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This study investigated a network of financial institutions in Korea using the Korea Consumer Credit Panel (KCCP). It is assumed that each consumer borrows from multiple institutions, so those institutions share risks from the same consumers regardless of the quality or type of loan. We constructed a financial network comprising those institutions and computed a contagion index based on their interconnections using a weight of probability of default for the individual borrowers. We found strong connection between banking institutions and credit card firms because of the convenience of making small loans using credit cards. However, with a weighted probability of default to the linkages among institutions, the connections between banking institutions and savings banks, non-credit card finance corporations and merchant banks are stronger than others, while banking institutions hold a central position and are exposed to the largest amount of loans individually. The contagion index hit a peak in 2013Q1 and then fell rapidly, before fluctuating at a relatively low level from 2016 to 2017Q2. The results enabled authorities to monitor systemic risk from the level of consumer credit, while accounting for specific types of consumers and their probability of default. This paper's main contribution is its construction of a network of financial institutions from the level of consumer credit. [ABSTRACT FROM AUTHOR]

Penny banks were Victorian institutions intended to encourage thrift among working-class people. Initially considered a model of its type, the Birmingham Penny Bank (1850–1865) collapsed because of mismanagement, bad investments, and self-dealing by its lower-middle-class directors. Thousands of depositors, including women and children, lost part of their savings as a result. An investigation followed to apportion blame for the failure. A key question was the level of liability and compensation owed by the bank's elite former officers and trustees, including William Scholefield MP, all of whom had stepped down some thirteen years earlier. Commentators argued that the trustees had betrayed the trust of the depositors by failing to publicise their departure from the supposedly philanthropic institution. In the end, they contributed to the public subscription raised in support of the victims, without admitting liability or experiencing reputational damage. [ABSTRACT FROM AUTHOR]

The Post Office Savings Bank operated in colonial Kenya from 1910 as a charitable institution with the objective to facilitate saving and cultivate a thrift mentality among Africans. However, as this research demonstrates, the savings bank did not act in accordance with those proclaimed values. The efforts of colonial authorities to popularise the institution among local communities were a response to historical circumstances, such as the Second World War, the demobilisation of African soldiers, and the Mau Mau uprising (1952-1960), that made African money valuable to the colonisers: Analysing the History of the Post Office Savings Bank in Kenya since its arrival until the Mau Mau uprising, this article sheds light on the complex and untold history of the institution, its motivations for expanding its services and the problems faced to win the trust of potential African savers. Moreover, the article demonstrates that in spite of the effort of the POSB to increase its number of African savers, the social and economic conditions of the African population in colonial Kenya made their traditional savings and investment practices more valuable when compared with the benefits offered by the postal savings bank. [ABSTRACT FROM AUTHOR]

Two implicit metaphors can be seen as having dominated the study of the gifted—the savings bank and the investment bank. In the savings-bank metaphor, people have differential levels of IQ or general intelligence, which is viewed as determining whether they are gifted. Their cognitive ability is their metaphorical "money in the bank." In the investment-bank metaphor, people are seen as having differential investments in varied kinds of abilities and talents. Their pattern of abilities is their metaphorical portfolio of investments. A better implicit metaphor might be the foundation, however, whose effectiveness is judged by the worthiness of the transformational causes to which it contributes and the effectiveness of the use of the foundation's assets toward these causes. A person is gifted by virtue not merely of the assets they have but of how they transformationally deploy those assets. [ABSTRACT FROM AUTHOR]

This paper uses the case of Ukraine to explore the association between attitudes and saving behavior. We hypothesize that individuals' preferences and beliefs, which we proxy with support for left-wing populist economic policies, have an adverse effect on strategic, forward-looking behavior. Using the data from a nationally representative survey conducted in 2019, we find that support for populist economic policies has a negative association with a likelihood to have bank savings. The results hold in the presence of socio-economic and behavioral factors and when we remove the variation attributed to the cultural and socio-economic factors from our measure of economic populism. [ABSTRACT FROM AUTHOR]

