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11 – 20 of over 87000Sangita Dutta Gupta, Ajitava Raychaudhuri and Sushil Kumar Haldar
Information Technology has transformed the banking sector with respect to various systems and processes. Banks have adopted various measures to quicken their business activity and…
Abstract
Purpose
Information Technology has transformed the banking sector with respect to various systems and processes. Banks have adopted various measures to quicken their business activity and also save cost and time. That is why there has been large requirement of IT in the banking sector. The question arises whether this investment is enhancing the profitability of the bank or not. The purpose of this paper is to examine the presence of profitability paradox in Indian Banking Sector.
Design/methodology/approach
Data are collected from ten nationalized banks and three private sector banks from 2006 to 2013. The impact of IT expenditure on return on assets and profit efficiency is examined. Profit efficiency is determined using Stochastic Frontier Analysis. Data are collected from annual reports of the banks. Data on IT expenditure are collected through Right to Information Act 2005. Correlation and Panel Regression are used to investigate the relationship between IT expenditure and ROE or Profit Efficiency.
Findings
The findings of the paper confirm the presence of profitability paradox in the Indian Banking sector.
Research limitations/implications
Extension of this study to other developing countries of the world will help to identify if any common pattern is there among the developing countries as far as productivity or profitability paradox is concerned.
Originality/value
There are some studies on the impact of IT on the banking sector in USA and Europe. This type of study however is rare in the context of India or for that matter other developing countries. Therefore, this paper will add new dimension to the existing literature and pave the way for future research in this area.
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The development of the Russian banking sector was subject to numerous criticisms and pessimistic forecasts in the recent years. The observers pointed out the low ability of the…
Abstract
The development of the Russian banking sector was subject to numerous criticisms and pessimistic forecasts in the recent years. The observers pointed out the low ability of the Russian banking sector to provide financial intermediation in the economy and thus to perform the key functions which society expects from the banking sector – mobilization of savings and financing investments in the real sector of the economy. The study seeks to explain above-mentioned features from institutional, economic, and political perspective on the basis of the existing knowledge of the nature of transition banking.
The aim of this paper is to evaluate empirically the impact of oil price fluctuations on the relationship between banking sector development and economic growth in oil-importing…
Abstract
Purpose
The aim of this paper is to evaluate empirically the impact of oil price fluctuations on the relationship between banking sector development and economic growth in oil-importing MENA countries.
Design/methodology/approach
The study used the newly developed panel autoregressive distributed lagged (ARDL) approach in order to address any potential endogeneity between research variables.
Findings
The empirical results show a unidirectional causality in the long run from oil price to both economic growth and banking sector development for oil-importing countries. Also, banking sector development not only leads directly to economic growth but also can play a moderator role in the oil price—economic growth nexus.
Research limitations/implications
The study has two principal limitations. On the one hand, this study was conducted in a relatively limited sample of countries. On the other hand, the study did not consider others indicators for banking sector development and others macroeconomic variables.
Practical implications
The results found have imperative implications for banks' managers, regulators and researchers. Bank managers should be more concerned with the negative repercussions of oil price fluctuations on the development of their banks. The regulatory authorities must emphasize policies and strategies to further strengthen their banking sector in order to alleviate the negative influence of oil price shocks on economic growth. Researchers focused on finance-growth nexus must take into account the potential influence of oil price shocks.
Originality/value
The developed conceptual model allows examining to what extent the oil price fluctuations might affect the relationship between economic growth and banking sector development. This effect is neither evaluated nor clarified in the relevant literature.
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Ibrahim Alley, Halima Hassan, Ahmad Wali and Fauziyah Suleiman
This paper provides evidence that the banking sector reforms of 2004 and 2009 enhanced prudential performance of the banking industry and financial system stability in Nigeria.
Abstract
Purpose
This paper provides evidence that the banking sector reforms of 2004 and 2009 enhanced prudential performance of the banking industry and financial system stability in Nigeria.
