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1 – 10 of 459The purpose of this research is to compare the board quality's (BQ) impacts on the financial performance (FP) of conventional and Islamic banks (IBs) after the Subprime financial…
Abstract
Purpose
The purpose of this research is to compare the board quality's (BQ) impacts on the financial performance (FP) of conventional and Islamic banks (IBs) after the Subprime financial crisis. The main reason is to help financial stakeholders choose the best performing and most appropriate bank type with its engagement based on the BQ index.
Design/methodology/approach
Based on the existing gap in previous researches and by using the GLS method (Generalized Least Squares method), the author compared the BQ's impacts on the FP of conventional and IBs. Settings of the FP and BQ were collected from 30 countries located on 4 continents. Two equal samples were tested; each of them is composed of 112 banks. The author concentrated only on the banks that have published regularly the banks' annual reports over the period 2010–2018.
Findings
Cylindrical panel results revealed that in conventional banks (CBs), the BQ has negatively affected banks' FP, while in IBs the BQ's impacts on the banks’' FP is ambiguous. Nevertheless, the positive impacts are more significant on the IBs' FP than the negative impacts on the IBs' FP.
Practical implications
The main practical contribution is the identification and distinction between the impacts of board determinants' quality on the shareholders' profits in the case of conventional and IBs. Hence, conventional or IBs which have a bad BQ will generate less FP and will be classified as a lender of bankruptcy danger for the bank customer. Besides, whatever the bank type, in a financial stable period, good BQ positively influences FP and provides a good impression to stakeholders. Otherwise, FP indicates that the banks suffer from the weaknesses of the board quality determinants.
Originality/value
Returning to the finance and banking governance literature, the author's article provides the first conditional and demonstrative analysis that detailed a logical comparative process to analyze the correlation between the board determinants' quality and the financial performance of conventional and IBs. However, previous research has always discussed the main role of the board as an internal governance mechanism on the FP separately in each bank type.
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Tendai Douglas Svotwa, Charles Makanyeza, Mornay Roberts-Lombard and Olumide Olasimbo Jaiyeoba
This study aims to explore the influence of surprise and delight on the loyalty intentions of retail banking customers in an emerging market context. This study also considers the…
Abstract
Purpose
This study aims to explore the influence of surprise and delight on the loyalty intentions of retail banking customers in an emerging market context. This study also considers the moderating effect of trust on these relationships.
Design/methodology/approach
Using convenience and purposive sampling methods, data collection was secured from 350 customers in the retail banking industry who are delighted with their banks.
Findings
This study found that for delightful experiences to occur, customers need to be surprised and see value in the product/service offered by the retail bank, coupled with the expertise of employees in delivering the service.
Research limitations/implications
The sample’s demographic profile was mostly skewed towards the younger generation (individuals 20–39 years of ages), meaning the results could be biased towards this group.
Practical implications
Retail banks need to create delightful experiences, as they are more memorable and leave a permanent mark in customers’ minds.
Originality/value
Limited studies have explored the relationship between delight, its antecedents and outcomes in a developing African market context, such as Botswana, hence the contribution of this study to literature.
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Mornay Roberts-Lombard, Charles Makanyeza, Olumide Jaiyeoba and Tendai Douglas Svotwa
This study uses relationship marketing theory to explore affective and calculative commitment as mediators in the delight–loyalty link. Furthermore, it investigates the role of…
Abstract
Purpose
This study uses relationship marketing theory to explore affective and calculative commitment as mediators in the delight–loyalty link. Furthermore, it investigates the role of perceived employee service delivery skills, perceived value and trust in the relationships between delight, affective commitment, calculative commitment and loyalty.
Design/methodology/approach
A descriptive research approach was applied, and the data were collected from 332 retail banking customers in an emergent market who are overall satisfied with their bank. A self-administered questionnaire collected data from 332 respondents who adhered to the stipulated requirements to participate in the study. These respondents were selected through purposive and convenience sampling. The constructs’ interrelationships were analysed via structural equation modelling. The measurement and structural models were also assessed.
Findings
Affective and calculative commitment and delight impact loyalty. Both affective commitment and calculative commitment were found to mediate the relationship between delight and customer loyalty.
