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1 – 10 of over 42000Yihays Fente Tarekegn, Weifeng Li and Huilin Xiao
The current paper's goal is to examine the productivity of the closed banking sector evidenced from Ethiopia. In addition, the inclusion of intangibles on productivity was…
Abstract
Purpose
The current paper's goal is to examine the productivity of the closed banking sector evidenced from Ethiopia. In addition, the inclusion of intangibles on productivity was examined in the current paper.
Design/methodology/approach
First, the standard Malmquist Productivity Index (MPI) was employed for 13 commercial banks for both stages. Second, by excluding the state-owned commercial bank, the analysis employed a bootstrapped MPI for the robust and comprehensive conclusion. Furthermore, from 2010 to 2019, the fixed effect Ordinary Least Square (OLS) regression with balanced panel data was used.
Findings
The standard MPI in both stages shows that the productivity of Ethiopian commercial banks is declining. The technological shock was the main reason for the loss. The catch-up in both stages scored above unity, mainly due to the pure efficiency change. Besides, when combined with tangible resources, the inclusion of resource-based view (RBV) proxy variables reduces technological shock regress and ultimately improves productivity change. The bootstrapped MPI also reveals that technological shock is the primary source of the productivity decline. However, efficiency change also contributes to the productivity decline based on this estimation.
Research limitations/implications
Future research could examine the more extensive productivity analysis by considering the primary sources of data collections for resource-based variables.
Practical implications
According to the study's results, banking regulatory authorities and bank management, including the shareholders, should continue to invest in cutting-edge technology to improve the productivity of the banking sector.
Originality/value
This is the first comprehensive study of productivity for Ethiopian commercial banks based on the standard MPI, bootstrapped MPI, and OLS by incorporating all resources into the analysis.
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In the present competitive scenario in the Indian banking industry, service quality has become one of the most important facets of interest to academic researchers. The purpose of…
Abstract
Purpose
In the present competitive scenario in the Indian banking industry, service quality has become one of the most important facets of interest to academic researchers. The purpose of this paper is to determine the dimensions of perceived service quality and investigate their impact on customer satisfaction in the Indian banking context, with special reference to selected public sector banks in India.
Design/methodology/approach
On the basis of the empirical study, the authors validate a measurement model using structural equation modeling for investigating the impact of perceived service quality dimensions on customer satisfaction. The study sample consists of 480 respondents in the National Capital Region (NCR) of India; the data were collected through a structured questionnaire utilizing a seven-point Likert scale while implementing a purposive sampling technique.
Findings
The perceived service quality dimensions identified were tangibility, reliability, assurance, responsiveness, empathy, and image. The empirical findings revealed that “responsiveness” was found to be the most significant predictor of customer satisfaction. On the other hand, “image” (corporate image) has a positive but the least significant relationship with customer satisfaction followed by all other constructs. The exception is “reliability,” which is insignificantly related to customer satisfaction in Indian public sector banks.
Research limitations/implications
The study cannot be generalized in the context of Indian banking sectors, as it only focused on the public sector. The findings of this study suggest that the six dimensions of perceived service quality model are a suitable instrument for evaluating bank service quality for public banks in India. Therefore, bank managers can use this model to assess the bank service quality in the context of Indian public sector banks.
Originality/value
There is dearth of research focusing on corporate image as a dimension of perceived service quality and its effect on customer satisfaction in the Indian banking context. Furthermore, similar studies were rarely found in the Indian context, especially within the public banking sector. Hence, this paper attempts to accomplish the research gap by empirically testing the satisfaction level of a large sample of the population in NCR toward six dimensions of perceived service quality rendered by selected public sector banks in India.
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Fadzlan Sufian and Fakarudin Kamarudin
This paper aims to provide empirical evidence for the impact globalization has had on the performance of the banking sector in South Africa. In addition, this study also…
Abstract
Purpose
This paper aims to provide empirical evidence for the impact globalization has had on the performance of the banking sector in South Africa. In addition, this study also investigates bank-specific characteristics and macroeconomic conditions that may influence the performance of the banking sector.
Design/methodology/approach
The authors use data collected for all commercial banks in South Africa between 1998 and 2012. The ratio of return on assets was used to measure bank performance. They then used the dynamic panel regression with the generalized method of moments as an estimation method to investigate the potential determinants and the impact of globalization on bank performance.
Findings
Positive impact of greater economic integration and trade movements of the host country, while greater social globalization in the host country tends to exert negative influence on bank profitability. The results show that banks originating from the relatively more economically globalized countries tend to perform better, while banks headquartered in countries with greater social and political globalizations tend to exhibit lower profitability levels.
Originality/value
An empirical model was developed that allows for the performance of multinational banks to depend on internal and external factors. Moreover, unlike the previous studies on bank performance, in this empirical analysis, we control for the different dimensions of globalizations while taking into account the origins of the multinational banks. The procedure allows us to test for the home field, the liability of foreignness and global advantage hypotheses to deduce further insights into the prospects of banking across borders.
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This paper seeks to examine the operation of an Islamic inter‐bank money market (IIMM), within a dual banking system.
Abstract
Purpose
This paper seeks to examine the operation of an Islamic inter‐bank money market (IIMM), within a dual banking system.
