Pub Date : 2022-05-19DOI: 10.1108/jfrc-02-2022-0011
Salvatore Polizzi, Enzo Scannella
Purpose This paper aims to analyse the implementation challenges faced by internal audit departments of public sector organisations and central banks when implementing continuous auditing (CA) systems. CA aims to monitor internal control systems and risk levels on a continuous basis to support the audit process. This study identifies the implementation challenges of CA systems and proposes adequate countermeasures. Design/methodology/approach This study employs the design science information system research and the design science research process methodologies to ensure the rigor of this analysis. These research methodologies are adopted to tackle identified organisational problems and propose solutions. This methodological approach consists in the following phases: identification of the problems and motivation; definition of the objectives of the solution; research design and development; evaluation; communication. Findings This study detects several implementation challenges for public sector organisations and central banks and proposes adequate solutions. This study finds that these challenges are related to organisations’ complexity, institutional rigidity, potential threats to internal auditors’ independence and the issue of considering CA system as a “real time error correction” mechanism. The solutions involve the development of a business process focussed audit approach to enable internal auditors to analyse CA indicators, and the use of CA systems to support each phase of the audit process. Originality/value This study contributes to the scant strand of literature on internal auditing in central banks. Given the exceptional demand for guidance concerning internal auditing in the public sector and in central banks, this paper provides guidelines for these organisations to implement CA systems and to tackle implementation challenges. The analysis allows internal audit departments within central banks to better support their organisations in the achievement of their important regulatory and policy objectives.
{"title":"Continuous auditing in public sector and central banks: a framework to tackle implementation challenges","authors":"Salvatore Polizzi, Enzo Scannella","doi":"10.1108/jfrc-02-2022-0011","DOIUrl":"https://doi.org/10.1108/jfrc-02-2022-0011","url":null,"abstract":"\u0000Purpose\u0000This paper aims to analyse the implementation challenges faced by internal audit departments of public sector organisations and central banks when implementing continuous auditing (CA) systems. CA aims to monitor internal control systems and risk levels on a continuous basis to support the audit process. This study identifies the implementation challenges of CA systems and proposes adequate countermeasures.\u0000\u0000\u0000Design/methodology/approach\u0000This study employs the design science information system research and the design science research process methodologies to ensure the rigor of this analysis. These research methodologies are adopted to tackle identified organisational problems and propose solutions. This methodological approach consists in the following phases: identification of the problems and motivation; definition of the objectives of the solution; research design and development; evaluation; communication.\u0000\u0000\u0000Findings\u0000This study detects several implementation challenges for public sector organisations and central banks and proposes adequate solutions. This study finds that these challenges are related to organisations’ complexity, institutional rigidity, potential threats to internal auditors’ independence and the issue of considering CA system as a “real time error correction” mechanism. The solutions involve the development of a business process focussed audit approach to enable internal auditors to analyse CA indicators, and the use of CA systems to support each phase of the audit process.\u0000\u0000\u0000Originality/value\u0000This study contributes to the scant strand of literature on internal auditing in central banks. Given the exceptional demand for guidance concerning internal auditing in the public sector and in central banks, this paper provides guidelines for these organisations to implement CA systems and to tackle implementation challenges. The analysis allows internal audit departments within central banks to better support their organisations in the achievement of their important regulatory and policy objectives.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-05-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44131517","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-10DOI: 10.1108/jfrc-04-2021-0029
Zhanhai Wang
Purpose This paper aims to study the effects of interest on reserves (IOR) on banks’ behavior in a theoretical framework. Design/methodology/approach This paper introduces IOR into both Cooper and Ross (1998) and Cooper and Ross (2002) and conducts quantitative analysis. It thoroughly examines the effects of IOR on banks’ resource allocation decisions under different assumptions. Findings In the model without deposit insurance, the results of this paper show that paying IOR facilitates the bank to use the run-proof contract. When the run-admitting contract is adopted, there is a set of conditions under which the bank is indifferent between holding illiquid asset and excess liquid reserves. In the model with deposit insurance, the results show that if the riskless illiquid investment is profitable and available, then paying IOR can hardly influence the bank's resource allocation. If the riskless illiquid investment is limited, then a certain level of IOR could fulfill some monetary targets. Originality/value Little research has combined IOR and model of bank runs. It helps to extend the theoretical analysis in this perspective.
