Search results for: banking performance

Authors: Ameen Alshugaa, Farrukh Habib

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Shariah (the Islamic law) sanctions a plethora of profit-sharing arrangements for financial transactions. However, when it comes to the practice of Islamic banking, it is felt by the scholars and practitioners that many of these arrangements often fail to compensate different parties of a financial transaction compared to conventional banking, due to the Riba (interest / usury) element. This issue is caused by the parties inability to codify these compensations in any contract so as to avoid Riba. Here, hibah (gift) may be regarded as one of the solutions. In essence, hibah is a unilateral charity contract where a party voluntarily gives away something to another party without any counter value. This paper attempts to analyse theoretical and practical aspects of hibah from the perspective of Islamic law, enunciating its legality and detailing its allowance in Islamic banking. It also discusses several practices evaluating the role of hibah in resolving issues related to Riba. In particular, these practices demonstrate the validity of hibah as a way to distribute revenues and compensate parties in Islamic financial transactions, while achieving competitive advantage over conventional banking, and avoiding the element of Riba.

Keywords: hibah (gift), Islamic Finance, Islamic Law of Contract, profit distribution, Shariah

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Authors: Abdul Kader

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This paper attempts to investigate several contributory factors to recent volatility in the Islamic Banking sector of Bangladesh. In particular, the study explores corporate governance, credit management, credit regulations, inept board of directors, using religious sentiment as a means to deceive general people, and the degree of political interference as potential contributory factors. To find the correlation among different variables, semi-structured questionnaires were distributed among the clients, bank managers, some Banking scholars and ex-members of the board of directors of three Islamic Banks in Bangladesh. Later, ten interviews were collected from key informants to gain in-depth information about the present mismanagement of Islamic Banks in Bangladesh. After then, data were analyzed using statistical software and substantiated by secondary sources like newspapers, reports and investigative reports aired in screen media. The paper found a correlation between almost all contributory factors and recent unstable conditions in the Islamic banking sector. After performing regression analysis, this paper found a more significant relationship between some of the contributory factors with Banking volatility than others. For instance, credit management, inept board of directors, depriving customers of proving no profit in the name of business—no interest-- and political interference have a strong significant positive correlation with the present poor condition of Islamic Banking. This paper concludes that while internal management is important in recovering the losses, the government needs to ensure framing better policy for the Islamic Banking system, Central Bank needs to supervise and monitor all Islamic banks meticulously and loan receivers must go through the impartial evaluation and approved by the representatives of the Central Shariah Board. This paper also recommends that there is a need to strengthen the auditing system and improve regulatory oversight of the Islamic Banks in Bangladesh. Policy recommendations that this paper put forward could provide an outline for dealing with the existing challenging condition of Islamic Banks and these could be applied to similar problems in other countries where the Islamic Banking model exists.

Keywords: Islamic bank, volatility in banking sector, shariah law, credit management, political interference

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Authors: Muhammad Rifqi Hafizhudin Arif, Mukhamad Zulfal Faradis, Ahmad Hidayatullah

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Indonesia is the country that uses conventional financial system adopted from European countries as a form of finance in the national banking system. Many of the derivative products of conventional banks either investment, buy and sell, saving and loan, which is not in accordance with Islamic Ethics. While the majority population in Indonesia are belief in Islam, which Islam has had financial management guide is written in the Quran, the Hadith, as well as the opinions of experts who strongly prohibits the use of interest in each transaction activities. Many different expert opinions on the application of the Islamic financial system in Indonesia. However, as the majority of the population of Indonesia, Islamic community have not been able to get the opportunities to choose the Islamic financial system that has mutual benefit between consumers and banks, particularly fairness in transactions, ethical investment, uphold the values of solidarity and brotherhood in every transaction activities, and avoid speculation. In this paper, we will discuss the reasons for the importance of providing an option for Islamic community as the majority of the population of Indonesia to use the banking system which adopted the Islamic ethical values that have been much discussed by other researchers in various countries. The existence of this research is expected to Government, academia and the general public aware of the urgency of Islamic economic system implementation in Indonesian banking as the solution and justice especially for the Islamic community to use the values which they held.

Keywords: Islamic economic system, conventional system, Islamic value, banking

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Authors: Sagir Abubakar

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Organization must move along with the employees, because organization should adapt itself to the changing environment. The paper examines the effect of training and development on employee performance. Training and development has an important role in improve the performance, skills and attitude of employee in an organization. Training and development will also help an employee to do his present job or to prepare him for a higher position with increased responsibilities. The paper analyses the employee performance towards training and development conducted in some selected banks within Bauchi metropolis. Review of related literature was done on, training, training objectives, methods and development and its method. A census survey was carried out using staff of GTB and Skye Banks Bauchi branch where a total of 40 questionnaires were administered personally by the researcher and there were 100% responses. Correlation analysis was adopted for the analysis of data collected. The study concludes that 95% of respondents agreed that training and development are vital for both employee and organizations performance. They also suggest that training and development should be made compulsory for all categories of employee in an organization. Training and Development programmes are necessary in any organization for improving the quality of work of the employee.

