The financial and prudential performance of Chinese banks and Fintech lenders in the era of digitalization

The years 2013 to 2019 marked an explosion in Fintech in China. We analyze the financial and prudential performance of 40 exchange-traded banks and 25 listed Fintech lenders in China during this watershed period. Among other things, traditional banks experienced rising operating costs, declining profit margins and softening loan quality. Consistent with a process of adaptation, traditional bank performance stabilized in the latter part of the study period (2018-19) after an initial period of decline. Study findings also highlight rising business and regulatory costs for Fintech providers over the course of the study frame. A marked deterioration in online lenders’ Special Mention and Non-Performing Loan (SML & NPL) positions arose during the period. Within the traditional bank group, smaller entities with fewer growth options and greater foreign ownership fared worst in prudential terms. Traditional banks’ financial and prudential performance also declines with time since IPO. Relative to joint stock commercial, city and rural banks, state-owned lenders registered more resilient performance, especially in relation to asset quality. In a final area, we construct a categorical Fintech proficiency variable for China's established banks. Our preliminary evidence suggests such proficiencies help stabilize SML and NPL rates and support financial returns. Overall, we offer major contribution to the banking literature by analyzing the financial and prudential performance of both incumbent and emerging lenders in one of the world’s most dynamic Fintech settings.

The effects of the environmental protection tax law on heavily polluting firms in China

In 2016, China implemented an environmental protection tax (EPTL2016) to promote the transformation and upgrading of heavily polluting industries through tax leverage. Using panel data of China’s listed companies, this study assesses the treatment effects of the EPTL2016 on the transformation and upgrading of heavily polluting firms by incorporating the intermediary role of the financial market. The empirical findings show that the EPTL2016 significantly reduced the innovation investment and productivity of heavily polluting firms but had no significant effect on fixed-asset investment. Additionally, EPTL2016 reduced the supply of bank loans to heavily polluting firms and increased the value of growth options for private enterprises and the efficiency of the supply of long-term loans to heavily polluting firms. Although the environmental policy of EPTL2016 benefits the transformation and upgrading of heavily polluting industries in many aspects, it generally hinders the industrial upgrading because of the reduction of bank loans.

39 Bakers: dilemma in expansion (part A)

Subject area Retail marketing: it can be discussed in a retail marketing course to explain the growth and expansion of the retail chain and illustrate the features of a retail model that can consider franchise as a method to expand or distribute its branded merchandise in other retail outlets. The case will also help assess the financially viable growth. Marketing Management: It can be useful for a comprehensive yet straightforward explanation of marketing mix price, promotion, place, and product, also at the same time it serves to explain the importance of customer service in terms of retailing. Strategic Marketing: The case provides varied growth options that are being considered by retail organizations, which gives the student real-time opportunity to arrive at strategic decisions by considering financial viability, internal strengths (SWOT analysis), franchising as a growth option. Study level/applicability This case can be used in foundation course on retail marketing or even in strategic marketing in postgraduate management program, or the dilemma can be explained as a part of a marketing course for postgraduate, executive programs, management development programs. Case overview Kanwar, the owner of 39 Bakers, was one of the fastest-growing retail outlets in Jammu, India. He had been successful in carving his pie for himself with its unique bakery products of more than 1000 variety of, break-even point price, everyday surprise product (EDSP), reasonable price, open kitchen concept, hygiene, excellent customer service. Within three years, 39 Bakers had grown from one to eight outlets, and revenue had increased to US$68,621, and vision was to achieve US$2m within the next three years. To achieve his vision, he made two business expansion plans either to start product distribution to other retailers like an FMCG company or to go ahead with the business format franchising model. The investors needed a detailed planned within three days. But Kanwar had to decide should he expand geographically and start with franchise model or shall he establish his brand with product distribution, and then go for the franchise model, which plan would make him reach his vision by 2023? Which strategy would be efficient? He indeed wanted to go for the franchise model, but the question is when? Expected learning outcomes This case will help entrepreneurs to decide on services and retail industries to expand their business and explore available growth options. It offers a platform to talk about how often franchising used to fuel growth. Either you select to be a franchisee or independent business owner or provide franchising opportunities or start your distribution network, a detailed business plan is one of the most critical decision-making activities. Without adequate details, it can make your life's most expensive option. After students have worked on the case and the task questions, the students can analyze whether a company should grow through product distribution, franchise or both; appreciate the significance of a business plan and to recognize all aspects of a retail operation, including the marketing mix; carry out strengths, weakness, opportunities, threats analysis and can develop Internal and External Factor Evaluation Matrix (IFE AND EFE); and examine various franchise options available for business expansion in a developing econ. Complexity academic level Position in course – This case can be used in foundation course on retail marketing or even in strategic marketing in postgraduate management program, or the dilemma can be explained as a part of a marketing course for postgraduate, executive programs and management development programs. Supplementary materials Teaching notes are available for educators only. Subject code CSS: 8 Marketing.

