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This paper aims to compare Islamic and commercial banks in the region of Middle East and North Africa (MENA) in terms of profitability and stability.

The study combines both the descriptive and analytical approaches. It considers panel data sets and adopts panel data econometric techniques.

The determinants of banks profitability and stability are different according to bank’s type. The results show that Islamic banks are more profitable than commercial banks, while on the other hand, commercial banks are more stable than Islamic banks. It is also concluded that banks profitability and stability are determined through some bank’s characteristics variables and macroeconomic variables in addition to the financial crises. MENA commercial and Islamic banking was affected by the financial crises in terms of profitability and stability. Additionally, larger banks are more stable than smaller banks, and off-balance sheet activities increase banks’ vulnerability for both commercial and Islamic MENA banks.

The most prominent limitation is the lack of data, as we had to exclude some variables because of missing observations. As a result, the authors could not use data envelopment approach and stochastic frontier approach to evaluate banks efficiency in MENA countries rather than the financial ratios.

Commercial banks need to enhance their capitalization to improve their profitability. Additionally, Islamic banks need to improve the risk assessment and adopt some of the available risk management tools. Moreover, the banking system should take advantage of relatively higher Islamic banks profitability and use the unexploited profit opportunities through spreading into those countries with limited availability, such as the North African countries.

This study address both banks profitability and stability in an emerging region that includes banks of different types (Islamic and commercial) which are located in different counties that allows accounting for operational and institutional differences.

The purpose of this paper is to investigate the relationship between bank-specific characteristics and profitability in European banking sector to find the role of internal factors in achieving high profitability.

A regression analysis is built on an unbalanced panel data set comprising 175 observations of 35 top European banks over the period 2009-2013. To this end, the empirical data are collected from Bankscope and a comprehensive set of internal characteristics is examined.

All the determinant variables included in the model have statistically significant impacts on European banks’ profitability. However, the effects are not uniform across profitability measures. Regression findings reveal that size and capital ratio are significant company-level determinants of bank profitability in Europe, while higher loan loss provisions result in lower profitability levels. Findings also suggest that banks with higher deposits and loans ratio tend to be more profitable but the effects on profitability are statistically insignificant in some cases.

This study has considerable policy implications, as the performance of the European banking sector depends on its efficiency, profitability and competitiveness. In view of these findings, some suggestions may be functional for bank regulatory authorities to intensify and sustain robustness and stability of the banking sector.

The results provide interesting insights into the characteristics and practices of profitable banks in Europe. Few econometric studies have empirically explored the determinants of bank profitability in Europe so far, even though similar studies have been conducted in several developed countries. Therefore, this paper tries to close an important gap in the existing literature improving the understanding of bank profitability in Europe.

There is a global concern over climate change issues. The banking sector is expected to join the initiatives in solving environmental issues, even though banking sectors have no direct contribution to environmental damage. Banking commitment to environmental issues is required. The banking sector should have a responsibility for monitoring and managing the impacts of the ecological effects as the result of their business activities. The advantages of green banking implementation are that bank can avoid the use of paper by utilizing online transaction for their daily operation such as internet banking, SMS banking, and ATM. This will bring in the paperless operation into the banks, which in turn will reduce the logging of the forest. Banks also can develop an environmentally friendly lending policy for their business activities. This research aims to determine the impact of green banking daily operation, green banking policy (GBP), capital adequacy, non-performing loan (NPL), bank efficiency, and bank liquidity on bank profitability. The sample of this research is the Indonesian banking sector during the period 2012–2016. The results showed that green banking daily operation, capital adequacy, and bank liquidity have a positive effect on bank profitability. GBP and bank efficiency negatively affect bank profitability, while the NPL did not have a significant impact on banks’ profitability.

This paper investigates the impact of bank‐specific determinants on bank’s profitability in the Kuwaiti banking sector for the period 1993‐2005. In order to achieve this purpose, a pooled annual data for seven national commercial banks is used to estimate a five variables model by the seemingly unrelated regression technique. The results indicate that equity ratio, loan‐assets ratio, operating expenses ratio, and total assets explain about 67% of the variation in return on assets (ROA). However, the results indicate that loan‐assets ratio, and operating expenses ratio are statistically insignificant. Accordingly, the results stress the need for improving capital adequacy and reducing the ratio of non‐interest assets as a way to improve profitability. The positive impact of the size variable indicates scale efficiency meaning that there is a potential for higher profits as the size of these banks increases.

This paper seeks to examine whether the market values the monitoring activity undertaken by a quality bank in the presence of a credit rating agency. Specifically, the question is asked whether the quality of a lead lending bank influences a market reaction to adverse rating announcements concerning its borrowers.

The event study methodology and various bank quality proxies (size, growth rate in assets, profitability, capital ratio, bank's credit rating, and ownership) are used to examine the market reaction when a borrower's bank loan rating is placed with negative implication or is downgraded.

Firms which are certified and monitored by high‐quality banks are less susceptible to negative market reactions when adverse rating announcements are made.

The findings indicate high‐quality lending banks sustain investors' confidence in their borrowers in the face of deteriorating news. The paper argues that investors and borrowers value monitoring from a high‐quality bank, which is an implication of a bank having access to private information about its borrowers.

This study aims to examine the effect of financial innovation, financial ratios, cost efficiency and good corporate governance on the financial performance of banks in Indonesia.

The data in this study are in the form of annual financial statements of conventional banks in Indonesia. The effect of cost efficiency, innovation and financial performance of banks in Indonesia is expected to be evident in 2009–2018. The research method used is the panel regression method.

