Template-Type: ReDIF-Article 1.0 Author-Name: Burak Dolar Title: INCOME SMOOTHING PRACTICES OF US BANKS AROUND THE 2008 FINANCIAL CRISIS Abstract: The financial crisis of 2008 had a profound effect on the US banking industry, causing financial distress and the failure of a large number of banks. In this paper, we investigate whether or not banking institutions smoothed their reported earnings upward through the utilization of loan loss provisions during the financially challenging times of the Great Recession. Using a large dataset of commercial banks and thrifts, our empirical results provide support for the income smoothing hypothesis that banking institutions underestimated their provision for loan losses in order to offset their declining earnings in the period after the financial crisis Classification-JEL: G21, M41 Keywords: Financial Crisis, Income Smoothing, Provision for Loan Losses, Commercial Banks, Thrifts Journal: The International Journal of Business and Finance Research Pages: 1-11 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:1-11 Template-Type: ReDIF-Article 1.0 Author-Name: Ikechukwu Kelikume Author-Name: Faith A. Alabi Author-Name: Roseline Chizoba Ike-Anikwe Title: AN EMPIRICAL ANALYSIS OF MONETARY POLICY REACTION FUNCTION: EVIDENCE FROM NIGERIA Abstract: The changing and unpredictable nature of the money demand function has led many Central Banks authorities around the world to shift from exchange rate and monetary policy targeting to inflation targeting framework. The gradual shift to inflation targeting has reawakened interest in the Taylor’s Rule which states that nominal anchor interest rate must be raised by more than a proportionate change in inflation to achieve price stability. The objective of this study is to examine the Central Bank of Nigeria monetary policy reaction function and how the CBN responds to the dynamic and evolving macroeconomic environment. The monetary policy response function developed for this study is derived following the basic structure of the Taylor’s rule. Using secondary time series data sourced from the Central Bank of Nigeria Statistical Bulletin covering the periods 1998:Q1-2014:Q2, the study builds on the Taylor rule to formulate a model that track the Central Bank of Nigeria monetary policy reaction function. The method adopted in carrying out the study is the Auto Regressive Distributed Lag Modeling technique and the Error Correction modeling framework. The stylized fact of the study shows that monetary policy variables are moving along same path accompanied by declining inflation and improved productivity. Results obtained from the study will be used to track stability and dynamics of the Central Bank reaction function and to predict the future direction for monetary policy in Nigeria. Classification-JEL: C11, E52, E58 Keywords: Monetary Policy, Central Bank, Reaction Function, Taylor’s Rule Journal: The International Journal of Business and Finance Research Pages: 13-25 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:13-25 Template-Type: ReDIF-Article 1.0 Author-Name: Arturo Rubalcava Title: UNDERPRICING OF SEASONED EQUITY OFFERINGS BY CANADIAN CROSS-LISTED FIRMS IN THE PRE- AND POST-SARBANES-OXLEY PERIODS Abstract: This paper examines the impact of the Sarbanes-Oxley Act of 2002 on underpricing of seasoned equity offerings by Canadian cross-listed firms and its determinants. It finds underpricing is not significantly different between the pre- and post-Sarbanes-Oxley periods. When distinguishing underpricing by two methods of choice for underwriting seasoned equity offerings -bought deals vs. firm commitment-, underpricing is higher for firm commitment than for bought deals during the overall period 1995-2008 and the post-Sarbanes period, after controlling for offer and firm characteristics. In addition, underpricing of bought deals and firm commitment are subject to different determinants for the pre- and post-Sarbanes periods, respectively. The main reason underpricing is high on firm commitment, after the passage of the Act, is for global offers. This suggests issuing equity globally has been unfavorable for firm commitment after the passage of the Act. Classification-JEL: G24, G32 Keywords: Sarbanes-Oxley Act, Seasoned Equity Offerings, Cross-listed, Underpricing, Bought Deals, Firm Commitment Journal: The International Journal of Business and Finance Research Pages: 27-37 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:27-37 Template-Type: ReDIF-Article 1.0 Author-Name: C. Catherine Chiang Author-Name: Yilun Shi Title: STATES OF THE ECONOMY AND GEOGRAPHIC INVESTMENT DECISIONS Abstract: We examine the impact of economic conditions on firm performance after geographic expansions and divestures. We conjecture that different economy conditions during which a firm expands in and out of geographic territories affect the firm’s ability to transform its resources into competitive edges. The difference in the ability of a firm to convert resources to advantages, in turn, leads to variations in operating performance subsequent to geographic expansions and divestures. We conduct empirical tests of our hypotheses using corporation self-disclosed segment data from 1979 to 2008 from COMPUSTAT. We find that, during weak economic cycles, geographic expansions result in sustained long-term profitability. Specifically, firms’ geographic expansion decisions contribute 5.4% and 3.9% per year to industry-adjusted annual return on assets (ROA) over 4- and 5-year periods, respectively. On the other hand, geographic divestures enacted during a weak economy do not help improve firm performance. Moreover, both strong and weak economic conditions enhance performance of geographic expansion over