scholarly journals The Impact of Organizational and Business Strategy on Performance and Risk in the Insurance Industry

2015 ◽  
Vol 1 (2) ◽  
pp. 107 ◽  
Author(s):  
Gene C. Lai ◽  
Lin-Yhi Chou ◽  
Lih Ru Chen
Keyword(s):  
Organizational Structure ◽  
Risk Taking ◽  
Business Strategy ◽  
Insurance Industry ◽  
Stochastic Frontier ◽  
Organizational Structures ◽  
Business Strategies ◽  
Leverage Ratio ◽  
Risk Taking Behavior ◽  
The Impact

This paper examines the impact of organizational structure and business strategy on company efficiency, profitability, and risk-taking behavior in the Taiwanese life insurance industry. The insurance industry in Taiwan provides an interesting environment for studying this issue because different organizational forms coexist in the insurance industry. We examine four different types of companies by organizational structure and two different business strategies. We use two frontier methodologies (stochastic frontier approach and data envelopment analysis approach) to measure the efficiency performance of insurance firms. The results show that organizational structures and business strategies have significant impact on efficiency, profitability, and risk-taking behavior. In addition, we also find size, lines of business, leverage ratio, and market share have significant impact on efficiency, profitability, and risk-taking behavior. Our overall evidence suggests that a more competitive environment should be encouraged in the Taiwanese insurance industry to improve the insurer efficiency.

The impact of bank liquidity risk on risk-taking and bank lending: evidence from European bank

2021 ◽  
Vol 6 (2) ◽  
pp. 82-97
Author(s):  
Hongyan Liang ◽  
Zilong Liu
Keyword(s):  
Growth Rate ◽  
Risk Taking ◽  
Fixed Effects ◽  
Liquidity Risk ◽  
Bank Lending ◽  
Basel Iii ◽  
European Banks ◽  
Risk Taking Behavior ◽  
Loan Growth ◽  
The Impact

Objective – This paper uses a sample of annual observations of European banks to examine whether the liquidity risk affects a bank’s risk-taking behavior and its future loan growth. Methodology – A sample of European banks (27 member countries of the European Union plus U.K.) over the period of 2005 to 2019 are used in this study. Liquidity risk is measured by the ratio of liquid assets to total assets. Given the longitudinal nature of the data, the authors use panel regression with bank fixed effects to control for unobserved characteristics that might affect the dependent variable. Findings – The authors find that banks holding more liquid assets take less risk and show a higher subsequent loan growth rate. These results hold for both small and large banks. Novelty – To the authors’ best knowledge, this is one of the earliest studies to carefully examine the effects of liquidity risk on risk-taking behavior and loan growth rate for European banks. Our research suggests that the current Basel III requirement on liquidity ratio can decrease bank’s risking-taking behavior while not necessarily impact their future loan growth. Type of Paper: Empirical JEL Classification: G21, G01, G18. Keywords: Bank Liquidity Risk; Risk-taking Behavior; Loan Growth; Basel III

Capital regulation, competition and risk-taking behavior of Indian banks in a simultaneous approach

2018 ◽  
Vol 44 (4) ◽  
pp. 459-477 ◽  
Author(s):  
Santi Gopal Maji ◽  
Preeti Hazarika
Keyword(s):  
Human Capital ◽  
Risk Taking ◽  
Value Added ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Capital Regulation ◽  
Content Type ◽  
Risk Taking Behavior ◽  
Indian Banks ◽  
The Impact

Purpose The purpose of this paper is to investigate the association between capital regulation and risk-taking behavior of Indian banks after incorporating the influence of competition. Further, the study intends to enrich the existing literature by providing empirical evidence on the role of human resources in managing risk along with the influence of other bank specific and macroeconomic variables. Design/methodology/approach Secondary data on 39 listed Indian commercial banks are collected from “Capitaline Plus” corporate data database for a period of 15 years. Capital is measured by capital adequacy ratio as defined by the regulators, and two definitions of risk – credit risk and insolvency risk – are employed. Competition is measured by Herfindahl-Hirschman deposits index, concentration ratio and H-statistic. The value-added intellectual coefficient model is employed to compute human capital efficiency (HCE). Three-stage least squares technique in a simultaneous equation framework is used to estimate the coefficients. Findings The study finds that absolute level of regulatory capital and bank risk are positively associated, although the influence of capital on risk is not statistically significant. The influence of competition on risk is negative for all the models, which supports the “competition stability” view. The impact of human capital on bank risk is also negative for all cases. Practical implications The findings of the study are useful for the decision makers in several ways based on the inverse influence of competition and HCE on bank risk. Further, the observed positive association between capital and risk indicates that the capital regulation is not sufficient to enhance the stability in the banking sector. Originality/value This is the first study in the Indian context that incorporates the competition in the banking industry as an explanatory variable in the extant bank capital and risk relationship.