Keywords: training, development, employee, performance, banks

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Authors: Sajid Aman

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Jobs in the banking sector in Pakistan are perceived as very tough, due to which employee turnover is very high. However, the managerial role is very important in influencing employees’ attitudes toward their turnout. This paper explores the manager’s role in influencing employees’ effectiveness on the job. The paper adopted a pragmatic approach by combining both qualitative and quantitative data. The study employed an exploratory sequential strategy under a mixed-method research design. Qualitative data was analyzed using thematic analysis. Five major themes, such as the manager’s attitude towards employees, his leadership style, listening to employee’s personal problems, provision of personal loans without interest and future career prospects, emerged as key factors increasing employee’s effectiveness in the banking sector. The quantitative data revealed that a manager’s attitude, leadership style, availability to listen to employees’ personal problems, and future career prospects and listening to employee’s personal problems are strongly associated with employees’ effectiveness at the job. However, personal loan without interest was noted as having no significant association with employee’s effectiveness at the job. The study concludes manager’s role is more important in the effectiveness of the employees at their job in the banking sector. It is suggested that managers should have a positive attitude towards employees and give time to listening to employee’s problems, even personal ones.

Keywords: banking sector, employee’s effectiveness, manager’s role, leadership style

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Authors: Dlir Abdullah Ahmed

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Overall aims of this study are to investigate the effects of differences of opinions among Shari’ah supervisory bodies on standardization and internationalization of Islamic banking products and services. The study has used semi-structured in-depth interview where five respondents from both the Middle East and Malaysia Shari’ah advisors participated in the interview sessions. The data were analyzed by both manual and software techniques. The findings reveal that indeed there are differences of opinions among Shari’ah advisors in different jurisdictions. These differences are due to differences in educational background, schools of thoughts, environment in which they operate, and legal requirements. Moreover, the findings also reveal that these differences in opinions among Shari’ah bodies create confusions among public and bankers, and negatively affect standardization of Islamic banking transactions. In addition, the study has explored the possibility to develop Islamic-based products. However, the finding shows that it is difficult for the industry to have Islamic-based products due to high competition from conventional counterpart, legal constraints and moral hazard. Furthermore, the findings indicate that lack of political will and unity, lack of technology are the main constraints to internationalization of Islamic banking products. Last but not least, the study found that there are possibility of convergence of opinions, standardization of Islamic banking products and services if there are unified international Shari’ah h advisory council, international basic requirements for Islamic Shari’ah h advisors, and increase training and educations of Islamic bankers. This study has several implications to the bankers, policymakers and researchers. The policymakers should be able to resolve their political differences and set up unified international advisory council and international research and development center. The bankers should increase training and educations of the workforce as well improve on their banking infrastructure to facility cross-border transactions.

Keywords: Shari’ah h views, Islamic banking, products & services, standardization.

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Authors: Muhammad Khaleequzzaman, Muhammad Mansoori, Abdul Rashid

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The legitimacy of Islamic banking refers to the compliance with the precepts of Shariah (Islamic law) of the pronouncements and their implementation, requisites of various contracts, as well as, observance of the welfare objectives. Therefore, the Islamic banks are supposed to follow the Islamic values focused to bring benefit to the society alongside the commercial motive. These distinguishing features establish identity of the Islamic banks separate from their conventional counterparts and require pursuing normative values of Islamic injunctions instead of profit maximization merely through commercial motive. Given this, the efficiency of the Islamic banks should be evaluated against the value judgements prescribed by the Islamic economic philosophy and their role in establishing the just economy. Nevertheless, the empirical evidence on such value-oriented role of Islamic banking is limited that is filled by this research. The primary focus of the research is two folds; developing a theoretical framework that affords a holistic approach of Shariah legitimacy of Islamic banking practices, including welfare pursuits in addition to the usual compliance mechanism, to help evaluating legitimacy of Islamic banking practices in Pakistan. Therefore, the research has been commissioned by developing the constructs of Shariah legitimacy through extensive review of the relevant literature. At the same time, the empirical analysis based on the opinion of 836 customers of Islamic and conventional banks in all the four provinces and the capital city of Pakistan has produced important conclusions regarding their perception about legitimacy of the Islamic banking practices. The results have helped to know as to how the legitimacy through Shariah perspective is viewed by them. The data analysis using various statistical techniques has yielded results consistent with the objectives of the study. The key findings of the theoretical framework conclude that the value judgements have been grossly ignored by the Islamic banks. The empirical research achieves that about half of the customers perceived Islamic banking as Shariah legitimate. On overall basis, the other half viewed contrary to this or preferred to remain indifferent. There is a need that Islamic banks should look into the desired goals of Shariah legitimacy in both contexts; the value judgement and the perception of the customers.