Before the 2007 financial crisis, Spanish savings banks (Cajas) and commercial banks had shared, almost equally, the Spanish market for years. By 2012, the stakeholder-oriented Cajas had disappeared. We study if these different outcomes of Cajas and commercial banks respond to different ownership structures, governance practices and top managers' human capital. Most of the previous debate has focused on the political affiliation of Cajas' managers. We contribute to the debate by using broader measures of banks' performance and by manually collecting chairman's human capital (through proxies such as chairman's experience, education, and political affiliation) for both bank types. We find that commercial banks took more risks in pre-crisis years and showed better risk-management than Cajas during the crisis. We find no evidence of the influence of chairman's political affiliation on banks' performance, but chairman's firm experience and certain levels of education did have an impact on banks' performance, showing that managers' human capital deserves more attention. Finally, we analyse deeper Cajas-stakeholders' participation, and while the presence of politicised seats in the governing bodies have no significant effects, larger employee participation or depositors' involvement could have helped to improve the resilience of these stakeholder organisations during the crisis. [ABSTRACT FROM AUTHOR]

In 1817 Justice Barron Field presented a proposal to Governor Lachlan Macquarie for an innovative financial institution in New South Wales – a savings bank. This new entity, only seven years old in Britain, accepted deposits from individuals which were well below minimum amounts required by commercial lending banks. Established in 1819, the New South Wales Savings Bank was founded for the benefit of both settlers and convicts to inspire what Field referred to as 'habits of frugality and economy of the lower orders'. Within the national history of Australia, Field's new bank could be perceived as specific to a fledgling colony with convict inhabitants. Viewed in terms of the circulation of ideas between the colonies and Britain, however, the institution reflected progress imported from the mother country. The original Australian savings bank was not, however, a direct translation of the British institution. The frequently-referenced 'peculiar circumstances' of the colony precluded replication. This article examines the trajectory of the new institution, from its inception to its role as the mandatory depository for all convict funds, and considers how the new institution was envisaged, and received, by governors, bankers, and a 'captive' customer base. [ABSTRACT FROM AUTHOR]

The paper investigates the impact of loan loss provisions (LLPs) on bank-specific effective tax rates (ETRs) using data of 2943 banks from European Union during 2007-2014.As control variables we used size, equity, fixed assets and return on assets (ROA), while the specific country-year tax reforms were captured using Devereux-Griffith effective tax rates. The results prove robust to different model estimators and sample selections, which suggests that LLPs act systematically towards the reduction of the bank entities' corporate tax burden. When distinguishing between two banking business models, respectively shareholders-value (commercial banks) and stakeholders-value banks (savings and cooperative banks), empirical findings indicate that provisions negatively affects the former (commercial banks) specific ETRs, whereas for the latter (savings and cooperative banks), no statistical significant effect was detected. From policy perspective, in the context of the switch from the incurred-loss model to the expected-loss model with respect to LLPs (IFRS 9), this may signal additional tax bill reduction for bank entities, if decision makers fail to react promptly. Finally, looking at types of banks investigated, the results show that among all three categories of banks, commercial banks manage to avoid the increase of tax bill driven by some bank-specific determinants (i.e. ROA), while maximizing the tax savings driven by others (i.e. capital intensity), thus suggesting more tax planning oriented behaviour as compared to savings and cooperative banks. [ABSTRACT FROM AUTHOR]

Theories of household saving, including the life cycle hypothesis, posit that households add or draw down wealth to equalize the value of consumption over time. This article examines the extent to which late–nineteenth–century, small–town Americans accumulated financial assets consistent with the life cycle hypothesis. Using individual account records from a small–town savings banks, I find that savers accumulated an average of one year's income at age sixty. Decumulation was slower than expected after age sixty. The evidence is inconsistent with a strong bequest motive, so the slow drawing down of wealth in old age may have been due to uncertain mortality risk or wealth–based attrition from the sample. I find differences in the life cycle accumulations between men and women, the native– and foreign–born, and low–skill and high–skill workers. [ABSTRACT FROM AUTHOR]

Poverty reduction has become a top goal in the socio-economic development strategies of countries and a topic of interest for researchers. A number of prior empirical studies have identified the importance of financial inclusion to poverty reduction. However, most of these studies assess the effect of financial inclusion on income poverty reduction. There are relatively few studies evaluating the impact of financial inclusion, especially in terms of household use of financial products and services, on multidimensional poverty reduction. This study uses a multivariate probit model with a dataset from Vietnam to estimate the effect of financial inclusion in terms of household use of financial products and services and other factors on multidimensional poverty. The results show that financial inclusion reduces multidimensional poverty. Specifically, households owning bank accounts, having savings at banks, using debit cards, credit cards, or investing in stocks or bonds are less likely to fall into multidimensional poverty. Based on the findings, we provide several recommendations for policymakers to increase the level of households' use of financial products and services. [ABSTRACT FROM AUTHOR]