Research limitations/implications
The study enhances an understanding of the role of affective and calculative commitment in strengthening the delight–loyalty link from a relationship marketing theory perspective.
Practical implications
The study provides guidance to the retail banking industry in emerging markets on the importance of affective and calculative commitment in strengthening the delight–loyalty link. It further informs retail banks of the need to provide banking customers with products and service value that exceed their expectations to strengthen their future commitment and loyalty to their bank.
Originality/value
Guided by relationship marketing theory, the role of affective and calculative commitment in mediating the delight–loyalty link in an emerging market context is uncovered.
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Victoria Okpukpara, Benjamin Chiedozie Okpukpara, Emmanuel Ejiofor Omeje, Ikenna Charles Ukwuaba and Maryann Ogbuakanne
Providing loans, particularly to small-scale farmers, is one of the roles of formal financial institutions. Lending to small farmers is risky. An institution's health is closely…
Abstract
Purpose
Providing loans, particularly to small-scale farmers, is one of the roles of formal financial institutions. Lending to small farmers is risky. An institution's health is closely related to the institution's ability to manage credit and portfolio risk. Expanding smallholder farmers' access to finance while maintaining a sustainable financial system is essential; however, pandemics present additional challenges. Accordingly, as reported in the literature, the pandemic's high loan default rates and decreases in return on assets (ROAs) call for further credit risk management research. There have been limited studies on credit risk management during coronavirus disease 2019 (COVID-19), so this article aims to provide useful information on its influences.
Design/methodology/approach
Researchers used data from formal financial institutions in 2018 (before COVID-19) and in 2021 (during COVID-19) to accomplish the study's broad objective. Descriptive and inferential statistics were the main analytical tools. The credit risk management indicators were categorized into collateral management, loan management, loan recovery management, governance and Information and Communication Technology (ICT). Weights were assigned to each category based on the importance to credit risk management. A binary logit model was employed in assessing the factors influencing credit risk management as proxied to loan repayment, while Ordinary Least Square (OLS) was used to examine factors that influence ROAs.
Findings
One of the most noteworthy findings is that credit risk management is affected by different factors and magnitudes before and during the COVID-19 era. Loan recovery and ICT management indicators were most influential during the pandemic. In addition, the study noted that low agricultural productivity during the pandemic contributed to an additional challenge in loan default rates because of various COVID-19-containing measures. Additionally, there was a lack of governance and ICT management capacity to drive credit and portfolio risk management during the epidemic.
Originality/value
The paper presents new empirical findings on credit risk management during the COVID-19 era. The study used a methodology which has not been used previously in credit risk management in Nigerian financial institutions. Therefore, this research could become the cornerstone of further academic research in other developing countries using this methodology.
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Zahid Iqbal, Zia-ur-Rehman Rao and Hassan Ahmad
To improve the loan repayment performance (LRP) of microfinance banks (MFBs) in Pakistan, this study aims to look at the direct impact of multiple borrowing (MB) on LRP and…
Abstract
Purpose
To improve the loan repayment performance (LRP) of microfinance banks (MFBs) in Pakistan, this study aims to look at the direct impact of multiple borrowing (MB) on LRP and client-business performance (CBP), as well as the direct impact of CBP on LRP. The moderating function of pandemic factors in the relationship between MB and CBP, as well as the mediating effect of CBP in the association between MB and LRP, was also investigated in this study.
Design/methodology/approach
A questionnaire was used to obtain data from 531 lower-level workers of microfinance institutions (MFIs) for the study. The respondents were chosen using stratified sampling, which divided the target population into four influential groups: lending officers in agriculture, lending officers in businesses, lending officers in gold loans and lending officers in salary loans. In this study, a two-stage structural equation modeling approach was used, including a measurement model (outer model) and a structural model (inner model). The validity and reliability of the questionnaire were investigated using the measurement model (outer model), whereas PLS-SEM bootstrapping was performed to test the hypothesis and find the relationship among different underpinning constructs by using the structural model (inner model).
Findings
The outcomes of this study demonstrate that MB has a direct impact on CBP, and that CBP has a direct impact on LRP. MB, on the contrary, had no direct and significant impact on LRP in this study. The idea that CBP mediates the relationship between MB and LRP, as well as the moderating effect of pandemic factors on the relationship between MB and CBP, is supported by this research.