Keywords: Islamic banking, Shariah legitimacy, Maqasid al Shariah (higher purposes of the lawgiver), value judgment, distributive justice

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Authors: Muhammad Hikmah

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Based on the population census in 2015, Indonesia consists of 254.9 millions of people, and 80% of them are Muslims (Data of Central Bureau of Statistic). Indonesia becomes the highest number of Muslims civilization in the world. The question would be, is the number of population proportional to the growth of Syariah transaction in Indonesia? It is going to be discussed in this research. The problem limitation of this research is in Syariah Banking. Therefore, Syariah transaction in this study is described as transaction only in Syariah Banking. The researcher focused on the study in Yogyakarta, a city in Indonesia. The development of Syariah Bank assets until January 2016, based on statistic data launched by Financial Services Authority (FSA), has increased Rp 287.44 trillion, however, a total amount of bank achieves Rp 6.198,15 trillions. It means that the assets of Syariah Bank are only 4.64% from the total amount of banking assets in Indonesia, though, Syariah Banking was first established in 1991, known as Bank Muamalat. As we can see that in these 25 years, Syariah Banking could only reach that number. Based on the press conference of FSA and Syariah Banking Exhibition iB Vaganza in 2015, the number of Syariah Bank’s customers are under 10 millions. With 80% of Muslims, Syariah Bank is not able to be a market leader in Indonesia. This will be answered in this research, how much the interest if Muslims in Yogyakarta towards Syariah Bank compared to conventional bank. This study will be conducted in Yogyakarta. The sampling will represent to the muslims having good knowledge of Islam, such as dawn prayer worshipers in some mosques in Yogyakarta. There are some reasons why Indonesian muslims are not interested in Syariah Bank, such as the people do not put trust in Syariah Bank; there are some obligation where they work to have conventional bank; business matters services which is not covered by Syariah Bank where most of them are limited to the laws authorities; and there is no sufficient knowledge about the importance of syariah transaction from religion point of view. Each of them is going to be discussed in this research. The suggestions of this study are we should share our knowledge about Islamic transaction anywhere and we need to support Syariah Bank to have Syariah principles. For those who have the authority should be active as well to announce the rules of the constitution supporting the development of syariah transaction in order to be apply perfectly. We hope that trust from the people will increase, and we should provide Syariah Banking products which fulfill business needs. Finally, syariah transaction will be the solution for all people in the world in bussiness transaction.

Keywords: shariah, Islamic, banking, Indonesia

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Authors: Éva Pintér, Péter Bagó, Nikolett Deutsch, Miklós Hetényi

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The process of digital transformation has a profound influence on all sectors of the worldwide economy and the business environment. The influence of blockchain technology can be observed in the digital economy and e-government, rendering it an essential element of a nation's growth strategy. The banking industry is experiencing significant expansion and development of financial technology firms. Utilizing developing technologies such as artificial intelligence (AI), machine learning (ML), and big data (BD), these entrants are offering more streamlined financial solutions, promptly addressing client demands, and presenting a challenge to incumbent institutions. The advantages of digital transformation are evident in the corporate realm, and firms that resist its adoption put their survival at risk. The advent of digital technologies has revolutionized the business environment, streamlining processes and creating opportunities for enhanced communication and collaboration. Thanks to the aid of digital technologies, businesses can now swiftly and effortlessly retrieve vast quantities of information, all the while accelerating the process of creating new and improved products and services. Big data analytics is generally recognized as a transformative force in business, considered the fourth paradigm of science, and seen as the next frontier for innovation, competition, and productivity. Big data, an emerging technology that is shaping the future of the banking sector, offers numerous advantages to banks. It enables them to effectively track consumer behavior and make informed decisions, thereby enhancing their operational efficiency. Banks may embrace big data technologies to promptly and efficiently identify fraud, as well as gain insights into client preferences, which can then be leveraged to create better-tailored products and services. Moreover, the utilization of big data technology empowers banks to develop more intelligent and streamlined models for accurately recognizing and focusing on the suitable clientele with pertinent offers. There is a scarcity of research on big data analytics in the banking industry, with the majority of existing studies only examining the advantages and prospects associated with big data. Although big data technologies are crucial, there is a dearth of empirical evidence about the role of big data analytics (BDA) capabilities in bank performance. This research addresses a gap in the existing literature by introducing a model that combines the resource-based view (RBV), the technical organization environment framework (TOE), and dynamic capability theory (DC). This study investigates the influence of Big Data Analytics (BDA) utilization on the performance of market and risk management. This is supported by a comparative examination of Hungarian mobile banking services.

Keywords: big data, digital transformation, dynamic capabilities, mobile banking

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Authors: Nidhin Dani Abraham, T. K. Sri Shilpa

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Asset liability management is an important aspect in banking business. Moreover, the today’s banking is based on BASEL III which strictly regulates on the counterparty default. This paper focuses on prediction and analysis of counter party default risk, which is a type of risk occurs when the customers fail to repay the amount back to the lender (bank or any financial institutions). This paper proposes an approach to reduce the counterparty risk occurring in the financial institutions using an appropriate data mining technique and thus predicts the occurrence of NPA. It also helps in asset building and restructuring quality. Liability management is very important to carry out banking business. To know and analyze the depth of liability of bank, a suitable technique is required. For that a data mining technique is being used to predict the dormant behaviour of various deposit bank customers. Various models are implemented and the results are analyzed of saving bank deposit customers. All these data are cleaned using data cleansing approach from the bank data warehouse.

