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This research aims to examine the effect of Tier-1 capital, risk management, and profitability on performance of Indonesia commercial banks.

The research population consisted of all commercial banks listed in the Indonesia Stock Exchange periods of 2010 to 2014 with a total of 42 companies. The statistical analysis for testing the hypothesis using structural equation modeling (SEM) covariance based using WarpPLS.

Research result shows that Tier-1 capital has a positive effect on capital on risk management; risk management has a positive effect on performance, but risk management does not have an effect to profitability; profitability has a positive effect on performance; and Tier-1 capital has a negative effect on profitability. On the other hand, profitability has a negative effect on Tier-1 capital and performance has a positive effect on Tier-1 capital, whereas Tier-1 capital does not have an effect on performance.

The originality of this research can be seen from the causal relationship between the effects of Tier-1 capital, risk management and profitability on performance of commercial banks in the context of stock performance among Indonesia commercial banks. In addition, previous research findings remain inconsistent between one another. By conducting this research, it is expected that more consistent research findings than the previous ones can be generated. Sluggish global economic conditions which result in declined bank performance are an interesting topic to investigate.

This paper aims to examine the effects of Tier-1 capital toward risk management and profitability on the performance of Indonesian Commercial Banks.

The research population consisted of all commercial banks listed on the Indonesia Stock Exchange. The data were in the form of financial statements of commercial banks for the periods of 2012 to 2016 with a total of 42 companies (bank). From a total of 42 commercial banks listed in the Indonesia Stock Exchange, not all of them met the criteria. Commercial banks that meet these criteria are as many as 28 banks are sampled research.

Tier-1 capital has a positive direct effect on risk management, Tier-1 capital has a positive indirect effect on profitability with risk management as a mediation variable, risk management has a positive direct effect on profitability, Tier-1 capital has a positive indirect effect on performance with risk management and profitability as mediation variables, risk management has a positive indirect effect on performance with as mediation variable and profitability has a positive impact on performance.

The originality of this research can be seen from the causal relationship between the effects of Tier-1 capital, risk management and profitability on the performance of commercial banks in the context of stock performance among Indonesia commercial banks. Also, the analysis tools using multiple fixed effect panel data models in this research as a novelty in this research. In addition, previous research findings remain inconsistent with one another. By conducting this research, it is expected that more consistent research findings than the previous ones can be generated. Sluggish global economic conditions, which result in declined bank performance are an interesting topic to investigate. The paper uses an original sample, 28 Indonesian banks in 2012-2016. Also, it links Tier 1 capital with risk management and performance in a novel theoretical framework.

Relying on the agency theory and the financial intermediation theory, the purpose of this paper is to examine to what extent risk governance would improve corporate governance and risk management effectiveness. The paper especially investigates the mediating role that would have the risk governance mechanisms in explaining both of the following relationships: the corporate governance–the banks’ performance, and the risk management–the banks’ performance.

This research uses the Baron and Kenny’s (1986) approach to investigate the mediating effect of risk governance; besides, the study refers to structural equation modeling in carrying out the appropriate panel regressions. The data collection was based largely on Bank scope Database, but some missing qualitative data were gathered manually from the banks’ annual reports available on the banks’ websites.

The study findings illustrate the significant role of risk governance mechanisms in improving both corporate governance and risk management’s effectiveness. Especially, this paper finds that risk governance is fully explaining the corporate governance–bank performance relationship, but risk governance would explain partially the risk management–bank performance relationship. Further, findings suggest that the internal corporate governance mechanisms seem to be more relevant than the external ones in improving the sample bank performance, and that risk management mechanisms seem to impede rather the sample bank performance.

The findings would make an important contribution to the current debate on the need to reinvent the optimal organization of the bank’s board and directorates and would allow readers to develop more cost-effective governance and risk-management thinking. Besides, the findings may help bank deciders and boards to rationalize costs and to focus only on the relevant corporate governance and risk management mechanisms. Finally, findings might illustrate to regulatory instance the importance of recommending risk governance in their coming corporate governance guidance.

The global credit crisis of 2008 caused significant difficulties to financial institutions, so it would be worth enlightening practitioners and policymakers, even regulators, on the importance of considering the level of potential risk and risk monitoring as a key component in the decision-making process, to strengthen the stability and resilience of banks in an increasingly uncertain environment.

The issues raised in the paper are important in that Islamic banking is an integral part of the global banking and finance industry. This paper extends the knowledge of the potential importance of the new concept of risk governance with specific reference to Islamic banking industry peculiarities. It also provides a telling illustration of the need for the enhancements of the Basel Committee’s prudential requirements as well as the accounting and auditing organization for Islamic financial institutions and Islamic Financial Services Board set out especially regarding the consideration of risk in the strategic decision process.

