign and state-owned banks only in the case of interest rate regulation. these banks tend to pass on the high cost of capital to customers. We also show that, in the absence of interest rate controls, foreign banks set higher margins when they take on higher credit risk, whereas in the presence of interest rate regulation private banks face higher credit risk without being able to increase their margin accordingly. The final chapter studies the impact of monetary policy and economic conditions on bank lending for different levels of bank capitalization. The results indicate that all types of monetary policy shocks have a negative effect on lending, but that increasing bank liquidity leads to a smaller reduction in loan growth. Finally, banks with lower capitalization are less influenced by the business cycle.

This paper studies the impact of a divergence between control rights and pecuniary rights of ultimate shareholders on the default risk of European banks. The results show that although this divergence is normally associated with a higher default risk, it has, on the contrary, contributed to the resilience of banks during the 2007-2008 financial crisis. Further analysis shows that such an effect is accentuated when the bank is controlled by family shareholders or when the bank is located in a country with low shareholder protection.

From a sample of publicly-traded banks in the Asia-Pacific region over the 1998-2012 period, we document that banks with higher charter value are able to insulate themselves from systemic risk by acquiring more capital. Nevertheless, we find that the self-disciplining role of bank charter value is more pronounced for countries with lower depth of credit information sharing. Our results also show that in countries with lower quality of private credit bureaus, higher charter value enhances capitalization, and alleviates systemic risk in banking. Overall, these findings suggest that higher bank charter value might be detrimental to systemic stability for countries where the credit reporting system is of better quality.

This paper examines the recent empirical literature in Islamic banking and finance, highlights the main findings and provides a guide for future research. Early studies focus on the efficiency, production technology and general performance features of Islamic versus conventional banks, whereas more recent work looks at profit-sharing and loss-bearing behaviour, competition, risks as well as other dimensions such as small business lending and financial inclusion. Apart from key exceptions, the empirical literature suggests no major differences between Islamic and conventional banks in terms of their efficiency, competition and risk features (although small Islamic banks are found to be less risky than their conventional counterparts). There is some evidence that Islamic finance aids inclusion and financial sector development. Results from the empirical finance literature, dominated by studies that focus on the risk/return features of mutual funds, finds that Islamic funds perform as well, if not better, than conventional funds – there is little evidence that they perform worse than standard industry benchmarks.

From a sample of publicly-traded banks in the Asia-Pacific region over the 1998-2012 period, we document that banks with higher charter value are able to insulate themselves from systemic risk by acquiring more capital. Nevertheless, we find that the self-disciplining role of bank charter value is more pronounced for countries with lower depth of credit information sharing. Our results also show that in countries with lower quality of private credit bureaus, higher charter value enhances capitalization, and alleviates systemic risk in banking. Overall, these findings suggest that higher bank charter value might be detrimental to systemic stability for countries where the credit reporting system is of better quality.

We investigate whether excess control rights of ultimate owners in pyramids affect banks' adjustment to their target capital ratio. When ultimate control rights and cash-flow rights are identical, banks increase their capital ratio by issuing equity and by reshuffling their assets without slowing their lending. However, when control rights exceed cash-flow rights, banks are reluctant to issue equity to increase their capital ratio and, instead, shrink their assets by mainly cutting their lending. A deeper investigation shows that this behavior is only apparent in family-controlled banks and in countries with relatively weak shareholder protection rights. Our findings provide new insights in the capital structure adjustment process and have critical policy implications for the implementation of Basel III.

No summary available.

This paper investigates the relationship between financial development and income inequality by using a broad range of loan categories as proxies for financial development. Our unique data set allows us to identify loans to micro, small and medium-sized enterprises (MSMEs). It also allows us to distinguish business loans and consumer loans. Using panel data for 33 provinces in Indonesia during the 2007-2013 period, we find that lending to MSMEs reduces income inequality while businesses loans, either for working capital or investment purposes, but also consumer loans increase income inequality. Our results indicate that boosting loans to micro, small, and medium-sized enterprises could significantly contribute to reduce income inequality.

No summary available.

This paper examines the recent empirical literature in Islamic banking and finance, highlights the main findings and provides a guide for future research. Early studies focus on the efficiency, production technology and general performance features of Islamic versus conventional banks, whereas more recent work looks at profit and loss-sharing (PLS) behaviour, competition, risks as well as other dimensions such as small business lending and financial inclusion. Apart from key exceptions, the empirical literature suggests no major differences between Islamic and conventional banks in terms of their efficiency, competition and risk features (although small Islamic banks are found to be less risky than their conventional counterparts). There is some evidence that Islamic finance aids inclusion and financial sector development. Results from the empirical finance literature, dominated by studies that focus on the risk/return features of mutual funds, finds that Islamic funds perform as well, if not better, than conventional funds - there is little evidence that they perform worse than standard industry benchmarks. Some recent evidence, however, suggests that Islamic bond (Sukuk) issuance destroys value for shareholders.

We estimate the benefits of intrastate and interstate geographic diversification for bank risk and return, and assess whether such benefits could be shaped by differences in bank size and disparities in economic conditions within states or across U.S. states. For small banks, only intrastate diversification is beneficial in terms of risk-adjusted returns but for very large institutions both intrastate and interstate expansions are rewarding. However, in all cases the relationship is hump-shaped for both intrastate and interstate diversification indicating limits for banks of all size. Moreover, we also find geographic expansion to reduce bank risk. Our results indicate that both small banks and very large banks could still benefit in terms of risk-adjusted returns from further geographic diversification. Disparities in economic conditions as measured by the dispersion in unemployment rates either across counties or states impact the benefits of diversification. At initially low levels of intrastate diversification, expanding in new markets allows small banks to further reduce their risk in the presence of higher economic disparities. However, when they get more diversified, this effect is reduced.

From a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank competition. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. Likewise, this study advocates the importance of strengthening market discipline to reduce bank riskiness regardless of the degree of competition in the banking industry.

In this paper, we examine the role of information sharing and borrower legal rights in affecting the procyclical effect of bank loan loss provisions. Based on a sample of Asian banks, our empirical results highlight that higher non-discretionary provisions reduce loan growth and hence, non-discretionary provisions are procyclical. A closer investigation suggests that better information sharing through public credit registries managed by central banks, but not private credit bureaus managed by the private sector, might substitute the role of a dynamic provisioning system in mitigating the procyclicality of non-discretionary provisions. We also document that higher discretionary provisions in countries with stronger legal rights of borrowers may temper the procyclical effect of non-discretionary provisions. However, these findings only hold for small banks. This suggests that the implementation of a dynamic provisioning system to mitigate the procyclicality of non-discretionary provisions is more crucial for large banks, because such procyclicality cannot be offset by strengthening credit market environments through better information sharing and legal rights of borrowers.