Originality/value
Until now, the influence of MB on LRP via the mediating role of CBP and the moderating role of a pandemic factor in the setting of Pakistani MFBs has received little attention. During the COVID-19 pandemic, this research also aids MFBs in better understanding MB and its impact on LRP. Furthermore, based on the findings of this study, Pakistani MFIs can enhance their LRP by implementing new lending regulations, particularly with reference to MB and the COVID-19 pandemic.
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Mohammed Mizanur Rahman, Md. Mominur Rahman, Mahfuzur Rahman and Md. Abdul Kaium Masud
The purpose of this paper is to examine the impact of trade openness on the cost of financial intermediation and bank performance. Developed and developing countries are currently…
Abstract
Purpose
The purpose of this paper is to examine the impact of trade openness on the cost of financial intermediation and bank performance. Developed and developing countries are currently pursuing trade openness to achieve higher bank performance with less intermediation costs.
Design/methodology/approach
In attaining the study's objectives, several regression methodologies were employed (i.e. system generalized method of moments (GMM), fixed effect, pooled ordinary least squares (OLS) and vector error correction model (VECM)). The authors tested the hypothesis on data of 885 banks from BRICS countries, which span 18 years (2000–2017).
Findings
The results from this robust study showed that embedding higher trade openness reduces financial intermediation costs and improves banks' performance. The results remain robust following the use of different estimation methods and alternative variables as proxies. In addition, results were still valid upon considering bank level, industry level and country level as control variables. It was also observed that the relation pattern holds its rigidity during “good” and “bad” times (i.e. the global financial crisis).
Originality/value
The results provide better references for bank regulators, academics and policymakers to take advantage of the low financial intermediation costs resulting from trade openness.
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George Okello Candiya Bongomin, Charles Akol Malinga, Alain Manzi Amani and Rebecca Balinda
The main purpose of this paper is to establish whether trust plays a significant mediating role in the relationship between access to microcredit and survival of young women…
Abstract
Purpose
The main purpose of this paper is to establish whether trust plays a significant mediating role in the relationship between access to microcredit and survival of young women microenterprises in under-developed financial markets in sub-Saharan Africa. The main focus of this paper is to specifically test whether relational social capital built by young women from homogeneous and heterogeneous groups can be more effective in promoting economic exchange in under-developed financial markets since interpersonal trust has recently been found to harbor group collusion, especially among kins. Overall, the paper distinguishes trust among individuals based on their age, gender and ethnic diversity.
Design/methodology/approach
This study used structural equation model to test whether trust significantly mediates the relationship between access to microcredit and survival of young women microenterprises using Analysis of Moments Structures (AMOS) based on recommendations by Hair et al. (2022) and Baron and Kenny (1986).
Findings
The findings from this study revealed that trust significantly and positively mediate the relationship between access to microcredit and survival of young women microenterprises in under-developed financial markets in sub-Saharan Africa. Trust developed from relational social capital among young women from homogeneous and heterogeneous groups create a stronger basis for economic exchange in under-developed financial markets.
Research limitations/implications
While this study generates a positive evidence on the impact of access to microcredit on survival of young women microenterprises, the results cannot be over emphasized and generalized because the data were collected from only a single developing country. Future research may extend the current study to include other developing countries to make a more justified comprehensive analysis.
Practical implications
The findings from this study highlights the importance of using a blend of social policy guided by norms combined with formal regulations as an informal contract enforcement mechanism to achieve efficient economic exchange in under-developed financial markets. Relational social capital formed on the basis of informal norms among groups from diverse population can supplement formal laws to enforce contractual obligations in microcredit access, especially among youthful microentrepreneurs, who seems to have stronger relational behaviors than adults. Financial institutions such as banks should use informal contract enforcement system to increase the scope of financial inclusion of young microentrepreneurs, especially in unbanked rural communities in sub-Saharan Africa, Uganda inclusive where formal laws are weak and sometimes not functional. The findings also show that younger people have a stronger relationship behavior than adults. Therefore, policy should create structures that can promote social activities among youth. Governments in sub-Saharan Africa, Uganda inclusive through their respective Ministry of Gender, Labour and Youth Affairs should create youth clubs that can increase interaction and relational social capital among the younger population to derive economic empowerment. sub-Saharan African governments, Uganda inclusive should rely more on social policy based on relational social capital as a missing link to promote and achieve economic development.