The results show that financial innovation affects the financial performance of banks. Cost efficiency has a negative effect on the financial performance of banks. Financial ratio, which is proxied by the capital adequacy ratio (CAR) and loan to deposit ratio, has a positive effect on return on asset and net interest margin. Financial ratio, which is proxied by nonperforming loan and equity to total assets, has a negative effect on return on asset and return on equity. Good corporate governance (GCG), which is proxied by the proportion of managerial ownership (PMO), does not affect the financial performance of banks, whereas GCG, which is proxied by the proportion of independent board of directors, has a negative and significant effect on the financial performance of banks in Indonesia.

These results are a warning to bankers and the government to be cautious when formulating a strategy for the financial performance of banking.

Cost efficiency and financial innovation are important for the financial performance of banking. However, the possible impact of cost efficiency and financial innovation in Indonesia does not have a significant impact. The study uses static panel estimation techniques to analyze the data.

This study aims to capture the “persistence effect” of credit risk in Indian banking industry using the bank-level data spanning over the period of 19 years from 1998/1999 to 2016/17. Alongside, the study explored how the bank-specific, industry-specific, macroeconomic variables alongside regulatory reforms, ownership changes and financial crisis affect the bank's asset quality in India.

Using two-step system generalized method of moment (GMM) approach, the study derives key factors that affect the bank's asset quality in India.

The empirical results confirm the time persistence of credit risk among Indian banks during study period. This reflects that bank defaults are expected to increase in the current year, if it had increased past year due to time lag involved in the process of recovery of past dues. Further, higher profitability, better managerial efficiency, more diversified income from nontraditional activities, optimal size of banks, proper credit screening and monitoring and adherence regulatory norms would help in improving the credit quality of Indian banks.

The practical implication drawn from the study is that nonaccumulation of nonperforming loans (NPLs), higher profitability, better managerial efficiency, more diversified income from nontraditional activities, optimal size of banks, proper credit screening and monitoring and adherence regulatory norms would help in improving the credit quality of Indian banks.

This study is probably the first one that identifies in addition to the current year, whether lag of bank industry-macroeconomic affects the level of NPLs of Indian banks. So far, such an analysis has received less attention with respect to Indian banking industry, especially immediate aftermath of the global financial crisis.

The paper aims to investigate whether the value of banks is affected by their financing policies. Higher capital requirements have been invoked by exploiting a renewed edition of the Modigliani–Miller (M&M) theorem. This paper shows the limits of this claim by highlighting that the general statement that “bank equity is not expensive” can be misleading. The authors argue that market prices should play an important role in bank supervision. Expectations of future profits in prices supply timely information on the viability of a bank.

The authors use the Merton model to show the inapplicability of M&M theorem to banks. The long-run viability of a bank is analyzed with a dividend discount model which allows to compare a bank’s long-term profitability with its overall cost of capital implicit in market prices.

The authors show that the M&M framework cannot be applied to banks neither ex-ante nor ex-post. Ex-ante the authors focus on government guarantees, ex-post they emphasize the risk-shifting phenomena that may increase the overall risk of the bank. The authors show that a bank’s stability cannot be achieved if the market expectations of its future profits stay below the cost of funding.

The authors use simple analytical models. In a future study, some key peculiarities of banks, such as the monetary nature of deposits, should be analytically modelled.

The paper contributes to the debate on capital regulation on the level of capital requirements and the instruments to assess the viability/stability of banks.

This paper uses simple models to assess analytically the key issues in the debate on banks’ capital regulation.

Examines and reports the customer retention practices of Frontier Bank as it provides telephone banking services to business customers. Assesses whether those practices at Frontier Bank reflect extant theories, and whether extant theories can explain customer retention practice in this context. Reviews two theoretical discussions on customer retention, discusses telephone banking services, describes and analyses four retention practices of Frontier Bank, and identifies gaps in both practice and theory. The findings suggest, first, that managers at Frontier Bank applied very few of the prescriptions suggested by extant theories. Managers of similar telephone banking operations could benefit from applying extant customer retention theory in their businesses. Second, authors are too simplistic in assuming that extant theories on customer retention are applicable in any business situations. States that researchers should be cautious in offering generalized customer retention strategies and should consider developing models of customer retention which take account of variations in business context.

Globalisation has influenced many countries, over the last few decades with financial globalisation and liberalisation bringing regulatory reforms in the banking sector. Thus, this study aims to fill a gap in the literature by examining the influence of globalisation on Islamic and conventional bank productivity in Southeast Asia.

The sample comprised 155 banks (23 Islamic and 132 conventional) from 4 countries from 2008 to 2017. Panel data techniques will be used, together with data envelopment analysis (DEA)-based Malmquist productivity index (MPI), to investigate the impact of chosen main determinants on bank productivity. A panel regression analysis will be performed after generating the productivity index from the DEA-based MPI frontier.

According to the findings, Islamic banks are statistically significantly more productive than conventional banks, and the findings of the t-test are corroborated by the findings of nonparametric tests. Furthermore, the findings of the panel regression model reveal that bank specific factors and macroeconomic variables are significant determinants to bank productivity. Surprisingly, the findings also show that the influence of social globalisation elements tends to be negatively related to conventional bank productivity.

This study adds to the existing literature by bridging the globalisation gap in the productivity of the dual banking industry, particularly in the specific context of Southeast Asia, given that the area is representative of Islamic and finance globally.