目的在理论框架下研究准备金利率对银行行为的影响。本文将IOR引入Cooper and Ross(1998)和Cooper and Ross(2002)，并进行定量分析。在不同的假设条件下，研究了IOR对银行资源配置决策的影响。在没有存款保险的模型中，本文的研究结果表明，支付IOR有利于银行使用防挤兑合同。当采用挤兑接纳合同时，在一定条件下，银行对持有非流动性资产和持有超额流动性准备金是无所谓的。在有存款保险的模型中，结果表明，如果无风险的非流动性投资是有利可图的，那么支付IOR几乎不会影响银行的资源配置。如果无风险的非流动性投资是有限的，那么一定水平的IOR可以实现一些货币目标。独创性/价值很少有研究将IOR与银行挤兑模型结合起来。这有助于拓展这一视角下的理论分析。
{"title":"Interest on reserves, bank runs and investment decisions","authors":"Zhanhai Wang","doi":"10.1108/jfrc-04-2021-0029","DOIUrl":"https://doi.org/10.1108/jfrc-04-2021-0029","url":null,"abstract":"\u0000Purpose\u0000This paper aims to study the effects of interest on reserves (IOR) on banks’ behavior in a theoretical framework.\u0000\u0000\u0000Design/methodology/approach\u0000This paper introduces IOR into both Cooper and Ross (1998) and Cooper and Ross (2002) and conducts quantitative analysis. It thoroughly examines the effects of IOR on banks’ resource allocation decisions under different assumptions.\u0000\u0000\u0000Findings\u0000In the model without deposit insurance, the results of this paper show that paying IOR facilitates the bank to use the run-proof contract. When the run-admitting contract is adopted, there is a set of conditions under which the bank is indifferent between holding illiquid asset and excess liquid reserves. In the model with deposit insurance, the results show that if the riskless illiquid investment is profitable and available, then paying IOR can hardly influence the bank's resource allocation. If the riskless illiquid investment is limited, then a certain level of IOR could fulfill some monetary targets.\u0000\u0000\u0000Originality/value\u0000Little research has combined IOR and model of bank runs. It helps to extend the theoretical analysis in this perspective.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-05-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48557419","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-09DOI: 10.1108/jfrc-12-2021-0106
Isaac Ofoeda
Purpose This study aims to examine the impact of anti-money laundering (AML) regulations on financial inclusion using a comprehensive measure of AML regulations developed by the Basel Institute on Governance. Again, this study investigates the existence of threshold effects in the AML regulations–financial inclusion nexus. Design/methodology/approach This study uses panel data across 212 economies (developed, developing and Africa) of the globe-spanning from 2012 to 2019. This study uses the dynamic panel threshold estimation technique proposed by Seo et al. (2019). Findings In general, the results indicate that AML regulations promote financial inclusion across the globe. However, AML regulations spur financial inclusion below the threshold of AML regulations, whereas, above the thresholds, AML regulations have damaging effects on financial inclusion. Further, the author finds that AML regulations have a detrimental impact on financial inclusion for developed economies. In contrast, AML regulations promote financial inclusion at all levels of AML regulations for African countries. Practical implications The findings of this study imply that countries must make conscious efforts in combating the incidence of money laundering by establishing sound AML regulatory regimes as a means of promoting financial inclusiveness. However, there is a need for regulators to ensure cost-effective and efficient implementation of AML regulations. Originality/value The value of this paper is its contribution to literature as it is a major attempt in empirically assessing the impact of AML regulations on financial inclusion. Again, to the best of the author’s knowledge, this is the first study to examine the non-linear relationship between AML regulations and financial inclusion.