The authors show the extremely negative impact of having inexperienced directors with minimal or no knowledge of economics or finance serving on the boards of directors of Spanish savings banks. The failure of the savings banks would have bankrupted the Spanish banking sector and so the government had to invest public money to rescue it. Other public spending was therefore drastically reduced. The authors call for banks to be depoliticized and for their supervisory systems to be strengthened to guarantee their solvency in the long term. The heavy politicization of the corporate governance of the Spanish savings banks is shown in this paper to be a key factor explaining a large number of defaults. The authors explain the effect of political influence on savings banks boards of directors and provide empirical evidence about the factors that led to both poor performance and failures. The authors found a negative association between the percentage of savings banks' board members appointed by politicians and performance. The demise of savings banks was important in terms of the public sector finances because the Spanish government had to spend millions of euros to rescue the banking system, with consequent cuts in government spending in other areas. [ABSTRACT FROM AUTHOR]

Can strong capital regulation prevent risk-taking from deposit insurance? Denmark offers a unique setting providing solid identification for testing risk incentives from deposit insurance under strong capital regulation. The Danish system is a universal system without strong risk exposure regulation. Commercial banks and savings banks have different ownership structures but are subject to the same set of regulations, but savings banks have no incentive to increase risk after the implementation of a deposit insurance scheme. We show that commercial banks did not increase their risk at the introduction of deposit insurance compared to savings banks. We attribute this to strong capital requirements and a firm closure policy. The results also hold for large commercial banks, indicating that the systemic risk did not increase either. Finally, there is no evidence that commercial banks increase their risk by allowing their customers to increase their leverage (risk) compared with customers in savings banks. [ABSTRACT FROM AUTHOR]

This paper presents an amendment to and empirical application of the much-acclaimed concept of market-based banking to the case of German Sparkassen. It does this by challenging both public and scholarly opinion on savings banks as resilient spearheads of traditional banking and relationship lending. Through a close and structured comparison of two thrift institutions in the context of the entire savings banks sector during three decades it demonstrates that alternative banks should not necessarily be considered as bulwarks against financialisation, but analysed more carefully with respect to various push and pull factors, while bearing in mind the changing context in which they operate. This not only opens up new paths for further research on the relationship of structure and agency in an era of finance-led accumulation but stimulates a critical debate on the prerequisites of and perils to not-solely for-profit financial services. [ABSTRACT FROM AUTHOR]

The Luenberger productivity indicator applies directional distance functions which allow to specifying in what direction (i.e. direction of measurement) the operating units will be evaluated. In the presence of a change in the direction of measurement, the standard components of the existing Luenberger productivity indicator may provide values which are not compatible with reality. In order to eliminate this pitfall, the so-called bottoms-up approach is used to revisit the definition of the indicator and its components. We start with a list of selected sources of productivity change, namely efficiency change, technical change and direction change, then examine the best possible way of measuring each of the sources and combine them to derive a new measure of productivity change. The proposed indicator will be illustrated by means of an empirical application to a panel of 417 German savings banks over the time period 2006–2012. The example explains how the proposed approach is able to properly measure efficiency change, technical change and direction change. The results also provide conclusive evidence about the effect of the change in direction of measurement on the results of the productivity over time in a centralised management scenario. [ABSTRACT FROM PUBLISHER]

Economic anthropology has long advocated a broader vision of savings than that proposed by economists. This article extends this redefinitional effort by examining ceremonial gifts in India and arguing that they are a specific form of savings. Rural households, including those at the bottom of the pyramid, do save, in the sense of storing, accumulating and circulating value. But this takes place via particular forms of mediation that allow savers to forge or maintain social and emotional relations, to keep control over value – what matters in people's lives – and over spaces and their own future. We propose terming these practices relational and reproductive saving, insofar as their main objective is to sustain life across generations. By contrast, trying to encourage saving via bank mediation may dispossess populations of control over their wealth, their socialisation, their territories and their time. In an increasingly financialised world of evermore aggressive policies to push people into financial inclusion, the social, symbolic, cultural and political aspects of diverse forms of financial mediation deserve our full attention. [ABSTRACT FROM AUTHOR]

This article explores the case of banking houses in Rio de Janeiro in 1864. The aim is to describe the deposit structures of banking houses and thus to show the significant part made up of small balances, which, when totalled, reached quite impressive sums. Banking houses have been described in the historiography as satellite institutions of commercial banks. However, considering their magnitude, this characterisation does not seem entirely appropriate. Banking houses appear to be more similar to saving banks. Banking houses had a dual source of funds: on the one hand, banking institutions, and on the other, the general public. [ABSTRACT FROM AUTHOR]

