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Purpose This paper aims to examine the influence of risk management (RM) practices on the credit risk of significantly supervised European banks. Design/methodology/approach To avoid regulatory and reporting discrepancies, this paper samples banks that come under the direct supervision of the European Central Bank. Significantly supervised European Banks are selected for the five years from 2013 to 2017. The RM and governance data is manually drawn (from annual reports, registration documents, governance and RM reports), and financial data sets are also used (from Moody’s BankFocus and ORBIS). Findings The results indicate that strong risk control and supervision by a powerful chief risk officer (CRO) reduces banks’ credit risk. Banks with sufficiently powerful and independent CROs tend to manage their risks effectively, therefore reporting lower credit risk. Research limitations/implications European Union introduced Capital Requirement Directive IV in 2013 and new guidelines on the banks' internal governance in 2017, which were to be implemented in 2018. Thus, this paper limited the sample to five years (from 2013 to 2017) to avoid inconsistencies in the results. Future studies can extend the research and compare banks' credit risk before and after the implementation of regulatory guidelines. Practical implications Since the global financial crisis, the regulatory environment has sufficiently changed. Hence, this study reveals that not all RM practices but a few important ones reduce credit risk. Social implications Effective risk control and supervision at the bank level can lower credit risk, ultimately enhancing overall financial stability. Originality/value Most existing studies focus on classic governance indicators to analyze banks’ credit risk; however, this paper considers risk governance indicators which include RM practices used by European banks. Moreover, existing studies in this line focus on the crisis period of 2007–2008. This paper considered the postfinancial crisis period, specifically after the implementation of the Capital Requirements Directive IV at the European level.

PurposeThe purpose of this study is to study the evolution of French corporate governance law in light of collibration approach and bring statistical evidence from French Companies Executive Compensation practices.Design/methodology/approachThe study has used mixed methods. In the first part, the authors analyzed the French laws in the light of collibration. In the second part of the study, the authors used unbalanced panel data to test the hypotheses related to executive remuneration based on the theoretical underpinning of collibration. Data for 173 firms listed in the Euronext Paris Index is collected from the Bloomberg database. Seemingly unrelated regression (SUR) analysis is performed to investigate the impact of collibration on the governance disclosure of French-listed firms.FindingsSUR results indicate that board size plays a significant role in the governance disclosure before collibration. However, the collibration model is found to be more effective in ensuring the desired level of governance disclosure. Under the collibration approach, executive remuneration, frequency of board meetings, executive directors in the compensation committee and independent directors play a significant role in governance disclosure. Board size, however, does not have a substantial impact on governance disclosure after the adoption of collibration mechanism.Research limitations/implicationsResults provided by this study can allow regulators to improve corporate disclosure regime in France, which could play a vital role in safeguarding the interest of stakeholder.Originality/valueThe authors study the impact of collibration on the extent of governance disclosure in the context of France. Empirical evidence on the implication of collibration as governance mechanisms to enhance stakeholder confidence is rare and allows this study to make a unique contribution to the governance literature.

International audience

La succession des crises financières dans le secteur bancaire depuis une trentaine d’années a conduit ą une demande d’amélioration des principes de gouvernance de ces organisations. Le but de cet article est d’examiner et de comparer le rôle de la performance et de la gouvernance dans la détresse financière des banques commerciales et des banques coopératives de l’Union européenne sur la période 2005-2011. L’étude empirique indique que la gouvernance a joué un rôle dans la situation de détresse financière qu’ont connue certaines banques commerciales alors que ce lien n’est pas établi pour les banques coopératives. La situation de détresse financière des banques coopératives relève des variables de performance.

International audience

Les cooperatives sont bien souvent analysees pour leur statut d’organisations a but non lucratif, d’organisations hybrides ou encore pour leur gouvernance non actionnariale. Plus rarement, elles sont etudiees pour leurs pratiques manageriales specifiques. Cet ouvrage s’attache ici a comprendre en quoi les valeurs cooperatives, marquees par la volonte de creer de la valeur pour leurs membres, impactent les pratiques de gestion (strategie, management des ressources humaines, modes de gouvernance, valorisation et evaluation, management de la marque, etc.). Autour de 12 chapitres, cet ouvrage laisse voir des modeles de gestion originaux et innovants au sein des cooperatives qui peuvent representer une source d’inspiration pour les acteurs des entreprises classiques.

