We review the contemporary theory of financial intermediation. The focus is on contributions in the past 15 years or so that have advanced our understanding of why financial intermediaries exist, the credit allocation and other services they provide in spot and forward credit markets, the contractual nature and allocational consequences of the claims they issue, and the optimal design of bank regulation. Journal of Economic Literature Classification Numbers: 310, 312, and 314.

Contemporary Banking Theory

The effects of loan portfolio concentration on Brazilian banks return and risk

Riding the FinTech innovation wave: FinTech, patents and bank performance

Purpose




The purpose of this paper is to develop and test a framework of small and medium enterprises’ (SMEs) strategic orientation (SO) and its impact on social media performance. Moreover, it introduces a new concept, social media orientation (SMO) (composed of sales and business development (SBD) and visibility) to add in the model.




Design/methodology/approach




A quantitative approach was used and, based on a study of 257 SMEs, analyses were performed. A smartPLS analysis was judged appropriate regarding the sample size.




Findings




Results show that entrepreneurial orientation (EO) and customer orientation have a positive influence on SBD which in turn has a positive influence on social media performance. Visibility is positively influenced by EO and has an indirect effect on social media performance. Social media performance is therefore directly influenced by SBD and indirectly by visibility.




Research limitations/implications




The authors complete previous research that called for the introduction of different SO on a same study and go further as the author highlight the role of EO on visibility (and not only on business or performance). A second contribution lies in the conceptualization of SMO (defined here with SBD and visibility) and third in the measurement of social media performance through growth and attention.




Practical implications




SMEs first need to develop their visibility, and then link it to SBD.




Originality/value




This research is one of the first to explore SMEs’ SO on social media and proposes a new concept defined as SMO. It gives SMEs future direction on how to perform on these platforms.

From strategic orientation to social media orientation: Improving SMEs’ performance on social media

We examine the role of bank capital in moderating the relationship between bank liquidity creation and the failure risk in U.S. banks over the period of 2003–2014. We find that, conditional on bank capital, bank liquidity creation is related to bank failure risk negatively. The negative relationship is moderated positively (i.e., strengthened) by (changes in) bank capital. This finding is consistent with the view that banks may strengthen their solvency through increased capital in response to the illiquidity risk associated with liquidity creation; and higher capital enhances the ability of banks to create liquidity. The result is robust to different estimation methods, and alternative measures of liquidity creation, bank failure risk, and bank capital. Further analysis shows that the significant and negative effect is more prominent for small banks, and the impact of bank capital was more pronounced during the recent financial crisis of 2007–2009.

The moderating role of capital on the relationship between bank liquidity creation and failure risk

Government-owned banks represent the smallest number of banks in Indonesia (25% of all banks) but have a dominant market share of almost 50% in the loan market. Studies previous to this one do not address the effect of size differences on the loan portfolio structures and performance of such banks. The objective of this study is to add to the literature in this area by determining whether small and large Indonesian government-owned banks differ in terms of their loan portfolio structures and performance. The study covers the 2003 to 2011 period. Descriptive statistics, univariate statistics and generalized least squares estimation are applied. The findings show that the loan portfolio structures and returns of small and large government-owned banks differ significantly.

Loan Portfolio Structure and Performance of Government Owned Banks in Indonesia: Does Size Matter?

The biotechnology industry is a knowledge-intensive industry that uses sophisticated production processes in which secrecy plays a key role. This paper investigates the contextual organisational characteristics such as firm size, firm age, and strategies of companies in the biotechnology sector that have adopted social media applications. A hypothetico-deductive method is used in this empirical study. The hypotheses were tested in 639 US Biotechnology firms, using the BioScan Database and an analysis of the firms' websites. Results suggest that social media tools analysed as an aggregate construct can produce misleading results. Except for marketing strategies, contextual characteristics differently affect the number and type of social media used.

Network technology adoption by us biotechnology firms: a contextual approach of social media applications

Bank lending: The bank ownership focus in the pre- and post-global financial crisis periods

The purpose of this paper is to determine the impact of loan concentration on the returns of Indonesian banks and examines whether bank ownership types affect the relationship between concentration and returns.,This research uses heuristic measures of concentration: The Hirschman–Herfindahl index and Deviation from Aggregated Averages are applied to Indonesian banks across all sectors. The data covers the pre and post global financial crises periods from 2003-2011 for 109 commercial banks in Indonesia. Panel feasible generalised least squares analysis was applied.,The findings show that loan concentration increases bank returns. The positive effect of concentration on returns tends to be more significant for domestic-owned banks. In addition, the interaction effect shows that the positive effect of concentration on returns is less for foreign-owned banks.,The Indonesian central bank changes to the reporting format of sectoral loan allocation by banks since 2012 in terms of the Indonesian Banking Statistics Details of Enhancement matrix requires separate data analysis for 2012 onwards. The findings of this paper could be enhanced by more detailed data like interest rate expenses and bank level sectoral non-performing loans data.,The findings suggest that a focus strategy provides better returns. Moreover, bank ownership types is an important factor to consider when setting a bank lending policy.,This paper is among the few studies where different measures of loan concentration in combination with measures of return are applied in Indonesia as an emerging Asian country. The research also provides evidence of the impact of concentration on the interest earnings of the loan portfolios of banks in addition to return on assets and return on equity that are generally applied as measures of return in previous research.

Tom Cronje

Papers

The moderating role of capital on the relationship between bank liquidity creation and failure risk

Loan Portfolio Structure and Performance of Government Owned Banks in Indonesia: Does Size Matter?

Network technology adoption by us biotechnology firms: a contextual approach of social media applications

Bank lending: The bank ownership focus in the pre- and post-global financial crisis periods

Does focus strategy work? A study of bank loan portfolios in Indonesia