{"title":"Anti-money laundering regulations and financial inclusion: empirical evidence across the globe","authors":"Isaac Ofoeda","doi":"10.1108/jfrc-12-2021-0106","DOIUrl":"https://doi.org/10.1108/jfrc-12-2021-0106","url":null,"abstract":"\u0000Purpose\u0000This study aims to examine the impact of anti-money laundering (AML) regulations on financial inclusion using a comprehensive measure of AML regulations developed by the Basel Institute on Governance. Again, this study investigates the existence of threshold effects in the AML regulations–financial inclusion nexus.\u0000\u0000\u0000Design/methodology/approach\u0000This study uses panel data across 212 economies (developed, developing and Africa) of the globe-spanning from 2012 to 2019. This study uses the dynamic panel threshold estimation technique proposed by Seo et al. (2019).\u0000\u0000\u0000Findings\u0000In general, the results indicate that AML regulations promote financial inclusion across the globe. However, AML regulations spur financial inclusion below the threshold of AML regulations, whereas, above the thresholds, AML regulations have damaging effects on financial inclusion. Further, the author finds that AML regulations have a detrimental impact on financial inclusion for developed economies. In contrast, AML regulations promote financial inclusion at all levels of AML regulations for African countries.\u0000\u0000\u0000Practical implications\u0000The findings of this study imply that countries must make conscious efforts in combating the incidence of money laundering by establishing sound AML regulatory regimes as a means of promoting financial inclusiveness. However, there is a need for regulators to ensure cost-effective and efficient implementation of AML regulations.\u0000\u0000\u0000Originality/value\u0000The value of this paper is its contribution to literature as it is a major attempt in empirically assessing the impact of AML regulations on financial inclusion. Again, to the best of the author’s knowledge, this is the first study to examine the non-linear relationship between AML regulations and financial inclusion.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49383293","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-20DOI: 10.1108/jfrc-11-2021-0099
Natalya Schenck, Lan Shi
Purpose
The purpose of this study is to examine the impact of supervisory Leveraged Lending Guidance (LLG) (2013–2014) on risk and structure of syndicated loans arranged by the largest US banks with participation of nonbank lenders.
Design/methodology/approach
This study uses supervisory shared national credit loan-level data from 2010 to 2015 and DealScan loan origination data and use linear regressions with clustered standard errors.
Findings
This study finds that the impact of the LLG was mixed. Incidence and risk of leveraged lending declined following the Guidance, as reflected in lower nonbank syndicate participation. However, the covenant protections weakened and loan spreads at origination declined. This study also provides evidence that some risky lending originations shifted to nonbank entities outside of the banking regulatory environment.
Originality/value
This study contributes and expands literature on the impact of regulatory guidance on loan risk, terms and structure, focusing on nonbank participation in syndicated commercial loans.
{"title":"Impact of Leveraged Lending Guidance: evidence from nonbank participation in syndicated loans","authors":"Natalya Schenck, Lan Shi","doi":"10.1108/jfrc-11-2021-0099","DOIUrl":"https://doi.org/10.1108/jfrc-11-2021-0099","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this study is to examine the impact of supervisory Leveraged Lending Guidance (LLG) (2013–2014) on risk and structure of syndicated loans arranged by the largest US banks with participation of nonbank lenders.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This study uses supervisory shared national credit loan-level data from 2010 to 2015 and DealScan loan origination data and use linear regressions with clustered standard errors.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>This study finds that the impact of the LLG was mixed. Incidence and risk of leveraged lending declined following the Guidance, as reflected in lower nonbank syndicate participation. However, the covenant protections weakened and loan spreads at origination declined. This study also provides evidence that some risky lending originations shifted to nonbank entities outside of the banking regulatory environment.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study contributes and expands literature on the impact of regulatory guidance on loan risk, terms and structure, focusing on nonbank participation in syndicated commercial loans.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138496808","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-18DOI: 10.1108/jfrc-09-2021-0079
F. Ajide, T. Ojeyinka
Purpose One of the main obstacles to the flourishment of African entrepreneurship is financial constraint. Existing studies on the nexus between entrepreneurship and financial development are inconclusive, while the position of African economies remains unknown. The purpose of this paper is to empirically study the impact of financial development on entrepreneurship in Africa. Design/methodology/approach This study utilizes data of 20 selected countries in Africa over a period of 2006–2017. International Monetary Fund (IMF) data on broad-based financial development were combined with World Bank Entrepreneurship database. This study uses system generalized methods of moments (system GMM) technique and the recently developed dynamic panel threshold based on dynamic panel GMM. Findings The following findings emerged: financial development does not spur entrepreneurship in Africa; there is a threshold at which financial development improves the level of African entrepreneurship; and the tendency of financial development to improve the level of entrepreneurship is conditioned on conducive business regulation and strong institutional quality at a specific threshold value. Originality/value This is one of the few studies that examines the impact of financial development on entrepreneurship in Africa. This study shows that the financial development relies on the effectiveness of regulatory environment to extend loan and other financial services to new firm entrants. In addition, the results of this study reveal that the assumption of linearity in the nexus between finance and entrepreneurship is not tenable for the case of Africa. Therefore, policymakers should keep on developing African financial system to accelerate the pace of entrepreneurship development.