Design/methodology/approach
This study uses regression analysis with regime shift to confirm results from tests of two means and variances model to examine the effectiveness of banking sector reforms in Nigeria.
Findings
Evidence from the regression model agrees with findings from the test of means model (not controlling for trend effects) that capital to assets ratio rose while non-performing loan ratio declined after the reforms, and that capital to earning assets ratio rose when trend effects were accounted for. Both the regression model and the tests of means model controlling for trend effects show that return on asset, return on equity and return on earning assets ratios declined after the reforms.
Research limitations/implications
This paper evaluated the effectiveness of banking sector reforms in Nigeria using models that avoid weaknesses that besieged many previous studies. It however used data covering 1983–2020 period, due to data availability. A larger scope of data may improve the results, and future research may re-examine this theme as more data become available. Furthermore, banking stability issues could be examined using specialised techniques such as the generalised autoregressive conditional heteroscedasticity model and related family.
Practical implications
These results suggest that the reforms led to improvement in the sector’s resilience (risks-absorbing capacity) and asset quality, and that profitability had not been the primary focus of the reforms.
Social implications
The authors recommend that regulatory and supervisory authorities in Nigeria continue to implement and improve on banking sector reforms for a more resilient and functional banking system. As a contribution to social research, this study shows that studies on policy evaluation should be located within appropriate theoretical framework: the theory of change. It shows that an appropriate use of attribution analysis and contribution analysis within this theoretical framework engenders robust analysis and results. Otherwise, the analytical findings would be erroneous and policy advice misguided.
Originality/value
The statistical significance of our findings establishes that the banking sector reforms in Nigeria have been effective in promoting financial system stability in Nigeria. By deploying both the test of means with and without trend effects (an attribution analysis) and the multivariate regression analysis with regulatory shift (a contribution analysis), and relying more on the later for its superiority, this study contributes to the body of knowledge in that, it not only determined the true effects of banking sector reforms in Nigeria for appropriate policy guidance but also demonstrated that, in research, an inappropriate methodology produces results that may diverge from the more accurate ones that were derived from the correct methodology.
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Yaoteng Zhao, Supat Chupradit, Marria Hassan, Sadaf Soudagar, Alaa Mohamd Shoukry and Jameel Khader
Recently, the financial sector has faced significant challenges regarding the market competition, its technical efficiency and risk factors around the globe and gain recent…
Abstract
Purpose
Recently, the financial sector has faced significant challenges regarding the market competition, its technical efficiency and risk factors around the globe and gain recent researchers' intentions. Thus, the present study aims to examine the impact of technical efficiency, market competition and risk in banking performance in Group of Twenty (G20) countries.
Design/methodology/approach
Data have been obtained from the World Development Indicator from 2008 to 2019. For analysis purpose, random effect model and generalized method of moments (GMMs) have been executed using Stata.
Findings
The results revealed that market competition and banks' capital efficiency have a positive impact on banking performance, while banks' lending efficiency and non-performing loans have a negative association with the banking sector performance of G20 countries. These outcomes provide the guidelines to the regulators that they should formulate the effective policies related to the lending practices and non-performing loans that could improve the banking sector performance worldwide.
Research limitations/implications
The study has examined only three economic factors like the technical efficiency rate, market competition and risk element, and their influences on banking institutions' operational and economic performance. But the analysis has proved that except these factors, several factors affect banking institutions' operational and economic performance. Thus, future scholars recommend they analyze all the banking sector areas, pick more factors and enlighten their operational and economic performance influences. Moreover, the author of this article has chosen a particular source for collecting data to meet his study's objective. Only a single piece of software has been applied to analyze data; thus, the data collected for this paper may be incomplete, lack accuracy and reliability. Therefore, the future authors are recommended to use multiple sources to collect data and its analysis to ensure the comprehension, completeness and accuracy.
