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The study verifies the relationship between the audit fee and reporting sentiment in the banking industry. The research adopts panel data from a sample of 490 commercial banks across 43 US states for years 2000-2016. The results indicate that the audit fee is affected by the sentiment and is subject to time development. The research shed light on the nature of auditor relations in the specific economic context of the US. The results add to the science new and robust evidence on attitudes towards asymmetry friction in the supervised market. The Financial Authorities might benefit from the presented results while preselecting the entities for on-site inspection.

Research background: Motivation for this study is the rapid development of conglomerate banking stimulated by the synergy between the traditional and parallel investment activity of banks before the 2007–2008 financial crisis. Existing studies do not answer the question about the positive influence of diversification on bank stability. They state that the combination of lending and non-interest income allows benefits to be derived from risk diversification. However, on the other hand they emphasise that non-interest and interest incomes are strongly correlated, which does not bring positive effects from diversification. Purpose: Scientific problem aimed to be solved is to verify how the diversification of activities in commercial banks into non-interest products (i.e. trading, securities-based investment activities, and derivatives) brings positive effects such as income stabilization and risk reduction. We examine the implications of banks’ risk adjusted ROA that manifest themselves as spreading and growing instability. Research methodology: We use a panel regression model, through a dataset that covers 777 international banks, in 91 selected countries of the world, spanning the period of 1996–2015. Results: We document that the diversification of a bank’s operations is varied and depends on a bank’s characteristics, including asset size. Novelty: The study contributes to the on-going discussion on the separation of retail and investment banks with a view to enhancing their profit stability.

This chapter examines the relation between the changes in the Polish banking sector and European Union (EU) membership. It identifies both similarities and differences among the group of countries which are seemingly homogenous in respect of their banking sector’s efficiency. The chapter discusses key developments in the Polish banking sector following EU accession. It presents a literature review regarding the integration process and banking efficiency. The chapter describes the methodology and look at the data. Major changes occurred in the ownership structure of the Polish banking sector. In terms of assets, banks with a majority of foreign capital dominated in the banking sector in Poland in 2004–2016. The European Union Single Market creates a place without internal regulatory obstacles to financial services and the movement of capital. The objective of maximizing profits not only requires that financial services be produced at a minimum cost, but it also demands that revenues be maximized.

This study aims to empirically identify how a bank’s board structure (size, indepen- dence, and members’ affiliations) and quality (experience, background, and skills) affect its risk incentives. Specifically, it investigates whether banks’ solvency and corporate governance nexus changed after the 2007–2009 financial crisis. We employ a cross-country sample of 239 commercial and publicly traded banks covering 1997– 2016 and a panel regression for 40 countries. We acknowledge a negative relationship between board size and bank stability and demonstrate that an independent board may have constrained rather than encouraged risk in banks. The global financial crisis has not changed much in the corporate governance and stability of banks nexus. These findings are robust even while controlling for a range of alternative sensitivity estima- tions for bank stability. This result indicates that in the aftermath of the market meltdown, we still need to strengthen corporate governance practices which may mitigate the adverse effects of the crisis on the banking sector. info:eu-repo/semantics/publishedVersion

The main goal of this research is to identify the direction and scale of connectedness of selected post-communist countries from Central and Eastern Europe (CEE) and major global and European sovereign bond markets, covering the period 2008–2020, including the COVID-19 pandemic. We verify the volatility spillovers in bond markets via directional method and dynamic conditional interconnectedness modelling perspectives. Unexpectedly, we discovered that CEE countries are more interlinked with each other than with global markets. Therefore, our results suggest that it is useful to look separately at advanced and developing bond markets in European countries, as it has a significant implication for bond's portfolio management.