{"title":"Financial development and entrepreneurship: insights from Africa","authors":"F. Ajide, T. Ojeyinka","doi":"10.1108/jfrc-09-2021-0079","DOIUrl":"https://doi.org/10.1108/jfrc-09-2021-0079","url":null,"abstract":"\u0000Purpose\u0000One of the main obstacles to the flourishment of African entrepreneurship is financial constraint. Existing studies on the nexus between entrepreneurship and financial development are inconclusive, while the position of African economies remains unknown. The purpose of this paper is to empirically study the impact of financial development on entrepreneurship in Africa.\u0000\u0000\u0000Design/methodology/approach\u0000This study utilizes data of 20 selected countries in Africa over a period of 2006–2017. International Monetary Fund (IMF) data on broad-based financial development were combined with World Bank Entrepreneurship database. This study uses system generalized methods of moments (system GMM) technique and the recently developed dynamic panel threshold based on dynamic panel GMM.\u0000\u0000\u0000Findings\u0000The following findings emerged: financial development does not spur entrepreneurship in Africa; there is a threshold at which financial development improves the level of African entrepreneurship; and the tendency of financial development to improve the level of entrepreneurship is conditioned on conducive business regulation and strong institutional quality at a specific threshold value.\u0000\u0000\u0000Originality/value\u0000This is one of the few studies that examines the impact of financial development on entrepreneurship in Africa. This study shows that the financial development relies on the effectiveness of regulatory environment to extend loan and other financial services to new firm entrants. In addition, the results of this study reveal that the assumption of linearity in the nexus between finance and entrepreneurship is not tenable for the case of Africa. Therefore, policymakers should keep on developing African financial system to accelerate the pace of entrepreneurship development.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-04-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47396957","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-11DOI: 10.1108/jfrc-10-2021-0087
Tom Loonen, Ronald Janssen
Purpose With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact on the day-to-day operations of private banks, which provide investment services to predominately retail or non-professional investors. The purpose of this paper is to determine how MiFID provisions regarding investor protection with respect to suitability are complied with in practice by private banks. Design/methodology/approach Based on interviews with 25 representatives of private banks from 10 different European Union (EU) member states, the researchers have determined how these provisions are fulfilled and associated risks mitigated. Mapping out the suitability requirements of MiFID and comparing them with how these have been operationalised, we arrive at the question of whether this leads to a level playing field and investor protection by different private banks. Findings Although MiFID is trying to achieve a level playing field between the EU member states, this study shows that this has not been achieved in all areas. Investor protection requirements from MiFID are interpreted and operationalised differently. Although these differences are sometimes small, sometimes they are larger and affect the way the investor is served and suitability determined. Originality/value This research provides a unique insight into the way private banks in Europe have implemented the MiFID II requirements and gives insight into best practices. For the future, this research can serve as a prelude to in-depth follow-up research on the implementation of EU provisions.