Business Intelligence Should be Centralized

2012 ◽  
pp. 139-152
Author(s):  
Brian Johnson
Keyword(s):  
Organizational Structure ◽  
Business Intelligence ◽  
Business Strategy ◽  
Center Of Excellence ◽  
Unique Nature ◽  
The Common ◽  
The Impact

The implementation of BI into the business strategy and culture is laden with many potential points that could result in failure of the initiative, leaving BI to be underdeveloped and a source of wasted resources for the company. Due to the unique nature of BI in the business space, properly setting up BI within the organizational structure from the onset of integration minimizes the impact of the most common hurdles to BI implementation. Many companies choose to mitigate these problems by using a centralized approach by building a Center of Excellence, but their place in the company’s organizational structure needs to be well-defined and properly empowered to be effective. This paper also reviews how the concept of centralization is defined, how it relates to the implementation of BI, and how it can effectively in overcome the common implementation hurdles.

Understanding Outsourcing of Web-Based Applications in Organizations

2011 ◽  
pp. 171-187
Author(s):  
Teuta Cata
Keyword(s):  
Organizational Structure ◽  
Web Site ◽  
Insurance Industry ◽  
Organizational Structures ◽  
Insurance Companies ◽  
Organizational Size ◽  
Online Activity ◽  
Web Based ◽  
Development Approach ◽  
The Relationship

This article has investigated the insurance industry and provided insights into the relationships of organizational size and age with outsourcing and organizational structure. Also, this study investigated the relationship between Web site age, outsourcing, and organizational structure. The main findings are that firm size and maturity is related to the decision of Web-based development approach and the best organizational structure to support online activity. The insights obtained by a new variable: Web site age suggests that insurance companies are trying to develop their Web-based activities within their existing organizational structures, rather than creating new e-commerce divisions.

Alignment Of Organizational Strategy With Information Technology Strategy

2011 ◽  
pp. 106-139
Author(s):  
Tamio Shimizu ◽  
Marley Monteiro de Carvalho ◽  
Fernando Jose Barbin
Keyword(s):  
Information Technology ◽  
Business Strategy ◽  
Business Strategies ◽  
Great Expectations ◽  
Organization Effectiveness ◽  
Long Run ◽  
New Strategy ◽  
Structured Problems ◽  
It Applications ◽  
The Impact

Digital computers came into being after the Second World War. After a period of use solely in scientific and military areas, business perceived that this technological innovation could be very useful. The large, expensive equipment was very limited in terms of the information it could process and store, in addition to the restricted number of users who could access them simultaneously or from remote locations. Both the training and vision of professionals in the area of what was then called “data processing” was eminently technical. Thus, the early applications were developed to resolve well-structured problems, i.e., those whose stages and sequences were well-defined, such as payroll, stock control, and accounts due and received. Technology evolved and by the end of the 1970s, there were a number of alternative uses for computers and basic applications had been installed in the large companies. At that point, specialists began discussing a way to use Information Technology (IT), a term that came into use in the 1980s, better to make businesses more competitive. From that time on, many theories, models, and techniques have been studied and developed so that information technology can be used in tune with business strategies and operations. IT progressively came to play an important role in the strategy of the leading companies in competitive markets. Presently there are great expectations that IT applications will make possible new strategy alternatives for business and new opportunities for companies; as in the case of e-commerce and e-business (Porter, 2001; Evans & Wurster, 1999). However, there is also an extensive debate about the real gains derived from investments in IT. Focusing solely on the efficiency of IT applications will not provide a response to such questions. To evaluate the impact of IT on business strategy and operations, a focus on its effectiveness is needed. One must examine the results of IT applications in relation to the objectives, goals, and needs of an organization. Effectiveness should be maintained in the long run, and for this to happen, the concept of Strategic Alignment between IT and the business is fundamental.