Originality/value
Last but not least, this study with the evidences from the banking sector of G20 countries tries to show on the banking management how the risk element matters in the banking sector in an economy. It makes it clear in which areas the banking institutions may be exposed to the risks, and how much sever different kinds of risks may be. Thus, it motivates the management to set a body of persons within the organization to monitor the risks, to try to avoid them and to overcome the problems created by these risks events.
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This paper aims to reconsider the role of asset-market participation in Diamond-Dybvig economies, to reconcile the existence of asset markets as a channel for financial…
Abstract
Purpose
This paper aims to reconsider the role of asset-market participation in Diamond-Dybvig economies, to reconcile the existence of asset markets as a channel for financial integration with the distortions that they might impose on the banking system.
Design/methodology/approach
The paper is a two-sector Diamond-Dybvig model of financial intermediation, with comparative advantages in the investment technologies, and introduces the possibility for the depositors to participate in an economy-wide asset market, when they can trade a bond without being observed by their banks.
Findings
The two-sector competitive banking equilibrium with hidden trades is not equivalent to autarky, is the unique Nash equilibrium of a “participation game” and is a constrained efficient.
Originality/value
This paper is the first to characterize the equilibrium of a two-sector Diamond-Dybvig economy with hidden trading in the asset market, and produces novel results, in contrast to the existing literature, with respect to the rationale for the existence of a financial system, its coexistence with asset markets and its efficiency. These conclusions also have important implications in terms of policy, in particular, regarding the case for the introduction of financial regulation.
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Yasin Mahmood, Maqsood Ahmad, Faisal Rizwan and Abdul Rashid
The purpose of this paper is to investigate the role of banking sector concentration, banking sector development and equity market development in corporate financial flexibility…
Abstract
Purpose
The purpose of this paper is to investigate the role of banking sector concentration, banking sector development and equity market development in corporate financial flexibility (FF).
Design/methodology/approach
The study used annual data for the period from 1991 to 2014 to examine the relationship between banking sector concentration, banking sector development, equity market development and corporate FF; hypotheses were tested using an unbalanced panel logistic regression model.
Findings
The paper provides empirical insights into the relationships between macroeconomic factors and corporate FF. The results suggest a substantial change in FF across firms; banking sector concentration discourages firms from borrowing, leading to the reduction of corporate borrowing, consequently an increase in FF can be observed. Banking sector development facilitates debt financing, hence reducing FF. Equity market development also has a positive impact on FF, as it is a substitute for debt financing.
Practical implications
The banking sector is an important provider of capital to business entities. A concentrated banking system discourages the provision of capital to firms; hence regulators have to take appropriate measures to resolve the problem of a reduced supply of capital. Banking sector development facilitates the provision of capital; further development may reduce bank lending rates to firms. Equity market development positively affects FF; hence, firm managers can use equity financing to resume FF. By following pecking order theory, managers use internal sources to finance value-maximizing investment projects, debt and issue shares as the last choice to get financing. When borrowing capacity is depleted, managers can obtain further funds by issuing stocks.
Originality/value
FF is an emergent area of research in advanced countries, while in developing economies, it is in the initial stages. Little work is available in this area to find the impact of banking sector concentration, banking sector development and equity market development, therefore, this study fills this gap in the existing literature.
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The purpose of this paper is to examine bank loan loss provisioning behavior during election years – focusing on the effect of elections on banking sector loan loss provisioning.
Abstract
Purpose
The purpose of this paper is to examine bank loan loss provisioning behavior during election years – focusing on the effect of elections on banking sector loan loss provisioning.
Design/methodology/approach
Regression analysis was used to analyze the behavior of bank loan loss provisioning in developed countries during election years.
Findings
The findings reveal that the banking sectors in developed countries have higher loan loss provisions (LLPs) in election years. Also, income smoothing is present in election years which supports the income smoothing hypothesis. Also, banking sectors with high capital levels have higher LLPs. Although, there were no significant differences in bank loan loss provisioning during election years across the four bloc, the EU banking sectors and the banking sectors of BIS member countries generally have higher LLPs while the non-EU banking sectors and the banking sectors of the G7 member countries generally have fewer LLPs.
