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Open Access
Article
Publication date: 21 April 2022

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…

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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.

Details

Management Matters, vol. 19 no. 1
Type: Research Article
ISSN: 2752-8359

Keywords

Open Access
Article
Publication date: 10 December 2021

Conglai Fan, Xinlei Cai and Jian Lin

Starting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and…

Abstract

Purpose

Starting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and makes a horizontal comparison with the banking industry of the United States, Japan, and Germany.

Design/methodology/approach

Based on the panel threshold model, it is found that there is a dual-threshold asymmetric effect between banking profit and the growth of real economy. When the net profit rate of the banking industry is lower than 0.491%, the increase in banking profitability will inhibit the growth of real economy due to profit grabbing; when the rate falls within the range of 0.491–0.801%, the increase in bank profitability is conducive to the growth of real economy.

Findings

Finance and the real economy are in the most comfortable symbiotic state; when the rate is higher than 0.801%, the continued increase in bank profitability will weaken the promotion effect of finance on the real economy, but bank profitability and the growth of real economy are still in a symbiotic state of positive promotion.

Originality/value

The promotion effect of China's bank profitability to the growth of real economy has shifted from the suboptimal state to the optimal range as a whole, which is attributed to the strong deleveraging and strict supervision of the Chinese government after 2016, the timely and decisive “stepping on the brakes”, pulling the financial sector back from the “illusion” caused by “self-circulated” profits and preventing it from harming the real economy.

Details

China Political Economy, vol. 4 no. 2
Type: Research Article
ISSN: 2516-1652

Keywords

Open Access
Article
Publication date: 29 September 2021

Nicholas Addai Boamah, Augustine Boakye-Dankwa and Emmanuel Opoku

The study examines the dynamic association between competition, risk-taking, performance and income diversification of frontier and emerging economy (FEE) banks. It additionally…

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Abstract

Purpose

The study examines the dynamic association between competition, risk-taking, performance and income diversification of frontier and emerging economy (FEE) banks. It additionally, explores the effect of banking sector depth and economic performance on the level of competition, performance and risk-taking behavior of banks in these economies.

Design/methodology/approach

The paper adopts a panel vector auto-regressive technique and collects data across ninety (90) FEEs.

Findings

The paper finds that competition increases with improvement in the depth of the banking sector, a surge in risk-taking behavior and the adoption of focused strategy by banks. Similarly, income diversification activities are driven by competition, banking sector depth, the state of the economy and bank performance. Additionally, risk-taking behavior, banking sector depth and the state of the economy are relevant in describing bank performance. Also, risk-taking behavior is influenced by bank performance, banking sector depth and economic growth.

Originality/value

The evidence indicates that although competition improves banking sector health, excessive competition and non-competitive banking environment constrain banks’ performance and stability.

Details

Asian Journal of Economics and Banking, vol. 6 no. 1
Type: Research Article
ISSN: 2615-9821

Keywords

Open Access
Article
Publication date: 1 September 2023

Dhulika Arora and Smita Kashiramka

Shadow banks or non-bank financial intermediaries (NBFIs) are facilitators of credit, especially in emerging market economies (EMEs). However, there are certain risks associated…

Abstract

Purpose

Shadow banks or non-bank financial intermediaries (NBFIs) are facilitators of credit, especially in emerging market economies (EMEs). However, there are certain risks associated with them, such as their unchecked leverage and interconnectedness with the rest of the financial system. In light of this, the present study analyses the impact of the growth of shadow banks on the stability of the banking sector and the overall stability of the financial system. The authors further examine the effect of the growth of finance companies (a type of NBFIs) on financial stability.

Design/methodology/approach

The study employs data of 11 EMEs (monitored by the Financial Stability Board (FSB)) for the period 2002–2020 to examine the above relationships. Panel-corrected standard errors method and Driscoll–Kray standard error estimation are deployed to conduct the analysis.

Findings

The results signify that the growth of the shadow banking sector and the growth of lending to the shadow banking sector are negatively associated with the stability of the banking sector and increases the vulnerability of the financial system (overall instability). This implies that the higher the growth of the shadow banks, the higher the financial fragility. Finance companies are also found to negatively affect financial stability. These findings are validated by different estimation methods and point out the risks posed by the NBFI sector.

