The objective of this chapter is to provide a stocktake of the financial sector reforms initiated... more The objective of this chapter is to provide a stocktake of the financial sector reforms initiated in India in 1992. The stocktake has been provided in the context of three elements that the financial sector of any country is comprised of: financial institutions, instruments and markets. Simultaneously, the chapter also looks at the reform of the regulatory authorities of the financial sector. The plan of this chapter is as follows. The next section, provides an overview of the Indian financial sector, section 10.3 outlines the circumstances that lead to the overhaul of the Indian financial sector, section 10.4 is a stocktake of reforms of financial institutions, section 10.5 provides an update on reforms in financial markets and instruments traded there in, section 10.6 outlines what remains to be done and section 10.7 concludes.
The International Journal of Banking and Finance, 2016
The theory of financial stability postulates that financial institutions in a country experiencin... more The theory of financial stability postulates that financial institutions in a country experiencing financial crisis would witness productivity losses. This study examined whether they experience productivity losses when there is no crisis, and whether the financial sector is not immune from global economic events. The Australian financial institution efficiency and productivity during 1999-2009 were examined, that is, after the financial system reforms but the test period includes the financial crisis years. Efficiency scores were computed using Stochastic Frontier Analysis and total factor productivity using Malmquist indices. Australian institutions were found to have experienced productivity decline during the global financial crisis. The evidence is just the opposite of the common belief that Australian institutions remained insulated from the crisis. Global economic slowdown can also lead to productivity losses in a country not experiencing severe financial crisis because of th...
We investigate the factors influencing the intention to use of mobile value added services in the... more We investigate the factors influencing the intention to use of mobile value added services in the Pacific island of Fiji. Technology adoption literature suggests that perceived usefulness and perceived ease of use influence intention to adopt new technology. However, behavioral research suggests that intention to adopt is influenced by social norms. We investigate the impact of these three constructs on behavioral intention to use mobile value added services in Fiji – a country which has some unique characteristics such as the culture of ‘sharing’ and ‘reciprocity’. We surveyed 74 women micro entrepreneurs and found that the predominant driver of intention to adopt of technology in collectivist societies such as Fiji is social influence. It was found that social influence also impacts perceived usefulness and perceived ease of use and through these the intention to adopt. Accordingly, in societies such as Fiji, policy makers and industry need to engage social organizations/networks ...
This study empirically examines how the bank specific factors, macro-economic, and institutional ... more This study empirically examines how the bank specific factors, macro-economic, and institutional variables impact interest margins in China’s banking sector. A panel data analysis of bank data for the period 1988–2015 was carried out. We found a significant association between credit quality, risk aversion, liquidity risk, and the proportion of corporate and industrial loans and the adjusted interest spread (AIS). GDP growth rate, inflation, and the proportion of national savings to the GDP were found to have significant association with the AIS. Furthermore, institutional variables were found to have a significant moderating effect on the AIS. We contribute to the literature by examining a unique context and a more accurate measure of bank interest margin not used in prior studies.
Australasian Accounting, Business and Finance Journal, 2017
We examine how national culture impacts organisational selection of capital budgeting systems to ... more We examine how national culture impacts organisational selection of capital budgeting systems to develop our understanding of what influence a holistic formulation of national culture has on capital budgeting systems. Such an understanding is important as it would not only provide a clearer link between national culture and capital budgeting systems and advance extant literature but would also help multinational firms that have business relationships with Indonesian firms in suitably designing strategies. We conducted semi-structured interviews of selected finance managers of listed firms in Indonesia and Australia. Consistent with the contingency theory, we found that economic, political, legal and social uncertainty impact on the use of capital budgeting systems. The levels of uncertainty were higher in Indonesia than Australia and need to be reckoned in the selection of capital budgeting systems used by firms. We also found that firms are influenced by project size and complexity, when selecting capital budgeting systems.
In a landmark reform in the managed fund industry, China permitted foreign joint ventures as well... more In a landmark reform in the managed fund industry, China permitted foreign joint ventures as well as off-shore investing. Have these decisions helped improved the efficiency of the industry? We examine this hitherto unexamined question in the literature, using a robust method of efficiency analysis—bootstrap data envelopment analysis. We compute the bootstrap efficiency scores and regress them using truncated regression on environmental variables. We focus on 64 of 69 funds management companies in China from 2003 to 2011 using a unique dataset made available to us. We find that there is considerable room for funds management companies to improve technical efficiency to ultimately bring increased benefits to investors. We find that foreign ownership has not helped efficiency improvement. Similarly, off-shore investing had no impact on technical efficiency. A number of regulatory constraints still persist in China, which makes it hard for the previously measured to yield efficiency gains. We recommend further liberalization of the sector, for example, by removing restriction on distribution of foreign funds.
