UNews - management professor

U of L researcher to examine effects of banking networks

caroline.zentner — Wed, 15 Nov 2017 21:51:06 +0000

People rely on networks to learn about job prospects, good restaurants and local news. Similarly, banking institutions go to their networks when they need information like determining a borrower’s creditworthiness.

While banks are increasingly connected through their involvement in lending networks, no one has analyzed these networks in any depth. Dr. Yutao Li, a ��Ѹ��Դ��߿�Ƭ of Lethbridge Management professor at its Calgary campus, wants to remedy that situation. Thanks to an Insight Development Grant worth approximately $39,000 from the Social Sciences and Humanities Research Council (SSHRC), Li will examine the costs and benefits of banks’ connectivity.

“There’s a trend that we’re now living in a more connected world,” says Li. “We are connected with each other through social networks, but I’m looking at the effect of connection among banks. This has been a hot issue since the financial crisis in 2007,” says Li. “There are good things about being connected and it can be helpful.”

Greater connectivity can have benefits. For example, banks that are more connected can get more information to better evaluate borrowers’ credit risk. Alternatively, connectivity can have a downside, like it did in the financial crisis of 2007-2008 when risk entered the financial system and spread throughout the network. Many banks were affected by the subprime mortgage crisis, which illustrated a trend toward lowered lending standards and mortgage products with a higher risk.

As in social network theory, a bank that is more centrally located in a network should have better access to information, because, as Li predicts, that bank can monitor borrowers more efficiently and produce higher quality financial reporting.

“If they are better connected, are they able to make a better decision in their lending because they are able to collect more information? Will this connection help them weather a financial crisis?” says Li. “I’m not sure what I’m going to find but there are arguments on both sides.”

Using the Dealscan database, which contains extensive and reliable information on the global commercial loan market, Li will first identify North American banks’ lending networks. Then she’ll examine their performance during the 2007-2008 financial crisis and in normal times to gauge how their position in a network affected their performance.

As the first study to investigate banks’ lending networks, Li’s research will provide evidence of banks’ connectivity in the syndicated loan market and build understanding about how that affects a bank’s information acquisition, its lending practices and financial reporting quality. For example, Li will examine banks’ loan-loss provisions, which is an estimate of the uncollectible loans.

“This is a very important item in banks’ financial statements,” she says. “Most people think accounting is just numbers, but there’s a lot of discretion and judgement. Some of the banks have a better ability to predict their future loss. It would be interesting to see whether a bank’s connectivity affects its judgement and ability in making such estimates.”

The study will also look at whether banks in the centre of a network are exposed to greater systematic risk. The results will be valuable to regulators and build their understanding of the effect of a bank’s centrality in a lending network on the financial system and the economy.

“The implication for regulators is to understand whether these connected networks are beneficial or detrimental for the financial system,” says Li.

Dr. Gerald Lobo, an accounting professor at the ��Ѹ��Դ��߿�Ƭ of Houston, is a co-investigator on the project.

Rethinking stress

trevor.kenney — Thu, 29 Oct 2009 17:07:42 +0000

Stress. There's a good chance you are experiencing it in your life right now or know someone who is. It's a buzzword that's become so pervasive in our culture that we hardly give it a second thought.

However, U of L management professor Dr. Bob Boudreau's research is raising a new awareness of the topic by showing how stress can lead to severe burnout – a serious epidemic sweeping across the nation.

Through a recent survey, Boudreau found that an alarmingly high rate of four in 10 Canadians suffer from burnout, a long-term debilitating condition marked by emotional exhaustion, lack of accomplishment and depersonalization. In taking his research further, Boudreau discovered an even more startling find.

"We found that one out of two doctors experiences burnout," says Boudreau. "In all other occupations there is no evidence of differences in burnout rates – it doesn't matter whether you are a policeman, nurse, fireman, lawyer or farmer – the rates are more or less the same. But relative to other professions, physicians are by far the highest at risk."

We tend to think of doctors as healers, those we turn to in times of sickness. So it's a troubling realization to find that they may be the one group needing urgent care the most.

Boudreau attributes the high rate of physician burnout to many factors, not the least of which is the pressure that comes from being responsible for the well-being of hundreds of patients. Tie that to an overtaxed health-care system rife with shortages, plus the day-to-day pressures of running a busy practice, and it's the perfect prescription for professional exhaustion.

With plans to continue and expand his work on professional burnout, Boudreau hopes to better the working environments of not only physicians, but professionals across the board.

"Once we understand burnout, we will be in a better position to manage many of its related workplace issues such as increased job conflict, poor performance, absenteeism, lateness and poor health," says Boudreau.

"The strategy is to find cracks in each occupation we study and develop the tools people need to cope with their own professional situations. Hopefully, as we progress, we will create more positive work and life spaces."

The evolution of marketing

trevor.kenney — Wed, 25 Mar 2009 15:53:06 +0000

A few decades ago, marketing strategies were focused purely on profit. Corporations today have evolved more toward an attitude of social responsibility, and current marketing reflects this evolution.

��Ѹ��Դ��߿�Ƭ of Lethbridge management professor Roberto Bello (MSc Mgt '02) conducts research into the concept of social responsibility as well as the impact that corporate activities have on consumer behaviour. According to Bello, practising social responsibility means that corporations should acknowledge and act upon their accountability to consumers, the government and the community.

��Ѹ��Դ��߿�Ƭ of Lethbridge management professor, Roberto Bello, champions the idea that corporations can profit by incorporating an attitude of social responsibility.

He explains that such actions involve advising consumers as to the proper use and disposal of products, replacing resources taken from communities and hiring local people with fair salaries and benefits.

"It is, to a certain degree, easy for marketers to influence public opinion. I think that power should be used not only to increase profit, but also to benefit society," says Bello, who strives to instill this philosophy of social responsibility in his students.

Bello also emphasizes the role of the consumer in the marketing process.

"The Internet and other communication tools provide consumers with the knowledge and power to pressure corporations to be socially responsible," says Bello. "Corporations are increasingly realizing the importance of consumers' opinions and are engaging in more open communication with them."

Unfortunately, true social responsibility has not yet permeated all industry sectors. Bello explains that some corporations use a strategy called green washing.

"These corporations claim to be socially responsible, but they use social responsibility as a catch phrase and competitive advantage, rather than a corporate value," he says.

As consumer power grows, Bello predicts that marketing will evolve away from green washing and more toward true social responsibility – an evolution that will capture the attention of researchers like Bello as it unfolds.

Rethinking stress

trevor.kenney — Mon, 27 Oct 2008 16:33:44 +0000

Stress. There's a good chance you are experiencing it in your life right now or know someone who is. It's a buzzword that's become so pervasive in our culture that we hardly give it a second thought.

We tend to think of doctors as healers, those we turn to in times of sickness. So it's a troubling realization to find that they may be the one group needing urgent care the most.

With plans to continue and expand his work on professional burnout, Boudreau hopes to better the working environments of not only physicians, but professionals across the board.

UNews - management professor

U of L researcher to examine effects of banking networks

Related Topics

Rethinking stress

Related Topics

The evolution of marketing

Related Topics

Rethinking stress

Related Topics