Originality/value
The literature has not explored the effect of political factors such as “election-year risk” on the managers’ discretion in banks. This is the first study that explores the effect of political change on managerial discretion in banks.
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Praveen Kulkarni, L.V. Appasaba and Gowda C.G. Nishchitha
The paper aims to provide insights into the influence of COVID-19 on employee engagement and ergonomics in the banking sector. The purpose of this study is understood from the…
Abstract
Purpose
The paper aims to provide insights into the influence of COVID-19 on employee engagement and ergonomics in the banking sector. The purpose of this study is understood from the perspective of impact of the pandemic on banking employees.
Design/methodology/approach
Data for the study are collected from the employees working in the banking sector of India. The study applied the partial least squares (PLS) method of analysis to understand the relationship between employee engagement and ergonomics in the banking sector.
Findings
The findings of the study suggest results with regards to change in the perception of the employees in the bank and its influence on the work ergonomics due to pandemic. The findings indicate that banks need to develop measures and strategies for improving employee engagement programs and work ergonomics at banks.
Research limitations/implications
The study is confined to the banking employees working in a specific region. Therefore, future research could focus more on the influence of Covid-19 on the organizational culture of the banking system and provide insight into this direction of research.
Practical implications
This study provides directions for human resource management for developing effective practices for improving the performance of the employees in the banking sector.
Social implications
This study offers support to the banking sector by providing insights into how it can improve the working environment and, thereby, enhance working in the banking sector.
Originality/value
This is the study that attempts to provide insights into how ergonomics is important for working in the banking sector, especially during a pandemic. The findings provide important implications for the banking sector and improve work ergonomics.
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Gargi Sanati and Anup Kumar Bhandari
In the backdrop of an increase in market-based banking activities, this paper aims to study operational efficiency of Indian banking sector during 2009–2010 through 2017–2018…
Abstract
Purpose
In the backdrop of an increase in market-based banking activities, this paper aims to study operational efficiency of Indian banking sector during 2009–2010 through 2017–2018 considering Capital Gain and Gain from Forex Market (as desirable outputs) and Slippage (as undesirable byproducts) simultaneously, along with Advances – a desirable output considered in the traditional banking performance assessment literature. This enables to have an assessment of performance (as captured by the measured efficiency scores) of Indian Banks following an alternative viewpoint about the banking activities. The authors also explain such efficiency scores in terms of bank-specific factors, banking industry competition scenario and interest rate channel.
Design/methodology/approach
Using data envelopment analysis (DEA) method, the authors estimate six alternatives but interlinked operational efficiency scores (TES) of the Indian domestic commercial banks. In the second stage, they explain such TES in terms of bank-specific factors, banking industry competition scenario and interest rate channel.
Findings
The authors observe that the private sector banks as a group outperform those under public ownership. Moreover, although the private sector banks could maintain somewhat consistency in their operational efficiency performance over the sample period, public sector banks clearly show a declining tendency. The second stage econometric estimation results show that the priority sector lending has a negative effect on efficiency. Interestingly, the authors get varying results for the relationship between maturity and efficiency score depending on banks’ strategies on stressed assets management. Furthermore, the analyses result that banks are not so efficient in managing relatively larger-volume loans. It is also observed that banks’ efficiency positively depends on the Credit-to-Deposit (CD) ratio. It is found that the overall operational efficiency of the banks to manage their credit risk portfolio improves with a reduction in the lending rate (LR). However, the interaction of lending activities and capital market shows that with the increase in LR, corporate borrowers may switch to capital market to explore for desired funds, which may induce the banking sector to investment in capital markets and create a positive market sentiment.
Originality/value
Literature, although scanty, is there dealing stressed assets of a bank as some undesirable byproducts of its operational and business activities. However, such literature mostly done within the traditional framework of banking business activities and modern market-based business activities are almost absent in the literature. The authors have done it in the present study.
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