Highlights • We identify determinants of banks’ voluntary climate change disclosure and quality. • Based on data of 117 banks worldwide, banks want to be seen as good citizens. • However, the picture is unclear for rigorous carbon disclosure. • Our results support stakeholder and legitimacy theory as well as greenwashing. • There is a gap between displaying responsible behavior and actual practice., Banks are both impacted by climate change and crucial for the implementation of sound practices and behaviors to combat climate change. The aim of this research is to identify the determinants of banks’ voluntary climate change disclosure and the quality of that disclosure. Using data on 117 banks from 40 developed and developed countries around the world, we use ordinary least square regression and multivariate logit analysis to show that country-level and bank-level characteristics are much better predictors of bank commitment to voluntary carbon disclosure initiatives and environmental scores than they are of carbon disclosure quality. Banks want to project themselves as good citizens when they are located in a developed and environmentally friendly country, profitable, less risky, and subject to multiple-listing constraints. However, the picture is unclear when it comes to the implementation of rigorous carbon disclosure. This study extends the current state of knowledge on the impacts of size and country-level characteristics on carbon disclosure, finding that size and national context are not independent of carbon disclosure.

La finance mutualiste s'appuie sur une specificite statutaire en decalage avec la structure actionnariale traditionnelle. Pour autant, cette differenciation n'a pas su jusqu'ici s'appuyer sur des indicateurs eux-memes specifiques de mesure de la creation de valeur. La caracterisation des attentes des clients des banques cooperatives montre leur caractere multiforme ou differents types de performances sont attendus : financiere, commerciale, territorial et communautaire. L'examen des rapports annuels d'organes centraux de banques mutualistes et de leurs caisses regionales confirme cette diversite, aucune ne parvenant pas a proposer des indicateurs de mesure de la creation de valeur societariale generalisables et replicables. Le secteur financier cooperatif ne pourra pas durablement s'affranchir de cet imperatif au risque de devenir des etablissements financiers comme les autres.Classification JEL : G32, L21, M14, M40, P13.