{"title":"Implementation of MiFID II investor protection provisions by private banks within the European Union","authors":"Tom Loonen, Ronald Janssen","doi":"10.1108/jfrc-10-2021-0087","DOIUrl":"https://doi.org/10.1108/jfrc-10-2021-0087","url":null,"abstract":"\u0000Purpose\u0000With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact on the day-to-day operations of private banks, which provide investment services to predominately retail or non-professional investors. The purpose of this paper is to determine how MiFID provisions regarding investor protection with respect to suitability are complied with in practice by private banks.\u0000\u0000\u0000Design/methodology/approach\u0000Based on interviews with 25 representatives of private banks from 10 different European Union (EU) member states, the researchers have determined how these provisions are fulfilled and associated risks mitigated. Mapping out the suitability requirements of MiFID and comparing them with how these have been operationalised, we arrive at the question of whether this leads to a level playing field and investor protection by different private banks.\u0000\u0000\u0000Findings\u0000Although MiFID is trying to achieve a level playing field between the EU member states, this study shows that this has not been achieved in all areas. Investor protection requirements from MiFID are interpreted and operationalised differently. Although these differences are sometimes small, sometimes they are larger and affect the way the investor is served and suitability determined.\u0000\u0000\u0000Originality/value\u0000This research provides a unique insight into the way private banks in Europe have implemented the MiFID II requirements and gives insight into best practices. For the future, this research can serve as a prelude to in-depth follow-up research on the implementation of EU provisions.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47232759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-11DOI: 10.1108/jfrc-12-2021-0118
F. Teichmann, Chiara Wittmann
Purpose This paper aims to enlighten the shortcomings of the EU Whistleblowing Directive 2019/1973, which could interfere negatively with its successful national implementation. In focus is the tension between companies potentially attempting to hide misconduct and disgruntled employees taking advantage of generous protection under the directive. Design/methodology/approach With an extensive literary basis, this paper explores articles of the EU Whistleblowing Directive 2019/1973 under five areas of the so-called “weakness.” With view to Germany and Austria, the difficulty of implementing the directive is highlighted and likewise with view to Switzerland, a potential solution is presented. Findings The Whistleblowing Directive 2019/1973 overshoots its target by protecting whistleblowers without considering the wider public interest. There are specific points of arbitrary definition which demand resolution to ensure a successful national implementation. Originality/value This is a multifaceted discussion of a highly contentious ethical debate. Through an exploration of specific points of the Directive, it is possible to present why there are points of contention in the first place, and also the difficulty of implementing the principle of proportionality. The issue at the heart of the matter is balancing the protection of trade secrets with the fundamental necessity of whistleblowing as a means of last resort.
{"title":"Whistleblowing: procedural and dogmatic problems in the implementation of directive (EU) 2019/1937","authors":"F. Teichmann, Chiara Wittmann","doi":"10.1108/jfrc-12-2021-0118","DOIUrl":"https://doi.org/10.1108/jfrc-12-2021-0118","url":null,"abstract":"\u0000Purpose\u0000This paper aims to enlighten the shortcomings of the EU Whistleblowing Directive 2019/1973, which could interfere negatively with its successful national implementation. In focus is the tension between companies potentially attempting to hide misconduct and disgruntled employees taking advantage of generous protection under the directive.\u0000\u0000\u0000Design/methodology/approach\u0000With an extensive literary basis, this paper explores articles of the EU Whistleblowing Directive 2019/1973 under five areas of the so-called “weakness.” With view to Germany and Austria, the difficulty of implementing the directive is highlighted and likewise with view to Switzerland, a potential solution is presented.\u0000\u0000\u0000Findings\u0000The Whistleblowing Directive 2019/1973 overshoots its target by protecting whistleblowers without considering the wider public interest. There are specific points of arbitrary definition which demand resolution to ensure a successful national implementation.\u0000\u0000\u0000Originality/value\u0000This is a multifaceted discussion of a highly contentious ethical debate. Through an exploration of specific points of the Directive, it is possible to present why there are points of contention in the first place, and also the difficulty of implementing the principle of proportionality. The issue at the heart of the matter is balancing the protection of trade secrets with the fundamental necessity of whistleblowing as a means of last resort.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45735918","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-08DOI: 10.1108/jfrc-11-2021-0102
Botond Benedek, Cristina Ciumaș, Bálint Zsolt Nagy
Purpose The purpose of this paper is to survey the automobile insurance fraud detection literature in the past 31 years (1990–2021) and present a research agenda that addresses the challenges and opportunities artificial intelligence and machine learning bring to car insurance fraud detection. Design/methodology/approach Content analysis methodology is used to analyze 46 peer-reviewed academic papers from 31 journals plus eight conference proceedings to identify their research themes and detect trends and changes in the automobile insurance fraud detection literature according to content characteristics. Findings This study found that automobile insurance fraud detection is going through a transformation, where traditional statistics-based detection methods are replaced by data mining- and artificial intelligence-based approaches. In this study, it was also noticed that cost-sensitive and hybrid approaches are the up-and-coming avenues for further research. Practical implications This paper’s findings not only highlight the rise and benefits of data mining- and artificial intelligence-based automobile insurance fraud detection but also highlight the deficiencies observable in this field such as the lack of cost-sensitive approaches or the absence of reliable data sets. Originality/value This paper offers greater insight into how artificial intelligence and data mining challenges traditional automobile insurance fraud detection models and addresses the need to develop new cost-sensitive fraud detection methods that identify new real-world data sets.