To study the nature of management accounting performance measures in the Financial Services Industry (FSI). The nature of Performance Measurement (PM), specially non‐financial PM in FSI (service “shop”) has not been explored before.

This exploratory multiple case study consists of survey, interviews with questionnaire, individuals' (senior management and executives) interviews, collecting primary and secondary sources of information as well as literature surveys.

The results of this study demonstrate that the actual practices of the recent trends of management accounting in non‐financial PM are negligible in the studied financial institutions, and management of studied banks paying more attention to improve and measure financial performance than that to non‐financial performance for different reasons that affect the function/operation of FSI.

The field study is being conducted without a conceptual/theoretical framework. An explanatory case study with particular theoretical framework/model could make possible to discuss the factors that affect non‐financial PM in this particular industry. Moreover, a comparative study with manufacturing industry would make the research results more robust.

A stable economic condition and competition that would increase the need and importance of non‐financial PM in FSI as well as in other services (and even in manufacturing industries).

This paper explores the nature of management accounting PM particularly in FSI.

The inadequacies of traditional management accounting (MA) information indicate a need for management to find proper measuring tools for emerging non‐financial performance (NFP) in the highly competitive financial services, as well as in the manufacturing industry. Thus, the role of MA in measuring the performances of emerging NFP has been receiving increased emphasis in the increasingly important service industries. Considering the shortcomings of the traditional MA information system, particularly the measurement of new emerging NFPs, this empirical research is an attempt to investigate the role of MA in non‐financial as well as financial performance measurement (PM) in selected banks and financial institutions (BFIs) in Finland. The study demonstrates that the role of MA in non‐financial PM is insignificant. However, management is paying more attention to its measurement. This study identifies three different aspects of NFP: profit‐driven NFP; NFP for long‐term competitive advantage; and independent NFP (those not linked with the profitability of an organisation).

The credit crunch of 2008 and recent COVID-19 influences underscored the importance of liquidity and credit risk management in businesses and financial institutions. The purpose of this study is to investigate the impact of liquidity risk and credit risk management on accounting and market performances of banks operating in the Middle East and North Africa (MENA) region.

This study uses a panel data regression analysis on a sample of 51 listed commercial banks operating in 10 MENA countries during the period 2010–2018.

The results show that credit risk management does not affect the accounting performance of banks, while it has a non-linear, convex relationship with market performance. Surprisingly, liquidity risk management is not a significant driver for either performance measure in studied banks. However, when a bank combines credit risk management with liquidity risk management efforts, liquidity risk management actions return significant results on both performances, illustrated by an inverted U-shaped relationship. In addition, this study examines the joint impact of both risks on bank performance. This study reveals that accounting and market performances are differently affected by joint risk management efforts. Their impact depends on the combination of risk management ratios upon which banks choose to focus their efforts.

The findings help bankers and regulators further consider non-linearities and offer them new tools for managing the impact of credit and liquidity risk interactions towards achieving more financial stability.

These results contribute to traditional banking in offering bankers and regulators new tools for managing the impact of credit and liquidity risk interactions on bank performance.

This study investigates firm attributes (namely level of capitalisation, scope of operation, organisational structure, organisational lifecycle, systemic importance and size) affecting the robustness of enterprise risk management (ERM) practice, the extent to which ERM affects the performance of banks and the impact of ERM on the long-term sustainability of banks in Nigeria. This was against the backdrop that the 2012 banking reform was a major regulatory intervention that mainstreamed ERM in the Nigerian banking sector.

The study employed a mixed methodology of content, trend and quantitative analyses. Ex post facto research design was deployed to analyse performance differential of banks, with respect to the implementation of ERM, over a 10-year period (2008–2017). A disclosure checklist developed from the COSO ERM integrated framework was used to assess the robustness of ERM by content-analysing divulgence on risk management in published annual reports. The banking reform periods were dichotomised into pre- (2008–2012) and post- (2013–2017) reform periods. Jonckheere–Terpstra test, independent sample t-test and Mann–Whitney test were applied to analyse a total of 1,036 firm-year observations over the period 2008–2017.

Result shows that bank attributes significantly affecting the robustness of risk management practice are level of capitalisation, scope of operation, systemic importance and size. Performance of banks improved slightly during the post-2012 banking reform period. This suggests that as banks consolidate on the gains of ERM, benefits of the regulatory policy on risk management may be realised in the long run. Result also shows that ERM enhances long-term performance, connoting that effective risk management could serve as a competitive strategy for surviving turbulence that typically characterises the banking sector.