Originality/value
This paper provides an evidence on the unique role of age, gender and ethnicity in information sharing and exchange based on social policy in the financial market to limit group collusion. The authors indicate that diversity in relational social capital among young women microentrepreneurs prohibit strategic defaults, which promotes access to microcredit for survival of women micro small and medium enterprises (MSMEs) through socialization. High level of interaction among younger women microentrepreneurs from homogeneous and heterogeneous groups allow them to close the information gap to timely meet borrowing contractual obligations to derive economic benefits. The paper shows that younger women have more trust than older women while searching for economic value through socialization. In fact, social policy can wholly supplement formal policy to promote growth and survival of young women microenterprises, especially in sub-Saharan Africa, Uganda inclusive.
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Katariina Juusola, Kwabena G. Boakye, Charles Blankson and Guangming Cao
This study aims to develop and validate a cross-national framework to identify the motivation underpinning consumers' (i.e. the general public's) loyalty toward credit card usage…
Abstract
Purpose
This study aims to develop and validate a cross-national framework to identify the motivation underpinning consumers' (i.e. the general public's) loyalty toward credit card usage. The following research questions guided the study: (1) What factors motivate consumers to stay loyal to their credit card? (2) Does the investment model (regarding satisfaction and investment size) mediate the relationship between factors motivating consumers to stay loyal to their credit card?
Design/methodology/approach
This study employs the investment model theory (Rusbult, 1980) as a theoretical framework and uses structural equation modeling to develop and validate a cross-national framework, addressing factors that motivate consumers to stay loyal to credit card brands. In addition, the authors test the mediating effect of the investment model on the relationship. Survey data were collected from the United States and France.
Findings
The findings revealed four factors (incentives, customer service, investment size and satisfaction) that impact consumer credit card loyalty behavior in the two mature credit card markets. The authors find empirical support for two of four hypotheses. That is, investment size mediates the relationship between incentives and consumer loyalty, and satisfaction mediates the relationship between customer service and consumer loyalty. Moreover, unlike the French sample, the American sample produced a significant finding for investment size to mediate the relationship between customer service and consumer loyalty.
Originality/value
This paper validates and extends the investment model theory in the marketing of credit cards within a cross-national setting. Most studies on credit card consumption focus on the college student segment, and there is less understanding of the motivation to stay loyal to using a credit card from the general public who are not necessarily college students. Given the scarce stream of empirical studies dealing with cross-national consumer motivation, choice criteria of credit cards, and loyalty toward credit cards, this research comes at an opportune moment as credit card firms differentiate their card brands in the global marketplace. Further, a dataset originating from two mature Western economies has been put forward for the benefit of practitioners and researchers.
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Charles O. Manasseh, Ifeoma C. Nwakoby, Ogochukwu C. Okanya, Nnenna G. Nwonye, Onuselogu Odidi, Kesuh Jude Thaddeus, Kenechukwu K. Ede and Williams Nzidee
This paper aims to assess the impact of digital financial innovation on financial system development in Common Market for eastern and Southern Africa (COMESA). This paper…
Abstract
Purpose
This paper aims to assess the impact of digital financial innovation on financial system development in Common Market for eastern and Southern Africa (COMESA). This paper evaluates the dynamic relationship between digital financial innovation measures and financial system development using time series data from COMESA countries for the period 1997–2019.
Design/methodology/approach
A dynamic autoregressive distributed lag model (ARDL) was adopted and the mean group (MG), pooled mean group (PMG) and dynamic fixed effect (DFE) of the model were estimated to evaluate the short- and long-run impact. In addition, the dynamic generalized method of moments (DGMM) was adopted for a robustness check. The Hausman test results show PMG to be the most consistent and efficient estimator, while the coefficient of lagged dependent variable of different GMM is less than the fixed effect coefficient, and, as such, suggests system GMM is the most suitable estimator. Data for the study were sourced from World Bank Development Indicator (WDI, 2020), World Governance Indicator (WGI, 2020) and World Bank Global Financial Development Database (GFD, 2020).