Keywords: data mining, asset liability management, BASEL III, banking

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Authors: Golnush Masghati-Amoli, Paul Chin

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Over the past recent years, with the rapid increases in data availability and computing power, Machine Learning (ML) techniques have been called on in a range of different industries for their strong predictive capability. However, the use of Machine Learning in commercial banking has been limited due to a special challenge imposed by numerous regulations that require lenders to be able to explain their analytic models, not only to regulators but often to consumers. In other words, although Machine Leaning techniques enable better prediction with a higher level of accuracy, in comparison with other industries, they are adopted less frequently in commercial banking especially for scoring purposes. This is due to the fact that Machine Learning techniques are often considered as a black box and fail to provide information on why a certain risk score is given to a customer. In order to bridge this gap between the explain-ability and performance of Machine Learning techniques, a Hybrid Model is developed at Dun and Bradstreet that is focused on blending Machine Learning algorithms with traditional approaches such as scorecards. The Hybrid Model maximizes efficiency of traditional scorecards by merging its practical benefits, such as explain-ability and the ability to input domain knowledge, with the deep insights of Machine Learning techniques which can uncover patterns scorecard approaches cannot. First, through development of Machine Learning models, engineered features and latent variables and feature interactions that demonstrate high information value in the prediction of customer risk are identified. Then, these features are employed to introduce observed non-linear relationships between the explanatory and dependent variables into traditional scorecards. Moreover, instead of directly computing the Weight of Evidence (WoE) from good and bad data points, the Hybrid Model tries to match the score distribution generated by a Machine Learning algorithm, which ends up providing an estimate of the WoE for each bin. This capability helps to build powerful scorecards with sparse cases that cannot be achieved with traditional approaches. The proposed Hybrid Model is tested on different portfolios where a significant gap is observed between the performance of traditional scorecards and Machine Learning models. The result of analysis shows that Hybrid Model can improve the performance of traditional scorecards by introducing non-linear relationships between explanatory and target variables from Machine Learning models into traditional scorecards. Also, it is observed that in some scenarios the Hybrid Model can be almost as predictive as the Machine Learning techniques while being as transparent as traditional scorecards. Therefore, it is concluded that, with the use of Hybrid Model, Machine Learning algorithms can be used in the commercial banking industry without being concerned with difficulties in explaining the models for regulatory purposes.

Keywords: machine learning algorithms, scorecard, commercial banking, consumer risk, feature engineering

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Authors: K. P. Sandesh, M. H. Suman

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Text processing plays an important role in information retrieval, data-mining, and web search. Measuring the similarity between the documents is an important operation in the text processing field. In this project, a new similarity measure is proposed. To compute the similarity between two documents with respect to a feature the proposed measure takes the following three cases into account: (1) The feature appears in both documents; (2) The feature appears in only one document and; (3) The feature appears in none of the documents. The proposed measure is extended to gauge the similarity between two sets of documents. The effectiveness of our measure is evaluated on several real-world data sets for text classification and clustering problems, especially in banking and health sectors. The results show that the performance obtained by the proposed measure is better than that achieved by the other measures.

Keywords: document classification, document clustering, entropy, accuracy, classifiers, clustering algorithms

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Authors: Onyinyechi Joy Kingdom

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Mergers and Acquisitions (M&A) have been proposed as a mechanism through which, problems associated with inefficiency or poor performance in financial institution could be addressed. The aim of this study is to examine the proposition that recapitalization of banks, which encouraged Mergers and Acquisitions in Nigeria banking system, would strengthen the domestic banks, improve financial deepening and the confidence of depositors. Hence, this study examines the impact of the 2005 M&A in the Nigerian-banking sector on financial deepening using mixed method (quantitative and qualitative approach). The quantitative process of this study utilised annual time series for financial deepening indicator for the period of 1997 to 2012. While, the qualitative aspect adopted semi-structured interview to collate data from three merged banks and three stand-alone banks to explore, understand and complement the quantitative results. Furthermore, a framework thematic analysis is employed to analyse the themes developed using NVivo 11 software. Using the quantitative approach, findings from the equality of mean test (EMT) used suggests that M&A have significant impact on financial deepening. However, this method is not robust enough given its weak validity as it does not control for other potential factors that may determine financial deepening. Thus, to control for other factors that may affect the level of financial deepening, a Multiple Regression Model (MRM) and Interrupted Times Series Analysis (ITSA) were applied. The coefficient for M&A dummy turned negative and insignificant using MRM. In addition, the estimated linear trend of the post intervention when ITSA was applied suggests that after M&A, the level of financial deepening decreased annually; however, this was statistically insignificant. Similarly, using the qualitative approach, the results from the interview supported the quantitative results from ITSA and MRM. The result suggests that interest rate should fall when capital base is increased to improve financial deepening. Hence, this study contributes to the existing literature the importance of other factors that may affect financial deepening and the economy when policies that will enhance bank performance and the economy are made. In addition, this study will enable the use of valuable policy instruments relevant to monetary authorities when formulating policies that will strengthen the Nigerian banking sector and the economy.

