Journal of Banking and Financial Economics

About Journal


The Journal of Banking and Financial Economics  (JBFE) is an open access journal (ISSN 2353-6845). The submission of manuscripts is free of fee payment. This journal follows a double-blind reviewing procedure.

Journal of Banking and Financial Economics is indexed by Ministry of Science and Higher Education


Aims and Scope

JBFE publishes high quality theoretical and empirical papers spanning all the major research fields in banking and financial economics.  The aim of the journal is to provide a space for the increasing flow of academic research concerning banking, financial institutions, money and capital markets within which they function. The journal also focuses on interrelations of financial variables, such as prices, interest rates and shares and concentrates on influences of real economic variables on financial ones and vice versa. Macro-financial policy issues, including comparative financial systems, the globalization of financial services, and the impact of these phenomena on economic growth and financial stability, are also within the JBFE’s scope of interest. The Journal seeks to promote research that enriches the profession’s understanding of the above mentioned topics as well as to promote the formulation of sound public policies.

Main subjects covered include, e.g.: [1] Valuation of assets: Accounting and financial reporting;  Asset pricing; Stochastic models for asset and instrument prices; [2] Financial markets and instruments:Alternative investments; Commodity and energy markets; Derivatives, stocks and bonds markets; Money markets and instruments; Currency markets; [3] Financial institutions, services and regulation: Banking efficiency; Banking regulation; Bank solvency and capital structure; Credit rating and scoring;  Regulation of financial markets and institutions; Systemic risk; [4] Corporate finance and governance:Behavioral finance; Empirical finance; Financial applications of decision theory or game theory; Financial applications of simulation or numerical methods; Financial forecasting; Financial risk management and analysis; Portfolio optimization and trading.


Special Issues

JBFE welcomes publication of Special Issues, whose aim is to bring  together and integrate  work on a specific theme; open up a previously under-researched area; or bridge the gap  between formerly rather separate research communities, who have been focusing on similar or related topics. Thematic issues are strongly preferred to a group of loosely connected papers.  

Proposals of Special Issues should be submitted to  All proposals are being reviewed by the Editorial Team on the basis of certain criteria that include e.g.: the novelty, importance and topicality of the theme; whether the papers will form an integrated whole; and the overall 'added value' of a Special Issue.


Manuscript checking is done using iThenticate which provides plagiarism prevention services to publishers around the world.


Latest articles

Sharing the Growth Dividend: Analysis of Inequality in Asia

Sonali Jain-Chandra, Tidiane Kinda, Kalpana Kochhar, Shi Piao, Johanna Schauer



This paper focusses on income inequality in Asia, its drivers and policies to combat it. It finds that income inequality has risen in most of Asia, in contrast to many other regions. While in the past, rapid growth in Asia has come with equitable distribution of the gains, more recently fastgrowing Asian economies have been unable to replicate the “growth with equity” miracle. There is a growing consensus that high levels of inequality can hamper the pace and sustainability of growth. The paper argues that policies could have a substantial effect on reversing the trend of rising inequality. It is imperative to address inequality of opportunities, in particular to broaden access to education, health, and financial services. Also, fiscal policy could combat rising inequality, including by expanding and broadening the coverage of social spending, improving tax progressivity, and boosting compliance. Further efforts to promote financial inclusion, while maintaining financial stability, can help.


JEL classification: D31, D63, O15
Keywords: Inequality, Gini coefficient, Asia

DOI: 10.7172/2353-6845.jbfe.2019.2.1

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Banks’ Trust in the EU Macroprudential Regulation

Matias Huhtilainen



Prior studies suggest that regulatory uncertainty is potentially detrimental to the wider economic performance, to the effectiveness of regulatory measures and to the objective of harmonized rules and a level playing field across jurisdictions. This paper discusses on the applicability of banks’ perceived trust as a method to evaluate the quality of the EU macroprudential regulation. Accordingly, the regulatory credibility, as opposed to regulatory uncertainty, is assumed to indicate consistent, predictable and solid regulatory and institutional environment. This paper argues that the perception of trust and the regulatory credibility are interrelated so that one cannot exist without the other. For the purpose of this study, a representative survey was conducted with Finnish banks and conglomerates. Although the respondents expressed, overall, slight trust in the ability of the renewed EU macroprudential regime to accomplish its intended objectives, definitive and direct conclusions are avoided. This is due to the several limitations of the survey and as such, the results are merely to provide context for the paper.