No summary available.

No summary available.

The unprecedented scale of the 2007-2008 financial crisis has given rise to a vast literature devoted to the analysis of the phenomenon of Shadow Banking, which is considered to be the main culprit of the banking and financial debacle of the Great Recession, without providing a comprehensive understanding. The objective of this thesis is, using a positive approach, to study the roots and dissect the Shadow Banking phenomenon, which is essential to identify its complexity, establish a global understanding and understand its central role in the financing of the economy and money creation. Before being normative, this study requires above all a positive approach that must present facts and mechanisms from an analytical point of view. To this end, this work contributes to the existing literature by proposing a progressive approach that exposes the tools of the supposed migration of banking risks off the banks' balance sheets and disentangles the truth from the fantasy in an in-depth reading of the issues at stake in shadow banking. In this logic, the first chapter of this thesis focuses on what seemed to be at the origin of the 2007-2008 crisis, namely the circulation of assets and risks of banks through the sale of bank credits. It is established that the transfer of banking assets in its modern form has been a reality for more than forty years, weakening the hypothesis of a recent phenomenon guilty of the original sin leading to the crisis, this burden seeming to devolve upon securitization. The second chapter of this thesis is thus devoted to the study of securitization, and more particularly its origins and mechanisms. Like the sale of credit, the hypothesis of a recent phenomenon is quickly dismissed by the rich and long history of the securitization process, which spans over four centuries. In contrast to a nascent and uniquely American phenomenon, securitization reveals European and ancient roots that are far from being devoid of a certain instability. On the other hand, it is a fact that the modern form of securitization owes its pattern to the American public sector which, by its choice to privilege commitments over the holding of assets, has maintained the mirage of a Midas blessing supposed to allow the creation of quality ex-nihilo. If this fable is far from being sustainable, the fact remains that securitization can be a virtuous process of quality and yield distribution made possible by the reduction of information asymmetries, accompanied by a significant improvement in the liquidity of financing. However, it is still the preferred medium for banking regulatory arbitrage made possible by the wait-and-see attitude of regulators. Finally, in light of these necessary insights into the tools of modern finance, the third chapter of this thesis is devoted to the study of shadow banking. After exposing and denouncing the clichés, it offers a reading of the phenomenon that goes beyond the simple fantasy of a parallel banking system hidden in the shadows by proposing a reading that progressively leads to questioning the shift of the financial system towards a dynamic of intensive collateralization. This multiplication of insurance then finds its paroxysm in the emergence of a new monetary hierarchy, with central banks abandoning their prerogatives to the private sector: for nearly a century, banks have had the capacity to create money, which has gradually been ceded to shadow banking. This third chapter calls for further reflection on the place of the bank in the financial system and on the future of money creation, which is increasingly escaping from central bankers.

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This paper studies the impact of a divergence between control rights and pecuniary rights of ultimate shareholders on the default risk of European banks. The results show that although this divergence is normally associated with a higher default risk, it has, on the contrary, contributed to the resilience of banks during the 2007-2008 financial crisis. Further analysis shows that such an effect is accentuated when the bank is controlled by family shareholders or when the bank is located in a country with low shareholder protection.

This paper investigates the determinants of financial deepening across regions in Indonesia after the institutional reforms which brought the country to become more decentralized. Using provincial-level data for 33 provinces from 2004 to 2010, we find that poor local governance significantly impedes financial deepening. Our results also conclude that in the socioeconomically less developed regions, the level of financial deepening is lower than that of more developed regions. Various policy implications are provided. Even though decentralization has been implemented, regional disparity in the form of financial deepening still exists. Improving local governance should be imposed to facilitate favorable business environment. Moreover, regulators have to reconsider regulations that have constrained bank lending.

We empirically investigate the impact of shareholders' excess control rights (greater control than cash-flow rights) on bank profitability and risk before, during, and after the global financial crisis of 2007-2008. We use a unique hand-crafted dataset tracing the complete control chains of 788 European commercial banks and cover the 2002-2010 period. We find that the presence of excess control rights is associated with lower profitability, higher risk- taking and higher default risk before (2002-2006) and after (2009-2010) the crisis. Conversely, it improves profitability and no longer affects risk during the crisis (2007-2008). Further evidence shows that, regardless of the period, the effect of excess control rights on profitability and risk is accentuated in family-controlled banks and in countries with relatively weak shareholder protection rights and that such an effect is only effective at intermediate and high levels of excess control rights. Overall, our findings contribute to the literature examining the corporate governance determinants of banks' performance during the 2007- 2008 financial crisis and have several policy implications.

From a sample of commercial banks in the Asia-Pacific region over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank competition. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. Likewise, this study advocates the importance of strengthening market discipline to reduce bank riskiness regardless of the degree of competition in the banking industry.

This paper investigates the impact of banks' political connections on their ability to collect deposits under two different deposit insurance regimes (blanket guarantee and limited guarantee). We estimate a simultaneous equations model of supply and demand for funds using quarterly data for Indonesian banks from 2002 to 2008. We find that, regardless of their type (state-owned or private entities), politically connected banks are able to attract deposits more easily than their non-connected counterparts. We also show that this effect is more pronounced after the implementation of formal deposit insurance with limited coverage. Our findings have various policy implications. Formal deposit insurance might have improved market discipline, as highlighted by earlier studies, but it has also exacerbated the issue of political connections in the banking sector.

This thesis examines the impact of shareholder structure on the capital structure and performance of European commercial banks over the period 2002-2010. It is composed of three empirical tests. The first chapter tests the effect of the divergence between the control and pecuniary rights of an ultimate shareholder on the adjustment of the capital ratio to its optimal level and on the credit supply by banks. The results show that in the presence of divergence between control and pecuniary rights, banks do not issue capital to increase their ratio and, instead, they reduce their size by slowing down their loan supply. Chapter 2 tests the effect of this divergence on bank profitability and risk in normal and crisis times. The results show that although a divergence between control and pecuniary rights is associated in normal times with lower profitability and higher risk, it did, in contrast, improve profitability and contribute to bank resilience during the 2007-2008 financial crisis. The third chapter tests whether the network of shareholders to which the bank is linked within a chain of control affects the relationship between diversification and performance. The results show that the presence of institutional investors in chains of control helps banks reap benefits when they diversify.

We investigate the impact of the interaction of disclosure and ownership structure on bank risk. Using a sample of 209 commercial banks from Asia during the 2004-2010 period, we find that disclosure is negatively associated with income volatility and that such an impact is stronger in the presence of block holders and institutional ownership and weaker with insider or government ownership. Our results also provide evidence that better disclosure ensures greater stability as measured by individual bank default risk. Furthermore, a deeper investigation shows that disclosure on income statement, loans, other earning assets, deposits, and memo lines plays a stronger role in limiting risk than disclosure on non-deposit liabilities.

