Bank Strategies and Challenges in the New

Both in global and European banking markets, banks and banking are undergoing fundamental changes. Deregulation, competition, technology, and other developments have extended the frontiers of banking into the wider and ever-expanding financial services industry. Bank Strategies and Challenges in the New Europe brings together the work of leading European researchers in banking and finance in a blend of theory, practice, and empirical study. The contributors situate banking within this new environment by exploring key issues such as the impact of technological advances, changes in delivery and payment systems, EMU and the convergence of EU banking sectors, competition, regional investment, offshore banking, capital adequacy, and risk management.

Edward P. M. Gardener is Professor of Banking and Finance, Co-Director of the Institute of European Finance, Head of School of Business and Regional Development, University of Wales.

Peter C. Versluijs is Training and Development Consultant, ABNARO Bank, Netherlands.

List of Tables

ix

List of Figures

xii

Preface

xiv

Notes on the Contributors

xvi

Synopses of Contributions

xxii

The Bank is Dead, Long Live the Bank

1

(18)

Ray Shaw

Introduction

1

(1)

Changing functions and processes

1

(2)

Impact of technological change on costs for the UK clearing banks

3

(4)

The architecture of future electronic banking

7

(2)

Developing payment systems on the Internet

9

(3)

Specialist corporate network services

12

(3)

Will the banks survive?

15

(4)

Technical Change in European Banking

19

(27)

Yener Altunbas

Philip Molyneux

Introduction

19

(1)

Methodology

20

(6)

Data and results

26

(2)

Conclusions

28

(18)

Appendix

32

(14)

Competitive Advantage Based on Information Technology in Banking

46

(18)

Esteban Fernandez

Jose M. Montes

Camilo J. Vasquez

Increasing competition and price competitiveness

46

(3)

The impact of new information technologies on subcontracting processes

49

(2)

Price competition versus relationship banking

51

(10)

Conclusions

61

(3)

Emerging Methods of Payment

64

(7)

Jack Revell

Introduction

64

(1)

Plastic cards

65

(1)

Credit cards

66

(1)

Chip cards and prepaid cards

67

(2)

The Internet

69

(2)

Dimensions of Actions Distribution

71

(16)

Marcel R. Creemers

Introduction

71

(1)

Distribution concepts

72

(2)

Types of actions

74

(1)

Market-driven businesses

75

(1)

Community building

75

(1)

Dimensions of actions distribution

76

(2)

Analysing distribution channels

78

(5)

Actions distribution research

83

(2)

Implications

85

(2)

Card Payments: Pricing and Competition

87

(19)

Ted Lindblom

Introduction

87

(3)

Current pricing of card payments

90

(4)

Recent card pricing trends

94

(2)

Theoretical guidelines

96

(4)

Conclusions

100

(6)

The Unified European Banking Market and the Convergence of National Banking Sectors

106

(33)

Elisabetta Montanaro

Claudio Scala

Mario Tonveronachi

Introduction

106

(2)

Regulation, competition and convergence

108

(6)

The recent experience

114

(10)

Conclusions

124

(15)

Methodological Appendix

125

(5)

Appendix

130

(9)

Product Mix of the Spanish Banking Firms: Do Competition Clubs Exist?

139

(25)

Francisco Perez

Emili Tortosa-Ausina

Introduction

139

(2)

Basic product mix indicators

141

(1)

Product mix measures

142

(6)

Do competition clubs exist?

148

(6)

Where is the banking sector diversity?

154

(3)

Concluding comments

157

(7)

Institutional Investment Flows and the Regions of the UK: a Case for a New Financial Infrastructure?

164

(29)

Jonathan Williams

Introduction and background

164

(2)

Financial liberalisation and the space economy

166

(2)

The financial system and regional development

168

(4)

The spatial distribution of institutional investment in the UK

172

(9)

Policy implications for Wales and the regions

181

(12)

Characteristics of International Financial Centres

193

(8)

Joe Falzon

Concepts and characteristics

194

(3)

Historical development

197

(1)

Communications and financial centres

198

(1)

Conclusions

199

(2)

Globalisation, Cross-Border Trade in Financial Services and Offshore Banking: the Case of Ireland

201

(12)

Philip Bourke

Introduction

201

(1)

Background

202

(3)

The IFSC

205

(8)

Conclusion

211

(2)

The Impact of CAR on Bank Capital Augmentation in Spain

213

(19)

Yener Altunbas Santiago Carbo

Edward P. M. Gardener

Introduction

213

(2)

Background and model

215

(6)

Statistical methodology

221

(2)

Data and results

223

(4)

Conclusions

227

(5)

The Management of Foreign Exchange Exposures and Interest Rate Exposures in a Number of UK and Swedish Firms between 1985 and 1996

232

(40)

Goran Bergendahl

Background

232

(3)

Exposure management in business firms

235

(17)

Experiences from treasury departments

252

(13)

Conclusions

265

(7)

Appendix

269

(3)

Fat Tails and the Effect on Optimal Asset Allocations

272

(17)

Andre Lucas

Pieter Klaassen

Introduction

272

(2)

The model

274

(4)

Theoretical effects of fat tails

278

(2)

An application to Dutch asset classes

280

(3)

The effect of misspecification of fat tails

283

(4)

Concluding remarks

287

(2)

Index

289

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Bank Strategies and Challenges in the New Europe

Summary

Author Biography

Table of Contents

Supplemental Materials