Search results for: banks

Authors: Matěj Kuc

Abstract:

This paper compares different types of profitability measures of cooperative banks from two developed regions: the European Union and the United States of America together with Canada. We created balanced dataset of more than 200 cooperative banks covering 2011-2016 period. We made series of tests and run Random Effects estimation on panel data. We found that American and Canadian cooperatives are more profitable in terms of return on assets (ROA) and return on equity (ROE). There is no significant difference in net interest margin (NIM). Our results show that the North American cooperative banks accommodated better to the current market environment.

Keywords: cooperative banking, panel data, profitability measures, random effects

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Authors: Charity Ifunanya Osakwe, Victoria Ogochuchukwu Obi-Nwosu, Chima Kenneth Anachedo

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The study investigates how automated teller machines (ATM) and mobile banking affect deposit money banks in the Nigerian economy. The study made use of time series data which were obtained from the Central Bank of Nigeria Statistical Bulletin from 2009 to 2021. The Central Bank of Nigeria (CBN) data on automated teller machine and mobile phones were used to proxy electronic banking while total deposit in banks proxied the performance of deposit money banks. The analysis for the study was done using ordinary least square econometric technique with the aid of economic view statistical package. The results show that the automated teller machine has a positive and significant effect on the total deposits of deposit money banks in Nigeria and that making use of deposits of deposit money banks in Nigeria. It was concluded in the study that e-banking has equally increased banking access to customers and also created room for banks to expand their operations to more customers. The study recommends that banks in Nigeria should prioritize the expansion and maintenance of ATM networks as well as continue to invest in and develop more mobile banking services.

Keywords: electronic, banking, automated teller machines, mobile, deposit

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Authors: Ahmed Sameer El Khatib

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The aim of the present paper is to examine the revenue efficiency of the Indonesian Islamic banking sector. The study also seeks to investigate the potential internal (bank specific) and external (macroeconomic) determinants that influence the revenue efficiency of Indonesian domestic Islamic banks. We employ the whole gamut of domestic and foreign Islamic banks operating in the Indonesian Islamic banking sector during the period of 2009 to 2018. The level of revenue efficiency is computed by using the Data Envelopment Analysis (DEA) method. Furthermore, we employ a panel regression analysis framework based on the Ordinary Least Square (OLS) method to examine the potential determinants of revenue efficiency. The results indicate that the level of revenue efficiency of Indonesian domestic Islamic banks is lower compared to their foreign Islamic bank counterparts. We find that bank market power, liquidity, and management quality significantly influence the improvement in revenue efficiency of the Indonesian domestic Islamic banks during the period under study. By calculating these efficiency concepts, we can observe the efficiency levels of the domestic and foreign Islamic banks. In addition, by comparing both cost and profit efficiency, we can identify the influence of the revenue efficiency on the banks’ profitability.

Keywords: Islamic Finance, Islamic Banks, Revenue Efficiency, Data Envelopment Analysis

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Authors: Ugbede Onalo, Mohd Lizam, Ahmad Kaseri

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In view of dearth of studies on changes in accounting standards and banks’ earnings management particularly in the context of emerging economies, and the recent Malaysia and Nigeria change from their respective local GAAP to IFRS, this study deemed it overwhelming to investigate the effects of the switch on banks’ earnings management focusing on LLP as the manipulative device. This study employed judgmental sampling to select twenty eight banks- eight Malaysia and twenty Nigeria banks as sample covering period 2008-2013. To provide an empirical research setting in pursuant of the objective of this study, the study period is further partitioned into pre (2008, 2009, 2010) and post (2011, 2012, 2013) IFRS adoption periods. This study consistent with previous studies models a LLP regression model to investigate specific discretionary accruals of banks. Findings suggest that Malaysia and Nigeria banks individually use LLP to manage reported earnings more prior to IFRS implementation. Comparative overall results evidenced that the pre IFRS adoption or domestic GAAP era for both Malaysia and Nigeria sample banks is associated with higher prevalent earnings management through LLP than the corresponding post IFRS adoption era in diverse magnitude but in favour of Malaysia banks for both periods. With results demonstrating that IFRS adoption is linked to lower earnings management via LLP, this study therefore recommends the global adoption of IFRS as reporting framework. This study also endorses that Nigeria banks embrace and borrow a leaf from Malaysia banks good corporate governance practices.