Keywords: mergers and acquisitions, recapitalization, financial deepening, efficiency, financial crisis

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Authors: Tan Swee Liang

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This paper studies the two-way relationship between fintech credit and banking efficiency using the Generalized panel Method of Moment (GMM) estimation in structural equation modeling (SEM). Banking system efficiency, defined as its ability to produce the existing level of outputs with minimal inputs, is measured using input-oriented data envelopment analysis (DEA), where the whole banking system of an economy is treated as a single DMU. Banks are considered an intermediary between depositors and borrowers, utilizing inputs (deposits and overhead costs) to provide outputs (increase credits to the private sector and its earnings). Analysis of the interrelationship between fintech credit and bank efficiency is conducted to determine the impact in different country groupings (ASEAN, Asia and OECD), in particular the banking system response to fintech credit platforms. Our preliminary results show that banks do respond to the greater pressure caused by fintech platforms to enhance their efficiency, but differently across the different groups. The author’s earlier research on ASEAN-5 high bank overhead costs (as a share of total assets) as the determinant of economic growth suggests that expenses may not have been channeled efficiently to income-generating activities. One practical implication of the findings is that policymakers should enable alternative financing, such as fintech credit, as a warning or encouragement for banks to improve their efficiency.

Keywords: fintech lending, banking efficiency, data envelopment analysis, structural equation modeling

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Authors: Novawiguna Kemalasari, Ahmad Badawi Saluy

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Recent economic developments are more dependent on the value created by intangible assets than tangible company's assets. Intangible assets in question is intellectual capital that is recognized as the basis of individual, organizational, and general competition in the 21st century. The rapid global economy and technological innovations that have led to tough competition in the business world, make IC creation, management, measurement, and evaluation an important indicator in improving company performance that will affect the value of the company in the future. This study aims to determine the strong influence of intellectual capital on corporate performance, and how the influence of human capital on structural capital and relation capital. By distributing questionnaires to 100 employees of banking companies in Jakarta with middle and upper positions. Approach method used is Partial Least Square (PLS) Based on research that has been done, it can be concluded that human capital has influence on relation capital and structural capital. Similarly, the influence on the performance of the company turned out to human capital and relation capital has a significant influence, but structural capital has a non-significant effect on company performance.

Keywords: human capital, structural capital, relation capital, corporate performance

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Authors: Farhad Reyazat, Richard Werner

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This paper contributes to the existent literature by developing a framework that explains how to monitor potential threats to banking sector stability. The study explores structural vulnerabilities at the country level, but also look at bilateral exposures within a network context. The study contributes in analysing of the European banking systemic risk at aggregated level, which integrates the characteristics of bank size, and interconnectedness relative to the size of the economy which ultimate risk belong to, taking to account the concentration ratio of the banking industry within the whole economy. The nature of the systemic risk depends on the interplay of the network topology with the nature of financial transactions over the network, assets and buffer stemming from bank size, correlations, and the nature of the shocks to the financial system. The study’s results illustrate the contribution of banks’ size, size of economy and concentration of counterparty exposures to a given country’s banks in explaining its systemic importance, how much the banking network depends on a few traditional hubs activities and the changes of this dependencies over the last 9 years. The role of few of traditional hubs such as Swiss banks and British Banks and also Irish banks- where the financial sector is fairly new and grew strongly between 1990s till 2008- take the fourth position on 2014 reducing the relative size since 2006 where they had the first position. In-degree concentration index analysis in the study shows concentration index of banking network was not changed since financial crisis 2007-8. In-degree concentration index on first quarter of 2014 indicates that US, UK and Germany together, getting over 70% of the network exposures. The result of comparing the in-degree concentration index with 2007-4Q, shows the same group having over 70% of the network exposure, however the UK getting more important role in the hub and the market share of US and Germany are slightly diminished.

Keywords: systemic risk, counterparty risk, financial stability, interconnectedness, banking concentration, european banks risk, network effect on systemic risk, concentration risk

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Authors: Tochukwu Timothy Okoli, Devi Datt Tewari

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The high rate of Fintech adoption has not transmitted to greater financial inclusion and development in Africa. This problem is attributed to poor Fintech diversification and usefulness in the continent. This concept is referred to as the Fintech depth of penetration in this study. The study, therefore, assessed its determinants and growth process in a panel of three emergings, twenty-four frontiers and five fragile African economies disaggregated with dummies over the period 2004-2018 to allow for heterogeneity between groups. The System Generalized Method of Moments (GMM) technique reveals that the average depth of Mobile banking and automated teller machine (ATM) is a dynamic heterogeneity process. Moreover, users' previous experiences/compatibility, trial-ability/income, and financial development were the major factors that raise its usefulness, whereas perceived risk, financial openness, and inflation rate significantly limit its usefulness. The growth rate of Mobile banking, ATM, and Internet banking in 2018 is, on average 41.82, 0.4, and 20.8 per cent respectively greater than its average rates in 2004. These greater averages after the 2009 financial crisis suggest that countries resort to Fintech as a risk-mitigating tool. This study, therefore, recommends greater Fintech diversification through improved literacy, institutional development, financial liberalization, and continuous innovation.