{"title":"Automobile insurance fraud detection in the age of big data – a systematic and comprehensive literature review","authors":"Botond Benedek, Cristina Ciumaș, Bálint Zsolt Nagy","doi":"10.1108/jfrc-11-2021-0102","DOIUrl":"https://doi.org/10.1108/jfrc-11-2021-0102","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to survey the automobile insurance fraud detection literature in the past 31 years (1990–2021) and present a research agenda that addresses the challenges and opportunities artificial intelligence and machine learning bring to car insurance fraud detection.\u0000\u0000\u0000Design/methodology/approach\u0000Content analysis methodology is used to analyze 46 peer-reviewed academic papers from 31 journals plus eight conference proceedings to identify their research themes and detect trends and changes in the automobile insurance fraud detection literature according to content characteristics.\u0000\u0000\u0000Findings\u0000This study found that automobile insurance fraud detection is going through a transformation, where traditional statistics-based detection methods are replaced by data mining- and artificial intelligence-based approaches. In this study, it was also noticed that cost-sensitive and hybrid approaches are the up-and-coming avenues for further research.\u0000\u0000\u0000Practical implications\u0000This paper’s findings not only highlight the rise and benefits of data mining- and artificial intelligence-based automobile insurance fraud detection but also highlight the deficiencies observable in this field such as the lack of cost-sensitive approaches or the absence of reliable data sets.\u0000\u0000\u0000Originality/value\u0000This paper offers greater insight into how artificial intelligence and data mining challenges traditional automobile insurance fraud detection models and addresses the need to develop new cost-sensitive fraud detection methods that identify new real-world data sets.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-04-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43540503","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-18DOI: 10.1108/jfrc-06-2021-0048
Kumbirai Mabwe, K. Jaffar
Purpose This paper aims to present an analysis of the UK bank loans and deposits in tandem, linking the loan-to-deposit (LTD) ratio to macroprudential policy and funding restrictions. LTD ratio is used by micro and macroprudential authorities to address both structural (long-term) and cyclical (short-term) liquidity risks. It is an outcome of several political and economic factors and should be evaluated against this background. Design/methodology/approach The authors use trend analysis and panel regression to investigate LTD ratio of Major British Banking Groups from 1945 to 2012 in the midst of changing the UK Government policies. Findings The results show that wholesale funding, government intervention and repression were the major forces behind LTD trends. Originality/value The authors recommend the use of LTD as a complement to other liquidity ratios in micro and macro-prudential regulation, particularly in the context of current reforms to banking capital requirements.