Keywords: accounting standards, IFRS, FRS, SAS, LLP, earnings management

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Authors: Sagir Abubakar

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The electronic means of transaction has provided an opportunity especially for commercial banks to entice more customers that will subsequently boost their return on investment. It moves them from traditional marketing into digital marketing and gives them a competitive advantage over others in the same industry.The paper, therefore, examined the competitive advantage of the electronic marketing strategy among commercial banks branches in Bauchi state. The main objective of the study was to determine the impact of e-marketing strategy as a competitive advantage among commercial banks branches in Bauchi state and to evaluate the level of enlightenment campaign offered by the commercial banks branches to their customers on e-marketing. The study obtained data from the staff of the five (s) selected banks branches as the respondents to answer the questionnaire. The research is a quantitative research, where the data where obtained using questionnaire. 100 questionnaires were distributed and analyzed using SPSS’s regression analysis. The research among other findings discovered that, the e-marketing has led to a significant improvement in the banking industry and is expected to continue because of the improvement in the ICT sector. It was also found out that most customers are not aware of the electronic products offered by commercial banks branches in Bauchi state. Some of factors affecting the adoption of e-marketing by banks as indicated from the findings include: top management commitment, government policy on ICT and availability of ICT personnel. The study recommended that commercial banks branches should engage in enlightenment campaign about the existing of their e- products/services, management should place an incentives in order to raise the interest of customers to patronize the products/services online.

Keywords: e-marketing strategy, competitive advantage, banks, Bauchi State

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Authors: Libena Cernohorska

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The goal of this paper is to specify factors influencing the profitability of selected banks. Next, a model will be created to help establish variables that have a demonstrable influence on the development of the selected banks' profitability ratios. Czech banks and their international parent companies were selected for analyzing profitability. Banks categorized as large banks (according to the Czech National Bank's system, which ranks banks according to balance sheet total) were selected to represent the Czech banks. Two ratios, the return on assets ratio (ROA) and the return on equity ratio (ROE) are used to assess bank profitability. Six endogenous and four external indicators were selected from among other factors that influence bank profitability. The data analyzed were for the years 2001 – 2013. First, correlation analysis, which was supposed to eliminate correlated values, was conducted. A large number of correlated values were established on the basis of this analysis. The strongly correlated values were omitted. Despite this, the subsequent regression analysis of profitability for the individual banks that were selected did not confirm that the selected variables influenced their profitability. The studied factors' influence on bank profitability was demonstrated only for Československá Obchodní Banka and Société Générale using regression analysis. For Československá Obchodní Banka, it was demonstrated that inflation level and the amount of the central bank's interest rate influenced the return on assets ratio and that capital adequacy and market concentration influenced the return on equity ratio for Société Générale.

Keywords: banks, profitability, regression analysis, ROA, ROE

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Authors: Khaled Alkadamani

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Using the simultaneous equations model, this paper examines the impact of capital requirements on bank risk-taking during the recent financial crisis. It also explores the relationship between capital and risk decisions and the impact of economic instability on this relationship. By analyzing the data of 20 Islamic commercial banks between 2004 and 2014 from four Middle East countries, the study concludes a positive effect of regulatory pressure on bank capital in Saudi Arabia and UAE and a negative effect in Jordan and Kuwait. Moreover, the results show a negative impact of regulatory pressure on bank risk taking in Saudi Arabia, Jordan and UAE. The findings reveal also that banks close to the minimum regulatory capital requirements improve their capital adequacy by increasing their capital and decreasing their risk taking. Furthermore, the results show that economic crisis negatively affects bank risk changes, suggesting that banks react to the impact of uncertainty by reducing their risk taking. Finally, the estimations show a negative correlation between banks profitability and capital adequacy ratio (CAR), implying that as more capital is set aside as a buffer for banks safety; it affects the performance of Islamic banks.

