Online banking adoption an empirical analysis of personal bankruptcy

online banking adoption an empirical analysis of personal bankruptcy

contribution in the existing body of Islamic banking empirical findings of this study provide some future directions and is considered to be a pioneer study, which has laid a foundation in the context of Islamic personal financing in Pakistan. Key words: Personal financing, Islamic banks, customer’s intention, Pakistan. A further empirical challenge lies in data and methodological choices. As some studies point out, the selection of time/cross-sectional coverage and variable definitions can affect empirical findings and conclusions. For some banking-related concepts (e.g., liquidity), the . Aug 11,  · 1. Introduction. Financial institutions exert considerable effort in collecting and analyzing private information on clients. Although time-consuming to gather and difficult to measure, soft information can provide financial institutions with a strategic advantage over competitors (Agarwal and Hauswald, ) as well as lead to lower default rates (Agarwal et al., ). 1 Disruptions in a Cited by: 6.

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This post reviews many of the papers and presentations from the workshop dealing with a variety of regulatory policy issues. An accompanying macroblog post will review the panel on cryptocurrency and central bank e-money. Liquidity in automated markets The long-run trend in financial markets has been to replace trading between humans with trading between machines. In many markets, machines acting within a fraction of a second make most buy and sell decisions.

This has led to considerable interest in the actions of these so-called high-frequency traders HFTs that supply liquidity to financial markets—temporarily bridging the gap between when a buy order reaches the exchange and when an offsetting sell order is received or vice versa.

The desire for speed from HFTs is so great that firms have their computers installed adjacent to the exchange to get their orders posted ahead of other traders. Similarly, traders that seek to exploit differences across markets located in different places such as the cash and futures markets demand the highest-speed communications equipment to allow information to be quickly communicated, often within milliseconds.

A large fraction of the academic analysis of high-speed markets, especially equity markets, has focused on HFTs and their role in supplying liquidity. However, the large buy-side firms such as mutual fund families also use computer-driven trading to obtain the best prices.

University of Illinois, Urbana-Champaign professors Sida Li, Xin Wang, and Mao Ye develop a theoretical model in which the buy-side firms are somewhat slower than HFT firms, but the buy-side is motivated to transact based on private valuations of a stock. Their paper " Who Supplies Liquidity, and When?

Arguably, a downside of the buy-side firms providing liquidity is that HFT firms quote much wider bid-ask spreads on their limit orders. As a result, a sudden jump in the net demand for a stock is more likely to cause a mini-flash crash, when spreads are low. Federal Reserve Board economist Dobrislav Dobrev and AQR Capital Management managing director Ernst Schaumburg exploit the development of high-speed communication and trading to help determine which exchanges lead in price setting and which tend to be followers for different instruments that are priced on the same underlying security or commodity.

However, they also find that the CME's Treasury futures market is about as likely to lag as it is to lead BrokerTec's cash market. Changing technology and mortgage market risk The market for residential mortgages and mortgage-backed securities has also undergone a variety of changes. Two papers presented at the workshop address the extent to which technological developments contributed to the —09 financial crisis.

Foote and Paul S. Willen from the Boston Fed study the extent to which the development of automated underwriting models starting in the s may have contributed to a spike in mortgage defaults in the early s. The reduced emphasis on borrowers' groups debt-to-income ratio did not lead to a spike in mortgage defaults in the s, but the authors speculate the reduced emphasis may have facilitated increased demand by mortgage borrowers based on inflated expectations of housing prices in the early s.

During the onset of the recent financial crisis, a significant concern was the extent to which the prices of credit default swaps CDSs written on mortgage-backed securities accurately reflected their riskiness.

Single-name CDS contracts written on a particular mortgage-backed security and, even more so, CDS contracts written on an index of single-name CDSs the ABX indices attracted considerable attention in —08 as an indicator of a coming wave of mortgage defaults and foreclosures.

