{"title":"Speed for Safety: The Establishment of Bankruptcy Courts and Bank Credit Risk in China","authors":"Yue Zhang","doi":"10.47260/jafb/1362","DOIUrl":"https://doi.org/10.47260/jafb/1362","url":null,"abstract":"Abstract\u0000\u0000We investigate the effect of bankruptcy court establishment on the credit risk of municipal commercial banks in China from 2013 to 2020. Establishing bankruptcy courts reduces the non-performing loan ratio of municipal commercial banks. The effect is more pronounced in cities with low fiscal transparency and market fragmentation, and a strong rule of law. Furthermore, we argue that the bank’s loan provision and provision coverage ratio is the crucial intermediate variable in the relationship between bankruptcy court establishment and credit risk management. Our findings demonstrate the critical role of judicial system reform in promoting financial stability in China.\u0000\u0000JEL classification numbers: G21, G32, G33.\u0000Keywords: Bankruptcy court, Credit risk, Judicial reform.","PeriodicalId":330012,"journal":{"name":"Journal of Applied Finance & Banking","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-07-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130401124","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}
{"title":"The Impact of Corporate Political Connections on Analyst Forecast Quality","authors":"Tzu-Ching Weng, Kai-Jui Hsu, Yihong He","doi":"10.47260/jafb/1361","DOIUrl":"https://doi.org/10.47260/jafb/1361","url":null,"abstract":"Abstract\u0000\u0000The purpose of this study is to investigate whether the companies have significant impact of political connections on analyst forecasts quality. Refer to the literature on relevant analyst information in the past, especially distinguish the information obtained by analysts into public information and private information, and check whether it will affect the quality of analysts’ forecast information. Our empirical results show that there is a significant negative correlation between companies with political ties and the accuracy of analysts' public information. It indicates that when companies have political connections, companies are only willing to disclose information to specific stakeholders, resulting in information asymmetry. Meanwhile, the accuracy of public information obtained by analysts is relatively low, while the accuracy of private information is relatively high for the companies with political connections.\u0000\u0000JEL classification numbers: G30, M41.\u0000Keywords: Political Connections, Analyst Forecast Quality.","PeriodicalId":330012,"journal":{"name":"Journal of Applied Finance & Banking","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-07-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115434523","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}
{"title":"Accounting vs. Politics: Effects of China-US Audit Cooperation on China Concept Stocks","authors":"Shijie Wang","doi":"10.47260/jafb/1356","DOIUrl":"https://doi.org/10.47260/jafb/1356","url":null,"abstract":"Abstract\u0000\u0000Since 1993, Chinese companies have entered the US capital market, becoming a crucial platform for their public listing and fundraising. However, inconsistent accounting policies between China and the US have resulted in the delisting of certain China Concepts Stocks (CCS) in the US. Nonetheless, the recent accounting review cooperation agreement between the China Securities Regulatory Commission and the US PCAOB has altered the future prospects of CCS in the US. This study aims to quantify the economic value of this bilateral collaboration using the Audit Supervision Cooperation Agreement, signed by China and the US on August 26, 2022, as a natural experiment. Our findings reveal that in the three months following the agreement, CCS with political connections and accounting issues related to the Chinese government exhibited returns of 4.63% and 1.13% respectively. We conducted robustness tests including parallel trend tests, experimental and control groups based on VIE architecture interference, and sub analysis samples and placebo tests. Additionally, trading volume and price volatility of politically affiliated companies also experienced positive effects. In conclusion, our study underscores the significant impact of the political friendship between China and the US on the economic development of both nations and the global economy.\u0000\u0000JEL classification numbers: F42, G14, G15.\u0000Keywords: Political connections, Chinese concept stock, Accounting collaboration.","PeriodicalId":330012,"journal":{"name":"Journal of Applied Finance & Banking","volume":"80 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123408254","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}
{"title":"Measuring the Cost Efficiency of Lebanese Commercial Banks using the Stochastic Frontier Approach","authors":"Nasma A. Berro","doi":"10.47260/jafb/1355","DOIUrl":"https://doi.org/10.47260/jafb/1355","url":null,"abstract":"Abstract\u0000\u0000This paper attempts to measure the cost efficiency of 44 banks operating in Lebanon throughout the period 1992-2016, using the stochastic frontier technique. The additional purpose of this study is to detect the impact of some endogenous and exogenous factors on the cost efficiency scores calculated. The empirical results show a stabilization in the cost efficiency of Lebanese banks over the period studied and that on average those banks could reduce up to 12% of their allocated resources while maintaining the same level of their final outputs. We also found that cost efficiency among Lebanese banks is driven by 1) macroeconomic factors such as economic growth and inflation development and 2) by banks specific factors such as liquidity, capitalization, profitability and the diversification strategy.\u0000\u0000JEL classification numbers: C10, C67, D61, G20, G21.\u0000Keywords: Stochastic frontier, Parametric approach, Cost efficiency, Banks, Efficiency determinants.","PeriodicalId":330012,"journal":{"name":"Journal of Applied Finance & Banking","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130612166","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}
{"title":"Corporate ESG Performance and Financing Constraints: Empirical Evidence from Chinese Listed Companies","authors":"Xiaoyu Hou","doi":"10.47260/jafb/1354","DOIUrl":"https://doi.org/10.47260/jafb/1354","url":null,"abstract":"Abstract\u0000\u0000In recent years, corporate ESG performance has received extensive attention from academic and practical circles around the world. This paper examines the impact of corporate ESG performance on financing constraints based on data from 2012-2019 Chinese A-share listed companies. The findings show that corporate ESG performance can mitigate corporate financing constraints. The results remain robust after using the new Environmental Protection Law, a quasi-natural experiment, with the difference-in-difference model to mitigate endogeneity. The mechanism test shows that ESG performance can mitigate corporate financing constraints by attracting more analyst attention to mitigate information asymmetry and obtaining more commercial credit. Heterogeneity analysis shows that corporate ESG performance has a more pronounced effect on alleviating financing constraints for non-state and high-tech firms.\u0000\u0000Keywords: ESG, Financing constraints, Analyst attention, Commercial credit.","PeriodicalId":330012,"journal":{"name":"Journal of Applied Finance & Banking","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125613057","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}
J. Leventides, Konstantinos Lefkaditis, Anna Donatou, E. Melas, C. Poulios
{"title":"Development of a Transition Matrix Model of Credit Rating of Companies based on\u0000Forecasted Macro Factors: the Case of Greece","authors":"J. Leventides, Konstantinos Lefkaditis, Anna Donatou, E. Melas, C. Poulios","doi":"10.47260/jafb/1353","DOIUrl":"https://doi.org/10.47260/jafb/1353","url":null,"abstract":"Abstract\u0000\u0000In this paper, we develop a model for the rating transition matrices for corporates. These matrices quantify the credit quality of the business sector and, hence, they are related to the financial stability and growth of the economy. The main objective is to estimate how a corporate portfolio behaves under various macroeconomic conditions and (to show the link between the quality of a corporate portfolio with macro variables) and to build a new transition matrix based on specific forecasted macroeconomic variables according to IFRS 9 requirements for the calculation of ECL. The model has been developed based on historical transition rates of credit risk assessments provided by ICAP SA and historical values of various macro factors provided by Hellenic Statistical Authority (ΕΛΣΤΑΤ).\u0000\u0000JEL classification numbers: G2, M1.\u0000Keywords: Rating transition matrices, Credit quality, Business sector, Macroeconomic factors.","PeriodicalId":330012,"journal":{"name":"Journal of Applied Finance & Banking","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132011541","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}