Keywords: bank capital, bank regulation, crisis, Islamic banks, risk taking

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Authors: Jameelah O. Yaqub

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The financial industry all over the world has undergone and still undergoing great transformation especially with the introduction of e-products which involves the use of computers and telecommunications to enable banking transactions to be done by telephone or computer rather than by humans. The adoption of e-banking in Nigeria is becoming more popular with customers now being able to use the ATM cards for different transactions. The internet banking, POS machines, telephone banking as well as mobile banking are some other e-products being used in Nigeria. This study examines how satisfied bank customers are with the e-products. The study found that the ATM is the most popular e-products among bank customers in Nigeria; followed by the POS. The least use of the e-products is telephone banking. The study also found that visits to banks for transactions declined with the use of e-products. The chi-square analysis shows that there is significant relationship between the use of banks’ e-products and customers’ satisfaction. One of the major reason adduced by respondents for low usage of e-products is insecurity or fear of cyber fraud, it is therefore recommended that banks should provide adequate. Security for transactions and ensure the proper backing up of critical data files. In addition, government should ensure stable electricity supply to reduce banks’ running costs and consequently, customers’ cost of transactions.

Keywords: banks, e-products, innovation, Nigeria

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Authors: Emmanuel Larbi Offei, Felix Agyei-Sasu, Maura Naa Densua Ashong

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Ghana has 26 universal banks and several banking and non-banking financial institutions operating in the country. The growing number of banks has heightened competition among banks to attract and retain customers more customers to ensure sustainability. Hence the need to identify and understand factors that influences customers’ choice of banks cannot be overemphasised. This study investigates the determinants of bank selection criteria by banking customers in Ghana. Four banks were purposively sampled for this study namely Barclays, Standard Chartered, Sahel Sahara and Unibank. Convenience sampling was then used to select 114 bank customers in Accra and interviewed. Questionnaires were used to collect data that were analysed in tables and charts with the use of STATA software. The findings of the study revealed that quick/prompt services and complaint handling, safety of funds, networked branches, easy access to functional Automated Teller Machines (ATMs) and low/moderate service charges were the major determinants of customers’ choice of banks. The results further show that 89.5 percent of all deposits are held in either current or savings accounts. About 22.1 percent of the respondents indicated that they have plans of changing their banks in the near future because they are not satisfied with their banks. A gender analysis of the choice criteria showed differences between the choice criteria of the male as compared to the female. The study recommends that banks in Ghana should focus on products and policies that will not compromise on the safety of funds of their customers. Again, banks must address customer complaints and dissatisfactions as promptly as possible by taking pragmatic steps to address administrative bureaucracies and infrastructural challenges that prolong the duration of banking transactions.

Keywords: Ghana, banks, determinants, customers’ choice, competition

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Authors: Maruf Ariyo Raheem, Patrick Oseloka Ezepue

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This research aimed at determining most appropriate heteroskedastic model to predicting volatility of 10 major Nigerian banks: Access, United Bank for Africa (UBA), Guaranty Trust, Skye, Diamond, Fidelity, Sterling, Union, ETI and Zenith banks using daily closing stock prices of each of the banks from 2004 to 2014. The models employed include ARCH (1), GARCH (1, 1), EGARCH (1, 1) and TARCH (1, 1). The results show that all the banks returns are highly leptokurtic, significantly skewed and thus non-normal across the four periods except for Fidelity bank during financial crises; findings similar to those of other global markets. There is also strong evidence for the presence of heteroscedasticity, and that volatility persistence during crisis is higher than before the crisis across the 10 banks, with that of UBA taking the lead, about 11 times higher during the crisis. Findings further revealed that Asymmetric GARCH models became dominant especially during financial crises and post crises when the second reforms were introduced into the banking industry by the Central Bank of Nigeria (CBN). Generally, one could say that Nigerian banks returns are volatility persistent during and after the crises, and characterised by leverage effects of negative and positive shocks during these periods

Keywords: global financial crisis, leverage effect, persistence, volatility clustering

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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: Mario Spremić, Natalija Kokolek, Božidar Jaković, Jurica Šimurina

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This paper deals with various questions related to functionality and providing banking services in the European union on the Internet. Due to the fact that we live in the information technologies era, the Internet become a new space for doing economic and business activities in all areas, and especially important in banking. Accepting the busy tempo of life, in the past several years electronic banking has become necessity and a must for most users of banking services. On a sample of 300 web sites of the banks operating in European union (EU) we conduct the research on the functionality of e-banking services offered through banks web sites with the key objective to reveal to what extent the information technologies are used in their business operations. Characteristics of EU banks websites will be examined and compared to the basic groups of business activities on the web. Also some recommendations for the successful bank web sites will be provided.

