A special issue of International Journal of Banking, Accounting and Finance
Two decades ago global banking was traditionally characterised by relatively high levels of controls where regulatory authorities maintained a protected banking environment that inhibited competition. However, market conditions have undergone extensive changes over recent years. On the demand side, customer preferences have changed substantially, becoming more sophisticated and price conscious. On the supply side, the globalisation of financial markets has been accompanied by governmental deregulation, financial innovation and automation. These factors imply an increase in the number of competitors and a tougher operating environment. In addition, progress in technology, both back and front-office has enabled financial firms to extend their activities beyond narrow local or national boundaries and to increase their market share by providing competitive products to wider markets at a lower price. New suppliers of financial services have entered the market. As such, banks are now faced with strong competition from both banks and non-bank institutions.
Deregulation has also allowed banks to seek new business in much wider fields of activity such as in insurance, loan purchase, hedge funds, private equity and other off-balance sheet transactions. Moves into new business areas and an increased competitive environment have implications for the nature of banks' and systemic risks – the growing emphasis on investment banking by some major commercial banks have obvious market risk implications. The changing environment has promulgated a regulatory response in the form of Basel 2, where market discipline complements rule-based regulations. Risk management has become the key to success for banks to manage risk-return pay-offs accurately and manage their capital effectively. The growth in new balance sheet and risk management practises characterised by VAR modelling and the use of sophisticated securitisation and credit risk management techniques has developed in-line with the desire to manage economic capital more effectively.
Structural developments in global banking markets have encouraged a trend towards greater market concentration. This preference for national consolidation is predicated on performance, efficiency or/and managerial grounds. Consolidation may offer opportunities for efficiency gains and risk diversification and also can create a platform for cross-country consolidation. However, the growing inter-linkages between large banks raise concerns about contagion and systemic risk, market power in the supply of financial services and implications for 'too-big-to-fail' implicit guarantees.
This special edition seeks to attract theoretical and empirical studies that relate to the above themes.
Papers are encouraged in areas which include but are not limited to:
- Integration and globalization of banking systems;
- Consolidation and its consequences for banking and financial services;
- Risk and price competition in banking
- Regulation, market discipline and deposit insurance
- Foreign banks and cross-border activities.
- Efficiency and technological progress
- Financial innovation
- Financing decisions of banks
- Efficiency and performance of investment versus commercial banking
- Management of financial institutions
- The cost of deregulation and regulation in banking
- Value creation and the cost of capital
- Bancassurance and other diversification trends
Deadline for submissions of completed papers: 31st December 2007
Double blind review of paper and feedback from review given to the author(s) by: 15 March, 2008
Deadline for final submission of corrected papers: 15 July 2008
No changes can be made to the papers after: 15 September, 2008