While mobile phones are making significant inroads in many developing countries, little is known ... more While mobile phones are making significant inroads in many developing countries, little is known about the institutional drivers, policy barriers and industry challenges that affect their use for business growth of micro- enterprises. The authors address this gap. After conducting semi-structured interviews of 74 women-owned micro entrepreneurs and ten key informants from the government and industry in Fiji, the authors found that appropriate policy framework, supporting infrastructure and appropriate ecosystem are required for rapid uptake of mobile value added services by women-owned micro entrepreneurs. They contribute by proposing a revised technology adoption framework as well as the four shackles theory of women micro entrepreneurs' empowerment and emancipation. The authors also highlight the policy initiatives necessary to accelerate the growth of women-owned micro enterprises by mobile value added services which could also guide other developing and emerging economies.
The study aims to understand the effect of GHG emissions, environmental performance (EP), and soc... more The study aims to understand the effect of GHG emissions, environmental performance (EP), and social performance (SP) on financial performance (FP) of listed manufacturing firms in Indonesia. Sampling was based on the availability of the firms' annual reports 2011 and interview feedback about the type and amount of fossil fuels and electricity consumed by the firms in 2011. Firm FP was measured in return on assets (ROA). GHG emissions were measured in CO2e intensity. Firm EP was measured in a dummy variable of PROPER rating. Firm SP was measured as social reporting scores developed through a content analysis. We found that CO2e intensity and social reporting scores have a positive and significant effect on ROA. The coefficient of PROPER rating was not significant.
The global financial crisis renewed interest in the financial regulatory system across the world.... more The global financial crisis renewed interest in the financial regulatory system across the world. We examine, in the Australian regulatory context, whether the objectives of Wallis Inquiry have been met and whether the Murray recommendations would help address the desired competition and regulatory public policy objectives. We extend the prior work of Thomson and Abbott (2000b). We found that the Wallis Inquiry did help strike an appropriate balance between competition and stability. In our view, though the Murray Inquiry takes the agenda further there are several areas in which its policy prescriptions are found wanting.
Risk management has been a topic of great interest to Michael McAleer. Even as recent as 2020, hi... more Risk management has been a topic of great interest to Michael McAleer. Even as recent as 2020, his paper on risk management for COVID-19 was published. In his memory, this article is focused on bankruptcy risk in financial firms. For financial institutions in particular, banks are considered special, given that they perform risk management functions that are unique. Risks in banking arise from both internal and external factors. The GFC underlined the need for comprehensive risk management, and researchers since then have been working towards fulfilling that need. Similarly, the central banks across the world have begun periodic stress-testing of banks’ ability to withstand shocks. This paper investigates the machine-learning and statistical techniques used in the literature on bank failure prediction. The study finds that though considerable progress has been made using advanced statistical and computational techniques, given the complex nature of banking risk, the ability of stati...
Do foreign banks enjoy a competitive edge in the Chinese banking market or are they disadvantaged... more Do foreign banks enjoy a competitive edge in the Chinese banking market or are they disadvantaged vis-à-vis domestic banks? This is the question that the present paper seeks to answer. The issue is important since on the one hand, these banks face the challenges the liability of foreignness brings, but at the same time, they have bank-specific advantages. We examine this issue in light of the literature of the liability of foreignness. In our path-breaking study, we found that due to the cost of foreignness, foreign banks’ performance was not as good as that of the local banks. Furthermore, despite the same amount of location- and bank-specific advantages, they performed badly as compared to their local counterparts. It was found that the cost of location-based disadvantages outweighed the cost of bank-specific disadvantages for foreign banks, and recent policy changes may help them overcome some of the cost of foreignness.
The paper aims to assess the level of competition in the Indian banking sector overall as well as... more The paper aims to assess the level of competition in the Indian banking sector overall as well as within the three groups of banks: foreign owned, state owned (public sector), and privately owned. We use panel data for the period from 2005–2018. We found that the overall competition in the Indian banking sector is strong, although there are differences by type of bank ownership. The Indian banking market continues to be characterized by monopolistic competition. The various policy measures taken by the Indian government in recent years appear to have helped boost competition. A policy suggestion would be to further liberalize the banking sector for foreign investment.
