New Economics Papers
on Banking
Issue of 2007‒12‒15
five papers chosen by
Roberto J. Santillán–Salgado, EGADE-ITESM

  1. Emerging Perspectives on Self Service Technologies in Retail Banking By Rajagopal; Ananya Rajagopal
  2. Branch banking networks assessment using DEA:A benchmarking analysis By Aude Hubrecht-Deville
  3. De nouvelles mesures de la performance financière et de la performance opérationnelle des réseaux de distribution:le cas des agences bancaires By Aude Hubrecht-Deville; Hervé Leleu
  4. Analysis of Operational Risk of Banks - Catastrophe Modelling By Gábor Benedek; Dániel Homolya
  5. E-Banking: Risk Management Practices of the Estonian Banks By Dmitri Sokolov

  1. By: Rajagopal (Tecnológico de Monterrey, Campus Ciudad de México); Ananya Rajagopal (Banco Azteca, Grupo Salinas Mexico)
    Abstract: This paper attempts to critically examine the available literature on the subject, discuss a model that provides a managerial framework for analyzing the variables associated with customer value, and to identify potential research areas. The discussion draws conceptual impetus from new technologies in banking services through self service technologies in banking as a tool for optimizing profit. The discussion in the paper also analyzes the main criteria for successful internet-banking strategy and brings out benefits of e-banking from the point of view of banks, their technology and customer values and tentatively concludes that there is increasing returns to scale in the bank services in relation to the banking products, new technology and customer value.
    Keywords: Self service technology, retail banking, customer value, profit optimization
    JEL: G21 M31 O14 O33
    Date: 2007–12
  2. By: Aude Hubrecht-Deville (Université de Bourgogne)
    Abstract: This paper presents a benchmarking analysis of the branches and regional banks of a large French banking group. The analysis focuses on the operational performance. Starting from an “individual” diagnostic at the branch level, a “network” diagnostic is developed at the regional banks level. The variations of performance are discussed within each regional bank and from one regional bank to another by using a DEA (“Data Envelopment Analysis”) approach. This approach allows to develop a synthetic index called the technical inefficiency score. Results reveal that 30% of these branches are efficient. Special emphasis is placed on quantifying the productive gains at the regional banks level and on practicing intra- and inter regional banks benchmarking.
    Keywords: productivity;benchmarking;aggregate measure;branches;banking network.
    JEL: G21 M19
    Date: 2007–11
  3. By: Aude Hubrecht-Deville (Université de Bourgogne); Hervé Leleu (CNRS-LEM, Catholic University of Lille)
    Abstract: (VF)Dans ce papier, nous proposons deux nouveaux indicateurs pour mesurer la performance opérationnelle et la performance financière des réseaux d’agences bancaires. Nous développons une approche alternative aux mesures classiques de productivité pour prendre en compte des effets de taille, d’environnement et de structure dans la comparaison des agences entre elles. Nous recourons à une approche non paramétrique d’estimation d’une frontière de production pour construire les indicateurs dans un cadre homogène. Une application empirique est menée sur un échantillon de 1423 agences bancaires réparties au sein de 15 banques régionales. Nos résultats indiquent que la performance opérationnelle n’est que faiblement liée à la performance financière et que les deux types d’indicateurs apparaissent donc davantage complémentaires que substituables pour établir un diagnostic global de performance.(VA)In this paper, we introduce two new indicators of the operational and the financial performance of bank branches networks. We develop an alternative approach to the traditional productivity measures to take into account size, environmental and structural effects in the benchmark process. We use a nonparametric production frontier to estimate the efficiency indices within a unified framework. We apply our analysis to a sample of 1423 bank branches belonging to 15 regional banks. Our results show that the operational and financial performances are weakly related to each other. Therefore, the two types of indicators appear to be more complementary than substitute.
    Keywords: réseaux de distribution;banque;performance financière;performance opérationnelle;retail networks;bank; financial performance;operational performance.
    JEL: G21 M19
    Date: 2007–11
  4. By: Gábor Benedek (Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest and Thesys Labs Ltd.); Dániel Homolya (Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest and Magyar Nemzeti Bank)
    Abstract: Nowadays financial institutions due to regulation and internal motivations care more intensively on their risks. Besides previously dominating market and credit risk new trend is to handle operational risk systematically. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. First we show the basic features of operational risk and its modelling and regulatory approaches, and after we will analyse operational risk in an own developed simulation model framework. Our approach is based on the analysis of latent risk process instead of manifest risk process, which widely popular in risk literature. In our model the latent risk process is a stochastic risk process, so called Ornstein-Uhlenbeck process, which is a mean reversion process. In the model framework we define catastrophe as breach of a critical barrier by the process. We analyse the distributions of catastrophe frequency, severity and first time to hit, not only for single process, but for dual process as well. Based on our first results we could not falsify the Poisson feature of frequency, and long tail feature of severity. Distribution of “first time to hit” requires more sophisticated analysis. At the end of paper we examine advantages of simulation based forecasting, and finally we conclude with the possible, further research directions to be done in the future.
    Keywords: risk management, operational risk, risk modelling, banking
    JEL: G32 C19 C69 G21
    Date: 2007–11
  5. By: Dmitri Sokolov (Institute of Economics at Tallinn University of Technology)
    Abstract: During the last years the development of e-banking in Estonia has been very significant. According to the report of the World Economic Forum, the Estonian IT-development has been substantial. The success of e-banking in Estonia can be compared to the corresponding success of the Nordic countries. According to the Deutsche Bank Research, around 70-80% of the Internet users in Estonia use Internet banking and in this respect, Estonia could be compared to Finland, Norway and Iceland. Despite of certain benefits, e-banking has turned out a great risk, as bank clients are expecting e-banking services to be available 24 hours a day and seven days a week. The major risks associated with e-banking are strategic, operational, legal and reputational. Security is considered the central operational risk of e-banking. Some of the specific problems cut across risk categories, e.g. breach of security allowing unauthorised access to customer information can be classified as an operational risk, but such an event also exposes the bank to legal risk and reputational risk. Customer education on security risks and precautions can play an important role for consumer protection and for limiting reputational risk. In Estonia, all commercial banks which are engaged in e-banking activities have published on their websites recommendations to potential customers on how to increase the security while making transactions in electronic environment. The Estonian Financial Supervision Authority responsible for the banking supervision has disseminated on its website a special brochure to e-banking customers on how to use the Internet bank safely. At the international level the Basel Committee on Banking Supervision (BCBS) has elaborated risk management principles for e-banking. These risk management principles fall into three broad, and often overlapping, categories: Board and Management Oversight, Security Controls and Legal and Reputational Risk Management. The research question of this paper is whether these risk management principles are implemented at the Estonian banks. In order to assess the risk management practices of the Estonian banks in the field of e-banking as well as their conformity to the BCBS guidelines, the author has prepared a questionnaire and circulated it to all banks. According to the results of the survey, the Estonian banks generally comply with all BCBS guidelines in the field of e-banking risk management.
    Keywords: e-banking, risks, risk management
    JEL: G21
    Date: 2007

This issue is ©2007 by Roberto J. Santillán–Salgado. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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