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Ethics as a Way to Sustainability in Banking?
Halamka, Radek ; Teplý, Petr (advisor) ; Polyák, Oliver (referee)
v Abstract This thesis proposes a theoretical framework for application of ethics in banking and analyses effects of such application on financial performance of banks. A sentiments-adjusted economic motivation enables employment of ethical concepts, such as universality and humanity, in economics as well as banking. Then, using Bankscope data of more than 80,000 bank-year observations for the years 2003-2013, it is shown that banks applying ethics have higher exposure to real economy and less volatile Return on Equity. A consequent analysis revealed that in comparison with their closest peers those banks have lower profitability caused by higher relative costs that conversely result in lower loan losses. JEL Classification A13, B12, B16, G21, Q56 Keywords banking, ethics, economic motivation, Smith, self-interest, sentiments, Kant, sustainability, Bankscope, banking business models, within- between model, profitability, volatility, ethical, sustainable, values-based, social Length 115 862 characters Author's e-mail radek.halamka@gmail.com Supervisor's e-mail teply@fsv.cuni.cz
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The Modern Money Creation Process: The Case of Collateral Crunch
Kroulíková, Šárka ; Teplý, Petr (advisor) ; Gapko, Petr (referee)
The aim of this thesis is to investigate the role of the wholesale funding in the modern credit intermediation process and to estimate the possible impact of pro- posed regulation of the wholesale funding on lending activity of a bank or its risk profile. Throughout the analysis we used data set of 132-1167 banks from the European Union (number of banks depends on the hypotheses tested) during the period 2006-2012. We found that the banks that are more exposed to the whole- sale funding are able to increase their lending relatively more in comparison to the less exposed banks; this advantage is wiped out during the times of liquidity or collateral crunch. Results of defined simultaneous equation model suggest that stricter eligibility criteria, higher margins and introduction of 100% threshold for the Net Stable Funding Ratio will significantly decrease the wholesale funding ra- tio and thus limit the supply of loans. We consider those results alarming since the majority of European enterprises is financed by the financial intermediaries, not on the capital market and therefore additional limitation of the wholesale funding activities could negatively influence the overall economic activity within the Euro- pean Union. We discovered that the commercial banks tent to transfer the costs of the wholesale...
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Financial performance of credit unions in the Czech Republic
Kuc, Matěj ; Teplý, Petr (advisor) ; Džmuráňová, Hana (referee)
This thesis is interested in relative performance of highly criticized Czech credit unions. Theoretical part comments on their historical development, makes international comparison and shows possible development of legislation. We created two unique datasets to assess financial performance of Czech credit unions in subsequent empirical part. The first one contains Czech credit unions' and commercial banks' data. The second one is established to make a comparison of Czech credit unions with cooperative banks operating elsewhere in the EU. Both are based on annual data between 2007 and 2012 period. System GMM method is employed as main instrument of our empirical analysis and alternative panel data methods are used as supplementary techniques. We focused our analysis on comparison of relative profitability and stability measures of Czech credit unions. The results revealed their poor performance in the given time period. According to our estimates, they resembled rather small commercial banks than cooperative ones. The negative relationship between Czech credit unions' stability measure (Z-score) and their asset size is especially striking. Moreover, Z- score of Czech credit unions decreased sharply in 2012. Such development was observed neither in case of Czech commercial banks nor in other...
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Banking fee income in the Czech Republic and the EU
Růžičková, Karolína ; Teplý, Petr (advisor) ; Lešanovská, Jitka (referee)
This thesis deals with both theoretical and practical aspects of banking fee and commission income in the European Union. Since fee income represents the largest part of non-interest income earned by banks, it remains a major challenge for bank management to set and maintain an appropriate fee policy. Nevertheless, solving for the optimal fee structure has not yet been accomplished either on a theoretical level, or in actual practice. In the thesis, we analyse fee income in EU banking sectors. Our results show that the Czech banking sector was not abnormally dependent on fee income compared to other EU countries in the period 2007-2012. As a result, we argue that the high profitability of Czech banks cannot be attributed to abnormal banking fees and commission income, but rather other factors should be considered. Moreover, we study the determinants of fee income share in individual banks and discuss the impact of market concentration on the magnitude of banking fees. We conclude that banks facing higher competition tend to expand more aggressively into non- traditional activities and therefore they report higher fee income shares. We also study the relationship between banking fees and banks' performance. The results are mixed depending on applied profitability measure, but in general, banks with...
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The importance of banking fee income in the EU banking industry - does market concentration matter?