The objective of this chapter is to provide a stocktake of the financial sector reforms initiated... more The objective of this chapter is to provide a stocktake of the financial sector reforms initiated in India in 1992. The stocktake has been provided in the context of three elements that the financial sector of any country is comprised of: financial institutions, instruments and markets. Simultaneously, the chapter also looks at the reform of the regulatory authorities of the financial sector. The plan of this chapter is as follows. The next section, provides an overview of the Indian financial sector, section 10.3 outlines the circumstances that lead to the overhaul of the Indian financial sector, section 10.4 is a stocktake of reforms of financial institutions, section 10.5 provides an update on reforms in financial markets and instruments traded there in, section 10.6 outlines what remains to be done and section 10.7 concludes.
The International Journal of Banking and Finance, 2016
The theory of financial stability postulates that financial institutions in a country experiencin... more The theory of financial stability postulates that financial institutions in a country experiencing financial crisis would witness productivity losses. This study examined whether they experience productivity losses when there is no crisis, and whether the financial sector is not immune from global economic events. The Australian financial institution efficiency and productivity during 1999-2009 were examined, that is, after the financial system reforms but the test period includes the financial crisis years. Efficiency scores were computed using Stochastic Frontier Analysis and total factor productivity using Malmquist indices. Australian institutions were found to have experienced productivity decline during the global financial crisis. The evidence is just the opposite of the common belief that Australian institutions remained insulated from the crisis. Global economic slowdown can also lead to productivity losses in a country not experiencing severe financial crisis because of th...
We investigate the factors influencing the intention to use of mobile value added services in the... more We investigate the factors influencing the intention to use of mobile value added services in the Pacific island of Fiji. Technology adoption literature suggests that perceived usefulness and perceived ease of use influence intention to adopt new technology. However, behavioral research suggests that intention to adopt is influenced by social norms. We investigate the impact of these three constructs on behavioral intention to use mobile value added services in Fiji – a country which has some unique characteristics such as the culture of ‘sharing’ and ‘reciprocity’. We surveyed 74 women micro entrepreneurs and found that the predominant driver of intention to adopt of technology in collectivist societies such as Fiji is social influence. It was found that social influence also impacts perceived usefulness and perceived ease of use and through these the intention to adopt. Accordingly, in societies such as Fiji, policy makers and industry need to engage social organizations/networks ...
This study empirically examines how the bank specific factors, macro-economic, and institutional ... more This study empirically examines how the bank specific factors, macro-economic, and institutional variables impact interest margins in China’s banking sector. A panel data analysis of bank data for the period 1988–2015 was carried out. We found a significant association between credit quality, risk aversion, liquidity risk, and the proportion of corporate and industrial loans and the adjusted interest spread (AIS). GDP growth rate, inflation, and the proportion of national savings to the GDP were found to have significant association with the AIS. Furthermore, institutional variables were found to have a significant moderating effect on the AIS. We contribute to the literature by examining a unique context and a more accurate measure of bank interest margin not used in prior studies.
Australasian Accounting, Business and Finance Journal, 2017
We examine how national culture impacts organisational selection of capital budgeting systems to ... more We examine how national culture impacts organisational selection of capital budgeting systems to develop our understanding of what influence a holistic formulation of national culture has on capital budgeting systems. Such an understanding is important as it would not only provide a clearer link between national culture and capital budgeting systems and advance extant literature but would also help multinational firms that have business relationships with Indonesian firms in suitably designing strategies. We conducted semi-structured interviews of selected finance managers of listed firms in Indonesia and Australia. Consistent with the contingency theory, we found that economic, political, legal and social uncertainty impact on the use of capital budgeting systems. The levels of uncertainty were higher in Indonesia than Australia and need to be reckoned in the selection of capital budgeting systems used by firms. We also found that firms are influenced by project size and complexity, when selecting capital budgeting systems.
In a landmark reform in the managed fund industry, China permitted foreign joint ventures as well... more In a landmark reform in the managed fund industry, China permitted foreign joint ventures as well as off-shore investing. Have these decisions helped improved the efficiency of the industry? We examine this hitherto unexamined question in the literature, using a robust method of efficiency analysis—bootstrap data envelopment analysis. We compute the bootstrap efficiency scores and regress them using truncated regression on environmental variables. We focus on 64 of 69 funds management companies in China from 2003 to 2011 using a unique dataset made available to us. We find that there is considerable room for funds management companies to improve technical efficiency to ultimately bring increased benefits to investors. We find that foreign ownership has not helped efficiency improvement. Similarly, off-shore investing had no impact on technical efficiency. A number of regulatory constraints still persist in China, which makes it hard for the previously measured to yield efficiency gains. We recommend further liberalization of the sector, for example, by removing restriction on distribution of foreign funds.