TP8.2.27 Unlocking growth options in surgical education and training during the pandemic

Introduction The COVID-19 pandemic brought widespread disruption to structured surgical education and training. The knee-jerk reaction is often pessimism about surgical training’s future, particularly in the Improved Surgical Training (IST) pilot’s context. However, Einstein famously once said, “In the midst of every crises lies great opportunity”. Unlocking growth during periods of high uncertainty is a premise of real options theory; one utilised by supply chain managers and decision scientists, but novel to medical education. This study explores the growth options that have resulted from new operational models during the pandemic. Methods Using qualitative case study approach, data were obtained from interviews with core surgical trainees across Scotland. Data coding and inductive thematic analysis were undertaken. Results Forty-six trainees participated. Analysis from trainees’ perspective revealed: unexpected fulfilment from redeployment to non-surgical specialties, benefits to personal development from the unintended broad-based training across surgical specialties, improved collaborative teamworking between specialties and allied healthcare professionals, and enhanced supervised learning opportunities. Institutional growth options reported by trainees included: rapid uptake of telemedicine and digital technology, implementation of single hospital episode encounters for minor conditions, streamlined processes in theatre and acute admissions, and changes in working culture towards rationalising and teamworking. Conclusion Growth options have been deliberately and unintentionally unlocked due to individual and institutional adaptions and innovations in response to exogenous disruption. While some changes may be temporary, hopefully structured reflection on these changes and responders to them will drive surgical education and training into a new sustainable and resilient post-pandemic era.

Analysis of Floating Rate Bonds and the Firm Characteristics

We examine the security and firm characteristics of a sample of 2,027 non-convertible investment grade floating rate securities (bonds) issued by the US based firms between 1980 and 2018. These bonds pay a coupon based on short term reference rate, such as fed funds rate, plus a fixed quoted margin. Considerable number (81.6%) of these issues are between 1992 and 2007 signifying floating rate as an effective mechanism to mitigate firm’s interest rate risk when the rates are high and expected to fall. A positive and significant abnormal return (CAR = 0.27%), in the event window surrounding issue date, provides strong evidence that the floating rate is viewed as a less restrictive provision as compared to the call option. Majority of the issues (89.3%) are non-callable since the floating rate mitigates interest rate risk for the issuing firm. Lack of put provision in these bonds (in only 7.35% of the sample issues) signifies no significant investor concerns of falling bond prices. Regression analysis reveals that firms with growth options and with higher leverage experience positive CAR due to the financial flexibility these bonds provide. Firms with higher level of information asymmetry benefits less from issuing these securities since most of these bonds (90.13%) are issued at par therefore, the price is not likely to carry information content that mitigates information asymmetry between the firms and the investors.

Intrinsic speed capabilities and alliance partner attractiveness

This study focuses on the role of intrinsic speed capabilities, which refer to the ability to execute investment projects faster than competitors, in the attractiveness and selection of alliance partners. We predict that intrinsically faster firms have a higher likelihood of being selected as alliance partners due to the potential of accelerating the realization of future revenue streams of an alliance project as well as of preempting slower competitors. We also expect that intrinsic speed capabilities substitute for deficiencies in alliance experience and firm innovativeness. Using data on construction projects in the global Liquefied Natural Gas industry, we find empirical support for our theoretical expectations. Our results suggest that firm speed plays an important role in alliance partner selection and has the potential to facilitate the generation of future growth options for firms due to greater partner attractiveness in the market for alliance partners.

1253 Unlocking Growth Options in Surgical Education and Training During the Pandemic

Introduction The COVID-19 pandemic brought widespread disruption to structured surgical education and training. The knee-jerk reaction is often pessimism about surgical training’s future, particularly in the Improved Surgical Training (IST) pilot’s context. However, Einstein famously once said, “In the midst of every crises lies great opportunity”. Unlocking growth during periods of high uncertainty is a premise of real options theory; one utilised by supply chain managers and decision scientists, but novel to medical education. This study explores the growth options that have resulted from new operational models during the pandemic. Method Using a qualitative case study approach, data were obtained from interviews with core surgical trainees across Scotland. Data coding and inductive thematic analysis were undertaken. Results Forty-six trainees participated. Analysis from trainees’ perspective revealed: unexpected fulfilment from redeployment to non-surgical specialties, benefits to personal development from the unintended broad-based training across surgical specialties, improved collaborative teamworking between specialties and allied healthcare professionals, and enhanced supervised learning opportunities. Institutional growth options reported by trainees included: rapid uptake of telemedicine and digital technology, implementation of single hospital episode encounters for minor conditions, streamlined processes in theatre and acute admissions, and changes in working culture towards rationalising and teamworking. Conclusions Growth options have been deliberately and unintentionally unlocked due to individual and institutional adaptions and innovations in response to the exogenous disruption. While some changes may be temporary, hopefully structured reflection on these changes and responders to them will drive surgical education and training into a new sustainable and resilient post-pandemic era.

Investment as the opportunity cost of dividend signaling

We provide evidence that dividends signal sustainable earnings generated by assets-in-place for firms with weak investment opportunities. In the cross-section, both dividend levels and changes contain more earnings information among firms with weaker investment opportunities. Intertemporally, when aggregate investment opportunities in the economy are worse, dividend changes convey more earnings information. In contrast, dividends have a more negative association with investment spending for firms with strong growth options, as funding investment is a higher priority for those firms. Collectively, our findings suggest that dividends serve as a counter-signal, whereby additional information about investment opportunities give rise to signaling that is non-monotonic in firm quality.