In the first chapter of this thesis, using data from Indonesian banks, we examine the impact of a bank's political connections on its ability to collect deposits under different deposit insurance schemes. We find that regardless of the type of bank (private bank or state-owned bank), politically connected banks attract deposits more easily. We also show that this effect is more pronounced after the implementation of the limited coverage deposit insurance scheme. In Chapter 2, we analyze the determinants of Indonesian banks' net interest margin after the 1997/1998 financial crisis. Our results provide evidence that the structure of loan portfolios matters in determining interest margins. Operating costs, market power, risk aversion, and liquidity risk all have a positive impact on interest margins. Credit risk and the cost-to-revenue ratio are negatively associated with margins. Our results reaffirm the loss leader hypothesis on cross-subsidization between traditional intermediation and service activities. Public banks set higher interest margins than other banks, while margins are lower for large and foreign banks. In chapter 3, we examine the determinants of financial sector deepening for Indonesia's regions following institutional reforms that are leading the country to become more decentralized. We find that poor local governance significantly limits financial deepening. Our results suggest that in the least socioeconomically developed regions, the level of financial deepening is lower than in more developed regions.

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We investigate the determinants of net interest margins of Indonesian banks after the 1997/1998 financial crisis. Using data for 93 Indonesian banks over the 2001-2009 period, we estimate an econometric model using a pooled regression as well as static and dynamic panel regressions. Our results confirm that the structure of loan portfolios matters in the determination of interest margins. Operating costs, market power, risk aversion and liquidity risk have positive impacts on interest margins, while credit risk and cost to income ratio are negatively associated with margins. Our results also corroborate the loss leader hypothesis on cross-subsidization between traditional interest activities and non-interest activities. State- owned banks set higher interest margins than other banks, while margins are lower for large banks and for foreign banks.

We investigate whether excess control rights of ultimate owners in pyramids affect banks' adjustment to their target capital ratio. When ultimate control rights and cash-flow rights are identical, banks increase their capital ratio by issuing equity and by reshuffling their assets without slowing their lending. However, when control rights exceed cash-flow rights, banks are reluctant to issue equity to increase their capital ratio and, instead, shrink their assets by mainly cutting their lending. A deeper investigation shows that this behavior is only apparent in family-controlled banks and in countries with relatively weak shareholder protection rights. Our findings provide new insights in the capital structure adjustment process and have critical policy implications for the implementation of Basel III.

No summary available.

We investigate the determinants of net interest margins of Indonesian banks after the 1997/1998 financial crisis. Using data for 93 Indonesian banks over the 2001-2009 period, we estimate an econometric model using a pooled regression as well as static and dynamic panel regressions. Our results confirm that the structure of loan portfolios matters in the determination of interest margins. Operating costs, market power, risk aversion and liquidity risk have positive impacts on interest margins, while credit risk and cost to income ratio are negatively associated with margins. Our results also corroborate the loss leader hypothesis on cross-subsidization between traditional interest activities and non-interest activities. State- owned banks set higher interest margins than other banks, while margins are lower for large banks and for foreign banks.

From a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank market structure. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. This study also advocates greater reliance on market discipline to promote bank stability.

We investigate the impact of the interaction of disclosure and ownership structure on bank risk. Using a sample of 209 commercial banks from Asia during the 2004-2010 period, we find that disclosure is negatively associated with income volatility and that such an impact is stronger in the presence of block holders and institutional ownership and weaker with insider or government ownership. Our results also provide evidence that better disclosure ensures greater stability as measured by individual bank default risk. Furthermore, a deeper investigation shows that disclosure on income statement, loans, other earning assets, deposits, and memo lines plays a stronger role in limiting risk than disclosure on non-deposit liabilities.

We estimate the benefits of intrastate and interstate geographic diversification for bank risk and return, and assess whether such benefits could be shaped by differences in bank size and disparities in economic conditions within states or across U.S. states. For small banks, only intrastate diversification is beneficial in terms of risk-adjusted returns but for very large institutions both intrastate and intrastate expansions are rewarding. However, in all cases the relationship is hump-shaped for both intrastate and interstate diversification indicating limits for banks of all size. Moreover, while our results indicate that the average 'very large' bank has already reached its optimal diversification level, the average 'small bank' could still benefit in terms of risk-adjusted returns from further geographic diversification. Higher economic disparity as measured by the dispersion in unemployment rates either across counties or states impacts the benefits of diversification. At initially low levels of diversification, moving to other markets with dissimilar economic conditions lowers the added value of diversification but it becomes more beneficial at higher diversification levels.

We estimate the benefits of intrastate and interstate geographic diversification for bank risk and return, and assess whether such benefits could be shaped by differences in bank size and disparities in economic conditions within states or across U.S. states. For small banks, only intrastate diversification is beneficial in terms of risk-adjusted returns but for very large institutions both intrastate and intrastate expansions are rewarding. However, in all cases the relationship is hump-shaped for both intrastate and interstate diversification indicating limits for banks of all size. Moreover, while our results indicate that the average 'very large' bank has already reached its optimal diversification level, the average 'small bank' could still benefit in terms of risk-adjusted returns from further geographic diversification. Higher economic disparity as measured by the dispersion in unemployment rates either across counties or states impacts the benefits of diversification. At initially low levels of diversification, moving to other markets with dissimilar economic conditions lowers the added value of diversification but it becomes more beneficial at higher diversification levels.

This study aims to investigate whether the presence of institutional investors in family-controlled banks impacts their performance and risk. Using detailed data on Indonesian banks from 2001 to 2008 and controlling for various factors, our results first show that family-controlled banks are less profitable and more risky than other banks. Specifically, family presence, either under the form of direct ownership, pure single majority, or family directors, is related to higher default risk, income variability, and loan risk. However, the presence of institutional investors as a second stage block holder in family controlled banks tends to mitigate and even reverse such behavior by reducing risk-taking and improving performance. Our results are generally robust with regard to endogeneity issues and alternative specifications.

From a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank market structure. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. This study also advocates greater reliance on market discipline to promote bank stability.