{"title":"UK Government controls and loan-to-deposit ratio","authors":"Kumbirai Mabwe, K. Jaffar","doi":"10.1108/jfrc-06-2021-0048","DOIUrl":"https://doi.org/10.1108/jfrc-06-2021-0048","url":null,"abstract":"\u0000Purpose\u0000This paper aims to present an analysis of the UK bank loans and deposits in tandem, linking the loan-to-deposit (LTD) ratio to macroprudential policy and funding restrictions. LTD ratio is used by micro and macroprudential authorities to address both structural (long-term) and cyclical (short-term) liquidity risks. It is an outcome of several political and economic factors and should be evaluated against this background.\u0000\u0000\u0000Design/methodology/approach\u0000The authors use trend analysis and panel regression to investigate LTD ratio of Major British Banking Groups from 1945 to 2012 in the midst of changing the UK Government policies.\u0000\u0000\u0000Findings\u0000The results show that wholesale funding, government intervention and repression were the major forces behind LTD trends.\u0000\u0000\u0000Originality/value\u0000The authors recommend the use of LTD as a complement to other liquidity ratios in micro and macro-prudential regulation, particularly in the context of current reforms to banking capital requirements.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45517241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-17DOI: 10.1108/jfrc-09-2021-0080
B. Abdallah, Francisco Rodríguez Fernández
Purpose This paper aims to study the impact of (regulatory and nonregulatory) liquidity on contingent convertible (CoCo) issuance and the relationship between CoCos and asset quality. Design/methodology/approach The analysis of this study comprises two stages. In the first stage, the authors used a logit model to test whether banks with riskier assets as well as lower solvency and (regulatory and nonregulatory) liquidity are more likely to issue CoCos. In the second stage, the authors used univariate analysis and fixed effects regression to measure the impact of Additional Tier 1 (AT1) CoCos on the quality of the issuer’s assets. Findings The study shows that regulatory liquidity ratios are negatively related to CoCo issuance. This study also finds that the likelihood to issue CoCo is higher when banks have lower regulatory capital or are less risky. Asset quality is found to not change significantly after the issuance. All in all, these results suggest that while solvency regulation is primarily regarded as the main motivation for CoCo issuance, liquidity regulation also matters. Research limitations/implications Despite the fact that CoCos have been emerging as an alternative way to help banks meet regulatory capital requirements, the paper argues that the relation between liquidity regulation and CoCos should be taken into account. Originality/value This study presents an empirical analysis on the CoCos instrument, focusing on the relationship between AT1 CoCos and liquidity regulation. Therefore, it serves to fill a gap in the literature on the underlying forces behind CoCo issuance. Moreover, this study measures the impact of AT1 CoCos issuance on bank risk, particularly on the quality of the issuer’s assets.
{"title":"Determinants of CoCo issuance: liquidity and risk incentives","authors":"B. Abdallah, Francisco Rodríguez Fernández","doi":"10.1108/jfrc-09-2021-0080","DOIUrl":"https://doi.org/10.1108/jfrc-09-2021-0080","url":null,"abstract":"\u0000Purpose\u0000This paper aims to study the impact of (regulatory and nonregulatory) liquidity on contingent convertible (CoCo) issuance and the relationship between CoCos and asset quality.\u0000\u0000\u0000Design/methodology/approach\u0000The analysis of this study comprises two stages. In the first stage, the authors used a logit model to test whether banks with riskier assets as well as lower solvency and (regulatory and nonregulatory) liquidity are more likely to issue CoCos. In the second stage, the authors used univariate analysis and fixed effects regression to measure the impact of Additional Tier 1 (AT1) CoCos on the quality of the issuer’s assets.\u0000\u0000\u0000Findings\u0000The study shows that regulatory liquidity ratios are negatively related to CoCo issuance. This study also finds that the likelihood to issue CoCo is higher when banks have lower regulatory capital or are less risky. Asset quality is found to not change significantly after the issuance. All in all, these results suggest that while solvency regulation is primarily regarded as the main motivation for CoCo issuance, liquidity regulation also matters.\u0000\u0000\u0000Research limitations/implications\u0000Despite the fact that CoCos have been emerging as an alternative way to help banks meet regulatory capital requirements, the paper argues that the relation between liquidity regulation and CoCos should be taken into account.\u0000\u0000\u0000Originality/value\u0000This study presents an empirical analysis on the CoCos instrument, focusing on the relationship between AT1 CoCos and liquidity regulation. Therefore, it serves to fill a gap in the literature on the underlying forces behind CoCo issuance. Moreover, this study measures the impact of AT1 CoCos issuance on bank risk, particularly on the quality of the issuer’s assets.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2022-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45408142","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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