Keywords: electronic banking, electronic business, European union banks, internet

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Authors: Xiaojun Wang

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In a lucky emerging market, most Sino commercial banks has developed rapidly and achieved dazzling performance in recent years. As a large sound commercial bank with long history, Wells Fargo Company(WFC) is taken as a mirror in this paper in order to roughly find out the relevance on life circle of the Sino banks in comparison with WFC. Two financial measures return on equity(ROE) and overall labor productivity(OLP), three commercial banks the Hong Kong and Shanghai Banking Corporation Limited(HSBC), the Bank of Communication(BCM) and China Minsheng Bank(CMSB) are selected. The comparison data coming from historical annual reports of each company vary from 13 years to 51 years. Several conclusions from the results indicate that most Sino commercial banks would be continually developing with lower financial measures performance for later several decades.

Keywords: commercial bank, features comparison, labor productivity, return on equity

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Authors: Arjun S.

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This study examines the impact of corporate governance on financial performance of Indian banks during five years (from 2010 to 2015). Based on 218 observations, a quantitative method of data analysis was employed to investigate the relevance of corporate governance mechanisms. The first finding reveals a significant and negative impact of board size on the performance of Indian banks. The research also finds a significant and negative relationship between CEO duality and bank performance. Finally, the correlation results reveal that there is a significant and negative correlation of Bank size and bank performance.

Keywords: Indian banks, financial performance, corporate governance, banksize

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Authors: Sagir Abubakar

Abstract:

The electronic means of transaction has provided an opportunity especially for commercial banks to entice more customers that will subsequently boost their return on investment. It moves them from traditional marketing into digital marketing and gives them a competitive advantage over others in the same industry. The paper, therefore, examined the competitive advantage of the electronic marketing strategy among commercial banks branches in Bauchi state. The main objective of the study was to determine the impact of e-marketing strategy as a competitive advantage among commercial banks branches in Bauchi state and to evaluate the level of enlightenment campaign offered by the commercial banks branches to their customers on e-marketing. The study obtained data from the staff of the five (s) selected banks branches as the respondents to answer the questionnaire. The research is a quantitative research, where the data where obtained using questionnaire. 100 questionnaires were distributed and analyzed using SPSS’s regression analysis. The research among other findings discovered that the e-marketing has led to a significant improvement in the banking industry and is expected to continue because of the improvement in the ICT sector. It was also found out that most customers are not aware of the electronic products offered by commercial banks branches in Bauchi state. Some of factors affecting the adoption of e-marketing by banks as indicated from the findings include: top management commitment, government policy on ICT and availability of ICT personnel. The study recommended that commercial banks branches should engage in enlightenment campaign about the existing of their e- products/services, management should place an incentive in order to raise the interest of customers to patronize the products/services online.

Keywords: e-marketing strategy, competitive advantage, banks, Bauchi State

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Authors: Karima Afif, Jacinthe Clouthier, Marie-Ève Gaboury-Bonhomme, Véronique Provencher, Morgane Leclercq

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This paper investigates how food banks have secured and improved their supply chain resilience to pursue their mission during COVID-19. More specifically, the implications of the COVID-19 outbreak on the food aid needs, donations, operations, and mission of food banks are explored. To develop an in-depth understanding of the reactions and actions that they have been taken, a qualitative approach has been adopted using a multiple case study design. Data from two focus groups, 12 semi-structured interviews with key informants covering all supply chain levels, and field notes from 7 workplace observations in donation points, food bank facilities, and community-based organizations in Québec (Canada) are triangulated. The results highlight that the pandemic has significantly and unpredictably increased the number of food aid demands, causing significant operational challenges for the food banks supply chain, as well as an unprecedented shortage of donations to food banks. Besides, the sanitary measures have required several adaptative strategies. These implications have caused food banks to enhance their operational flexibility, optimize their logistics operations, enhance their human resources management, and expand collaboration within their supply chain.