This paper investigates the impact of non-interest income businesses on bank lending. Using quarterly data on 8,287 U.S. commercial banks over 2003-2010, we find that the non-interest income activities of banks with total assets above $100 million ('non-micro' banks) influence credit risk. In particular, banks that have higher income from fiduciary activities have lower credit risk. The impact is more pronounced during the post-crisis period. Our findings suggest that fiduciary activities induce managers to behave more prudently in lending because such activities are found to increase banks' franchise value. Other non-interest income activities that may be thought to have an influence on lending - such as service charges on deposit accounts - do not appear to have any robust relationship with the quality of credit extended. Moreover, we find little evidence of income or price cross- subsidization between traditional intermediation and non-interest income activities, except for fiduciary activities after the crisis. Furthermore, we find that micro banks suffer from diseconomies in joint production of non-interest income activities and lending.

This paper investigates the relationship between the coexistence of Islamic banks alongside their conventional counterparts and the quantitative and qualitative development of commercial banking and economic welfare. We study 22 Muslim countries with a dual banking system during the 1999-2009 period and find a positive relationship between the market share of Islamic banks and the development of financial intermediation and economic growth. The results also show a negative linkage between Islamic banks' presence and income inequality and poverty. Moreover, a greater market share of Islamic banks is associated with lower credit risk and cost inefficiency of conventional banks in certain countries. The extent and modality of the relationships considerably depend on the institutional environment within which a dual banking system operates.

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This study investigates the influence of background diversity of bank board members on performance and risk. Using data from Indonesian banks from 2001 to 2011 covering 4200 individual year observations and 21 ethnic groups, we estimate the degree of diversity by considering various aspects (gender, citizenship, age, experience, tenure, ethnicity, nationality, education level and type) and find significant impacts on bank performance. On the whole, diversity is in general positively associated with performance except when it relates to ethnicity. It not only reduces performance per se but also increases risk. Female presence and professional diversity reduce risk but nationality and ethnicity diversities are associated with higher risk. Education diversity generally leads to higher income volatility and leverage risk. Our results are generally robust to various alternative performance measures, including risk adjusted returns, and estimation methods.

This study aims to investigate whether the presence of institutional investors in family-controlled banks impacts their performance and risk. Using detailed data on Indonesian banks from 2001 to 2008 and controlling for various factors, our results first show that family-controlled banks are less profitable and more risky than other banks. Specifically, family presence, either under the form of direct ownership, pure single majority, or family directors, is related to higher default risk, income variability, and loan risk. However, the presence of institutional investors as a second stage block holder in family controlled banks tends to mitigate and even reverse such behavior by reducing risk-taking and improving performance. Our results are generally robust with regard to endogeneity issues and alternative specifications.

This paper investigates the impact of non-interest income businesses on bank lending. Using quarterly data on 8,287 U.S. commercial banks over 2003-2010, we find that the non-interest income activities of banks with total assets above $100 million ('non-micro' banks) influence credit risk. In particular, banks that have higher income from fiduciary activities have lower credit risk. The impact is more pronounced during the post-crisis period. Our findings suggest that fiduciary activities induce managers to behave more prudently in lending because such activities are found to increase banks' franchise value. Other non-interest income activities that may be thought to have an influence on lending - such as service charges on deposit accounts - do not appear to have any robust relationship with the quality of credit extended. Moreover, we find little evidence of income or price cross- subsidization between traditional intermediation and non-interest income activities, except for fiduciary activities after the crisis. Furthermore, we find that micro banks suffer from diseconomies in joint production of non-interest income activities and lending.

This paper examines the recent empirical literature in Islamic banking and finance, highlights the main findings and provides a guide for future research. Early studies focus on the efficiency, production technology and general performance features of Islamic versus conventional banks, whereas more recent work looks at profit and loss-sharing (PLS) behaviour, competition, risks as well as other dimensions such as small business lending and financial inclusion. Apart from key exceptions, the empirical literature suggests no major differences between Islamic and conventional banks in terms of their efficiency, competition and risk features (although small Islamic banks are found to be less risky than their conventional counterparts). There is some evidence that Islamic finance aids inclusion and financial sector development. Results from the empirical finance literature, dominated by studies that focus on the risk/return features of mutual funds, finds that Islamic funds perform as well, if not better, than conventional funds - there is little evidence that they perform worse than standard industry benchmarks. Some recent evidence, however, suggests that Islamic bond (Sukuk) issuance destroys value for shareholders.

This dissertation comprises three chapters. The first chapter explores risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009. The results show that small Islamic banks have lower credit and insolvency risks than their conventional Counterparts. Little evidence is found to support that Islamic banks charge rents to their customers for offering Sharia compliant financial products. Moreover, the loan quality of Islamic banks is less responsive to domestic interest rates compared to conventional banks. In the second chapter, using quarterly data of 7,578 U. S. Community banks between 2003 and 2010, the impact of seven non-interest income businesses on bank lending is studied. The findings show that for banks with total assets above100 million non-interest income activities influence credit risk and loan portfolio compositions. Banks which emphasize fiduciary and life insurance businesses appear to have a lower credit risk. Moreover, a greater reliance on loan servicing is associated with lower lending-deposit spreads. The results provide little evidence to support whether cost complementarity can explain the joint production of non-interest income and lending. The third chapter analyses whether the coexistence of Islamic banks alongside conventional banks has any significant influence on the size and quality of the banking system and economic growth. The possible impact of Islamic banking presence on the performance of conventional banks is also examined. 22 Muslim countries with a dual banking system during the 1999-2009 period are studied. The results show a positive relationship between the market share of Islamic banks and savings mobilization. The operation of more efficient Islamic banks improves credit allocation across private and Governmental sectors and reduces lending-deposit spreads. Moreover, a larger market share of Islamic banking is associated with lower credit risk and cost inefficiency, but higher lending-deposit spreads of small conventional banks in certain countries.

In chapter 1 of this thesis, we empirically analyze the impact of the introduction of an explicit deposit insurance scheme on bank risk taking and market discipline in Central and Eastern European countries. We show that the introduction of a deposit insurance scheme in the 1990s led to high risk taking by banks. We also show that in the absence of an explicit deposit insurance scheme, the market discipline exercised by depositors through the interest charged on deposits is weak and disappears in the presence of an explicit deposit insurance scheme. However, in the presence of an explicit deposit insurance scheme, depositors exercise market discipline through deposits by withdrawing their assets from banks with a high risk profile. We also show that the risk-taking incentives generated by the existence of an explicit deposit insurance system vary with the quality of the institutional and legal framework in the country. In chapter 2, we analyze the disciplining role of interbank deposits and show the existence of market discipline exercised by banks since the introduction of an explicit deposit insurance scheme in Central and Eastern European countries. However, several factors such as bank ownership and the extent of the deposit insurer's power affect the effectiveness of this market discipline. Our results show that regulator discipline reduces excessive risk taking by banks but weakens market discipline. The empirical study in chapter 3 analyzes the type of activity and financing of foreign banks operating in emerging markets and the consequences for risk taking. We show that the activities and financing of foreign banks differ from those of domestic banks and that this difference leads to different types and levels of risk.