This article draws on the concept of ‘strategic action fields’ to examine the interaction of law and organisations in the nineteenth-century United States. Focusing on the emergence of savings banking, it analyses how new legal rules were created to define the actors, actions and relationships that constituted the organisational field. The article develops three conceptual claims about the dynamics of institutional contexts: (a) the configuration of state fields shaped the nature and timing of legal rule making vis-à-vis organisational fields; (b) state actors engaged in ‘inter-field framing’ by applying analogies from the legal field to define social order in the organisational one; and (c) the legal and organisational fields were mutually constituted through these interactions. The article concludes by elaborating on the broader value of the theory of fields in business history. [ABSTRACT FROM AUTHOR]

Dominant narratives of the sovereign debt crisis in Spain blamed regional savings bank’s old-style lending patterns and naïve management for creating a ‘traditional’ banking crisis which eventually caused their own demise. Yet these narratives rest on an over-territorialized representation of regional finance. This article offers a regionally sensitive narrative of the conditions of possibility of the banking crisis in Spanish SBs by tracing the history of their deregulation and, using Catalonia as an exemplary case, their progressive financialization. Hence, it provides an alternative explanation of how savings banks came to be at the centre of the financial crisis in Spain, one that stresses the relevance of the interconnectivities between regional financial communities and the European financial market. [ABSTRACT FROM PUBLISHER]

Banking union challenges the institutional mechanisms that alternative banks use to retain their status, goals, identity and carry out their operations. Yet the impact of banking union on them varies considerably and systematically: those alternative banks that held most closely to the traditional model fared best in the recent financial crises and have been impacted the least by banking union. In contrast, those banks that strayed from the traditional model and sought rapid expansion into new geographic or financial product markets fared much worse under the adverse conditions of recent years and, consequently, ended up under the full weight of banking union provisions. But even where alternative banks hewed to their traditional model and remain a significant part of national financial systems, we find that the crises and subsequent strengthening of the EU’s financial role have reduced the scope for national control over all banks, not just those directly supervised by the ECB. [ABSTRACT FROM PUBLISHER]

Military and regimental savings schemes have not attracted a great deal of attention in accounts of colonial India yet they were part of daily life for many soldiers. The East India Company introduced savings banks as one of a number of measures to deal with the problem of indiscipline among the troops, but fairly quickly they were being used in other ways: as a marketing tool to recruit better quality troops and to appeal to entrepreneurs who wanted to use their time in the army as a means to self-improvement and prosperity. Several years later a royal warrant established regimental banks for the queen's troops wherever they served. Many thousands of soldiers used regimental savings banks and they provide important insights into the workings of the army in Victorian Britain and British India that have hitherto been neglected. [ABSTRACT FROM PUBLISHER]

This article aims to analyse the processes by which French savings banks have transformed themselves in the past 70 years. Although much is known about how banking has changed in industrialised countries since the late 1970s, in particular through higher competition, regulatory changes and restructuring, we know relatively little about how non-profit banks have been affected. In addition, although the key factors of change highlighted in the literature all reveal an implicit emphasis on exogenous sources of change (i.e. banks respond to changes in their external environment by adjusting their strategy), not much research has been dedicated to investigate the potential endogenous factors of change and, by extension, more complex interactions between banks and their environment have been ignored. This article aims to respond to these two challenges, by drawing on the framework proposed by Haveman and Rao suggesting that organisational change occurs as the outcome of co-evolution between organisations and institutions. Given the key role played by the state in banking, the article proposes an amendment to this framework by taking into account the multiple interdependencies between state and banking actors, and how these interdependencies evolve over time. [ABSTRACT FROM AUTHOR]

Spanish savings banks (Cajas de Ahorro) have had a long and distinguished history over more than 100 years of existence. They have served well the community and small businesses. However, they have been heavily affected by the 2007 banking crisis and they are on the verge of disappearing. Some of them had to merge with other institutions or had to be rescued, while others became banks. We show that there was statistical evidence to identify, before the crisis, structural differences between successfulCajasand those that had to be rescued. The technical approach is based on multidimensional scaling (MDS) analysis. MDS has the advantage that the main characteristics of the study can be presented in a visual form, and thus facilitate communication of the results with regulators, politicians, and the community at large. We complete the study with the time path of four institutions: two that survived and two that had to be rescued. [ABSTRACT FROM AUTHOR]