Keywords: supply chain resilience, food banks, food donations, food aid, COVID-19

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Authors: Narvada Ramdhany, Reena Bhattu Babajee

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The 2007-2008 Global Financial Crisis which initiated in the US had a global outreach, impacting the financial and banking sectors of several economies; such as European countries, developing and emerging countries in Asia, Latin America and Africa. European countries represent one of the main sources of export earnings for Mauritius and given that Europe has been quite profoundly affected by the crisis, the Mauritian economy also could have been negatively affected. This study is being undertaken to see if the crisis had a spill-over effect on the Mauritian banking system. It will also enable to determine if the measures put in place to counteract the crisis by regulatory authorities have been effective. The study will be carried out on 17 banks and data will be collected over a time frame of seven years; with a pre-crisis period from 2005 to 2007 and a post-crisis period from 2009 to 2011. The impact of the crisis as such will be measured through the financial performance of the banks, using financial ratios and regression analysis. The results show that during the period concerned Mauritian banks have remained solvent and relatively stable. One of the main explanations put forward to explain the resilience of the banking sector to the crisis is that foreign exposure was relatively low. Another explanation put forward is that Mauritian banks normally transact mainly with prime borrowers unlike most the banks which were affected by the financial crisis.  

Keywords: global financial crisis, banking sector, financial performance, Mauritian banks

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Authors: Elham Fakhrpoor, Daryush Mohammadi Zanjirani, Maziyar Nojaba

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Business process reengineering is one of the most important strategies in banks in recent years that not only it increases customers’ satisfaction, but also it increases performance of banks. The purpose of elementary (initial) business process reengineering is reinforcing banks abilities to obtain new customers and making long-term relationships with existed customers and increasing customers’ satisfaction among service quality in global level. Banks specially the private ones are the main streams of state, because cash flow is necessary to survive a state. What guarantees survival and permanency of financial institutes’ activities is providing favorite, certain, and proper services. Capital market being small and state financial system being bank-oriented needs optimum usage from banks. According to this fact and role and importance of developing banking system, the present study tried to offer a constructed model using Lisrel and also spss software to evaluate effects of business process reengineering on performance of private banks. We have one min hypothesis and four sub-hypotheses. The main hypothesis says reengineering factors have positive effects on bank performances (balanced- scores card aspects). These hypotheses were tested by structural equations modeling.

Keywords: effect, business, reengineering, private bank

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Authors: Mehriban Ahmadova

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Country of origin has been found to be an important determinant of the level of corporate social disclosure. The purpose of this study is to investigate the differences of corporate social disclosure, including sharia non-compliant information, by Islamic banks. The study applies content analysis approach of annual reports of fully-fledged Islamic banks from 24 countries. International differences are found in terms of level, methods and location of disclosure.

Keywords: Content analysis, Corporate social disclosure, Islamic banks, Sharia non-compliant disclosure

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Authors: Sadia Bibi, Karim Ullah

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Islamic banks have excess liquidity, which needs proper management to earn a high rate of return on them to remain competitive. However, they lack assets-backed avenues and rely on a few sukuks, which led them to liquidity management issues. Financial engineering comes forward to innovate and develop instruments for the requisite financial problem. Still, they face many challenges, explored in the context of liquidity management in Islamic banks. The rigorous literature review shows that Shariah compliance, competition from the conventional banks, lack of sufficient instruments, derivatives are still not accepted as legitimate products, the inter-bank market being less developed, and no possibility of lender of last resort is the six significant constraints to financial engineering for liquidity management of Islamic banks. To further explore the problem, a multiple case study strategy is used to extend and develop the theory with the philosophical stance of social constructivism. Narrative in-depth interviews over the telephone are conducted with key personnel at treasury departments of selected banks. Data is segregated and displayed using NVivo 11 software, and the thematic analysis approach identifies themes related to the constraints. The exploration of further constraints to financial engineering for liquidity management of Islamic banks achieves the research aim. The theory is further developed by the addition of three more constraints to the theoretical framework, which are i) lack of skilled human resources, ii) lack of unified vision, and iii) lack of government support to the Islamic banks. These study findings are fruitful for the use of the government, regulatory authorities of the banking sector, the State Bank of Pakistan (Central Bank), and the product design & development division of Islamic banks to make the financial engineering process feasible and resolve liquidity management issues of Islamic banks.