No summary available.

We empirically investigate the impact of shareholders' excess control rights (greater control than cash-flow rights) on bank profitability and risk before, during, and after the global financial crisis of 2007-2008. We use a unique hand-crafted dataset tracing the complete control chains of 788 European commercial banks and cover the 2002-2010 period. We find that the presence of excess control rights is associated with lower profitability, higher risk- taking and higher default risk before (2002-2006) and after (2009-2010) the crisis. Conversely, it improves profitability and no longer affects risk during the crisis (2007-2008). Further evidence shows that, regardless of the period, the effect of excess control rights on profitability and risk is accentuated in family-controlled banks and in countries with relatively weak shareholder protection rights and that such an effect is only effective at intermediate and high levels of excess control rights. Overall, our findings contribute to the literature examining the corporate governance determinants of banks' performance during the 2007- 2008 financial crisis and have several policy implications.

The theory of financial intermediation highlights various channels through which capital and liquidity are interrelated. Using a simultaneous equations framework, we investigate the relationship between bank regulatory capital and bank liquidity measured from on-balance sheet positions for European and U.S. publicly traded commercial banks. Previous research studying the determinants of bank capital buffer has neglected the role of liquidity. On the whole, we find that banks decrease their regulatory capital ratios when they face higher illiquidity as defined in the Basel III accords or when they create more liquidity as measured by Berger and Bouwman (2009). However, considering other measures of illiquidity that focus more closely on core deposits in the United States, our results show that small banks strengthen their solvency standards when they are exposed to higher illiquidity. Our empirical investigation supports the need to implement minimum liquidity ratios concomitant to capital ratios, as stressed by the Basel Committee. however, our findings also shed light on the need to further clarify how to define and measure illiquidity and also on how to regulate large banking institutions, which behave differently than smaller ones.

This paper examines the relationship between opacity and the cost of intermediation in Asian banks. Using a sample of publicly traded commercial banks from 2002 to 2008, our empirical results show that higher opacity is associated with a lower intermediation cost in banking. Hence, bank managers in their efforts to overcome asymmetric information issues and to improve transparency tend to offset the higher cost of acquiring and disclosing information by increasing the cost of intermediation for entrepreneurs. Moreover, a deeper look at the country level indicates that the negative link between opacity and the cost of intermediation is reversed as globalization increases. Greater globalization therefore outweighs managerial entrenchment behavior to preserve bank opacity. Our findings highlight that bank opacity issues are even more costly in countries with higher globalization.

We aim to assess how accurately accounting and stock market indicators predict rating changes for Asian banks. We conduct a stepwise process to determine the optimal set of early indicators by tracing upgrades and downgrades from rating agencies, as well as other relevant factors. Our results indicate that both accounting and market indicators are useful leading indicators but are more effective in predicting upgrades than downgrades, especially for large banks. Moreover, early indicators are only significant in predicting rating changes for banks that are more focused on traditional banking activities such as deposit and loan activities. Finally, a higher reliance of banks on subordinated debt is associated with better accuracy of early indicators.

This paper examines the relationship between opacity and the cost of intermediation in Asian banks. Using a sample of publicly traded commercial banks from 2002 to 2008, our empirical results show that higher opacity is associated with a lower intermediation cost in banking. Hence, bank managers in their efforts to overcome asymmetric information issues and to improve transparency tend to offset the higher cost of acquiring and disclosing information by increasing the cost of intermediation for entrepreneurs. Moreover, a deeper look at the country level indicates that the negative link between opacity and the cost of intermediation is reversed as globalization increases. Greater globalization therefore outweighs managerial entrenchment behavior to preserve bank opacity. Our findings highlight that bank opacity issues are even more costly in countries with higher globalization.

We investigate the impact of changes in capital of European banks on their risk- taking behavior from 1992 to 2006, a time period covering the Basel I capital requirements. We specifically focus on the initial level and type of regulatory capital banks hold. First, we assume that risk changes depend on banks' ex ante regulatory capital position. Second, we consider the impact of an increase in each component of regulatory capital on banks' risk changes. We find that, for highly capitalized and strongly undercapitalized banks, an increase in equity positively affects risk. but an increase in subordinated debt has the opposite effect namely for undercapitalized banks. Moderately undercapitalized banks tend to invest in less risky assets when their equity ratio increases but not when they improve their capital position by extending hybrid capital. Hybrid capital and equity have the same impact for banks with low capital buffers. On the whole, our conclusions support the need to implement more explicit thresholds to classify European banks according to their capital ratios but also to clearly distinguish pure equity from hybrid and subordinated instruments.

This paper investigates risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009. Small Islamic banks that are leveraged or based in countries with predominantly Muslim populations have lower credit risk than conventional banks. In terms of insolvency risk, small Islamic banks also appear more stable. Moreover, we find little evidence that Islamic banks charge rents to their customers for offering Shariá compliant financial products. Our results also show that loan quality of Islamic banks is less responsive to domestic interest rates compared to conventional banks.

This paper examines the impact of bank revenue diversification on the performance of banks in an emerging economy. Using a unique dataset with detailed information on non- interest income, our findings show that, conversely to studies on Western economies, a shift towards non-interest activities increases bank profits and risk-adjusted profits particularly when they are more involved in trading in government securities. Our results also indicate that foreign banks benefit more from such a shift than their domestic counterparts. Moreover, we account for the institutional and regulatory environment advocating loans to SMEs and find that higher involvement in non-interest activities is only beneficial for banks with low exposures to SMEs. Our findings have important policy implications in terms of achieving optimal diversification and lower risk exposure, which might conflict with policies aiming to promote SME lending.

There is a considerable debate on the role played by market discipline in the banking industry. Using data for 207 banks across 10 Central and Eastern European countries, this paper empirically analyzes the disciplining role of interbank deposits. We find that market discipline has been effective in Central and Eastern Europe since the implementation of explicit deposit insurance. However, several factors affect the strength of this discipline. State-owned banks are not disciplined probably because they benefit from implicit insurance. Institutional and legal factors, and resolution strategies adopted by countries during banking crises also impact bank risk and the effectiveness of market discipline. Our results indicate that stronger regulatory discipline reduces risk but also weakens market discipline. We are very grateful to two anonymous reviewers,.

No summary available.

This paper investigates the impact of banks' political connections on their ability to collect deposits under two different deposit insurance regimes (blanket guarantee and limited guarantee). We estimate a simultaneous equations model of supply and demand for funds using quarterly data for Indonesian banks from 2002 to 2008. We find that, regardless of their type (state-owned or private entities), politically connected banks are able to attract deposits more easily than their non-connected counterparts. We also show that this effect is more pronounced after the implementation of formal deposit insurance with limited coverage. Our findings have various policy implications. Formal deposit insurance might have improved market discipline, as highlighted by earlier studies, but it has also exacerbated the issue of political connections in the banking sector.