Korea’s savings banks that expanded their number of high-risk loans experienced defaults after the 2008 global financial crisis. We consider the prompt corrective action (PCA) to analyze factors that drive savings banks to failure given that an order for PCA by a supervisory authority normally leads to default. We conduct discrete choice models to estimate the probability of PCA using 2005–11 data on 103 Korea savings banks. We find that the postexamination actions taken by supervisory authorities and a rapid increase in loans increase the possibility of PCA. These results suggest that depositors and the market can reduce the costs incurred from defaults by identifying information that predicts PCA. [ABSTRACT FROM PUBLISHER]

This paper studies institutional changes in Irish savings banks and their functionality from 1817 to 1914. These changes saw market incumbents, trustee savings banks, suffering from a loss of confidence and displaced by a functionally equivalent but institutionally distinct competitor, the Post Office Savings Bank. The paper finds that, despite significant institutional change, savings banks of all types were consistently loss-making. This suggests that Irish savings banks were subsidised. In addition, despite contemporary accusations of credit shortages, Irish savings banks, due to legal restrictions, did not engage in any private sector lending, thus arguably crowding out private investment. [ABSTRACT FROM AUTHOR]

Most European economies will experience significant demographic changes in the decades ahead. Due to low birth rates, populations are shrinking and ageing at the same time. This article explores the impact of demographic change on the banking industry. A unique data set, which contains detailed information on almost 2.5 million accounts in 11 German savings banks, allows us estimating the socio-demographic determinants of retail profitability. Using a simulation model, we predict the development of bank profitability resulting from demographic shifts through 2025. Our central finding is that the effects of population ageing will partially offset the impact of shrinking customer bases. While the decline in the size of the population reduces the customer base, ageing increases profitability per se, as older customers typically generate higher profits for their banks. [ABSTRACT FROM AUTHOR]

Mergers and acquisitions (M&A) have been frequently justified in terms of value creation or efficiency improvements. Nevertheless, the evidence is not consistent with the existence of benefits in terms of profitability or market value of the firms involved. A distinguishing feature of extant research is that it focuses on the assessment of the consequences of mergers around the time in which the operation takes place, limiting the possibility of observing a complete integration between the merged firms. In this context, the objective of this paper is to evaluate the effects of M&A on the long-run profitability of Spanish savings banks. [ABSTRACT FROM PUBLISHER]

The ‘Quiet Life Hypothesis (QLH)’ posits that banks with market power have less incentives to maximize revenues and minimize cost. Especially government owned banks with a public mandate precluding profit maximization might succumb to a quiet life. We use a unified approach that simultaneously measures market power and efficiency to test the quiet life hypothesis of German savings banks. We find that average local market power declined between 1996 and 2006. Cost and profit efficiency remained constant. Nonparametric correlations are consistent with a quiet life regarding cost efficiency but not regarding profit efficiency. The quiet life on the cost side is negatively correlated with bank size, quality of loan portfolio and local per capita income. The last result indicates that the quiet cost life is therefore potentially due to benevolent excess consumption of local input factors by public savings banks. [ABSTRACT FROM PUBLISHER]

This article shows the profit efficiency and its determinants in Korean savings banks in the period 2002–2008 using a three-step estimation procedure: profit efficiency, computed in the second step after the first step Generalized Method of Moments (GMM) estimation, is regressed on the environmental variables in the third step. We found that industry-average profit efficiency dropped in 2004–2005 and quickly rebound in the subsequent years. We also found that unit banks and small banks are more efficient than affiliated banks and large banks. This article then analyses determinants of profit efficiency and presents three findings: (1) interest rate is the most important factor, with a 1% point increase in interest rate leading to a 20% point increase in profit efficiency; (2) profit efficiency declines as bank assets increase, implying that the expansionary strategy is not profit-enhancing unless current technology for financial intermediation changes; and (3) an increase in noncollateral loans lowers profit efficiency, implying that a policy drive for an increase in noncollateral loans requires a priori appropriate credit rating system and transparent accounting practices. [ABSTRACT FROM AUTHOR]