The emergence of level of capitalisation, scope of operation, systemic importance and size as determinants of ERM provides empirical evidence to support the practice of reviewing the capital requirements for banking business from time to time by regulatory authorities (i.e. recapitalisation policy) as a strategy for managing systemic risk. Top management of banks may consider instituting mechanisms that will ensure risk management is given prominence. A proactive approach must be taken to convert risks to opportunities by banks and other financial institutions, going forward, to cope with the vicissitudes of financial intermediation.

The originality of the study stems from the consideration that it provides some new insights into the impact of ERM on banks long-term sustainability in a developing country. The study also contributes to knowledge by exposing the factors determining the robustness of risk management practice. The study developed a checklist for assessing ERM practice from annual reports and other risk management disclosure documents. The paper also adds to the scarce literature on risk governance and risk management.

This study aims to analyse the relationship between management ownership and the performance of Islamic microfinance institutions (MFIs) using panel data from Indonesian Islamic rural banks (Bank Pembiayaan Rakyat Syariah [BPRS]).

This study uses unbalanced quarterly panel data from BPRS during the period from 2011 to 2016. Performance, as the dependent variable in this study, is analysed based on three sets of measures, namely, profitability, efficiency and the financing risk. Management ownership, as the independent variable in this study, is represented by ownership by the board of directors (BOD), the board of commissioners (BOC) and the sharia supervisory boards (SSB).

The results show that ownership by the BOD and BOC does not have a significant relationship with profitability and efficiency. However, the BOD ownership has a negative relationship with the financing risk and vice versa for the BOC ownership. Additionally, the study reveals that ownership by the SSB plays a positive and significant role in increasing the profitability and efficiency but does not have a significant impact on the financing risk.

This is one of the first studies to provide empirical results regarding the relationship between management (BOD, BOC and SSB) ownership and the performance of BPRS. The finding reveals that ownership by the SSB is very important to increase the profitability and efficiency of the BPRS.

This study fills the gap in the literature about Islamic MFIs in Indonesia, especially the BPRS. This research also provides an insight into corporate governance practices and Islamic MFIs’ performance using BPRS data. The findings provide useful information for policy makers and regulators.

This paper aims to explore and model the factors of management quality dimension (FMQD) in evaluating banking performance.

The FMQD in evaluating banking performance are explored through the review of literature. The identified factors are modeled using integrated fuzzy cognitive map (FCM) and Matrices’ Impacts Croise’s Multiplication Appliquée a UN Classement (MICMAC) approach. Scenario analysis is carried out on the proposed model to study the behavior in a dynamic setting.

The main finding of this study is the prioritization of FMQD in evaluating banking performance. The cohesive model obtained by FCM-MICMAC integrated approach demonstrates that the interlinked factors can be grouped into independent, autonomous, dependent and relay clusters. The results suggest that internal control system is the most influential factor, whereas the business per employee is the most sensitive one in modeling management quality.

This study models the FMQD through expert opinions, and hence, individual bias may influence the results. This study can be further validated through statistical analysis.

The study suggests that practitioners may focus more on these select factors and their mutual interactions to enhance management quality for improving the performance of the banks. The study emphasizes that better clarity and efficient designing of internal processes are the key to management soundness.

This is the first study to explore and model FMQD in banking performance using FCM-MICMAC approach. Validation of the proposed model in a dynamic setting is also relatively new in the banking performance literature.

The study aims to analyze the effect of financial soundness on financial performance of commercial banks in Kenya.

The study used dynamic panel model to analyze data from commercial banks for the period 2009 to 2020. The study was modeled on the concept of CAMEL approach using five CAMEL variables as financial soundness indicators. Four indicators that is, net interest margin (NIM), earnings per share (EPS), return on assets (ROA) and return on equity (ROE) were used as measures of financial performance.

Generalized method of moments results established that financial soundness had a statistically significant effect on NIM, ROA and ROE. It was also found that asset quality and earning quality had a statistically significant effect on net interest margin. In addition management efficiency had significant effect on ROE. However, the study established that capital adequacy, asset quality, earning quality and liquidity had a statistically insignificant effect on ROA and ROE respectively while capital adequacy, management efficiency and liquidity had statistically insignificant effect on NIM.

Bank managers should put into place effective financial policies to govern changes in CAMEL variables to ensure optimal banks' financial soundness to facilitate positive growth in banks' financial performance.

The current study is modeled on the concept of the CAMEL approach by employing the five CAMEL variables as financial soundness indicators. In addition, the study contributes to local literature by examining banks in a developing economy to provide reliable and relevant information on their differences to monitor their dynamics in financial soundness and financial performance which could not be provided by regional or global studies.