There is a considerable debate on the role played by market discipline in the banking industry. Using data for 207 banks across 10 Central and Eastern European countries, this paper empirically analyzes the disciplining role of interbank deposits. We find that market discipline has been effective in Central and Eastern Europe since the implementation of explicit deposit insurance. However, several factors affect the strength of this discipline. State-owned banks are not disciplined probably because they benefit from implicit insurance. Institutional and legal factors, and resolution strategies adopted by countries during banking crises also impact bank risk and the effectiveness of market discipline. Our results indicate that stronger regulatory discipline reduces risk but also weakens market discipline.

We investigate whether excess control rights of ultimate owners in pyramids affect banks' adjustment to their target capital ratio. When ultimate control rights and cash-flow rights are identical, banks increase their capital ratio by issuing equity and by reshuffling their assets without slowing their lending. However, when control rights exceed cash-flow rights, banks are reluctant to issue equity to increase their capital ratio and, instead, shrink their assets by mainly cutting their lending. A deeper investigation shows that this behavior is only apparent in family-controlled banks and in countries with relatively weak shareholder protection rights. Our findings provide new insights in the capital structure adjustment process and have critical policy implications for the implementation of Basel III.

This paper analyses the relationship between market discipline and bank charter value using a panel dataset of publicly-listed domestic banks in Australia and Canada over the 1995-2011 periods, with particular focus on the 2007/2008 global financial crisis (GFC). Overall, our results show a positive relationship between market discipline and bank charter value, although this has reduced in the post-GFC period. Furthermore, our findings reveal that in the presence of market discipline, bank capital, contingent liabilities, and non-interest income are important sources of charter value. These findings have important policy implications related to bank safety and soundness. The results are robust to model specification.

We empirically investigate the impact of shareholders' excess control rights (greater control than cash-flow rights) on bank profitability and risk before, during, and after the global financial crisis of 2007-2008. We use a unique hand-crafted dataset tracing the complete control chains of 788 European commercial banks and cover the 2002-2010 period. We find that the presence of excess control rights is associated with lower profitability, higher risk- taking and higher default risk before (2002-2006) and after (2009-2010) the crisis. Conversely, it improves profitability and no longer affects risk during the crisis (2007-2008). Further evidence shows that, regardless of the period, the effect of excess control rights on profitability and risk is accentuated in family-controlled banks and in countries with relatively weak shareholder protection rights and that such an effect is only effective at intermediate and high levels of excess control rights. Overall, our findings contribute to the literature examining the corporate governance determinants of banks' performance during the 2007- 2008 financial crisis and have several policy implications.

This paper investigates the impact on financial stability of bank competition in emerging markets by taking into account crisis periods. Based on a broad set of commercial banks in Asia over the 1994-2009 period, the empirical results indicate that a higher degree of market power in the banking market is associated with higher capital ratios, higher income volatility and higher insolvency risk of banks. In general, although banks in less competitive markets hold more capital, the levels of capitalization are not high enough to offset the impact on default risk of higher risk taking. Nevertheless, during crisis periods, specifically the 1997 Asian crisis that has directly affected Asian banks, market power in banking has a stabilizing impact. A closer investigation however shows that such findings only hold for countries with a smaller size of the largest banks, suggesting that the impact of bank competition is conditional on the extent to which the banking industry may benefit from too-big-to-fail subsidies. Overall, this paper has policy implications for bank consolidation policies and the role of the lender of last resort.

This article investigates risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009. Small Islamic banks that are leveraged or based in countries with predominantly Muslim populations have lower credit risk than conventional banks. In terms of insolvency risk, small Islamic banks also appear more stable. Moreover, we find little evidence that Islamic banks charge rents to their customers for offering Shariá-compliant financial products. Our results also show that loan quality of Islamic banks is less responsive to domestic interest rates compared to conventional banks.

The objective of this thesis is to analyze the implications of the reforms of the banking system in emerging countries on banking risk taking and financial intermediation. This thesis is composed of three parts. In the first part, consisting of two chapters, we focus on the impact of market power on the financial stability of Asian banks. The empirical results show that high market power leads to more financial instability. This is despite the fact that banks that operate in a less competitive market are well capitalized. Part two consists of two chapters devoted to the Indonesian banking system. The objective is to examine the impact of the increase in the capital ratio on banking stability, taking into account the risk aversion of banks. Our empirical results show the presence of managerial interests that cause inefficiencies and financial disintermediation. In the third part, we formalize, in a theoretical model, the presence of this financial disintermediation that leads to the appearance of a threshold effect in the link between finance and growth.

The objective of this thesis is to analyze the advantages of adding liquidity standards in the current banking regulatory framework to strengthen bank stability. Chapter 1 reviews the existing literature and presents stylized facts focusing on the extent of banks’ liquidity creation and maturity transformation risk. The chapter also investigates the sensitivity of maturity transformation risk to several factors depending on banks’ business models. The findings raise several challenges for both banks and regulators to improve the profile of banks’ maturity transformation risk. Chapter 2 examines whether the introduction of a liquidity measure as defined in the Basel III accords can contribute to improve the prediction of bank financial distress. The results show that the Basel III net stable funding ratio adds predictive value to models relying on liquidity ratios from the CAMELS approach to explain bank default probability. The findings support the need to improve the definition of liquidity to predict bank financial distress. Chapter 3 investigates the relationship between bank capital buffer and liquidity. The purpose is to examine whether banks maintain or strengthen their capital buffer when they face lower liquidity. The empirical investigation supports the need to implement minimum liquidity ratios concomitant to capital ratios, as stressed by the Basel Committee.

The objective of this thesis is to analyze the role of shareholding structure in explaining risk taking and bank performance.It is also to study the factors that may modify the relationship between shareholding structure and bank risk. In chapter 1, we theoretically and empirically analyze the studies on the implication of the shareholder structure of banks in terms of risk and performance. In Chapter 2, we test the impact of shareholding structure on the risk and profitability of European banks. We show that an increase in the shareholding of families or banks is associated with a decrease in asset risk and default risk. We also show that institutional investors and non-financial companies impose riskier strategies on banks where they hold high shares. For listed banks, changes in ownership structure do not affect their risk-taking behavior. Market forces thus appear to align the risk-taking behavior of listed banks. In chapter 3, we study the impact of changes in shareholding structure on the efficiency of Asian banks after the 1997 crisis. Our results show that state-owned banks improved their cost efficiency even if this was not accompanied by improved profit efficiency. In contrast, we find no difference in efficiency among listed banks regardless of the shareholder class considered. Our results imply that regulators should take shareholder structure into account when designing regulatory policies, especially for listed banks. Furthermore, actions to differentiate the supervisory process for listed and unlisted banks are important for a more robust banking system.

