Research articles for the 2019-07-13
Debt, Innovation, and Growth
SSRN
Recent empirical studies show that innovative firms heavily rely on debt financing. This paper develops a Schumpeterian growth model in which firms' dynamic R&D, investment, and financing choices are jointly and endogenously determined. It then investigates the relation between debt financing and innovation and growth. The paper features a rich interaction between firm policies and predicts substantial intra-industry variation in leverage and innovation, consistent with the empirical evidence. It also demonstrates that while debt hampers innovation by incumbents due to debt overhang, it also stimulates entry, thereby fostering innovation and growth at the aggregate level.
SSRN
Recent empirical studies show that innovative firms heavily rely on debt financing. This paper develops a Schumpeterian growth model in which firms' dynamic R&D, investment, and financing choices are jointly and endogenously determined. It then investigates the relation between debt financing and innovation and growth. The paper features a rich interaction between firm policies and predicts substantial intra-industry variation in leverage and innovation, consistent with the empirical evidence. It also demonstrates that while debt hampers innovation by incumbents due to debt overhang, it also stimulates entry, thereby fostering innovation and growth at the aggregate level.
Ensuring Quality Customer Service of the Financial Organizations: Drawbacks and Recommendations
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This study explores customer satisfaction and services condition of the financial organizations. At present financial organizations are following digital banking system. So that customers’ expectation from a financial organization has totally changed. Modern banking is technology based where computerized system is used in providing services to client. Considering the volume of operation and limitations of resources the banks and financial institutes are working hard to provide effective service. In order to uphold their position in the competitive field of the banking sector, all banks are working proficiently to serve its customers, either by the traditional method or through the modern approach. In service-oriented organization, it is very difficult to set a standard rule to satisfy the customer. The services which the Banks and Non-Bank Financial Institutions (FIs) provide to their clients are very prompt and quality is satisfactory. They made satisfactory progress in all areas of business operation. So the Banks and Non-Bank Financial Institutions (FIs) are going on with commitment to serve the nation.
SSRN
This study explores customer satisfaction and services condition of the financial organizations. At present financial organizations are following digital banking system. So that customers’ expectation from a financial organization has totally changed. Modern banking is technology based where computerized system is used in providing services to client. Considering the volume of operation and limitations of resources the banks and financial institutes are working hard to provide effective service. In order to uphold their position in the competitive field of the banking sector, all banks are working proficiently to serve its customers, either by the traditional method or through the modern approach. In service-oriented organization, it is very difficult to set a standard rule to satisfy the customer. The services which the Banks and Non-Bank Financial Institutions (FIs) provide to their clients are very prompt and quality is satisfactory. They made satisfactory progress in all areas of business operation. So the Banks and Non-Bank Financial Institutions (FIs) are going on with commitment to serve the nation.
Ownership, Board Characteristics and Liquidity Creation: Evidence from Indian Banks
SSRN
Modern financial intermediation theory recognizes liquidity creation and risk transformation as important functions of banks. This paper attempts to study liquidity creation and investigate its relationship with ownership and board characteristics for Indian commercial banks from 2007-2008 to 2016-2017. This paper develops two broad measures of liquidity creation namely catfat and catnonfat. The catfat measure comprises of liquidity creation through on and off balance sheet activities by banks whereas catnonfat includes liquidity creation taking place through only on-balance sheet activities. These are widely recognized as broad (catfat) and narrow (catnonfat) measure of liquidity creation in the existing literature. This paper further examines whether ownership and board characteristics influences liquidity creation in commercial banks (public and private banks) in India. The results highlight that for the sample period, Indian banks, on an average, created liquidity on the basis of catfat measure and destroyed liquidity when catnonfat liquidity creation measure was used. New private sector banks (NPSBs) created greatest liquidity based on catfat measure followed by public sector banks and then by old private sector banks (OPSBs). Based on catnonfat measure public sector banks destroyed the least liquidity relative to NPSBs and OPSBs whereas OPSBs destroyed maximum liquidity when compared with public banks and NPSBs.Board size reduced liquidity creation for NPSBs relative to public sector banks based on catfat measure. For the sample period board independence reduced liquidity creation for NPSBs and OPSBs relative to public sector banks based on catfat measure. Higher number of board meetings reduced liquidity creation for OPSBs based on catfat measure whereas it increased liquidity creation for NPSBs based on catnonfat measure. Greater gender diversity in NPSBs increased its liquidity creation based on catnonfat measure whereas it reduced liquidity creation for OPSBs based on catfat measure. Board structure had significant influence on liquidity creation process in Indian banks.
SSRN
Modern financial intermediation theory recognizes liquidity creation and risk transformation as important functions of banks. This paper attempts to study liquidity creation and investigate its relationship with ownership and board characteristics for Indian commercial banks from 2007-2008 to 2016-2017. This paper develops two broad measures of liquidity creation namely catfat and catnonfat. The catfat measure comprises of liquidity creation through on and off balance sheet activities by banks whereas catnonfat includes liquidity creation taking place through only on-balance sheet activities. These are widely recognized as broad (catfat) and narrow (catnonfat) measure of liquidity creation in the existing literature. This paper further examines whether ownership and board characteristics influences liquidity creation in commercial banks (public and private banks) in India. The results highlight that for the sample period, Indian banks, on an average, created liquidity on the basis of catfat measure and destroyed liquidity when catnonfat liquidity creation measure was used. New private sector banks (NPSBs) created greatest liquidity based on catfat measure followed by public sector banks and then by old private sector banks (OPSBs). Based on catnonfat measure public sector banks destroyed the least liquidity relative to NPSBs and OPSBs whereas OPSBs destroyed maximum liquidity when compared with public banks and NPSBs.Board size reduced liquidity creation for NPSBs relative to public sector banks based on catfat measure. For the sample period board independence reduced liquidity creation for NPSBs and OPSBs relative to public sector banks based on catfat measure. Higher number of board meetings reduced liquidity creation for OPSBs based on catfat measure whereas it increased liquidity creation for NPSBs based on catnonfat measure. Greater gender diversity in NPSBs increased its liquidity creation based on catnonfat measure whereas it reduced liquidity creation for OPSBs based on catfat measure. Board structure had significant influence on liquidity creation process in Indian banks.
Trading on Long-Term Information
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Using data from the Toronto Stock Exchange, we identify long-term informed trading as trading by investors that regularly anticipate earnings surprises. We use the data to test theories of informed trading. The informed investors earn significant profits trading with shorter-term traders and uninformed traders, who both lose money to the informed. Consistent with Collin-Dufresne and Fos (2016), the informed investors avoid being detected by trading during periods of volatile uninformed trading and low price impact. Informed investors have negative intraday price impact, helping to explain low measures of information asymmetry on days with high informed-investor activity. In contrast to a recent literature, we find that informed investors benefit from the presence of short-term traders.
SSRN
Using data from the Toronto Stock Exchange, we identify long-term informed trading as trading by investors that regularly anticipate earnings surprises. We use the data to test theories of informed trading. The informed investors earn significant profits trading with shorter-term traders and uninformed traders, who both lose money to the informed. Consistent with Collin-Dufresne and Fos (2016), the informed investors avoid being detected by trading during periods of volatile uninformed trading and low price impact. Informed investors have negative intraday price impact, helping to explain low measures of information asymmetry on days with high informed-investor activity. In contrast to a recent literature, we find that informed investors benefit from the presence of short-term traders.
