毕业论文外文翻译-效率比率与社区银行的经营绩效.doc

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1、北京联合大学毕业论文外文原文及译文题目：北京市村镇银行支持三农发展问题研究 专业： 金融学 指导教师： 一、外文原文Efficiency Ratios and Community Bank PerformanceFred H. HaysUniversity of MissouriKansas CityStephen A. De LurgioUniversity of MissouriKansas CityArthur H. Gilbert, Jr.University of West FloridaAbstractThis study develops a multivariate discr

2、iminate model to differentiate between low efficiency and high efficiency community banks (less than $1 billion in total assets) based upon the efficiency ratio, a commonly used financial performance measure that relates non-interest expenses to total operating income. The model includes proxies for

3、 the banking regulatory CAMELS rating variables including: the equity capital to total asset ratio, net charge-offs to loans, salaries to average assets, return on average assets, the liquidity ratio and the one year GAP ratio. The discriminate model is tested using data for 2006, 2007 and 2008. Thi

4、s includes periods of high performance as well as deteriorating industry conditions associated with the current financial crisis. The models classification accuracy ranges from approximately 88% to 96% for both original and cross-validation datasets.Keywords Efficiency ratio, community bank, CAMELS;

5、 discriminate analysis; financial crisisIntroductionThe global economic and financial crisis initially affected large financial institutions like Citibank, Bank of America and Wachovia. As the effects spread throughout the U.S. economy, especially during the latter part of 2008, smaller institutions

6、, including about 7,000 community banks (with under $1 billion in assets measured at the individual bank level rather than the bank holding company level) have been affected as well. Community banks are characterized by not only their relatively small size but also their focus on local banking marke

7、ts rather than regional, national or global markets.While sub prime lending is frequently cited as a catalyst for current banking problems, community banks have been adversely affected by a decrease in liquidity in the overall financial system as well as deterioration in traditional residential real

8、 estate loans, commercial and industrial loans and consumer loans including credit cards and student loans. Overall profitability in the banking industry has plunged from near record highs in 2006 to an industry loss of $32.1 billion in the fourth quarter of 2008, a -0.94% quarterly return on averag

9、e assets. (FDIC Quarterly Banking Report, Fourth Quarter 2008). For all of 2008 total industry profits were a mere $10.2 billion, a year-to-year reduction of almost 90%. Net interest margins for community banks fell to the lowest levels in 20 years.Even before the recent financial crisis, the number

10、 of banks in the US declined by about half since 1980. Most of these were community banks. Predictions of their total demise have not materialized. Changes in technology, fierce competition and changing population demographics have not eliminated their presence. These forces do raise questions, howe

11、ver, about the ability of the least efficient to continue to operate.This study looks at factors that differentiate efficient from inefficient community banks using the efficiency ratio, a popular tool used by bank financial analysts. The efficiency ratio measures the level of non-interest expense n

12、eeded to support one dollar of operating revenue, consisting of both interest income and non-interest or fee income. The value of the efficiency ratio can be influenced by changes in salaries and benefits, labor productivity, technology, utilization of physical facilities especially branch offices a

13、long with many other factors including economies or diseconomies of scale.The analytical framework in this study is based on the CAMELS rating system, a device created by federal banking regulators to assess the overall performance of commercial banks (Rose, 2010). The CAMELS acronym stands for Capi

14、tal adequacy, Asset quality, Management, Earnings and Liquidity. Regulators created an additional measure, Sensitivity, to evaluate market risk associated with changing interest rates and other factors. This study uses proxy variables to represent each of these dimensions of bank performance.This st

15、udy also employs multiple discriminate analysis to investigate the differences between high efficiency and low efficiency banks based upon the level of the efficiency ratio. A model is developed that demonstrates substantial differences between high and low efficiency banks. The model is tested usin

16、g year-end data for 2006, 2007 and 2008. This incorporates periods of high profitability as well as the negative effects of the financial crisis on recent periods including year-end 2008 when the brunt of the current crisis hit. This is the most recent data currently available.Bank profitability as