The objective of this thesis is to assess the impact of capital regulation on bank risk. We contribute to the literature in three ways. First, we consider the level of regulatory capital initially held by banks as well as the type of capital chosen to increase this level. Second, we study the appropriateness of introducing a requirement on the non-risk weighted capital ratio in Europe. In the first chapter of the thesis, we present the financial structure of banks and analyze the different channels through which capital regulation influences banks' risk taking, by reviewing the theoretical and empirical literature. We highlight the lack of consensus regarding the impact of capital requirements on bank risk. The second chapter is devoted to the study of the impact of capital changes on the risk-taking of European banks, taking into account the "ex ante" level and the different components of regulatory capital. We find, first, that highly capitalized and adequately capitalized banks take more risk when they increase their capital. Moderately undercapitalized banks behave conservatively, while severely undercapitalized banks bet for resurrection by taking more risk. We then show that moderately undercapitalized banks reduce their risk taking only when they increase their capital. Conversely, an increase in subordinated debt and hybrid capital generally leads to higher risk taking, regardless of the bank's initial capital level. In the third chapter, we assess the impact of risk-weighted and unweighted capital ratios on the default risk of European banks, taking into account market discipline The results show that an increase in risk-weighted capital ratios leads to a decrease in default risk Conversely, unweighted risk-weighted capital ratios are associated with a higher default risk for unlisted banks

This thesis is an extension of the Early Warning Systems of banking crises based on a multinomial logit econometric approach. The objective of the thesis is twofold: in a first part, we analyze the concept, the determinants and the theoretical foundations of the banking crisis in a general context. In this way, we define a framework of analysis conducive to the implementation of a crisis prevention policy. In a second part, based on this analytical framework, we contribute to the prediction techniques of banking crises. The originality of the thesis lies in the use of multinomial logit models as a tool for predicting banking crises. From two empirical studies, we highlight three main results: first, we show that taking into account the specificities of banks in terms of accounting ratios improves the prediction of banking crises. Second, we detect the presence of a bias related to the identification of crises. This bias is revealed when we take into account the periods that precede or follow a crisis episode, which are neither quiet periods nor crisis periods. Third, we propose a framework for monitoring banking systems that consists of assigning scores in terms of the level of fragility. On this basis, we show, for example, that the most severe banking crises that occurred in Brazil and Mexico in 1994 and in Southeast Asia in 1997, follow periods of very high fragility.

The objective of this thesis is to contribute to the elaboration of an early warning system of banking crises for emerging countries in Asia and Latin America. Such a contribution is all the more essential as their crises are more frequent and the costs of resolution are more expensive. This thesis is constructed in three chapters. In the first chapter, we have examined the different ways of fighting banking crises. We have highlighted the ineffectiveness of crisis management measures, then we have underlined the limits of preventive measures, and finally, we have noted the absence of a crisis early warning system dedicated to emerging countries, while underlining the possible applications. In chapters 2 and 3 we have attempted to develop an early warning system based on a univariate and a multivariate technique and using, for the first time, banking variables. The application of both techniques leads to three main results. First, the Asian and Latin American banking crises are better predicted when banking, macroeconomic and institutional variables are considered simultaneously. Second, variables lagged by one year predict crises better than those lagged by two or three years. Finally, some variables show consistent significance in both methods, mainly the real GDP growth rate, foreign capital flows to GDP, bad debt reserves to total assets and net income to total assets.

The objective of this thesis is to analyze the conditions that must be met in order to implement market discipline in the banking sector. In chapter 1, we analyze the modalities of use and the conditions of effectiveness of a market discipline. We study the incentives and capacities of agents to evaluate the risk of banks before presenting the obstacles to the effectiveness of a discipline linked to the specificity of the banking activity. In Chapter 2, using theoretical modeling, we analyze the effects on bank risk of����a subordinated debt policy by considering the incentives and capabilities of subordinated debt holders to assess risk. We highlight that better risk control can be achieved through direct market influence if subordinated debt holders have sufficient information about risk and are credibly removed from any insurance. The use of market information by supervisors can complement the beneficial effects of direct discipline and, in some cases, counteract its perverse effects when its conditions for effectiveness are not met. In chapter 3, we test the contribution of equity market indicators in predicting financial deterioration in banks. We show that the market indicators contain information not contained in the accounting indicators and that this information can be used effectively between the dates of the balance sheets. However, this result is valid only for banks with sufficiently marketed liabilities.

The objective of this thesis is to contribute to the debate on banking regulation within the EU. Indeed, we have first recalled the situation of the European banking industry today and have imagined a model of supranational regulation. We then showed that the growing interdependence between European banks can be a source of contagion risk both at the domestic and cross-border levels. An analysis of the determinants of this contagion showed that it is best explained by financial indicators when it is cross-border��re and by accounting indicators when it is domestic. The impact of both domestic and cross-border bank consolidations remains negligible on the systematic risk of the banks selected in our sample.

The Lebanese banking sector has undergone a deep structural and functional change due to globalization and liberalization during the last two decades. This mutation improving the competitiveness of this sector through the decrease of the interest margin, necessarily exposes it to different types of risks. The objective of this thesis is to show the fundamental role of the risk in the determination of the margin and to highlight the effect of the determinants of this margin for the banks in Lebanon. The approach is organized in three steps. The first step is to present the reorganization of the Lebanese banking sector since the 1990s. In fact, the predominance of credits to the resident private sector and private sector deposits in US dollars has characterized the performance of the banking sector while the respect of prudential norms and the accentuation of merger and acquisition operations have marked its modernization. In the second part, a review of the theoretical and empirical literature on the pricing of the banking intermediation activity through two approaches is proposed. In the third part, an empirical investigation, in panel data, for a sample of Lebanese commercial banks over the period 1995-2002 is carried out. We use the microeconomic model of Goyeau, Sauviat and Tarazi (1999) which uses a neoclassical framework with uncertainty. The empirical results reveal the significant and positive effect of market power, credit and transformation risks from customers and administrative costs on the margin for all banks over the whole period. The time trend reflects a change in margin determination and profit structure. Distinguishing banks by the size of their average balance sheet reveals that only large banks appear to be constrained by regulation and to obey the expected effects on transformation risk from customers, while small and medium-sized banks significantly pass on changes in the yield on Treasury bills. Differences in behavior for the customer-only estimate were also revealed over the 1995-98 subperiod, and the effect of market power is negative for large banks while it is positive for small and medium-sized banks. However, even though both groups are constrained by regulation in the 1999-2002 sub-period, only the large banks manage the transformation risk while the small and medium banks benefit from administrative costs that positively influence the margin. A distinction between banks according to the share of customer loans in their balance sheet was made in order to determine whether banks that specialize in granting loans have better risk management, particularly with respect to customer loans. Although both groups have a positive influence on the margin for the entire period, only banks with an average ratio of more than 32 percent have a capitalization that negatively affects the margin for the customer estimate for the 1995-1998 subperiod.