Originality/value

The extant study builds a composite index (Financial Vulnerability Index (FVI)) to measure financial stability; thus, the findings contribute to the evolving literature on shadow banks.

Details

China Accounting and Finance Review, vol. 25 no. 4
Type: Research Article
ISSN: 1029-807X

Keywords

Open Access
Article
Publication date: 2 November 2022

Sotirios Rouvolis

Testing a total of five hypotheses, the paper contributes to overall comparison of the two regimes, as it scrutinises whether these improvements have helped regulate this sector

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Abstract

Purpose

Testing a total of five hypotheses, the paper contributes to overall comparison of the two regimes, as it scrutinises whether these improvements have helped regulate this sector. Although it appears that, for the first time, International Financial Reporting Standards (IFRS) had a more timely effect than US Generally Accepted Accounting Principles (GAAP), multiple parameters must be taken into consideration. The banking system has additional rules that may affect financial statements, such as the Basel Accord which sets many policies closely related to the IFRS, such as deferred tax credits. In this way, this paper aim to enrich the results of these decisions, and illuminate aspects of amendments to IFRS and US GAAP in light of the crisis. Focussing on the financial sector, the author sought to critically evaluate their reactions, and to question some of their fundamental rules in practice. This is vital for accounting researchers and analysts, allowing for the first time to compare IFRS performance between Europe and the US, and make better investment evaluations.

Design/methodology/approach

The study sought to detect whether IFRS and US GAAP protected firms from abnormal sales arising from the outbreak of the crisis, whether the reclassification option under IFRS was an answer to the crisis, and whether IFRS and US GAAP succeeded in regulating shadow banking through their amendments. Therefore, it processes five hypotheses. In order to detect the effects of the crisis on accounting regimes, the analysis focused only on companies from the financial sector composed of the banking industry, insurance companies and shadow banking. The author included firms from Australia, Germany, Greece, the UK and the US, and collected information on 679 financial institutions for the period 2009–2013. The author settled on these time frames because the author aimed to capture IFRS performance surrounding the crisis effects in 2008 and the amendments that followed. In this way, the author applied quantitative methods using only numerical data over a given period.

Findings

The results suggest that the reclassification option was successful, helping firms to perform better amid the crisis, indicating that the manipulation of the crisis was appropriate. It seems therefore that US GAAP should have activated this option for US firms. However, the US may not have hurried to act because its banking sector seemed to recover more quickly than in Australia and Europe. Either way, both regimes need to consider speculative market cases that might have appeared during the crisis, as the author have detected cases of abnormal returns. Finally, concerning regulation of the shadow banking sector, the results seem to be encouraging only with regard to the latest improvements and only for all countries examined.

Originality/value

The project contributes to debate on the reactions of both IFRS and US GAAP during and after the economic crisis. For this, it addresses several questions to investigate the performance of the financial sector under both regimes, identifying possible additional effects and considerations. More specifically, it answers if the fair value orientation actually contributes to the financial crisis through contagion effects, while it addresses additional questions. Have these two global accounting regimes succeeded in overcoming the consequences of the crisis? Have amendments and the introduction of new standards to IFRS and US GAAP achieved regulation of shadow banking? Which of the two has performed better? As aforementioned, the analysis focused only on companies from the financial sector composed of the banking industry, insurance companies and shadow banking firms from Australia, Germany, Greece, the UK and the US, for the period 2009–2013.

Details

Journal of Capital Markets Studies, vol. 6 no. 3
Type: Research Article
ISSN: 2514-4774

Keywords

Open Access
Article
Publication date: 24 September 2020

Aigul P. Salina, Xin Zhang and Omaima A.G. Hassan

The contribution of the banking industry to the financial crisis of 2007/8 has raised public concerns about the financial soundness of banks around the world with many countries…

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Abstract

Purpose

The contribution of the banking industry to the financial crisis of 2007/8 has raised public concerns about the financial soundness of banks around the world with many countries still suffering the backlogs of this crisis. The continuous emergence of such crises at both national and international levels increases governments', bank regulators' and financial market participants' need for reliable tools to assess the financial soundness of banks. In this context, this study investigates the financial soundness of the Kazakh banking sector, which is ranked by the World Bank as the first in the world in terms of the percentage of nonperforming loans (NPL) to total gross loans in 2012.