This article departs from the dominant interpretation of montes de piedad as charitable pawnshops, typical of Catholic Europe, by framing the analysis of their activities as microfinance institutions. Fieldwork documents two cases in the industrial city of Barcelona during the mid-nineteenth century. The long established Monte de Piedad de Nuestra Señora de la Esperanza de Barcelona (MPB) offered small loans to the most disadvantaged sectors, with more than 70% of its clients being very low-income women. In contrast, the Montepío Barcelonés covered a broader spectrum, granting larger loans to clients, of whom the majority were working-class men. But during periods of extreme illiquidity, such as the financial and industrial crisis of 1847–48, the Montepío Barcelonés would even support traders and manufacturers. Hence, this article shows how not-for-profit financial institutions, located on the periphery of the new and burgeoning financial system, are able to contribute to mitigating the social costs of industrialisation, through alleviating situations of crisis and adding to the resilience of the financial system as a whole. [ABSTRACT FROM AUTHOR]

Economic theories of commercial nonprofits and mutuals usually emphasise the advantages of such organisational forms in reducing agency and monitoring costs in markets that suffer from information asymmetries in exchanges between firms and their customers. This article examines the ability of such transaction cost theories to account for historical variations in the ownership and governance of firms in the US personal finance industry between the early nineteenth century and the Great Depression. It focuses, in particular, on mutual savings banks and their role in the development of the intermediated market for savings accounts. While I find some evidence in support of transaction cost theories of organisational form, I also find that entrepreneurial and socio-political factors played crucial roles in the choice of ownership and governance structures; mutual savings banks predominated in the early years of the industry because the form offered entrepreneurial advantages over investor-owned corporations and because in some states they benefitted from regulatory and political advantages that joint-stock companies lacked. Their relative decline by the early twentieth century was the result of increasing competition in the market for savings deposits, the loosening of regulatory barriers to entry, and changes in public policy that reduced the transaction, innovation and regulatory advantages that the mutual savings bank form had once held. The article draws out the theoretical implications for our understanding of the historical role of nonprofit and mutual firms. [ABSTRACT FROM AUTHOR]

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We employ the Luenberger productivity indicator to estimate productivity growth and its decomposition into technical change and efficiency change components for savings banks sectors in 10 EU countries between 1996 and 2003. The Luenberger indicator requires less restrictive assumptions than standard nonparametric productivity indexes, and it allows the assumption of profit maximization to be made for sample firms. We estimate average productivity growth in the savings banks sector to be 2.78% per annum and driven almost entirely by technical change. Whilst the general results confirm earlier findings, this study is one of the earliest to identify cross-border differences in productivity growth in the savings banks sector. [ABSTRACT FROM AUTHOR]

This paper presents a model whereby banking firms use various strategies (price and non-price) simultaneously in a monopolistically competitive model of spatial competition when the various strategies are used across different markets in the presence of a multioutput technology. The theoretical model is estimated with Spanish data pertaining to the pre- and post-deregulatory periods in order to investigate the effects of deregulation of both interest rates and branches on the (differential) strategic conduct of private and savings bank. [ABSTRACT FROM AUTHOR]

This study analyses the possible reasons for banks deciding to invest in firm equity, based on the fundamentals of the strategic diversification literature. Those fundamentals suggest that it may be in response to the negative evolution of other aspects of banking business, namely, credit business, fixed interest business and services, as well as the bank's level of efficiency. The results confirm the hypotheses that the decision to hold equity in other firms is related to the evolution of the bank's other businesses. However, the results for savings banks differed from those for banks. [ABSTRACT FROM AUTHOR]

The role of economic policy in Finland's depression of the 1990s is analyzed with a simple model of an open economy, and the conditions for a successful financial reform derived: Let the system adjust after the removal of interest rate ceilings, and the domestic interest rate then be aligned with foreign rates before liberalizing international capital flows. In Finland, the financial system was liberalized simultaneously with international capital movements, with the domestic shadow interest rate initially considerably higher than the international market rates. A capital inflow the size of the monetary base followed, leading to the ‘crazy years’ of 1987–89. With a large current account deficit, the Bank of Finland tightened money sharply, causing a banking crisis practically wiping out the savings bank sector. The GDP declined by 13%. Several lesser policy measures aggravated the crisis. [ABSTRACT FROM AUTHOR]

The article comments on the issues concerning the reform of postal savings and loans in Japan. The system of postal savings and investments is composed of entrance to post offices through which funds entered the system and exit through which savings were invested in or lent to various public or quasi-public bodies. As of 2001, forty Fiscal Investment and Loan Program agencies had lost part or all of the capital the government had invested in them.