17、measured by return on average assets (ROAA) in Chart 1 was at near record levels from the late 1990s until the end of 2006. Beginning in 2007 ROAA began to deteriorate rapidly. The decline in asset quality in 2008 forced banks to increase their provisions for loan losses which further reduced profit

18、s.Chart 2 depicts both the increase in non-current loans (loans 90 days or more past due) and net charge-offs (loans that have been deemed to be uncollectible). While non-current loan rates were considerably higher in the early 1990s during the Savings and Loan and Banking Crises compared with the l

19、evels at year-end 2008, the level of actual charge-offs in 2008 exceeded the highest level in the early 1990s.The efficiency ratio is calculated by dividing overhead expenses by the sum of net interest income and non-interest or fee income. It is a measure of how effective a bank is in using overhea

20、d expenses including salaries and benefit costs and occupancy expenses as well as other operating expenses in generating revenues. Other things being equal, a decrease in the efficiency ratio is viewed as a positive while a rising efficiency ratio is generally undesirable. The efficiency ratio can r

21、ise temporarily when a bank expands facilities. For example, opening a new branch immediately adds to overhead costs including staffing. New loans may not be immediately forthcoming. Fee income may be slow developing as well. As a result there can be a short-term spike in the efficiency ratio.Chart

22、3 shows the differences between the efficiency ratios for community banks with assets less than $1 billion and larger regional and national banks. The efficiency ratio for community banks has risen by almost 10% since the late 1990s. The increase has been particularly notable since 2005. By contrast

23、, efficiency ratios for banks in excess of $1 billion in assets are actually lower at year-end 2008 than in 1998. Among other things, this may reflect the growing consolidation of large banking organizations during this period as organizations such as Nations Bank and Bank of America merged. It may

24、also include the effects of merging banks with non-bank financial institutions including insurance companies (such as Travelers merging with Citicorp) that became possible after passage of the Gramm Leach Bliley Act in late 1999.The economies of scope and scale may reduce average costs and result in

25、 lower efficiency ratios. Efficiency ratios are subject to controls of overhead expenses as implemented by senior management and the board of directors. Economic theory assumes that managers will seek to reduce overhead expenses in an attempt to maximize profits. Edwards (1977) offers an opposing vi

26、ew that bank management may choose to maximize utility rather than profitability. This expense preference theory has been developed in bank management literature. Williamson (1963) notes that management may increase “staff expenditures, managerial emoluments and discretionary profits” rather than fo

27、cus strictly on maximizing profits. If management prefers larger staffs or more locations, this is normally reflected in the short term in higher efficiency ratios. Such decisions may or may not contribute to long-run profitability.Review of LiteratureLiterature on community bank performance, especi

28、ally related to efficiency and bank strategy continues to expand. The following discussion summarizes some research in this area over the past decade. Wall (1985) examined small and medium sized banks from the early 1970s until deregulation occurred in the early 1980s. He found that profitable banks

29、 had lower interest and non interest expense than less profitable banks. In addition, the more profitable banks had lower cost of funds, greater use of transactions deposits, more marketable securities and higher capital levels.Gup and Walter (1989) found that consistently profitable small banks str

30、essed basic banking with low cost funds and high quality investments. The study examined banks from 1982 to 1987 during the early stages of bank deregulation. During this period there were considerable differences between regions due to declining energy, real estate and commodity prices. High perfor

31、mance banks during this period made higher quality loans, held proportionately more capital, invested more in securities (especially long-term) and relied on lower cost funding sources compared with the average small bank.Zimmerman (1996) examined community bank performance in California during the

32、early 1990s, a period of slow recovery for these institutions. Excessive reliance on real estate lending caused deterioration in asset quality which reduced overall profitability. Lack of geographic diversification further compounded community bank performance.Two different studies by Bassett and Br

33、ady (2001; 2002) examined recent performance of community banks. The 2001 study found that many small banks from 1985-2000 vanished through mergers and acquisitions. Increased competition with stock, bond and mutual fund investments may have weakened the competitive position of small banks. These co