JEL classification: G280, G210, K220
Keywords: CRD IV, Banking Union, Macroprudential Regulation, Systemic Stability, Trust

DOI: 10.7172/2353-6845.jbfe.2019.2.2

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Determinants of Bank Competitiveness in Digital Era A Case Study of South Korea

Young Jun Jin, Yanthi Hutagaol-Martowidjojo



Technical innovations in Digital Era provide the incentives for banks to redesign their business operations to enhance their competitiveness. Prior studies use financial indicator as factors that affect bank competitiveness, however, with the technology advancement, Information Communication Technology (ICT) become major factors in assessing banks’ competitiveness. The aim of this study is to analyze specific ICT factors, as well as financial factors, affecting bank
competitiveness. This study examines all 17 commercial banks in South Korea. The ICT factors are measured by IT center operation and IT scandal released in news or mass media while the bank competitiveness is proxied by market share of each bank both in the borrowing and lending market. In addition, the study tests to retrospect financial indicators in comparison with ICT factors. Using OLS regression models, this study finds that, in the case of Korean commercial
banks, ICT factors plays an importance role in bank competitiveness, however, the financial factors still have greater influences on market share than ICT factors. The implication is that banks should leverage the ICT innovation since there is a surge of ICT based non-bank financial service providers that have started to assume roles that have been traditionally played by banks. Furthermore, this study raises implications for policy makers to consider ICT security regulations in the banking market. This study contributes to the literatures by supporting the fact that the positive relationship between IT scandals and market share suggests implications to concentrated banking sectors and provides alarming with authority’s monitoring system.


JEL classification: G21, M15
Keywords: ICT factors, Financial factors, Bank competitiveness, Commercial banks, South Korea

DOI: 10.7172/2353-6845.jbfe.2019.2.3

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Pacific Island Countries: In Search of a Trade Strategy

Hong Chen, Lanieta Rauqeuqe, Shiu Raj Singh​, Yiqun Wu, Yongzheng Yang



This paper examines the role of international trade for economic prosperity in Pacific island countries (PICs), discusses their comparative advantage, and explores the potential for trade, and tourism in particular, to serve as a locomotive for inclusive economic growth. We find the trade performance in PICs has been generally weak over the past decade, with the exception of resource-rich countries. Small country size and remoteness from global economic centers may have contributed to this relatively poor performance. Using the gravity models to analyze the determinants of merchandise trade and tourism in PICs, we find tourism in these countries faces more favorable conditions for growth than goods exports. Further, we place our analysis in the context of the eastward shift of global economic gravity, focusing on emerging Asia as a source of demand for resource-based goods and services. We argue that the emergence of Asia
as a dynamic global economic region presents PICs with an unprecedented opportunity to develop trade, particularly tourism, although traditional markets will remain important for a long time to come. Moreover, if stronger synergies can be established between tourism, agriculture, and fisheries, Pacific island countries stand a better chance to improve broad-based growth.


JEL classification: F6
Keywords: Pacific island countries, trade, tourism, agriculture, inclusive growth

DOI: 10.7172/2353-6845.jbfe.2019.2.4

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Local competition, innovation, and firms’ bank relationships

Maximilian Zurek​



With firms searching for secured external funding by engaging in multiple bank relationships on the one hand and banks for profit maximization on the other hand, conflicts of interests may arise when firms’ banks demand access to corporate private information. This information can help banks to gauge the creditworthiness of borrowers, but also exposes the latter to losses of secrecy. Thus, firms which are dependant on informative secrecy – especially innovative firms – might
incur difficulties when trying to get access to external funding. As rival firms prevail within firms’ own industries, a special focus is on effects of local industry specialization and competition when investigating the quantity of firms’ bank connections. Analysing German firm level and county specific industry data, I find evidence that the number of bank relationships decreases for the cross-section of firms with local industry diversification. The effects of the indicators of industry-specific and overall competition are twofold with the former being positively related to the probability of using multi-bank relationships and the latter negative. Concluding, firms located in industrially specialized areas might rather refrain from relationship lending, due to potential loss of external funding, while innovative firms seem to rely on transaction-based banking. Contrarily, firms located in areas that are diversified w.r.t. industries, firm sizes and corporate landscape engage in relationship banking.


JEL classification: G32, O16, R11, R51, G21
Keywords: Local Specialization; Firm financing; Innovation; Competition; Tacit Knowledge

DOI: 10.7172/2353-6845.jbfe.2019.2.5

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JBFE No 1/2019

Journal of Banking and Financial Economics No 1 (11) 2019




Financial Deepening in Mexico

Alexander Herman, Alexander Klemm


Frontier and Emerging Markets: A Perspective from Portfolio Flows and Financial Integration

Nordine Abidi, Burcu Hacibedel, Mwanza Nkusu


Financial Stability Reports in Latin America and the Caribbean

Cheng Hoon Lim, Alexander D. Klemm, Sumiko Ogawa, Marco Pani, Claudio Visconti


Options Pricing by Monte Carlo Simulation, Binomial Tree and BMS Model: a comparative study

Ali Bendob, Naima Bentouir


The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

Omar Ghazy Aziz,  Julie Knutsen

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