(ProQuest: ... denotes formulae omitted.)1. IntroductionThe concept of mean-variance optimization was introduced by Markowitz (1952). Although studies such as Jagannathan and Ma (2003) and Chan, Karceski and Lakonishok (1999) support the use of the standard mean-variance framework for optimal portfolio construction, it has been criticized on a number of fronts. Michaud (1989) terms the concept an "enigma" while Disatnik and Benninga (2007) argue that it yields questionable results. There are two main approaches to dealing with the problems presented by traditional mean-variance optimization. The theoretical approach focuses on the assumptions and notional aspects of the mean-variance framework, while the implementation approach looks at how investors can estimate the expected return vector and covariance matrix of asset classes in order to use the framework successfully.This study examines the literature on the implementation approach to mean-variance optimization and the estimation of the covariance matrix, which is seen as the most troubling aspect of the framework (Ledoit & Wolf, 2003). Elton and Gruber (1973) and DeMiguel, Garlappi and Uppal (2009) reinforce the importance of the covariance estimator in implementing mean-variance optimization successfully.The sample covariance matrix is the conventional measure for estimating the pair-wise covariances of asset classes, based primarily on past covariances. Pafka and Kondor (2004), Michaud (1989), and Jobson and Korkie (1980) have criticized this method of estimating pair-wise covariances. Specifically, it is prone to errors when the number of underlying asset classes is larger than the sample. Michaud (1989) labels this phenomenon "error maximization." Sharpe (1963) proposes a relatively intuitive way of explaining covariances through a common factor - the market factor. Blume (1971), Vasicek (1973) and King (1966) try to improve the estimator by considering the mean-reverting tendency of betas, adjusting their variation and taking into account other factors beyond the single common factor, respectively.Statistical and nontheory-based measures, such as principal component analysis (PCA), can also be used to identify factors relating to historical sample covariances. Elton and Gruber (1973) suggest using average correlation-based covariance estimators. While the literature on covariance estimators is too extensive to survey here, we agree that the standard method of estimating the covariance matrix is prone to either estimation or specification errors. Given the errors and numerical instability of estimators, DeMiguel et al. (2009) conclude empirically that nontheory-based diversification outperforms the more sophisticated asset allocation strategies.The financial literature applies a fundamental principle of statistics to optimize between the estimation error and specification error. Bengtsson and Holst (2002), Chan et al. (1999), Jagannathan and Ma (2003), Ledoit and Wolf (2003, 2004) and Wolf (2004) show empirically that shrinkage estimators and a portfolio of estimators are best suited to covariance estimation. As per the decision theory in statistics, there is an optimal point between the specification error and estimation error. According to Stein (1956), this optimal point can be determined by a weighted average of both estimators.Ledoit and Wolf (2003) suggest using the Bayesian shrinkage approach to optimization in relation to the single-index covariance estimator and sample covariance estimator. This process guarantees to reduce the estimation error in the sample covariance without producing much of a specification error. It results in a shrinkage matrix whereby all the covariances (off-diagonal elements) of the conventional sample matrix are shrunk without changing the diagonal elements. Ledoit and Wolf (2004) shrink the sample covariance toward a constant correlation covariance estimator. Jagannathan and Ma (2003) conceptualize a portfolio of covariance estimators, which challenges the more complex Ledoit and Wolf (2003) estimator, and involves using the equally weighted average of the sample covariance estimator and any other covariance estimator. …

The seemingly simple question of how cooperative banks are governed is indeed of the utmost importance. Beyond their unique status and shared democratic principle of “one member, one vote”, cooperative banks exhibit a diverse spectrum of complex governance strategies. In addition, recent regulatory provisions have introduced a number of constraints. The primary objective of this chapter is to identify and describe the fundamental characteristics of the cooperative banks’ governance models so as to differentiate between their modes of operation. To this end, the chapter discusses how and at which level members are involved in the governance of the cooperative banks, how the different models of governance work in the context of cooperative banks and how governance can have an impact on the bank’s risk appetite.

This paper seeks to establish the relationship between economic efficiency and social efficiency to analyze the sustainability of banking in Europe. The type-effect has been analyzed, as stakeholder value banks&mdash, cooperatives and saving banks&mdash, should not be less socially and economically efficient than commercial banks. This European analysis was made using the Bankscope database, as it provides a unique insight into the stakeholder view that clarifies, by an analysis of two-stage boundaries, that there is no single model of social and economic efficiency according to the type of financial entity in Europe. These findings contribute to the social cost paradox and shared value perspective, and more broadly to stakeholder theory. It is established that a tradeoff between economic and social efficiency is not needed. There are different behaviors in different European countries. Moreover, our results could lead to the development of social indicators of the sustainability aspects of organizations without resorting to traditional accounting.