Keywords: financial engineering, liquidity management, Islamic banks, shariah compliance

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Authors: Irena Paramita Pramono

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Islamic bank is a financial industry with huge potential to grow in Indonesia. Profit-sharing agreement in the operations of Islamic banks distinguishes Islamic banks with conventional banks. Profit-sharing agreement allows sharing of benefits and risks between shahibul maal and mudharib in islamic bank. This study aimed to observe the patterns of influence between the risk-sharing agreement, financing risk and Profitability in Islamic banks. This research used several Islamic banks as sample and path analysis method. The empirical results of this research shows that the profit-sharing agreement in deposits structure has no direct significant effect to ROA, but it has indirect effect to ROA through profit-sharing financing. On the other hand, profit-sharing financing has direct and indirect influence to ROA through financing risk. This research shows that profit-sharing financing has a positive significant effect to the financing risk and also to the ROA. The research recommends Islamic banks to continue using and developing profit-sharing agreement in its operational activities, hence to create value.

Keywords: Islamic bank, profit-loss sharing agreement, financing risk, profitability

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Authors: Mouldi Djelassi, Jamel Boukhatem

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Background: A relation has been established between Islamic banks' activities and interest rates. The aim of this study was to explore the impact of interest rates on the deposits and loans held by Islamic and conventional banks in Saudi Arabia. Methods: A time series data was performed over the period 2008Q1-2020Q2 on eight conventional banks and four Islamic banks. The impacts of interest rate shocks on deposits and loans were identified through panel vector autoregressive models. Results: Impulse response function analysis showed that increasing interest rates reduce loans and conventional deposits. For Islamic banks, deposits are more affected by interest rates than lending. Variance decomposition analysis revealed that deposits contribute to 61% of the Islamic financing variation and only 25% of the conventional loans. Conclusion: Interest rates impacted Islamic banks especially through deposits, which is inconsistent with the theoretical framework. Islamic deposits played an important role in Islamic financing variation and may provide to be a channel for the transmission of the monetary policy in a dual banking system. Monetary policy in Saudi Arabia works in part through “credits” (conventional bank credits) as well as through “money” (conventional and Islamic bank deposits).

Keywords: Islamic banking, interest rates, monetary policy transmission, panel VAR

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Authors: Neeraj Gupta, Jitendra Mahakud

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The banking system plays a major role in the Indian economy. Banking system is the payment gateway of most of the financial transactions. Banking has gone a major transition that is still in progress. Recent banking reforms after liberalization in 1991 have led to the establishment of the foreign banks in the country. The foreign banks are not listed in the Indian stock markets and have increased the competition leading to the capture of the significant share in the revenue from the public sector banks which are still the major players in the Indian banking sector. The performance of the banking sector depends on the internal (bank specific) as well as the external (market specific and macroeconomic) factors. Profitability in banking sector is affected by numerous factors which can be internal or external. The present study examines these internal and external factors which are likely to effect the profitablilty of the Indian banks. The sample consists of a panel dataset of 64 commercial banks in India, consisting of 1088 observations over the years from 1998 to 2016. The GMM dynamic panel estimation given by Arellano and Bond has been used. The study revealed that the variables capital adequacy ratio, deposit, age, labour productivity, non-performing asset, inflation and concentration have significant effect on performance measured.

