Chesini et al (eds ) the business of banking; models, risk and regulation (2017)

Palgrave Macmillan Studies in Banking and Financial Institutions Series Editor Philip Molyneux University of Sharjah, Sharjah, UAE The Palgrave Macmillan Studies in Banking and Financial Institutions series is international in orientation and includes studies of banking systems in particular countries or regions as well as contemporary themes such as Islamic Banking, Financial Exclusion, Mergers and Acquisitions, Risk Management, and IT in Banking The books focus on research and practice and include up to date and innovative studies that cover issues which impact banking systems globally More information about this series at http://​www.​springer.​com/​series/​14678 Editors Giusy Chesini, Elisa Giaretta and Andrea Paltrinieri The Business of Banking Models, Risk and Regulation Editors Giusy Chesini Department of Economics, University of Verona, Verona, Italy Elisa Giaretta Department of Business Administration, University of Verona, Verona, Italy Andrea Paltrinieri Department of Economic and Statistical Sciences, University of Udine, Udine, Italy Palgrave Macmillan Studies in Banking and Financial Institutions ISBN 978-3-319-54893-7 e-ISBN 978-3-319-54894-4 https://doi.org/10.1007/978-3-319-54894-4 Library of Congress Control Number: 2017943467 © The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Cover image: © Maciej Bledowski/Alamy Stock Photo Cover design: Tom Howey Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Acknowledgements First and foremost, we would like to thank all our contributors, whose biographies are provided in this volume, without which the edited book would not have been possible Also, we want to express our gratitude to all participants of the 2016 Wolpertinger Conference— organized by the European Association of University Teachers of Banking and Finance in September 2016 at the University of Verona—for their insightful comments about all the papers included in this volume We would also like to show our gratitude to Professor Philip Molyneux (Professor of Banking and Finance and Dean of the College of Business, Law, Education and Social Sciences), editor in chief of the Palgrave Macmillan Studies in Banking and Financial Institution Series, for approving our book proposal and for his support during the process Also, many thanks to the Palgrave Macmillan team, Aimee Dibbens and Natasha Denby, for their support during the publishing process Special thanks to the institutions which kindly supported the Wolpertinger Conference in Verona and so contributed to make it a pleasant and fruitful event: Banco Popolare, Unicredit (Verona), and S&P Global Market Intelligence Finally, as conference organizers, we would like to thank Steven Ongena, Professor at the University of Zurich, for giving a plenary speech at the conference on “Relationship Lending Reloaded” and the other speakers at the Jack Revell Session on “The Financial System in the Macroeconomy” (Cesare Bisoni, University of Modena; Maurizio Faroni, General Director at Banco Popolare; Phil Molyneux, Bangor Business School; and Greg Udell, Indiana University) Contents Introduction Giusy Chesini, Elisa Giaretta and Andrea Paltrinieri Interest Rates and Net Interest Margins:​ The Impact of Monetary Policy Paula Cruz-García, Juan Fernández de Guevara and Joaquín Maudos The Swedish Mortgage Market:​ Bank Funding, Margins, and Risk Shifting Viktor Elliot and Ted Lindblom Incapability or Bad Luck?​ Testing the “Bad Management” Hypothesis in the Italian Banking System Fabrizio Crespi and Mauro Aliano Why Do US Banks React Differently to Short Selling Bans?​ Daniele Angelo Previati, Giuseppe Galloppo, Mauro Aliano and Viktoriia Paimanova Reputational Risk in Banking:​ Important to Whom?​ Ewa Miklaszewska and Krzysztof Kil The Business Model of Banks:​ A Review of the Theoretical and Empirical Literature Stefano Cosma, Riccardo Ferretti, Elisabetta Gualandri, Andrea Landi and Valeria Venturelli On European Deposit Protection Scheme(s) Milena Migliavacca A Technical Approach to Deposit Guarantee Schemes Francesca Arnaboldi Index List of Figures Fig 2.1 Intervention interest rates by the main Central Banks Fig 2.2 Three-month interbank rates evolution Fig 2.3 Net interest income evolution (% total assets) Fig 2.4 Economic impact of the net interest margin determinants (bp) The graph shows the effect on net interest income of a variation of 25–75 percentile of the distribution in each of the explanatory variables The bars that have a more subdued colour correspond to variables whose effect is not statistically significant The variables are sorted from highest to lowest impact on net interest income The equation [2] of the Table 2.2 was used for the analysis Fig 2.5 Observed changes in interest rates and predicted changes in the net interest margin (bp) Fig 3.1 Illustration of overcapitalization of CB issues Fig 3.2 Growth (in mEuro) of outstanding CBs on the Swedish market since 2006 Fig 3.3 Indirect issuing of CBs through a bank-owned “building society” Fig 3.4 Direct issuing of CBs through a bank-owned “building society” Fig 3.5 Illustration of the roles of actors involved in CB issues Fig 3.6 Average discounts on the banks’ officially offered mortgage rates the past year Fig 3.7 Aggregate bank funding 1996–2015 Fig 3.8 Pre- and post-CB claims by different bank funds providers on bank assets in case of bankruptcy Fig 3.9 Average market rates and risk premiums on 2- and 5-year covered bonds (CB/MB) relative government bonds (GB) for 2000–2016 Fig 3.10 Average official mortgage rates of the five Swedish “mortgage” banks from 2000 to 2016 Fig 3.11 Deviations of the banks’ officially offered mortgage rates from 2000 to 2016 Fig 3.12 Marginal mortgage lending margins of the average bank from 2000 to 2016 Fig 3.13 Illustration of average interest rate margins if borrowing short and lending long Fig 7.1 BM definition: the different approaches in the management literature Fig 7.2 Strategic components of banking business model (BBM) Fig 8.1 EU28 Member States DPSs’ design Fig 9.1 Banks (%) and coefficients List of Tables Table 2.1 Descriptive statistics (2003–2014 averages) Table 2.2 Determinants of net interest income: 2003–2014 Table 2.3 Observed changes in interest rate and yield slope curve and predicted changes in net interest margin (bp) Table 3.1 Credit ratings of CBs issued by Swedish institutions Table 3.2 Key figures (in SEKm) of selected banks as of December 31, 2015 Table 4.1 Dataset description Table 4.2 Mean ratio of impaired loans on credit to clients for the banks in our dataset Table 4.3 Descriptive statistics of variables used Table 4.4 Panel regression Bank-specific determinants on credit quality Table 4.5 VIF test results Table 4.6 Redundant Fixed Effects Tests Table 4.7 Panel regression Bank-specific determinants on credit quality GMM Table 5.1 Fundamental variables description Table 5.2 Short selling ban interventions in US financial sector ... Markets, Institutions and Money, Journal of International Money and Finance, Regional Studies, Review of Income and Wealth, Journal of Business Economics and Management, etc .) He is a member of the. .. Banking and Finance and Softech-ICT © The Author(s) 2017 Giusy Chesini, Elisa Giaretta and Andrea Paltrinieri (eds. ), The Business of Banking, Palgrave Macmillan Studies in Banking and Financial... Review of the Theoretical and Empirical Literature” by Stefano Cosma, Riccardo Ferretti, Elisabetta Gualandri, Andrea Landi, and Valeria Venturelli considers that the business model (BM) has become