The most recent financial crisis has shown, however, that this form of investment may entail costs: although diversification reduces the bankruptcy chances for an individual bank. This study seeks to verify the importance of non-traditional banking activity for the financial stability of banks, using a sample of 1430 banks on a global scale, in 1995–2015. In particular, it verifies the fluctuations of the stability of commercial banks in the context of their asset levels. The study results have shown that the diversification of commercial banks’ income into non-traditional activities adversely affects their stability, with varying intensity for the different groups of asset volume. The study contributes to the ongoing discussion on the separation of retail and investment banks with a view to enhancing their resilience to losses and bankruptcy risk.

Przyklady naduzyc finansowych w bankach, mające miejsce podczas ostatniego kryzysu, mozna tlumaczyc brakiem dostatecznego nadzoru w instytucjach finansowych. W odpowiedzi na to zwielokrotnieniu ulega sila nacisku na stosowanie zasad corporate governance wśrod zarządzających i interesariuszy bankow, tj. inwestorow. W kontekście zmieniającego sie otoczenia gospodarczego i oczekiwan wspolczesnego spoleczenstwa, poprawa otoczenia biznesu w Europie wydaje sie uzasadniona. Czy wyniki instytucji finansowych są wrazliwe na zmiany zachodzące w zasadach ladu korporacyjnego? Jaki wplyw na rentownośc bankow ma wzrost kosztow na monitorowanie dzialan zarządow? Czy wieksza przejrzystośc praw akcjonariuszy skutkuje lepszymi wynikami bankow? Odpowiedzi na te i inne pytania są celem niniejszego badania. Wyroznikiem niniejszej analizy jest zastosowanie szeregu indywidualnych miar ladu korporacyjnego w poszczegolnych bankach, zamiast jednej opartej na bazie ogolnego indeksu. Badanie przeprowadzono dla okresu 2007–2014, dla 81 bankow komercyjnych z 20 krajow europejskich. Wyniki badania okazaly sie niejednoznaczne, poddając w wątpliwośc rosnący udzial zasad ladu korporacyjnego w czynnikach wplywających na rentownośc bankow.

While contemporary systemic risk takes many forms, usually all kinds of wellknown risks overlap in time and space. Considering leverage undertaken by banksas a potential source of systemic risk, the author attempts to discover the factorsintensifying this phenomenon. The article presents the results of a study on datafrom individual banks in 31 European states for the period 2000–2010. The primaryobjective of this study is to verify the diversification of sources of systemicrisk in the banking sectors of developing and developed countries. Evidence ofheterogeneity of systematic risk’s determinants in European countries is provided.

We measure a systemic risk faced by European banking sectors using the CoVaR measure. We propose the conditional value-at-risk for measuring a spillover risk which demonstrates the bilateral relation between the tail risks of two financial institutions. The aim of the study is to estimate the contribution systemic risk of the bank i in the analyzed banking sector of a country in conditions of its insolvency. The study included commercial banks from 8 emerging markets from Europe, which gave a total of 40 banks, traded on the public market, which provided a market valuation of the bank’s capital. The conclusions are that the CoVaR seems to be a better measure for systemic risk in the banking sector than the VaR, which is more individual. And banks in developing countries in Europe do not provide significant risk for the banking sector as a whole. But it must be taken into account that some individuals that may find objectionable. Our results hence tend to a practical use of the CoVaR for supervisory purposes.

The paper presents the concept of a sustainable bank by developing a framework based on performance of different business models. Traditional banking and investment activities, such as trading in securities or securitization, may reduce the risk of commercial banks and provide an attractive approach to sustainable finance. Using the method of assessing the performance of a bank, the study appraises the degree of sustainability of the bank from different stakeholders&rsquo, points of view. The aim of the article is to verify the research question: how does diversification of traditional activities of commercial banks affect their sustainability? The analysis has been extended by the importance of country-specific and macroeconomic factors. The survey was conducted on 368 commercial banks from European countries, using data from the period 1998&minus, 2015. The study contributes to the ongoing discussion on the recognized profitability and sustainability nexus as an important part of sustainable finance that may be a powerful solution to financial crises.