This paper investigates the extent to which the linkages between bank performance and governance structure affect deposits market competition and risk taking incentives when commercial banks compete with organizations with objectives different from profit maximization. These organizations include savings banks whose corporate and ownership structure yields an objective function that can incorporate labour expenses. It is found that such objective function enables the savings banks to capture a greater market share of bank deposits and to take on relatively less risk in their portfolio of investments. The empirical evidence from the Spanish retail banking sector documents these conclusions. [ABSTRACT FROM AUTHOR]

At the time of the 1997 Asian crisis, Indonesia's financial sector had serious weaknesses. This made it vulnerable to the key element of the crisis: massive reversal of foreign capital flows. Despite huge expenditures on restructuring, many of these weaknesses remain and the current strategy does not seem likely to overcome them. The alternative strategy explored here advocates the creation of 'savings banks', holding government bonds as their principal asset. With these safe assets, deposits in such institutions would be secure, even in the event of a major economic crisis. With this safe 'core', the rest of the financial system could develop on conventional lines (allowing removal of the current blanket guarantee, and making it more feasible to close banks without this causing a run on the system as a whole). The inherent risk to the taxpayer of another expensive bail-out would be greatly diminished. [ABSTRACT FROM AUTHOR]

Modelling and testing whether competitive pressures driven by deregulatory changes make markets more competitive are examined. Departures from competitive markets are modelled via mark-up prices. Empirically, a panel data is used on Spanish savings banking industry that is undergoing unprecedented changes caused by the deregulation of financial services, the establishment of the economic and monetary union and developments in information technology. Evidence of mark-ups in output markets is found, and such mark-ups are found to decline slowly over time. This finding suggests that the presence of deregulatory pressures improved the competitive strength of the Spanish savings banks. [ABSTRACT FROM AUTHOR]

The aim of this article was to analyse the value of human resources (HR) for competitive advantage and their influence on the firm's performance in the service industry. To achieve our goal, we have first proposed a resource-based framework to discuss the circumstances under which human resources can be a source of competitive advantage. Then, an empirical research was developed in the Spanish savings bank sector to analyse the relationship between HR management and the firm's performance. Our results, suggest that those savings banks which better combine their HR practices to create and to develop a strategic human capital pool have shown better levels of profitability and productivity. [ABSTRACT FROM AUTHOR]

Using a Fourier flexible form cost function methodology, technical progress is estimated for a large sample of European savings banks between 1989 and 1997. On average, technical progress has reduced savings banks total costs by around 3.4% per annum. Since the European savings banks industry is characterized by technology sharing arrangements, a test is made to determine whether technical change is positively related to bank size. The estimates identify two important features of how technical progress has effected European savings banks' costs. First, costs reductions arising from technical change diminish between 1989 and 1997. Second, technical progress has a bigger impact on reducing large savings banks' costs, chiefly because of its influence on input prices, that is, non-neutral technical change increases systematically with size. This suggests that large savings banks have greater flexibility in reducing costs in response to technical progress, implying that technology sharing arrangements have not led to uniform reductions in banks' total cost. Rather, large savings banks are market leaders and small banks market followers. Since larger banks benefit more from technical progress this may be an important factor promoting consolidation in the European savings banks industry. [ABSTRACT FROM AUTHOR]

This article attempts to answer two questions, using Spain as a case study: do savings banks, and the regional banking system in general, have specific forms of activity which may be termed `regionalising'?; and then, is the quantitative importance of the regional banking system sufficient to ensure that the effects of such behaviour upon the regional distribution of credit will be substantial? The evidence shows that in Spain these institutions have a strongly regionally-oriented character that has greatly contributed to financial convergence. The regional orientation has resulted in relatively low inter-regional differences in access to credit. [ABSTRACT FROM AUTHOR]

The paper is concerned with the estimation of labour demand. The model is generalized to incorporate a variance function. A flexible translog functional form is used where the demand for labour is a function of wages, outputs, quasi-fixed inputs and a time variable. The variance function appears multiplicatively with the demand function and it accommodates both positive and negative marginal effects with respect to the determinants of employment. The model includes features of the usual panel data models. A multi-step procedure is used to estimate the parameters of the model. Focus is on the estimation of productivity and efficiency of labour in Swedish savings banks. The labour productivity and efficiency is defined in terms of a shift in the labour demand over time and the bank's distance from the labour demand frontier, respectively. Empirical results show that the average labour efficiency is about 96%. [ABSTRACT FROM AUTHOR]