Keywords: depth of fintech, emerging Africa, financial technology, internet banking, mobile banking

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Authors: Nisha Harry, Keshia Sing

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Orientation: The Multifactor Leadership Questionnaire (MLF) and the sense of coherence-29 (SCS) is an effective tools to assess the prevalence and underlying structures of empirically based taxonomies related to leadership and wellbeing. Research purpose: The purpose of the study was to test the psychometric properties of the SCS and Multifactor Leadership Questionnaire (MLQ) to screen for psychological wellness indices within the banking industry in South Africa. Motivation for the study: The contribution of these two instruments for the purpose of determining psychological wellness in a banking work environment is unique. Research design, approach, or method: The sample consisted of (N = 150) financial staff employed in a South African banking organisation. The age of the sample was: 37% (30 -40 yrs), 31% (20-30 yrs), 26% (40- 50 yrs), and 6% (50+yrs), of which 52% were males, 48% were females. The white race group was the majority at 29%, African at 26%, Coloured at 23%, and Indian was 22%. Main findings: Results from the exploratory factor analysis revealed a two-factor structure as the most satisfactory. Confirmatory factor analyses revealed the two-factor model displayed better good of-fit indices. Practical implications: The factor structure of the Sense of Coherence-29 scale (SCS), and the Multifactor Leadership Questionnaire (MLQ), have a value-added focus to determine psychological wellness within banking staff. It is essential to take into account these constructs when developing employee wellness interventions. Contribution/value add: Understanding the psychometric properties of the SCS, the self-reported form, and the MLQ questionnaire contributes to screening psychological wellness indices such as coping within the banking industry in a developing country like South Africa. Leaders are an important part of the implementation process of organisational employee wellness practices.

Keywords: factorial structure, leadership, measurement invariance, psychological wellness, sense of coherence

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Authors: Camille Paldi

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The tense dichotomy between Shari’ah compliance and the economic goals of an Islamic Bank produces a proliferation of reverse engineered products, which are barely in compliance with Islamic law. The result is basically a hybrid conventional banking system with conventional products in Islamic disguise using Arabic and Islamic terminology. Many Islamic financial professionals and academics advocate for the use of conventional products and devices despite their non-Shari’ah compliance based on commercial necessity and the need to compete. However, this dangerous trend will lead to the demise of the Islamic finance industry. Rather than thoughtlessly following conventional products and practice, Islamic finance professionals should delve into the Shari’ah to find the answers to the current Islamic banking conundrum and lead the industry on the right path of developing Shari’ah based products and using Shari’ah devices to hedge risk.

Keywords: Islamic banking, Shari'ah, finance, investment

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Authors: Zelalem Zerihun

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In this study, attempts were made to assess the bank-specific, industry-specific, and macro-economic factors affecting bank profitability. Data were collected from ten commercial banks in Ethiopia, covering the period of 2008-2012. A mixed method research approach was adopted for this research. Documentary analysis and in-depth interview were also used to substantiate the data. The study found out that capital strength, income diversification, bank size and gross domestic product are statistically significant and they have a positive relationship with banks’ profitability. However, operational efficiency and asset quality have a negative relationship with banks’ profitability. The relationship for liquidity risk, concentration and inflation were found to be statistically insignificant. The study revealed that focusing and reengineering the banks in light of the key internal drivers could enhance the profitability as well as the performance of the commercial banks in Ethiopia. In addition to this, the study suggests that banks in Ethiopia should not only be concerned about internal structures but also they must consider both the internal environment and the macro-economic environment in designing strategies to improve their profit or their performance.

Keywords: Ethiopian banking industry, macro-economic factors, documentary analysis, capital strength, income diversification

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Authors: Simisola I. Akintoye, Sunday K. Iyaniwura

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Recent global corporate failures have called for increase in the need to regulate corporate governance across the world. In Nigeria, the impact of corporate governance regulation in the banking sector has reached epidemic levels contributing to the country’s economic depression. This study critically evaluates Nigeria’s corporate governance regime and explores how weak regulation has impacted on the banking sector. By adopting a socio legal methodology, the study analyses both theoretical and empirical works from a socio-scientific point of view to examine the role of Nigeria’s legal, cultural and social arrangements in corporate governance regulation. The study reveals that Nigeria’s institutional arrangement has contributed to its weak system of corporate governance regulation with adverse effects on the banking sector. The research mainly impacts on current global corporate governance literature in sub-Saharan Africa by contributing to knowledge of the peculiarities of corporate governance regulation in different institutional jurisdictions. The particular focus on emerging economies such as Nigeria expands on the need for countries to develop a bespoke system of corporate governance regulation that takes into consideration the peculiarities of individual countries devoid of external influence.