Design/methodology/approach

Using data about all Kazakh banks over the period January 01, 2008 to January 01, 2014, the study identifies a number of accounting indicators that influence the financial soundness of banks using principal component analysis (PCA). Then, it uses the outcomes of the PCA in a cluster analysis and groups the Kazakh banks into sound, risky and unsound banks at two points in time: January 01, 2008 and January 01, 2014. This methodology was further tested against a ranking system of banks and proved to be more reliable in detecting risky banks.

Findings

Fifteen financial ratios were initially selected as accounting indicators for the assessment of bank financial soundness. Using PCA, twelve indicators were isolated, which explain five principal components of capital adequacy, return on assets, profitability, asset quality, liquidity and leverage. Then using the “k-means” method, the results suggest a structure of the Kazakh banking sector on January 01, 2008 that includes two groups of banks: sound and risky banks. On January 01, 2014, this structure of the banking system has changed to include three groups of banks: sound, risky and unsound banks. Thus, in 2014 a new group of banks has emerged, i.e. financially unsound banks.

Practical implications

The proposed cluster-based methodology has proven to be a reliable tool to detect the financial soundness of Kazakh banks, which makes us advocate its employability for bank monitoring and supervision purposes.

Originality/value

This study is the first to employ a cluster-based methodology to assess the financial soundness of a banking sector. This methodology can be used at a micro-level to determine the structure of a banking sector. Also, it can be used to monitor any changes in the structure of a banking sector and provide early warning signals about the financial health of banks.

Details

Asian Journal of Accounting Research, vol. 6 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 16 July 2019

Rabia Khatun and Jagadish Prasad Bist

The purpose of this paper is to examine the relationship between financial development, openness in financial services trade and economic growth in BRICS countries for the period…

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Abstract

Purpose

The purpose of this paper is to examine the relationship between financial development, openness in financial services trade and economic growth in BRICS countries for the period 1990–2012.

Design/methodology/approach

An index for financial development has been constructed using principal component analysis technique by including banking sector development, stock market development, bond market development and insurance sector development. For the robustness of the result, the long-run cointegrating relationship amongst the variables has been analyzed.

Findings

Overall financial development has a positive and significant impact on economic growth. To take the full advantage of openness in financial services trade, countries need to put more emphasis on the development of their stock markets, bond markets and the insurance sector. The result shows that openness in financial services trade has a positive impact on economic growth when the stock market, bond market and insurance sector are included in the system.

Research limitations/implications

The policy implication of the findings is that policymakers should focus more on developing all four areas of finance to get the full benefit of the financial system on the process of economic growth.

Originality/value

The authors have constructed the better indicators of financial development in the case of BRICS economies. Most of the studies in BRICS economies have measured the development of the financial sector as either banking sector development or stock market development. However, the present study includes all four areas of finance (banking sector development, stock market development, insurance sector development and bond market development) into account.

Details

International Trade, Politics and Development, vol. 3 no. 2
Type: Research Article
ISSN: 2586-3932

Keywords

Open Access
Article
Publication date: 27 December 2022

Sudhi Sharma, Indira Bhardwaj and Kamal Kishore

Analysts expect reduced bank earnings as a result of the impact of the increase in bad loans. Banks have strategically created high provision coverage ratios allocating large…

1968

Abstract

Purpose

Analysts expect reduced bank earnings as a result of the impact of the increase in bad loans. Banks have strategically created high provision coverage ratios allocating large funds for possible deterioration in asset quality. Given the expected faster growth and recovery in the bank lending sector, investors have always been interested in banking stocks, despite the waves of non-performing assets (NPAs) and recessionary influences. Historical references reiterate that the banking stocks have been better performers in their returns compared to the capital markets.

Design/methodology/approach

The study aims to examine the impact of key accounting variables on the stock prices of Indian banks in the panel data framework.

Findings

The current study explores the impact of accounting variables on the market prices of shares. After the study, it may be concluded that earning per share (EPS), return on equity (ROE), capital adequacy ratio (CAR) and net interest margin (NIM) have an incremental impact on the prices of banking stocks, and the current ratio (CR) and NPAs have a detrimental impact on them.