Findings
The result shows that digital financial innovation significantly impacts financial system development in the long run. As such, the evidence revealed that automated teller machines (ATMs), point of sale (POS), mobile payments (MP) and mobile banking are significant and contribute positively to financial system development in the long run, while mobile money (MM) and Internet banking (INB) are insignificant but exhibit positive and inverse relationship with financial development respectively. Further investigation revealed that institutional quality and a stable macroeconomic environment including their interactive term are significantly imperative in predicting financial system development in the COMESA region.
Practical implications
Researchers recommend a cohesive and conscious policy that would checkmate the divergence in the short run and suggest a common regional innovative financial strategy that could be pursued to incentivize technology transfer needed to promote financial system development in the long run. More so, plausible product and process innovations may be adapted to complement innovative institutions in the different components of the COMESA financial system.
Social implications
Digital financial innovation services if well managed increase the inherent benefits in financial system development.
Originality/value
To the best of the authors’ knowledge, this paper presents new background information on digital financial innovation that may stimulate the development of the financial system, particularly in the COMESA region. It also exposes the relevance of digital financial innovation, institutional quality and stable macroeconomic environment as well as their interactive effect on COMESA financial system development.
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George Okello Candiya Bongomin, Charles Akol Malinga, Alain Manzi Amani and Rebecca Balinda
The main purpose of this study is to test for the interaction effect of digital literacy in the relationship between financial technologies (FinTechs) of biometrics and mobile…
Abstract
Purpose
The main purpose of this study is to test for the interaction effect of digital literacy in the relationship between financial technologies (FinTechs) of biometrics and mobile money and digital financial inclusion among the unbanked poor women, youth and persons with disabilities (PWDs) in rural Uganda.
Design/methodology/approach
Covariance-based structural equation modeling was used to construct the interaction effect using data collected from the unbanked poor women, youth and PWDs located in the four regions in Uganda as prescribed by Hair et al. (2022).
Findings
The findings from this study are threefold: first; the results revealed a positive interaction effect of digital literacy between FinTechs of biometrics and mobile money and digital financial inclusion. Second; the results also confirmed that biometrics identification positively promotes digital financial inclusion. Lastly; the results showed that mobile money positively promotes digital financial inclusion. A combination of FinTechs of biometrics and mobile money together with digital literacy explain 29% variation in digital financial inclusion among the unbanked poor women, youth and PWDs in rural Uganda.
Research limitations/implications
The data for this study were collected mainly from the unbanked poor women, youth and PWDs. Further studies may look at data from other sections of the vulnerable population in under developed financial markets. Additionally, the data for this study were collected only from Uganda as a developing country. Thus, more data may be obtained from other developing countries to draw conclusive and generalized empirical evidence. Besides, the current study used cross sectional design to collect the data. Therefore, future studies may adopt longitudinal research design to investigate the impact of FinTechs on digital financial inclusion in the presence of digital literacy across different time range.
Practical implications
The governments in developing countries like Uganda should support women, youth, PWDs and other equally vulnerable groups, especially in the rural communities to understand and use FinTechs. This can be achieved through digital literacy that can help them to embrace digital financial services and competently navigate and perform digital transactions over digital platforms like mobile money without making errors. Besides, governments in developing countries like Uganda can use this finding to advocate for the design of appropriate digital infrastructures to reach remote areas and ensure “last mile connectivity for digital financial services' users.” The use of off-line solutions can complement the absence or loss of on-line network connectivity for biometrics and mobile money to close the huge digital divide gap in rural areas. This can scale-up access to and use of financial services by the unbanked rural population.
Originality/value
This paper sheds more light on the importance of digital literacy in the ever complex and dynamic global FinTech ecosystem in the presence of rampant cyber risks. To the best of the authors' knowledge, limited studies currently exist that integrate digital literacy as a moderator in the relationship between FinTechs and digital financial inclusion, especially among vulnerable groups in under-developed digital financial markets in developing countries. This is the novelty of the paper with data obtained from the unbanked poor women, youth and PWDs in rural Uganda.
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