Keywords: banks, corporate governance, emerging economies, Nigeria

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Authors: Adel Ali Elshaibani

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Risk management indicators augment the reporting infrastructure, particularly for the board and senior management, to identify, monitor, and manage risks. This enhancement facilitates improved decision-making throughout the banking organization. Decision tree analysis is a tool that visually outlines potential outcomes, costs, and consequences of complex decisions. It is particularly beneficial for analyzing quantitative data and making decisions based on numerical values. By calculating the expected value of each outcome, decision tree analysis can help assess the best course of action. In the context of banking, decision tree analysis can assist lenders in evaluating a customer’s creditworthiness, thereby preventing losses. However, applying these tools in developing countries may face several limitations, such as data availability, lack of technological infrastructure and resources, lack of skilled professionals, cultural factors, and cost. Moreover, decision trees can create overly complex models that do not generalize well to new data, known as overfitting. They can also be sensitive to small changes in the data, which can result in different tree structures and can become computationally expensive when dealing with large datasets. In conclusion, while risk management indicators and decision tree analysis are beneficial for decision-making in banks, their effectiveness is contingent upon how they are implemented and utilized by the board of directors, especially in the context of developing countries. It’s important to consider these limitations when planning to implement these tools in developing countries.

Keywords: risk management indicators, decision tree analysis, developing countries, board of directors, bank performance, risk management strategy, banking institutions

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Authors: Andre Kadandji, Mouhamadou Fall, Francois Koum Ekalle

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This paper aims to analyze the sound banking through the effects of the damage of the loan portfolio in the Cameroonian banking sector through the Z-score. The approach is to test the effect of other CAMEL indicators and macroeconomics indicators on the relationship between the non-performing loan and the soundness of Cameroonian banks. We use a dynamic panel data, made by 13 banks for the period 2010-2013. The analysis provides a model equations embedded in panel data. For the estimation, we use the generalized method of moments to understand the effects of macroeconomic and CAMEL type variables on the ability of Cameroonian banks to face a shock. We find that the management quality and macroeconomic variables neutralize the effects of the non-performing loan on the banks soundness.

Keywords: loan portfolio, sound banking, Z-score, dynamic panel

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Authors: Lidia Sanchis-Marco, Antonio Rubia

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In this paper we analyze the state-dependent risk-spillover in different economic areas. To this end, we apply the quantile regression-based methodology developed in Adams, Füss and Gropp approach to examine the spillover in conditional tails of daily returns of indices of the banking industry in the US, BRICs, Peripheral EMU, Core EMU, Scandinavia, the UK and Emerging Markets. This methodology allow us to characterize size, direction and strength of financial contagion in a network of bilateral exposures to address cross-border vulnerabilities under different states of the economy. The general evidence shows as the spillover effects are higher and more significant in volatile periods than in tranquil ones. There is evidence of tail spillovers of which much is attributable to a spillover from the US on the rest of the analyzed regions, specially on European countries. In sharp contrast, the US banking system show more financial resilience against foreign shocks.

Keywords: spillover effects, Bank Contagion, SDSVaR, expected shortfall, VaR, expectiles

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Authors: Euphrasia Susy Suhendra, Lies Handrijaningsih

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The banking sector as an intermediary party or intermediaries occupies a very important position in bridging the needs of working capital investment in the real sector with funds owner. This will certainly make money more effectively to improve the economic value added. As an intermediary, Islamic banks raise funds from the public and then distribute in the form of financing. In practice, the distribution of funding that is run by Islamic Banking is not as easy as, in theory, because, in fact, there are many financing problems; some are caused by lacking the assessment and supervision of banks to customers. This study aims to analyze the influence of the Third Party Funds, Return on Assets (ROA), Non Performing Financing (NPF), and Financing Deposit Ratio (FDR) to Total Financing provided to the Community by Islamic Banks in Indonesia. The data used is monthly data released by Bank of Indonesia in Islamic Banking Statistics in the time period of January 2009 - December 2013. This study uses cointegration test to see the long-term relationship, and use error correction models to examine the relationship of short-term. The results of this study indicate that the Third Party Fund has a short-term effect on total funding, Return on Assets has a long term effect on the total financing, Non Performing Financing has long-term effects of total financing, and Financing deposit ratio has the effect of short-term and long-term of the total financing provided by Islamic Banks in Indonesia.

Keywords: Islamic banking, third party fund, return on asset, non-performing financing, financing deposit ratio

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Authors: A. Rahaf, S. Liyakathunsia

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In today’s world, unprecedented operational pressure is faced by banks that test the efficiency, effectiveness, and agility of their business processes. In a typical banking process, a person’s authorization is usually based on his signature on most all of the transactions. Signature verification is considered as one of the highly significant information needed for any bank document processing. Banks usually use Signature Verification to authenticate the identity of individuals. In this paper, a business process model has been proposed in order to increase the quality of the verification process and to reduce time and needed resources. In order to understand the current process, a survey has been conducted and distributed among bank employees. After analyzing the survey, a process model has been created using Bizagi modeler which helps in simulating the process after assigning time and cost of it. The outcomes show that the automation of signature verification process is highly recommended for a banking business process.