two years but have no long-term effects. Finally, the state of the economy during which time geographic divesture takes place does not affect subsequent operating performance. Classification-JEL: F2, L1, L25 Keywords: Geographic Diversification and Divesture, Operating Performance, Resource-Based View Journal: The International Journal of Business and Finance Research Pages: 39-52 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:39-52 Template-Type: ReDIF-Article 1.0 Author-Name: Renato Balbontín Author-Name: Rodrigo Blanch Title: PERFORMANCE OF CHILEAN PENSION FUNDS INVESTMENTS ABROAD 2010-2014 Abstract: Considering the high volatility generated from the financial crisis of 2008 and low returns in the years 2011, 2013 and 2014, we analyzed the performance of the Chilean Pension Funds. We use Jensen, Sharpe and Treynor indices to evaluate the funds. The comparison is made on a monthly basis for the period 2010 - 2014. We conclude that diversification of pension funds in foreign equities generated a performance similar to global Morgan Stanley All Country World Index, but failed to deliver a return per unit of risk above the average yield on US Treasury bonds. When total risk is segregated into systematic and idiosyncratic components, the difficulty to eliminate unsystematic risk is confirmed. Conclusions suggest that restrictions imposed by the regulations in Chile allow them to achieve a return similar to a passive portfolio, but with a substantial increase in overall risk. Classification-JEL: C01, C12, C20, G15, G23, G32 Keywords: Diversification, Return, Volatility, Risk, Systematic, Idiosyncratic Journal: The International Journal of Business and Finance Research Pages: 53-67 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:53-67 Template-Type: ReDIF-Article 1.0 Author-Name: Ghassen Bouslama Author-Name: Christophe Bouteiller Title: BANK ACQUISITIONS AND LOAN OFFICER AUTHORITY: EVIDENCE FROM FRENCH BANKS Abstract: The purpose of this article is to study how the delegation of decision-making rights towards Small and medium-sized enterprises loan officers evolves as a result of bank mergers and acquisitions. Using the framework of organizational architecture theory as our starting point, we examine here one of its three components: the decentralization of decision-making rights. Our survey of Small and medium-sized enterprises loan officers in two recently acquired French banks shows that these officers are often allowed to use their initiative. However, bank consolidation operations do not increase the decentralization of authorization rights. We even observe in such circumstances an increase in hierarchical control. Ultimately, we cannot conclude that in consolidated banks small and medium-sized enterprises loan officers enjoy greater autonomy. Classification-JEL: G21, G34 Keywords: Bank Mergers and Acquisitions, Decentralization of Decision-Making Rights, Theory of Organizational Architecture, Soft Information, Bank-SME Relation Journal: The International Journal of Business and Finance Research Pages: 68-84 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:68-84 Template-Type: ReDIF-Article 1.0 Author-Name: Khemais Zaghdoudi Author-Name: Helmi Hamdi Author-Name: Hichem Dkhili Author-Name: Abdelaziz Hakimi Title: BANK COMPETITION AND RISK APPETITE: EVIDENCE FROM TUNISIA Abstract: In this paper, we investigate whether bank competition increases risk taking for the case of the Tunisian banks. Our data set covers nine Tunisian banks observed during the period from1980 to 2009 and we conducted an econometric model based on panel data estimations. The econometric results reveal the presence of a positive relationship between competition and bank risk taking. This shows that the functions of Tunisian banks remain based on the basic traditional activities and banks need to diversify their activities in safe functions to keep the banking sector stable and avoid bank failure. Classification-JEL: G21, L11 Keywords: Bank Competition, Tunisian Banks, Bank Risk Taking, Panel Data Analysis Journal: The International Journal of Business and Finance Research Pages: 85-93 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:85-93 Template-Type: ReDIF-Article 1.0 Author-Name: Isaiah Oino Title: A COMPARISON OF CREDIT RISK MANAGEMENT IN PRIVATE AND PUBLIC BANKS IN INDIA Abstract: Like other corporations, banks want to create value and seek ways to control risk while aiming to enhance productivity and performance. This is achieved by granting credits to customers from the money deposited by the depositor, thus placing them at risk in the case of defaulting. Despite this risk, banks must continually issue credit since it is the key source of its profitability. This research study assesses the impact of credit risk management on Indian public and private banks during the 2009-2012 period. Using pooled OLS, fixed effects and random effects, the study examines credit risk management in seven private banks and seven public banks. The results show that private banks are more capitalized and more profitable than public banks. In addition, in both cases asset quality measured using non-performing assets with negative coefficients significantly influenced bank profitability. The study extrapolates the importance of regulatory capital and the importance of risk management in ensuring stability in the financial industry. Classification-JEL: G02, G18 Keywords: Capital Adequacy, Non-Performing Assets, Performance, Net Interest Margin Journal: The International Journal of Business and Finance Research Pages: 95-108 Volume: 10 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n1-2016/IJBFR-V10N1-2016-8.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:1:p:95-108