International audience; For many bankers, Basel III has led to a change of epoch, a change of model and for some even a change of profession. These views initially reflect the content of the Basel principles relating to two major indicators of bank stability, namely: i) solvency via the level of equity capital required, and ii) liquidity in terms of assets held. The mainstream financial press and bankers have largely discussed the impact of these measures on banking sector and the wider economy. There is no doubt that they have significant consequences on banks' activities and financing capacity. But Basel III also deals with other issues relating to the organisation and governance of financial institutions. These have been less publicised, but affect banks and the way actors operate on a daily basis as much, if not more. Basel III is a system based on three pillars. Pillar 1 is detailed throughout EU Directive CRD4. It concerns the definition of equity required to cover exposure to credit, market and operational risks. Such exposure is gauged by risk weighted assets (RWAs), and regulatory equity capital is defined differently compared to usual accounting definitions. Pillar 2 leads to the implementation of control measures of equity capital, of exposure to risks. It also includes measures to be pursued to meet these requirements. Lastly, Pillar 3 relates to market discipline, with emphasis on the information financial institutions must communicate in terms of risks. The motives of regulators in adopting Basel III clearly follow the banking crisis in September 2008: they seek to ensure that governments will no longer be obliged to protect banks from filing bankruptcy. The decisions to take capital holdings in banks in October 2008 were not understood by the public, even if the public monies committed were recovered with a profit. The political cost of such interventions has been so high that it is no longer possible for governments to find themselves in a similar situation. Public regulators have had the mission of reinforcing the safety and financial stability of banks, as well as ensuring and reinforcing the quality of internal bank controls and those carried out by national and European supervisory agencies. The European Capital Requirements Directive (CRD 4) runs to nearly 340 pages. It covers the three pillars and aims to provide precise recommendations on how banks can protect themselves against insolvency risks with sufficient levels of equity capital, and how to protect themselves against liquidity risks to prevent sudden bankruptcies. These two risks lie at the heart of regulatory concerns. But the Directive also addresses the conditions under which banks are supervised, the bodies involved in such supervision and the resolution mechanisms they put into place. Basel III therefore addresses criteria for risk and financial management as much as it stresses organisational and strategic criteria. The aim of this chapter is to review and assess the two dimensions of the consequences induced by these new texts. It seeks to see what is truly new and how financial institutions will adapt-more or less easily-to the new conditions for exercising their trade.

Comment mesurer l’efficacite du Systeme de Controle Interne d’une banque ? Cette question s’insere dans une analyse plus vaste visant a faire le lien entre differentes caracteristiques des organisations bancaires et leur efficacite dans la gestion des risques operationnels. Il n’existe pas a ce jour, de methodologie et de dispositif d’evaluation des controles effectues au sein des etablissements financiers au titre du controle interne. Il etait donc necessaire, dans le cadre d’une etape cle du projet de recherche, de mener un travail de type recherche-action visant a fournir un outil d’evaluation fonde sur des travaux de differents organismes professionnels ou universitaires qui serviront de cadre theorique et conceptuel. La demarche empirique menee sur la base des informations recueillies dans les rapports annuels de 17 etablissements financiers a permis d’evaluer nos avancees et nos propositions de construction de l’outil et une premiere classification des banques sur ce critere.

Le scandale de la Societe Generale a devoile au grand public les consequences des risques lies a des dysfonctionnements operationnels. Avec la reforme de Bâle II, cette categorie de risques doit maintenant etre prise en compte dans l’evaluation des fonds propres des etablissements financiers. Leur evaluation quantitative est donc la premiere demarche qui ait ete entreprise. Cependant cette approche apparait comme insuffisante pour maitriser ces risques et la gravite des evenements exceptionnels est extremement difficile a evaluer. Il faut donc combiner ces approches quantitatives a des demarches plus qualitatives relevant de la mise en place d’un dispositif de controle interne efficace et plus generalement d’une gouvernance generale du systeme de controle garantissant une securisation optimale du fonctionnement de la banque. Cet article, fonde sur plusieurs analyses de cas, evalue les differents elements de ce dispositif.

International audience; Parmi tous les lancements récents d’innovation technologique concernant les moyens de paiement, le Porte Monnaie Electronique semble celle qui rencontre le plus de freins à l’adoption. Malgré les échecs d’expériences européennes et américaines, le PME fait l’objet de tests en France. Le lancement du PME Monéo en France a été l’occasion de mener une recherche exploratoire sur les conditions d’acceptation et d’utilisation du nouveau moyen de paiement. Les auteurs analysent les conditions de cette expérimentation inédite.

