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We investigate the impact of stakeholder orientation on bank payout policy. As a quasi‐experimental setting, we exploit the staggered enactment of constituency statutes across US states, which broaden the scope of managerial duties to an extended group of stakeholders. The results of a difference‐in‐differences analysis suggest that bank holding companies (BHCs) incorporated in states enacting constituency statutes experience significant declines in total payouts, which is driven by a decline in share repurchases. This observed decline in share repurchases is stronger for banks with sizeable implicit claims, lower transparency and substantial agency conflicts. These findings remain intact following a myriad of robustness checks and alternative estimation techniques. [ABSTRACT FROM AUTHOR]

In this paper, we investigate whether innovative small- and medium-sized enterprises (SMEs) are more likely to be discouraged from applying for external finance than non-innovators. These so-called discouraged borrowers are credit worthy SMEs who choose not to apply for external finance despite the fact that this is needed. We find that SMEs undertaking pure product and joint product and process innovation have a significantly higher incidence of borrower discouragement than non-innovative counterparts. Moreover, radical and incremental product innovators are more likely to be discouraged relative to non-innovative counterparts. Innovative activity can increase borrower discouragement for a myriad of reasons including fear of rejection, reluctance to take on additional risk, negative perceptions of the funding application process and perceived negative economic conditions. Overall, our results suggest a need for targeted policy interventions in order to alleviate borrower discouragement within innovative SMEs, as well as a closer alignment between innovation and SME finance policy. Plain English Summary: Innovative SMEs play a crucial role in driving technological change and productivity growth. Therefore, understanding the factors shaping access to finance for innovative SMEs is of crucial importance to the economy. We investigate the potential impact of innovation activity on the incidence of borrower discouragement, credit worthy firms who choose not to apply for external finance despite the fact that it is required. The results of our empirical investigation suggest that SMEs undertaking pure product and joint product and process innovation have a significantly higher incidence of borrower discouragement than non-innovative counterparts. The principal implication of this study is that innovation is a factor, which self-limits access to finance for innovative SMEs. We offer recommendations to mitigate borrower discouragement in this context. [ABSTRACT FROM AUTHOR]

We examine the determinants of profitability for a large sample of US banks over the period 1984–2010. Specifically, we assess the extent to which short-run profits persist, and whether such persistence is affected by changes in regulation and the recent financial crisis. Our findings suggest that the competitive process reduces positions of abnormal profitability, albeit this is not immediate. There is also evidence that changes in regulation enacted during the 1990s affected both the level and persistence of bank profitability. The financial crisis of 2007–2010 appears to have resulted in an increase in the persistence of bank profitability. [ABSTRACT FROM AUTHOR]

This study uses survey data and instrumental variables’ methods to assess whether in the USA the prices of credit cards (annual percentage rates, APRs) reflect the short- and long-term risks of cardholders (measured as unpaid credit card debt in the previous year, outstanding debt and Fair Issac Corporation score). We find a negative relationship between APRs and long-term risk. This effect is pronounced for sub-prime cardholders. This suggests that higher risk consumers shop around more intensively for credit cards offering the best terms and conditions. However, under stressed economic conditions, issuer banks increase APRs to account for short-term risk. Credit card characteristics, including network affiliation and issuer brand, play an important role in the pricing decisions of issuer banks. [ABSTRACT FROM PUBLISHER]

This study examines the firm size distribution of US banks and credit unions. A truncated lognormal distribution describes the size distribution, measured using assets data, of a large population of small, community-based commercial banks. The size distribution of a smaller but increasingly dominant cohort of large banks, which operate a high-volume low-cost retail banking model, exhibits power-law behaviour. There is a progressive increase in skewness over time, and Zipf’s Law is rejected as a descriptor of the size distribution in the upper tail. By contrast, the asset size distribution of the population of credit unions conforms closely to the lognormal distribution. [ABSTRACT FROM PUBLISHER]

The section discusses the article "Banks' Liquidity and Cost of Liquidity for Corporations" by Vitally M. Bord and João A. C. Santos. Topics discussed include the impact of the 2008 financial crisis on U.S. bank credit provision and the role of banks as providers of liquidity to corporations through credit lines and loans. Also discussed is the connection between a bank's liquidity condition and the price it charges corporations for access to liquidity.

This paper examines the determinants and convergence of bank profitability in eight European Union member countries, between 1992 and 2007, using a dynamic panel model. Average profitability is higher for banks that are efficient and diversified, but lower for those that are more highly capitalised. There is evidence of persistence of excess profit from one year to the next. The persistence of profit was lower in 1999-2007 than it was in 1992-98 in all eight countries. This finding is consistent with the hypothesis of an increase in the intensity of bank competition as a result of an increase in the integration of EU financial markets following the introduction of the euro in 1999, and the implementation of the Financial Services Action Plan. [ABSTRACT FROM AUTHOR]

We investigate whether the relationship between competition and risk varies across different types of Japanese banks over the period 2000–2009. The results of our empirical investigation show that risk varies across bank types. Specifically, nationwide (City and Trust) banks are riskier on average than their counterparts (Regional, Tier 2 Regional, Shinkin and Credit Cooperative banks) with a regional focus. The relationship between competition and risk also varies across bank types based on different initial levels of risk. Increasing competition appears to reduce the risk of (City) banks with higher initial levels of risk, but increase the risk of their (Regional, Tier 2 Regional, Shinkin and Credit Cooperative) counterparts with lower initial levels of risk. [ABSTRACT FROM AUTHOR]