Assessing the impact of risk-taking behavior on road crash involvement among University students residing in two Mediterranean countries

2011 ◽  
Vol 49 (6) ◽  
pp. 933-938 ◽  
Author(s):  
Constantine N. Antonopoulos ◽  
Evi Germeni ◽  
Flora Bacopoulou ◽  
Vassiliki Kalampoki ◽  
Stefanos Maltezos ◽  
...  
Keyword(s):  
University Students ◽  
Risk Taking ◽  
Mediterranean Countries ◽  
Road Crash ◽  
Risk Taking Behavior ◽  
The Impact

scholarly journals Capital Flows and Bank Risk-Taking Behavior: Evidence From Indonesia

2020 ◽  
Vol 9 (s1) ◽  
pp. 33-53
Author(s):  
Bayront Yudit Rumondor ◽  
Pakasa Bary
Keyword(s):  
Risk Taking ◽  
Capital Flows ◽  
Emerging Market ◽  
Capital Inflows ◽  
Bank Risk ◽  
Portfolio Investment ◽  
Industry Level ◽  
Country Level ◽  
Risk Taking Behavior ◽  
The Impact

AbstractThis paper investigates the impact of capital flows on bank risk-taking behavior. It undertakes two levels of empirical estimations, namely (i) single-country industry-level; and (ii) multi-country industry-level estimations, covering emerging market economies. The results suggest that capital inflows, in the form of portfolio investment, is significant in raising risk-taking behavior. Large banks are less aggressive in their risk-taking behavior vis-à-vis smaller banks. Such impact of portfolio investment on risk-taking behavior is also shown in the multi-country level estimates.

scholarly journals Corporate governance, audit quality and risk taking in the U.S. property casualty insurance industry

2009 ◽  
Vol 7 (1) ◽  
pp. 84-95 ◽  
Author(s):  
Chia-Ling Ho ◽  
Gene Lai ◽  
Jin-Ping Lee
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Audit Quality ◽  
Net Present Value ◽  
Insurance Industry ◽  
Deep Understanding ◽  
Sarbanes Oxley ◽  
The Impact ◽  
The U.S ◽  
Property Casualty

This paper examines the impact of corporate governance and audit quality on risk-taking in the U.S. property casualty insurance industry. The evidence shows that some corporate governance variables, as well as some audit quality variables are related to risk-taking. We find that longer board tenure is associated with low underwriting risk. But the higher percentage of financial experts on the board is associated with high underwriting risk. The possible reason is that financial experts possess a deep understanding of a firm’s financial situation and may encourage the management to take higher risk in anticipation of a higher return for a positive net present value project. The results are consistent with agency theory and wealth transfer hypothesis in that high risk taking is consistent with shareholder interest maximization. In addition, we find a non-monotonic relation between insider ownership and leverage risk. Finally, we do not find evidence that the Sarbanes-Oxley act have impact on the risk taking behavior.

scholarly journals The Effect of Executive Compensation on Credit Default Swap Spread

2019 ◽  
Vol 21 (1) ◽  
pp. 19
Author(s):  
Meizaroh Meizaroh ◽  
Masripah Masripah
Keyword(s):  
Executive Compensation ◽  
Risk Taking ◽  
Time Series Data ◽  
Credit Default Swap ◽  
Best Interests ◽  
Series Data ◽  
Credit Default ◽  
Default Swap ◽  
Risk Taking Behavior ◽  
The Impact

Investors have been trying to formulate the optimum composition of executives’ compensation which will incentivize the executives to perform better and act in the shareholders’ best interests. This study aims to find empirical evidence about the impact of executive compensation on the default risk with the Credit Default Swap (CDS) spread as the proxy, using panel data to test the research model, which combines the analysis of cross-section and time series data. The study is conducted based on 1,416 observations of 177 U.S. companies from 2008-2015. The data are mainly collected from Datastream, Compustat, CRSP, and the US SEC’s EDGAR database. The current study provides a contribution by suggesting that executives’ compensation will trigger risk-taking behavior. The results of this study reveal, firstly, both equity-based compensation and debt-like compensation induce risk-taking behavior by the executives. Secondly, the correlation between both the form of the compensation and the CDS spread is weakened in a high information asymmetry environment. Lastly, this study finds that a CFO’s compensation has more influence on the CDS spread, compared to the other board executives, but this condition only occurs when the compensation is awarded in the form of debt-like compensation. To improve the generalization of the results, a further study may consider expanding the sample into several countries.

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