Deregulation during the 1980s allowed savings and loan associations to undertake many of the same activities as mutual savings banks, so that competition among thrifts increased, and they became more homogeneous in nature. At the same time, according to agency theory, mutual institutions should experience less efficient operations than stock institutions due to differences in monitoring and compensation of management. The purpose of this study, then, is two fold: first, to determine whether mutual savings banks exhibit the same cost behaviour as savings and loans; and second, to determine whether mutual institutions are less cost efficient than stock institutions. To compare cost structures and cost efficiencies, a three input, three output, translog cost frontier is estimated for mutual savings banks, mutual S&Ls, and stock S&Ls. Approximately 1500 observations, restricted to the states in which mutual savings banks are chartered, are extracted from the 1990 OTS data to be used in the estimation. Each type of institution is found to have a unique cost function. The data are then used in a second regression to determine which characteristics are correlated with the inefficiency scores. It appears that mutual savings banks do have a different cost structure than savings and loans. As well, the comparison of stock versus mutual savings and loans reveals that mutuals exhibit cost efficiency, a result that contradicts agency theory. [ABSTRACT FROM AUTHOR]

This article analyses the bank regulation process in Denmark until the passing of the second Bank Act of 1930. It is demonstrated that the regulatory initiatives were the results of banking crises and that the explicit rationale for regulation was an attempt to avoid future banking crises i.e. to secure financial stability. However, even though the public interest was at the centre of the argument, private interests also affected the outcome of the regulatory process, and to a certain degree there was no conflict between public and private interests. The main private interests were the commercial banks and the savings banks, respectively, and it is shown that the savings banks held a strong position in Parliament, which enabled them to fend of proposed restrictions affecting their business. Thus, the competition between the savings banks and the commercial banks influenced Danish bank regulation to a considerable degree which meant that both private and public interests were important in determining the outcome. [ABSTRACT FROM AUTHOR]

This paper reports on tests, using panel methods, of a new capital augmentation model on Spanish savings banks over the period 1987-1996. It is argued that this banking subsector and time frame provide an interesting laboratory of the potential impact of regulation on bank capital augmentation. Early modelling work in this area is built on by extending the control variables to encompass risks not factored into the regulatory capital adequacy ratio, managerial efficiency, innovation and a new productive efficiency variable. The results indicate strong evidence of the impact of the capital adequacy regulatory regime on bank capital augmentation. Furthermore, this impact appears to be related to the relative strictness of the regulatory regime. At the same time the model also confirms the particular importance of the expected return on bank capital and productive efficiency in explaining capital augmentation. [ABSTRACT FROM AUTHOR]

The article examines the modernization of two savings banks, namely the Ortsby Savings Bank and Provincial Savings Bank, in Sweden. The study reported was an attempt to understand how the banks function and how they are perceived by the actors. The conceptual tool used to achieve this goal was the concept of worlds of representations. The most obvious point in a comparison between the two banks involves a difference in size. The traditional savings banks have a limited organization, and they operate in a limited geographical area with limited capital and a limited number of products. In contrast, the modern savings bank operates in a much wider area. The traditional savings bank has no large and independent professional organization and the board may also take care of day-to-day operations. The modern savings banks operate quite differently as the professional organization within has expanded and become separated from the principals and the board.

Because most small business enterprises must rely on the availability of bank loans as one of their primary sources of operating funds at various points in their operating cycle, any changes that might limit this availability is likely to be a major concern. One such change is the acquisition of U.S.-owned banks by foreign interests. This study compared the lending patterns of 73 banks acquired by foreign owners to 535 of their domestic counterparts over a six-year period to determine whether foreign ownership was likely to be beneficial or detrimental to U.S. small business firms. The study suggests that, contrary to much of the concerns expressed in the popular press, foreign- owned banks commit substantially larger percentages of their loanable funds to the small business community than do their domestic counterparts. [ABSTRACT FROM AUTHOR]

Discusses the structure and stability of savings accounts in the context of the rapid growth of deposits in saving banks in the Soviet Union. Development of savings banks in rural areas; Rise in the volume of retail trade, wages, and the number of savings accounts; Organizational measures for the further development of savings accounts; Data citing the participation of various groups in the creation of savings.

Theoretical models of credit union (CU) behaviour suggest that CUs may be saver-dominated, borrower-dominated, or neutral. A CU is dominated if it is operated for the benefit of one member group at the expense of the other. Neutral behaviour occurs when a CU is managed so that both member groups are equally benefited. This empirical study develops a direct measure of the monetary benefits to each member group and tests for the existence of dominated behaviour among US CUs in 1984 and 1985. Evidence of dominated and neutral behaviour is found and the operating characteristics of these distinct organizational forms are generally consistent with theoretical expectations. [ABSTRACT FROM AUTHOR]