Keywords: banks in India, bank performance, bank productivity, banking management

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Authors: K. P. Fasalu Rahman

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The financial services industry of Islam include large number of institutions, such as investment banks and commercial banks, investment companies and mutual insurance companies. All types of these financial institutions should have to deal with many issues and risks in their field of work. Islamic banks should expect to face two types of risks: risks that are similar to those faced by conventional financial intermediaries and risks that are unique to the Islamic Banks due to their compliance with the Shariah. The use of financial services and products that comply with the Shariah principles cause special issues for supervision and risk management. Risks are uncertain future events that could influence the achievement of the bank’s objectives, including strategic, operational, financial and compliance objectives. In Islamic banks, effective risk management deserves special attention. As an operational problem, risk management is the classification and identification of methods, processes, and risks in banks to supervise, monitor and measure them. In comparison to conventional banks, Islamic banks face big difficulties in identifying and managing risks due to bigger complexities emerging from the profit loss sharing (PLS) concept and nature of particular risks of Islamic financing. As the developing of managing risks tool becomes very essential, especially in Islamic banking as most of the products are depending on PLS principle, identifying and measuring each type of risk is highly important and critical in any Islamic finance based systems. This paper highlights the special and general risks surrounding Islamic banking. And it investigates in detail the need for risk management in Islamic banks. In addition to analyzing the effectiveness of risk management strategies adopted by Islamic financial institutions at present, this research is also suggesting strategies for improving risk management process of Islamic banks in future.

Keywords: Islamic banking, management, risk, risk management

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Authors: Emin Avcı, Çiydem Çatak

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The recent economic crisis have shown that procyclicality, which could threaten the stability and growth of the economy, is a major problem of financial and real sector. The term procyclicality refers here the cyclical behavior of banks that lead them to follow the same patterns as the real economy. In this study, leverage which demonstrate how a bank manage its debt, is chosen as bank specific variable to see the effect of changes in it over the economic cycle. The procyclical behavior of Turkish banking sector (commercial, participation, development-investment banks) is tried to explain with analyzing the relationship between leverage and asset growth. On the basis of theoretical explanations, eight different leverage ratios are utilized in eight different panel data models to demonstrate the procyclicality effect of Turkish banks leverage using monthly data covering the 2005-2014 period. It is tested whether there is an increasing (decreasing) trend in the leverage ratio of Turkish banks when there is an enlargement (contraction) in their balance sheet. The major finding of the study indicates that asset growth has a significant effect on all eight leverage ratios. In other words, the leverage of Turkish banks follow a cyclical pattern, which is in line with those of earlier literature.

Keywords: banking, economic cycles, leverage, procyclicality

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Authors: Benjamin Bae, Mahdy Elhusseiny, Sherif El-Halaby

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This study investigates the relationship between some cultural factors and the level of dividend payouts of banks in a number of Muslim countries. We examine whether cultural factors play any role in determining dividend payout policy in banks. The results suggest that banks in high masculinity countries tend to pay higher dividends than low masculinity countries. The results also show that banks in high uncertainty avoidance (UA) countries tend to pay lower dividends than high UA countries. Additionally, the results of this study indicate that banks in high long-term orientation (LTO) countries tend to pay lower dividends than low LTO countries. However, two other cultural factors of power distance (PD) and individualism do not have any incremental explanatory power on the dividend payouts. Overall, this research adds to our understanding of the bank’s dividend payout policies. First, evidence on the relationship between the cultural factors and bank’s level of dividend payouts should be useful to investors. Second, the findings of this study provide financial statement users with useful information about the bank’s dividend payout levels. Third, in general, it also adds to the accounting and finance literature on dividends.