The objective of this thesis is to analyze through the case of the three most advanced countries in the process of financial liberalization in the Middle East (Jordan, Egypt and Lebanon) the relationship between financial development and economic development and what will be the impacts of financial liberalization. More specifically, it is to determine the financial system that will be more effective in the economic development of the three countries (system based on the bank or system based on the market) Our approach is to first adopt a quantitative analysis of financial development indicators to measure the impacts of financial liberalization and to understand the place occupied by each component of the financial system, To answer the major question, we adopt a cross-sectional econometric model with the objective of seeing the effect made by financial indicators on the growth rate of GDP in the long term, We use OLS to estimate the coefficients of explanatory variables, The influences of financial variables are estimated separately in five different regressions,.

The objective of this thesis is to present a theoretical and empirical attempt to put into perspective an explicit deposit insurance system in WAEMU countries. Unlike most studies and works on developing countries, this reflection has been absent for a long time in WAEMU countries. The latter are among the developing countries that have not yet put in place an explicit guarantee for depositors' savings. It seems to be a priority for these countries at present for several reasons: the consequences of the bank failures of the 1980s in particular on depositors and banks; the considerable development of informal finance due to the deterioration of the general public's confidence in formal intermediation; the low rate of savings and bank penetration; and the low degree of financial deepening and relatively high level of banking fragility in several of these countries. More specifically, this study has a twofold objective: (1) first, to examine the rationale for and desirability of a deposit insurance scheme in WAEMU countries, drawing on the recent literature on the effectiveness of deposit insurance in developing countries. (2) and then establish an attempt to implicitly price the deposit insurance premium for banks in these countries. We propose a specification of an econometric model to capture banking, financial, macroeconomic and institutional indicators of this implicit premium. Also, through this implicit premium, we present another measure of risk for banks in these countries. Our main results lead us to highlight the need to take into account banking, financial, macroeconomic and institutional aspects for these countries in any risk management of banks and, by implication, in any insurance premium pricing program.

The main purpose of this thesis is to investigate the impact of deregulation and financial reform on the competitive structure of the Lebanese banking market and on the reproductive efficiency of banks operating in Lebanon. This work is conducted by considering four approaches: 1) the use of industrial economics to analyze the competitive structure of the Lebanese market. 2) the use of production microeconomics for the specification of a cost function. 3) the use of the theory of productive efficiency and finally 4) the use of estimation techniques on panel data. The results obtained show on the one hand an intensification of competition and on the other hand an improvement of the productive efficiency of banks operating in Lebanon over the period 1992-2000.

The efficiency of the firm is at the heart of the concerns of the microeconomic theory of production. For banks, efficiency corresponds not only to an internal objective, but also to a commercial necessity. The objective of this paper is to show, first, the relevance of the distance function as a tool for measuring efficiency, and second, to propose an application to the banking industry. While the distance function is relevant for many industries, it is particularly relevant for the banking industry. The Mauritanian banking sector, which has been undergoing restructuring and modernization for several years, presents an interesting field of study that provides the Mauritanian authorities with a decision-making tool for liberalizing the banking industry.

This thesis proposes a method for managing the interest rate risk related to the commercial activity of the Caisse d'Epargne du Limousin. This method is based on the principle of the Markowitz (1952) portfolio choice model adapted to the banking activity. Its theoretical structure makes it possible to determine the optimal distribution of new operations of a bank that is adverse to risk by arbitrating between return and risk. This optimization is performed in the presence of regulatory and commercial constraints. Since the bank's previous operations cannot be cancelled, the interest rate risk is managed through its new operations. This method is adapted to the balance sheet of the Caisse d'Epargne du Limousin and then subjected to numerous simulations. These simulations show that, in relation to the new production objectives of the Caisse d'Epargne du Limousin, the proposed method makes it possible to improve the interest margin while reducing the risk.

Given the increasing share of non-interest income, the motivation behind this thesis is to understand how the major changes that took place in the banking industry may have affected banks' intermediation activity. The review of literature shows that the price setting of intermediation activity, the role of risk within this setting and the multi-production of banks have not been considered conjointly. After an empirical survey, we carry out our own test about the determinants of bank margins in Europe. We include fees as an explanatory variable, and find a negative impact of this variable on the margin. Our model, based on a principal-agent framework with adverse selection, underlines two major results: banks subsidise their lending rate as they desire to increase their sale of services, and a strategy to further increase service revenue decreases their incentives to screen firms' project, taking on higher credit risk. Then, our theoretical findings are assessed empirically.

The objective of this thesis was to analyze the optimal weighting between internal and external control of banks in the context of a greater degree of freedom granted by the new banking regulation to banks. External regulation is based on procedures and techniques developed by practitioners within the institutions. In a context of liberalization of financial markets and marketization, internal control can only develop, but the question of its greater effectiveness then arose. The link between external control, which has shown its limits, and internal control, which allows for a more detailed assessment of banking risks, became a key issue. The proposed approach is based on three stages. The first is a theoretical and institutional analysis of internal control, then of external control. An analytical and empirical study is conducted on the VaR (value at risk) model, which is used as a risk quantification tool by practitioners. The second step proposes a reflection on the articulation between internal and external control. The use of internal models raises the question of their reliability and brings to light the notion of "model risk", which leads to the justification of the conservative approach adopted by the regulator, which consists of applying a multiplicative factor to the results of the VaR in order to calculate regulatory capital. Moreover, it is possible to combine the VaR method for normal periods and stress tests to take into account abnormal events. The last part of the thesis proposes a regulatory scheme based on "flexible and dynamic regulation". It is indeed possible to question the traditional dichotomy between market risks and credit risks, thanks to the use of new instruments, notably credit derivatives.

The objective of this paper is to analyze banking risk in the regulatory environment of the 1980s. The two-parameter portfolio model (expectation and variance) is applied to the banking firm and prudential rules are introduced. It is shown both from a theoretical and an empirical point of view that prudential rules, even the most sophisticated ones (radio cooke), are unable by themselves to control the risk of bank failure. It is suggested that individualized control of banks by the authorities is also necessary as long as the problems of imperfect information and moral hazard are not resolved.