However, market practitioners often criticized CDSs on mortgage-backed securities as trading at excessively pessimistic prices. Imerman of Claremont University, professors Joseph R. Mason and Rajesh P. Rhodes, also from Louisiana State. They find that the cash market for residential mortgage-backed securities RMBSs most accurately reflected fundamental values.

CDS and CDS index prices departed from these fundamentals, especially in the period between remittance report dates. Blockchains Interest in the database technology underlying bitcoin, called the blockchain, has grown considerably in the last several years. Two papers presented at the conference address two very different economic issues associated with blockchain technology: how to value blockchain tokens including cryptocurrencies such as bitcoin and how blockchains could be used to increase the efficiency of corporate audits.

In the paper " Tokenomics: Dynamic Adoption and Valuation ," the authors consider how the use of tokens can increase platform usage. If the platform does not use a token in other words, payment for usage is in dollars , potential users consider only the immediate benefits they may obtain from using the platform.

However, if the platform issues a token, then potential users value not only the immediate benefits but also the expected appreciation of the value of the token, leading to an increase in the number of users. Moreover, this increase in the number of users may be multiplied to the extent that the platform benefits from network effects. The second paper, " Auditing and Blockchains: Pricing, Misstatements, and Regulation ," examines the potential for blockchain technology to improve the efficiency of corporate audits.

Auditing firms currently manually confirm a sample of a corporation's transactions to verify the transactions' authenticity. However, this manual sampling is costly and, because it is incomplete, leaves open the possibility that some transactions are fake.

The paper—by professors Baozhong Yang and Sean Cao of Georgia State University, along with Lin William Cong—considers an environment in which transactions between firms are given a universal identifier and made available to accounting firms.

In their model, auditing firms could verify the universe of transactions between firms that make the data available to their auditing firm at near zero cost, reducing reporting errors. Assuming that adoption of this technology requires the payment of a one-time fixed cost, the authors find that either all auditors will find it cost-efficient to adopt the technology or all auditors will decide the costs of adoption exceed the benefits.

Research on financial innovation Financial innovation is not new. Over 30 years ago, Nobel Prize—winning economist Merton Miller observed that the "word revolution is entirely appropriate" to describe the changes in financial institutions and instruments over the period from approximately to White, reviewed the state of the academic literature on financial innovation.

White observed that when he and my Atlanta Fed colleague W. Scott Frame surveyed the academic literature in a paper, they found considerable evidence of further financial innovation but only a tiny number of papers relative to a vast industrial organization literature on other types of innovation. More recently, White noted a "vast expansion of the literature on financial innovations" arising in part because of recent innovations such as fintech.

However, White observed that we still "know little about how and why financial innovations are initially developed, and by whom. Online lending markets The development of peer-to-peer lending was initially promoted as an activity that could replace bank lending to consumers with direct lending between consumers, just as Airbnb disintermediates hotels.

However, as Atlanta Fed economist W. Scott Frame observed in a post , peer-to-peer lending morphed into marketplace lending, as personal lending platforms found it more efficient to obtain most of their funding from institutional investors. Papers at the workshop addressed developments in online lending from a variety of perspectives.

The ongoing development of online lending was chronicled in a paper by professors Tetyana Balyuk of Emory University and Sergei Davydenko of the University of Toronto. However, the authors find the market has continued to evolve so that these large institutions no longer help price the loans and in most cases do not conduct independent analysis of them.

Instead, institutional investors tend to rely on the platform to perform these functions. Looking more carefully at Prosper's loan evaluation, the authors also find that its ability to predict defaults has steadily improved since and is now " much more informative than FICO" scores by themselves. Given that online or fintech lenders compete with commercial banks in consumer lending, a natural question is the relative credit efficiency of fintech lenders.

Google Scholar. Evren Damar. David Martinez-Miera. Cite Cite Jason Allen, H. Select Format Select format. Permissions Icon Permissions. Abstract This article analyzes the relationship between consumer bankruptcy patterns and the destruction of soft information caused by mergers. All rights reserved. For Permissions, please email: journals. Issue Section:. You do not currently have access to this article. Download all figures.

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online banking adoption an empirical analysis of personal bankruptcy

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