Keywords: cultural factor, dividend payout, Hofstede index, bank industry

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Authors: Patrik Jangl, Milan Mikuláštík

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The objective of the paper is to measure and compare market orientation of Swiss and Czech banks, as well as examine statistically the degree of influence it has on competitiveness of the institutions. The analysis of market orientation is based on the collecting, analysis and correct interpretation of the data. Descriptive analysis of market orientation describe current situation. Research of relation of competitiveness and market orientation in the sector of big international banks is suggested with the expectation of existence of a strong relationship. Partially, the work served as reconfirmation of suitability of classic methodologies to measurement of banks’ market orientation. Two types of data were gathered. Firstly, by measuring subjectively perceived market orientation of a company and secondly, by quantifying its competitiveness. All data were collected from a sample of small, mid-sized and large banks. We used numerical secondary character data from the international statistical financial Bureau Van Dijk’s BANKSCOPE database. Statistical analysis led to the following results. Assuming classical market orientation measures to be scientifically justified, Czech banks are statistically less market-oriented than Swiss banks. Secondly, among small Swiss banks, which are not broadly internationally active, small relationship exist between market orientation measures and market share based competitiveness measures. Thirdly, among all Swiss banks, a strong relationship exists between market orientation measures and market share based competitiveness measures. Above results imply existence of a strong relation of this measure in sector of big international banks. A strong statistical relationship has been proven to exist between market orientation measures and equity/total assets ratio in Switzerland.

Keywords: market orientation, competitiveness, marketing strategy, measurement of market orientation, relation between market orientation and competitiveness, banking sector

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Authors: Eda Orhun

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Turkey stayed as a closed economy until the beginning of 1980s. This changed with the de-regulation and the liberalization program that was adopted by the government at that time. This re-structuring program also affected the Turkish banking system by triggering more foreign bank entry. While the number of foreign banks have been increasing, the number of (local) private banks have been decreasing especially after the currency crisis of 2001. This outcome is largely due to increased acquisitions of (local) private banks by foreign entrants.

Keywords: acquisitions, de-regulation, foreign bank entry, globalization

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Authors: Tadele Tesfay Teame, Tsegaye Abrehame, Hágen István Zsombor

Abstract:

Liquidity is one of the main concerns for banks, and thus achieving the optimum level of liquidity is critical. The main objective of this study is to discover the driving force of selected private commercial banks’ liquidity. In order to achieve the objective explanatory research design and quantitative research approach were used. Data has been collected from a secondary source of the sampled Ethiopian private commercial banks’ financial statements, the National Bank of Ethiopia, and the Minister of Finance, the sample covering the period from 2011 to 2022. Bank-specific and macroeconomic variables were analyzed by using the balanced panel fixed effect regression model. Bank’s liquidity ratio is measured by the total liquid asset to total deposits. The findings of the study revealed that bank size, capital adequacy, loan growth rate, and non-performing loan had a statistically significant impact on private commercial banks’ liquidity, and annual inflation rate and interest rate margin had a statistically significant impact on the liquidity of Ethiopian private commercial banks measured by L1 (bank liquidity). Thus, banks in Ethiopia should not only be concerned about internal structures and policies/procedures, but they must consider both the internal environment and the macroeconomic environment together in developing their strategies to efficiently manage their liquidity position and private commercial banks to maintain their financial proficiency shall have bank liquidity management policy by assimilating both bank-specific and macro-economic variables.

Keywords: liquidity, Ethiopian private commercial banks, liquidity ratio, panel data regression analysis

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Authors: Mary David, Denis Basila

Abstract:

This study assessed the Impact of Board Composition on the Performance of Listed Deposit Money Banks in Nigeria. A sample of ten (10) deposit money banks formed the sample of this study. Board size, gender diversity, and board independence were used as the independent variables, and firm size as a control variable, whiles the bank performance was proxy with Tobin’s Q (TQ) as the dependent variable. Secondary data was collected from secondary source through the annual report and account of the banks and was analyzed through the support of STATA 14 versions. Descriptive statistics, correlation matrix, and OLS multiple regression model were adopted for the study. Breusch and pagan lagrangian multiplier test for random effect was conducted. The findings of the study reveal that board size has positive and significant impact on Tobin’s Q, gender diversity has positive and significant impact on Tobin’s Q, while board independent had a negative and nonsignificant influence on the Tobin’s Q, Similarly, firm size was found to have a negative and nonsignificant impact on Tobin’s Q of the study banks. This study recommended that policy makers, stakeholders, and corporate managers of deposit money banks of Nigeria and related industries are encouraged to adopt board sizes and gender diversity that impact positively on bank performance.

Keywords: board composition, performance, deposit money banks, nigeria

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