Keywords: business process management, process modeling, quality, Signature Verification

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Authors: Haroon Mahmood, Christopher Gan, Cuong Nguyen

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Maturity transformation risk is highlighted as one of the major causes of recent global financial crisis. Basel III has proposed new liquidity regulations for transformation function of banks and hence to monitor this risk. Specifically, net stable funding ratio (NSFR) is introduced to enhance medium- and long-term resilience against liquidity shocks. Islamic banking is widely accepted in many parts of the world and contributes to a significant portion of the financial sector in many countries. Using a dataset of 68 fully fledged Islamic banks from 11 different countries, over a period from 2005 – 2014, this study has attempted to analyze various factors that may significantly affect the maturity transformation risk in these banks. We utilize 2-step system GMM estimation technique on unbalanced panel and find bank capital, credit risk, financing, size and market power are most significant among the bank specific factors. Also, gross domestic product and inflation are the significant macro-economic factors influencing this risk. However, bank profitability, asset efficiency, and income diversity are found insignificant in determining the maturity transformation risk in Islamic banking model.

Keywords: Basel III, Islamic banking, maturity transformation risk, net stable funding ratio

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Authors: Sobar M. Johari, Ida Putri Anjarsari

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In the transmission of monetary instrument towards real sector of the economy, Bank Indonesia as monetary authority has developed Islamic Bank Indonesia Certificate (abbreviated as SBIS) as an instrument in Islamic open market operation. One of the monetary transmission channels could take place through financing channel from which the fund is used as the source of banking financing. This study aims to analyse the impact of Islamic monetary instrument towards output or economic growth. Data used in this research is taken from Bank Indonesia and Central Board of Statistics for the period of January 2008 until December 2015. The study employs Granger Causality Test, Vector Error Correction Model (VECM), Impulse Response Function (IRF) technique and Forecast Error Variance Decomposition (FEVD) as its analytical methods. The results show that, first, the transmission mechanism of banking financing channel are not linked to output. Second, estimation results of VECM show that SBIS, PUAS, and FIN have significant impact in the long term towards output. When there is monetary shock, output or economic growth could be recovered and stabilized in the short term. FEVD results show that Islamic banking financing contributes 1.33 percent to increase economic growth.

Keywords: Islamic monetary instrument, Islamic banking financing channel, economic growth, Vector Error Correction Model (VECM)

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Authors: Montoya C.A., Erina J., Erina I.

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The purpose of this research is to assess the performance and impact of CSR on business in the banking sector in Australia by applying the financial indicators of 20 ASX banks for the period from 2016-2017. The authors carried out CSR assessment in several stages of research: 1) gathering the nonfinancial and financial indicators of 20 ASX listed banks (available were only 16) from the annual reports of Australian banks for 2016 and 2017; 2) calculation of bank performance indicators using such financial indicators as return on assets (ROA), return on equity (ROE), efficiency ratio and net interest margin; 3) analysis of financial data using cross-sectional regression and answers to the research questions. Based on the obtained research results, the authors obtained answers to the initially raised research questions and came to a conclusion that Q1 - Insignificant positive coefficient result - slight positive relationship between CSR disclosure and business performance 2016; Q2 - Insignificant negative coefficient result - slight negative relationship between CSR disclosure and business performance 2017; Q3 - Insignificant positive coefficient result - slight positive relationship between CSR disclosure and business performance.

Keywords: Australia, banks, business performance, CSR

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Authors: Ronal Muresano, Andrea Pagano

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Nowadays, the mathematical/statistical applications are developed with more complexity and accuracy. However, these precisions and complexities have brought as result that applications need more computational power in order to be executed faster. In this sense, the multicore environments are playing an important role to improve and to optimize the execution time of these applications. These environments allow us the inclusion of more parallelism inside the node. However, to take advantage of this parallelism is not an easy task, because we have to deal with some problems such as: cores communications, data locality, memory sizes (cache and RAM), synchronizations, data dependencies on the model, etc. These issues are becoming more important when we wish to improve the application’s performance and scalability. Hence, this paper describes an optimization method developed for Systemic Model of Banking Originated Losses (SYMBOL) tool developed by the European Commission, which is based on analyzing the application's weakness in order to exploit the advantages of the multicore. All these improvements are done in an automatic and transparent manner with the aim of improving the performance metrics of our tool. Finally, experimental evaluations show the effectiveness of our new optimized version, in which we have achieved a considerable improvement on the execution time. The time has been reduced around 96% for the best case tested, between the original serial version and the automatic parallel version.

Keywords: algorithm optimization, bank failures, OpenMP, parallel techniques, statistical tool

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