Růžičková, Karolína ; Teplý, Petr (advisor) ; Geršl, Adam (referee)
This thesis deals with both theoretical and practical aspects of banking fee and commission income in the European Union. Since fee income represents the largest part of non-interest income earned by banks, it remains a major challenge for bank management to set and maintain an appropriate fee policy. Nevertheless, solving for the optimal fee structure has not yet been accomplished either on a theoretical level, or in actual practice. In the thesis, we analyse fee income in EU banking sectors. Our results show that the Czech banking sector was not abnormally dependent on fee income compared to other EU countries in the period 2007-2012. As a result, we argue that the high profitability of Czech banks cannot be attributed to abnormal banking fee and commission income, but rather other factors should be considered. Moreover, we study the determinants of fee income share in individual banks and discuss the impact of market concentration on the magnitude of banking fees. We conclude that banks facing higher competition tend to expand more aggressively into non-traditional activities and therefore they report higher fee income shares. We also study the relationship between banking fees and banks' performance in terms of profit and risk. The results on profitability are mixed depending on applied...
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Estimating the Euro effect with Synthetic Control Method for Eastern Europe
Janota, Martin ; Teplý, Petr (advisor) ; Vošvrda, Miloslav (referee)
Estimating the Euro effect with Synthetic Control Method for Eastern Europe Abstract This thesis estimates the effect of Euro adoption on newest Eurozone members using synthetic control method. The effect is estimated on income per capita and GDP growth. Estimates indicate overall indecisive effect for Slovakia and Malta, neutral effect for Estonia and negative effect for Slovenia and Cyprus. The cost of Euro for Cyprus is estimated to be as high as 1/3 of GDP per capita. In some cases the direction of the effect changed before and after the financial crisis. The quality of inference suffers from low number of observations. Methodological assumptions are discussed, concluding that quality of Eastern European time series likely causes substantial bias in the results.
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The Rise of Shadow Banking
Dovicová, Michaela ; Teplý, Petr (advisor) ; Lelovská, Adriána (referee)
i Abstract Recent financial crisis resulting in global financial instability pointed at the importance of growing shadow banking. Shadow banking activities are gen- erally defined as banking-like activities outside of regulated banking. In this thesis, we study theoretical background of shadow banking, its regulation and supervision. Despite the data availability problem, a qualitative analysis is performed to estimate the volume of the European and the U.S. shadow bank- ing sectors from 2006 until 2013 Q2. European shadow banking system hit its bottom of EUR 8.3 trillion (19% of total European bank assets) in 2008 Q4. Nowadays, it equals to EUR 9.3 trillion (21% of total European bank assets). U.S. shadow banking sector attained its maximum of USD 20.7 trillion (163% of total U.S. bank assets) in 2008 Q1. Nowadays, it equals to USD 15.6 tril- lion which also equals to total U.S. bank assets. Moreover, we concentrate on Chinese money market funds and French and UK repo markets, since these represent an important part of shadow banking. Quantitative analysis studies relationships among traditional banking, shadow banking and economy itself in France and UK. Results show that if repo transactions, GDP and government debt increase, total bank assets increase. Furthermore, if money market fund assets decrease and...
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Liquidity risk under Basel III in the EU
Mošnová, Alžběta ; Teplý, Petr (advisor) ; Doležel, Pavel (referee)
In order to address the deficiencies in the banking regulation revealed by the recent financial crisis the Basel III introduces two minimum standards for funding liquidity, Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). The goal of this thesis is to analyze whether the NSFR is defined optimally or whether the Basel Committee on Banking Supervision (BCBS) will be forced to relax NSFR conditions similarly as happened by the LCR. Based on the approximation of the NSFR between 2007 and 2012 for a sample of 3 128 European banks we test the ability of banks to satisfy the NSFR. Our results suggest that the European banks have not started to converge to the NSFR yet. Despite this fact they should not have problems with meeting this requirement as 40.3% of banks in our sample would have already satisfied the NSFR in 2011. A Probit model analysis suggests that the NSFR requirement will decrease the probability of bank defaults and therefore increase the stability of the banking sector in the future which proves that the NSFR is correctly specified. Moreover, a simple stress testing shows that the stability of the system would not be improved anymore if the NSFR was defined more strictly. The current version of the NSFR therefore seems to be optimal and in our opinion should be...
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Foreign-owned banks and host economies
Fišerová, Tereza ; Teplý, Petr (advisor) ; Mejstřík, Michal (referee)
In the past two decades, significant changes have been shaping and transforming the banking sectors worldwide. Among these trends we find an intensive surge in foreign bank ownership which is especially remarkable in the countries of the Central, Eastern and South-Eastern European region. Using the sample of 17 countries and filtering out more than 140 domestically-operating foreign-owned banks, we examine the determinants of their performance in relation to host country conditions and home country banking sector performance over the period of seven years between 2005 and 2011. Due to the topic's currency, we additionally provide an insight into the link between sovereign debt and bank ownership. By means of system GMM model, or fixed effects model, we reveal that macroeconomic fundamentals of the host country affect the foreign-owned banks' performance but do not suffice in explaining it fully. Moreover, the depth of the current crisis as demonstrated in the home country impacts negatively on the host-country-operating foreign-owned banks. We did not find any convincing evidence of the host sovereign debt and bank ownership nature of relationship.
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