Practical implications

Studying their impact on stock prices is the most convenient fundamental analysis that could be conducted on the stock prices of the banks.

Originality/value

To provide insights into the association of the accounting and regulatory variables there is a severe limitation in the quantity of the literature available. This study has attempted to build a relationship between the accounting and regulatory variables and the stock prices of banking stocks, to help investors with some reliable methods to estimate the stock prices in the future.

Details

Asian Journal of Accounting Research, vol. 8 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 4 August 2021

Varun Kumar Rai and Dharen Kumar Pandey

With a sample of 22 banks, this study examines the significance of the news contents about the privatization of two public sector banks in India. New information does impact the…

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Abstract

Purpose

With a sample of 22 banks, this study examines the significance of the news contents about the privatization of two public sector banks in India. New information does impact the stock markets. This study provides evidence on how the privatization of public sector banks impacted the returns of the Indian banking sector.

Design/methodology/approach

This study employs the standard event study methodology with the market model for estimating the normal returns.

Findings

The statistical results indicate that while the private sector banks experienced positive average abnormal returns on the event day, the cumulative effect of the announcement is negatively significant for both private and public sector banks. The statistical results also provide evidence of information leakage, with significant results before the announcement date. The shorter event windows analysis exhibits significant positive returns in the 5-days [−2, +2] window for the private sector banks and the entire sample, signifying a positive short-term impact on the private sector banks.

Originality/value

The event study literature captures the impacts of many events. However, to the best of our knowledge, the impacts of the privatization of the Indian public sector banks have never been examined using the event study methodology. Hence, this study anticipates being the first-ever study to fill this gap and extend the available literature in finance. In addition, although we provide Indian evidence, future studies may be oriented to capture cross-country impacts.

Details

Asian Journal of Accounting Research, vol. 7 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 8 November 2018

Rohit Bansal, Arun Singh, Sushil Kumar and Rajni Gupta

The purpose of this paper is to quantify several measures to examine the determinants of profitability for the listed Indian banks. The authors include both public sector (PSUs…

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Abstract

Purpose

The purpose of this paper is to quantify several measures to examine the determinants of profitability for the listed Indian banks. The authors include both public sector (PSUs) and private sector’s banks in the study. The authors have taken all the banks that are registered on the Bombay stock exchange (BSE) in the sample. This paper also intends to identify the association between the net profit margin (PM) and return on assets (ROA) with the several other independent variables of the Indian banking sector including private banks and public banks over the past six years starting from April 1, 2012 to March 31, 2017. Therefore, a sample of 39 listed banking companies and total 195 balanced observations are selected for the analysis purpose.

Design/methodology/approach

The authors have used profitability as a dependent variable represented by net PM, ROA and several financial ratios as independent variables. Financial statement and income statement of all listed banks were obtained from BSE and particular company’s website. Panel data regression has been analyzed with both the descriptive research techniques, i.e., fixed effects and random effects. The authors also verified both panel techniques with Hausman’s specification test, which is a widely used procedure for selecting a panel effect. The authors applied PP – Fisher χ2, PP – Choi Z-statistics and Hadri to testing whether the data set is free from unit root problem and data set is a stationary series.

Findings

Results imply that interest expended interest earned (IEIE) and credit deposit ratio (CRDR) reduced the profitability of private banks in India. IEIE, CRDR and quick ratio (QR) reduced the profitability of public banks in India, while cash deposit ratio (CDR) and Advances to Loan Funds (ALF) increased the effectiveness of public banks. Under the total banks IEIE, CRDR reduced the profitability, on the other side, CDR, ALF and Total Debt to Owners Fund (TDOF) increased the profitability of total banks in India. Under the dependency of ROA, CRDR and TDOF reduced the return of private banks in India, while CDR, ALF and QR enhanced the profitability of private banks.

Originality/value

No variables found significant under public banks while taking ROA as a dependent variable. Under the overall banking data, CRDR reduced the profitability. On the other side, capital adequacy ratio and ALF increased the profitability of total banks in India. The findings of this study will support policy creators, financial executives and investors in constructing investment decisions.

Details

Asian Journal of Accounting Research, vol. 3 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

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