Theoretical studies have noted that loan applicants rejected by one bank can apply at another bank, systematically worsening the pool of applicants faced by all banks. This paper presents the first empirical evidence of this effect and explores some additional ramifications, including the role of common filters, such as commercially available credit scoring models, in mitigating this adverse se...

We consider a banking model in which firms’ access to credit is constrained due to the banks’ limited risk-bearing capacities. We show that such constraints may be relaxed by allowing banks to transfer risks to outside investors. However, the market for credit risk transfer (CRT) works smoothly only if loans are based on hard, i. e., verifiable information. In contrast, the market for CRT eithe...

This paper unifies the growth and profit strands in the empirical banking literature. A model allowing for bi-directional causality between growth and profit is used to test for the law of proportionate effect (LPE) and persistence of profit (POP), using 1990s European banking data. Larger commercial banks grew faster than smaller ones. The LPE describes the growth of savings and co-operative b...

The aim of this study, through the estimation of a cost function, is to estimate the scale economies and scale and X-inefficiencies of commercial banks operating in Indonesia with a view to identifying hypothetical mergers that could deliver significant cost savings. Economies of scale are typically only found for the largest and smallest banks, with the industry’s estimated scale inefficiency ...

The purpose of this paper is to apply "lter banks to the control problem involving the rejection of multi-sinusoidal disturbance from output of slowly time-varying stable systems. The use of "lter banks allows to distribute the control e!ort in many independent adaptive controllers, each of them taking care of a sinusoidal component of the disturbance. By varying the "lter banks speci"cations, ...

a r t i c l e i n f o a b s t r a c t In this paper we study the optimal design of credit derivative contracts when banks have private information about their ability in the loan market and are subject to capital requirements. First, we prove that when banks are subject to a maximum loss capital requirement the optimal signaling contract is a binary credit default basket. Second, we show that i...

Ownership structures widely differ across the EU. While large blockholdings dominate in the banking sector in Continental Europe, ownership is widely dispersed in the United Kingdom. These differences have consequences for corporate governance in the EU banking sector. This paper analyzes the efficiency of shareholder control and hostile takeovers as corporate governance mechanisms in the EU ba...

Bangladesh is a moderate Islamic country. There are six full pledged Islamic banks providing services to wide range of customers. This study is designed to examine the impact of demographic disparities on the bank selection criteria applied by diversified customers of domestic Islamic banks in Bangladesh. We have run regression analysis after controlling for four demographic groupings such as G...