34、mmunity banks, nevertheless, were able to compete effectively against larger banks due in part to superior knowledge of local loan markets combined with a reluctance of customers to bank with out-of area institutions. Bassett and Bradys (2002) study found that small banks grew more rapidly than larg

35、e banks from 1985-2001 with profitability remained at a high level. While interest costs increased, this was more than offset by higher returns on earning assets.Gilbert and Sierra (2003) used the Federal Reserve System for Estimating Examination Ratings (SEER) surveillance system to estimate the pr

36、obability of failure for community banks (which they define as less than $1 billion in assets) versus large banks (with assets greater than $1 billion). The failure probability declined for both groups during the 1990s. The risk of failure since about 1997 rose slightly for community banks and as of

37、 2003 were about 4 basis points higher than for large banks.Myers and Spong (2003) examined community bank growth in the 10th Federal Reserve District (Kansas City) with an emphasis on economic conditions in slower growing markets. These slower growing markets presented problems in loan quality as w

38、ell as staffing including senior management and directors. Community banks in low growth markets experienced higher overhead costs relative to income than banks in higher growth markets.DeYoung, Hunter and Udell (2003) provided an extensive investigation of community bank performance commencing in t

39、he early 1970s. They concluded that while many community banks have left the industry in the past three decades, many more inefficient banks must still exit in order for those remaining to be competitive with their larger bank counterparts. Critchfield, Davis, Davison, Gratton, Hanc and Samolyk (200

40、5) in a study of past, present and future community bank performance conducted for the FDIC concluded that community banks continue to be of interest because 1) they still constitute over 90% of all banks,2) they are economically important to small business and agricultural lending and 3) they repre

41、sent a disproportionately large percentage of FDIC failure costs.MethodologyThis study examines the performance of low efficiency vs. high efficiency community banks using data from year-end 2006-2008. High vs. low efficiency is defined in terms of the efficiency ratio, a commonly used measure of ba

42、nk performance. The efficiency ratio (ER) is non-interest expenses divided by the sum of interest income and non-interest income (fee income). A higher ratio value indicates relative inefficiency while a lower value indicates greater efficiency. Inefficiency can be the result of overstaffing, excess

43、ive salaries and benefits, investments in new branches that have yet to become profitable along with other reasons. In this study we use a “polar extremes approach” that defines high and low efficiency banks while eliminating the middle group. For additional discussion of this approach to discrimina

44、te analysis see Hair et.al. (1998).Efficient banks are defined as those with efficiency ratios (ER) less than 51 while inefficient banks are those with efficiency ratios greater than 81. This corresponds to one standard deviation below and above the mean ER of 66.Community banks are defined in this

45、study as banks with total assets less than or equal to one billion dollars. This cutoff value is consistent with many current studies of community bank performance. To assure that special purpose banks such as credit card banks are excluded from the study, only banks with loan to deposit ratios grea

46、ter than 25% and less than 125% are included. To eliminate problems associated with de novo (newly chartered) banks, an additional constraint that banks be chartered prior to December 31, 2002 was applied.After applying the previous screening parameters, the result is 739 low efficiency banks and 67

47、4 high efficiency banks, the universe of U.S. banks that meet the screening criteria described above. Data are obtained from a relational database available by subscription from SNL Financial. The data are based on quarterly reports by commercial banks and bank holding companies filed with the Feder

48、al Deposit Insurance Corporation and published in the FDIC Reports of Condition and Income.The Model and ResultsThe CAMELS rating system was developed by federal banking regulators as a composite measure of overall commercial bank performance. Bank management and the board of directors receive an ag

49、gregate performance score on a scale of 1-5 where 1 is the highest rating and 5 is the lowest. Banks rated 4 or 5 are considered “problem banks” and are severely limited in their operations by their respective regulators. These ratings may require obtaining additional capital, limitations on interest rates paid on deposit liabilities, limitations on dividend distributions,