The aim of this article is to identify systemically important banks on a European scale, according the criteria proposed by supervisory authorities. In this study, we discuss the analytical framework for identifying and benchmarking systemically important financial institutions. We selected a group of 36 largest banks in Europe and analyzed their risk indicators, i.e.: leverage, liquidity, capital ratio, asset quality and profitability, as a source of systemic risk. The aim of the study is to find out whether the size of an institution generates higher systemic risk. We find that risk indicators of excessive debt, liquidity, capital adequacy and effectiveness for the largest commercial banks in Europe do not differ from the average across Europe.

The goal of this study is to identify empirically how country-level development, taking into account the financial and macroeconomic environment, affect the risk profiles of the banking sector in Europe. Through a dataset that covers 3,399 European banks spanning the period 1996–2011, and the methodology of panel regression, the empirical findings document the heterogeneity of banking risk determinants. I examine the implications of bank leverage that manifest itself as spreading and growing instability. The study contributes to and combines the different strands of literature and understanding of the importance of the links between the variables. It also contributes to the literature by focusing on a group of countries from Central and Eastern Europe and the Commonwealth of Independent States that have not been studied before. The extended model provides a causal link between risk in the banking sector and the growth of the financial market and macroeconomy. I apply four measures of country-level development that are available in previous studies: share of foreign ownership in the banking sector; the financial freedom index; the real growth rate; and stock market capitalization. Using these measures, I obtain different results which highlight the fact that the effect of macroeconomic and financial development on banking sector risk-taking is ambiguous.

Article aims to demonstrate the significant impact of dynamics of the relationship between financial intermediaries on the level of market volatility. Particularly important are the growing share of the links between hedge funds and other financial institutions. In order to demonstrate the dynamic test was presented Granger causality, which allows the statistical analysis of cause and effect relationships in the risk spread in the financial system. Using multiple regression analysis study was calculated the impact of the hedge fund market development measured in assets, leverage, the price volatility in various financial markets). Due to data availability study has been limited to 10-year period of analysis (2001-2011). The results show a significant correlation between the volatility in the stock market, bonds and CDS, and the activities of hedge funds on financial markets.

The object of the study is the causality analysis of credit and liquidity risk on Treasury bond market in selected European countries, during the crisis of Greece’s public finances from 2010 to 2013. The specific aim of the study is to determine: do we have to deal with so-called contagion effect in Treasury bonds market? Additionally, the survey is designed to identify the causality of the credit and liquidity risk in selected European countries. The analysis was conducted in two trials: 1. for the countries of Central and Eastern Europe, represented by Czech Republic and Poland, 2. for developed countries - Austria and France. For this purpose used Granger causality test, the procedure is based on vector autoregression models - VAR. However, to determine the variation in bond yields was used the GARCH (1.1) model.

The purpose of the article is to attempt to answer the question of how the crisis affected the banking systems of cee countries, with special emphasis on liquidity risk. It seems that this problem has particularly affected emerging economies. First, the liquidity risk began to exert considerable influence on the functioning banking system and, indirectly, the whole economy. In this paper author wanted to answer the following questions: What are the channels of transmission systemic risk on cee markets? What is the role of big world banking groups in these financial systems? This concept is applied to ten Central Eastern European countries, which experienced a financial crisis. In the research author hypothesized about interconnectedness of liquidity in financial systems and solvency problems of big banking groups operating in CEE.

Last crisis and instability of financial markets caused considerable interest within public and academic community in measuring and management systemic risk. This article introduces a new framework for measuring systemic risk by using a risk-adjusted balance sheet approach. In this regard, the analysis of 21 largest commercial banks operating in 7 countries from Central and Eastern Europe, shows potential risk which could threaten all the financial system. The paper concludes new directions for measuring systemic risk by using Merton option model. It shows how risk management tools can be applied in new ways to measure and analyze systemic risk in European banking system. The research results is a systemic risk map for the CEE banking systems. The survey finds also instability risk determinants.