La recherche menee porte sur le role de l’encadrement intermediaire lors de l’introduction d’une innovation en systeme d’information destine a des PMO (Petites et Moyennes Organisations) du secteur sanitaire et social. Elle est fondee sur une demarche qualitative longitudinale par observation participante de 12 mois et portant sur 3 etudes de cas. Les resultats montrent que la phase d’introduction du nouveau systeme d’information s’opere a partir d’un ensemble d’attentes et de representations decalees par rapport au contenu du logiciel. Les cadres intermediaires construisent un systeme « representationnel » de l’innovation pour l’assimiler de facon graduelle par reduction, accentuation et anticipation. Le pilotage de l’innovation dans sa phase emergente se comprend egalement comme une gestion de deux espaces d’interactions par les cadres intermediaires afin d’introduire de facon incrementale le nouveau systeme d’information.

In the last ten years, operational risk has received a considerable attention from banking supervisors, practitioners and researchers alike. While the majority of studies have been devoted to derive the appropriate formulas for quantifying this risk (i.e. under pillar I of Basel II), less has been done to bring the so-called “operational risk profile” into scrupulous analysis. In this paper, we attempt to provide a better understanding of how the bank’s exposure to operational risk responds to changes brought into her operational risk profile. Using data collected from 16 large internationally active banks, our model shows a higher performance compared to previous studies. We find that operational loss amounts are more likely to increase when banks increase the number of employees per business unit, of customers, of geographic presence, and the volume of treated assets per employee, but decrease when banks increase their investments in information technology and the volume of treated assets per business unit.

We examine, in this paper, whether or not subprime mortgage crisis-related write-downs are mainly due to banks involvement in credit risk transfer market (CRT). Using data from 288 European banks over the period 2004-2007, we find that, for different types of CRT involvement, different patterns of risk-taking behavior and performance do exist (i.e., hypothesis of intra-groups differences). The main results show that, European banks that are ended-up with negative performance at year-end 2007 are more likely to be engaged in some securitization-related activities (ABS) and are characterized by higher leverage ratio, higher Basel ratio, higher liquid asset ratio, higher maturity mismatch ratio, and large size but, by contrast, are characterized by lower non-performing loans and lower intermediation ratios. As such, banks involvement in CRT market, per se, is not sufficient to explain why some banks may culminate in suffering negative performance unless it is related to some risky patterns. Our findings state that results provided by previous works may be overstated or biased by the omitting of this effect.

There has been a constant evolution over the past two decades in the banking business portfolio, due to economic globalisation, deregulation, and the advent of new technologies. This trend continues today and is even more marked by the emergence of production businesses which have traditionally been included in the value chain of banking services. An examination of this phenomenon is made possible by value chain analysis. This concept has been adapted to banking. The notions of organisational competencies and value chain have been linked to detect value-adding activities in the various bank services and identify opportunities for new conditions for value production.

Empirical research with a purpose of identifying a firm's competencies is quite rare even if results allow for a highlighting of the roots of competitive advantage, discussion of identification methodologies of competencies and, sometimes, questioning of the possibility of such identification. Following a synthesis of research, a particular attention is paid to the French banking sector through a de-tailed presentation of a research started in 1995 and repeated in 1999. Results allow for a discussion of the problems related to identification of competencies and their ability to give a good representation of competitive advantage.

There has been a constant evolution of the banking business portofolio in the past two decades, due to economic globalization, deregulation and the advert of new technologies. This trend is still the same today and is even more marked by the emergence of production businesses, the latter been traditionally included in the value chain of banking businesses.Studying this phenomenon has led to resorting to value chain analysis. This concept has been adapted to that specific sector. The notion of organizational capabilities has been linked to the value chain notion so as to detect value adding activities in a bank various businesses and identify the opportunities for new conditions to value production.

National audience

International audience; L’analyse de la gouvernance des entreprises françaises à ce jour montre que les recommandations issues de très nombreux travaux académiques ont été très largement reprises par la pratique. Pour autant, la mise en œuvre s’est avérée historiquement plus réactive à la suite de crises ou de « scandales » que proactive. Cela s’explique en France par le choix principal d’une autorégulation dénuée de réelles sanctions. En outre, tant en termes théoriques que pratiques, la gouvernance a encore de nombreux chantiers à approfondir qu’il s’agisse des entreprises familiales, du private equity, de la prise en compte des parties prenantes ou du reporting intégré.

National audience