While mobile phones are making significant inroads in many developing countries, little is known ... more While mobile phones are making significant inroads in many developing countries, little is known about the institutional drivers, policy barriers and industry challenges that affect their use for business growth of micro- enterprises. The authors address this gap. After conducting semi-structured interviews of 74 women-owned micro entrepreneurs and ten key informants from the government and industry in Fiji, the authors found that appropriate policy framework, supporting infrastructure and appropriate ecosystem are required for rapid uptake of mobile value added services by women-owned micro entrepreneurs. They contribute by proposing a revised technology adoption framework as well as the four shackles theory of women micro entrepreneurs' empowerment and emancipation. The authors also highlight the policy initiatives necessary to accelerate the growth of women-owned micro enterprises by mobile value added services which could also guide other developing and emerging economies.
The study aims to understand the effect of GHG emissions, environmental performance (EP), and soc... more The study aims to understand the effect of GHG emissions, environmental performance (EP), and social performance (SP) on financial performance (FP) of listed manufacturing firms in Indonesia. Sampling was based on the availability of the firms' annual reports 2011 and interview feedback about the type and amount of fossil fuels and electricity consumed by the firms in 2011. Firm FP was measured in return on assets (ROA). GHG emissions were measured in CO2e intensity. Firm EP was measured in a dummy variable of PROPER rating. Firm SP was measured as social reporting scores developed through a content analysis. We found that CO2e intensity and social reporting scores have a positive and significant effect on ROA. The coefficient of PROPER rating was not significant.
The global financial crisis renewed interest in the financial regulatory system across the world.... more The global financial crisis renewed interest in the financial regulatory system across the world. We examine, in the Australian regulatory context, whether the objectives of Wallis Inquiry have been met and whether the Murray recommendations would help address the desired competition and regulatory public policy objectives. We extend the prior work of Thomson and Abbott (2000b). We found that the Wallis Inquiry did help strike an appropriate balance between competition and stability. In our view, though the Murray Inquiry takes the agenda further there are several areas in which its policy prescriptions are found wanting.
Risk management has been a topic of great interest to Michael McAleer. Even as recent as 2020, hi... more Risk management has been a topic of great interest to Michael McAleer. Even as recent as 2020, his paper on risk management for COVID-19 was published. In his memory, this article is focused on bankruptcy risk in financial firms. For financial institutions in particular, banks are considered special, given that they perform risk management functions that are unique. Risks in banking arise from both internal and external factors. The GFC underlined the need for comprehensive risk management, and researchers since then have been working towards fulfilling that need. Similarly, the central banks across the world have begun periodic stress-testing of banks’ ability to withstand shocks. This paper investigates the machine-learning and statistical techniques used in the literature on bank failure prediction. The study finds that though considerable progress has been made using advanced statistical and computational techniques, given the complex nature of banking risk, the ability of stati...
Do foreign banks enjoy a competitive edge in the Chinese banking market or are they disadvantaged... more Do foreign banks enjoy a competitive edge in the Chinese banking market or are they disadvantaged vis-à-vis domestic banks? This is the question that the present paper seeks to answer. The issue is important since on the one hand, these banks face the challenges the liability of foreignness brings, but at the same time, they have bank-specific advantages. We examine this issue in light of the literature of the liability of foreignness. In our path-breaking study, we found that due to the cost of foreignness, foreign banks’ performance was not as good as that of the local banks. Furthermore, despite the same amount of location- and bank-specific advantages, they performed badly as compared to their local counterparts. It was found that the cost of location-based disadvantages outweighed the cost of bank-specific disadvantages for foreign banks, and recent policy changes may help them overcome some of the cost of foreignness.
The paper aims to assess the level of competition in the Indian banking sector overall as well as... more The paper aims to assess the level of competition in the Indian banking sector overall as well as within the three groups of banks: foreign owned, state owned (public sector), and privately owned. We use panel data for the period from 2005–2018. We found that the overall competition in the Indian banking sector is strong, although there are differences by type of bank ownership. The Indian banking market continues to be characterized by monopolistic competition. The various policy measures taken by the Indian government in recent years appear to have helped boost competition. A policy suggestion would be to further liberalize the banking sector for foreign investment.
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Papers by Milind Sathye