Design/methodology/approach
The paper describes Malaysia's Islamic IIMM. It then examines some of the key risks associated with money market functions. An empirical examination of the extent to which yields in the IIMM are correlated with conventional money market yields is undertaken. The implication of this on interest‐rate exposure for the Islamic financial sector is discussed. Finally, the paper looks at some of the challenges and offers conclusions.
Findings
The paper argues that even though an Islamic money market operates in an interest‐free environment and trades Shariah‐compliant instruments, many of the risks associated with conventional money markets, including interest‐rate risks are relevant. The empirical evidence, based on Malaysian data, points to Islamic money market profit rates/yields that are highly correlated and move in tandem with conventional money market rates. Given the dynamics of fund flows and cross‐linkages, an IIMM operating within a dual banking system cannot sterilize itself from interest‐rate risks. In fact, the paper argues that such an IIMM may actually enhance interest‐rate risk transmission to the Islamic banking sector, by providing additional channels of transmission. Ironical as it may be, the operations of an IIMM in a dual banking system may serve to bring the Islamic banking sector into closer orbit with the conventional sector.
Originality/value
The paper offers insights into the IIMM, focusing on Malaysia.
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The purpose of this paper is to analyse regulatory reform in the wake of the financial crisis of 2007‐2008.
Abstract
Purpose
The purpose of this paper is to analyse regulatory reform in the wake of the financial crisis of 2007‐2008.
Design/methodology/approach
The paper proposes a framework for regulatory reform that begins with the observation that financial manias and panics cannot be legislated away, and may be an unavoidable aspect of modern capitalism.
Findings
Financial crises are unavoidable when hardwired human behavior – fear and greed, or “animal spirits” – is combined with free enterprise, and cannot be legislated or regulated away. Like hurricanes and other forces of nature, market bubbles, and crashes cannot be entirely eliminated, but their most destructive consequences can be greatly mitigated with proper preparation. In fact, the most damaging effects of financial crisis come not from loss of wealth, but rather from those who are unprepared for such losses and panic in response. This perspective has several implications for the types of regulatory reform needed in the wake of the financial crisis of 2007‐2008, all centered around the need for greater transparency, improved measures of systemic risk, more adaptive regulations, including counter‐cyclical leverage constraints, and more emphasis on financial literacy starting in high school, including certifications for expertise in financial engineering for the senior management and directors of all financial institutions.
Originality/value
The paper stresses how we must resist the temptation to react too hastily to market events, and deliberate thoughtfully and broadly, instead, craft new regulations for the financial system of the twenty‐first century. Financial markets do not need more regulation; they need smarter and more effective regulation.
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This paper aims to survey available data sources and put China’s shadow banking system in perspective. Although bank loans still account for the majority of credit provided to…
Abstract
Purpose
This paper aims to survey available data sources and put China’s shadow banking system in perspective. Although bank loans still account for the majority of credit provided to China’s real economy, other channels of credit extension are growing rapidly. The fast expansion of shadow banking has spurred wide concerns regarding credit quality and financial stability.
Design/methodology/approach
This paper explores various data sources, provides an overview of shadow banking activities in China, discusses their close ties with banks and summarizes regulatory issues. Extensive descriptive data are included to provide a comprehensive picture of the nature of shadow banking activities in China. In particular, institutions and products are discussed in great details.
Findings
While China’s shadow banking system is by no means simple, it does not (yet) involve the extensive use of financial derivatives. Rather, shadow banking credit is often directly extended to the real economy. In addition, shadow banks are typically interconnected with commercial banks in various ways. The expanding scale and constantly evolving structure of the shadow banking system has posed challenges for financial regulators.
Originality/value
This paper attempts to quantify the scale and scope of China’s shadow banking activities and provides a consistent framework as the basis for cross-country comparison of shadow banking systems. This is one of the first scholarly research products that discusses the origin, nature and risks of China’s shadow banking system in a regulatory context.
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Lei Xu, Shih-Cheng Lee and Yishu Fu
– The purpose of this paper is to examine the impacts of capital regulation and market discipline when China imposed most of the Basel I requirements between 2004 and 2010.
Abstract
Purpose
The purpose of this paper is to examine the impacts of capital regulation and market discipline when China imposed most of the Basel I requirements between 2004 and 2010.
Design/methodology/approach
Following Barrios and Blanco (2003) and Rime (2001), the authors apply disequilibrium and simultaneous measurements to identify the financial safety net underlying capital movements as well as the changes in credit risk levels in China’s banking sector.
Findings
The authors discover that capital regulation outweighs market discipline by an average probability of 0.65-0.35 in the contribution to bank capital movements when banks significantly improve their capital buffers. In addition, the banking sector lowered its risk levels in the sample period.
Research limitations/implications
The findings suggest that the largest bank-based economy has consolidated its financial system for future expansion.
Originality/value
China’s banking sector requires closer examination of capital and risks provided by its emerging significance in the financial world. Thus, this study contributes to current literature.
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Dimitra Loukia Kolia and Simeon Papadopoulos
This paper investigates the development of efficiency and the progress of banking integration in the European Union by checking for convergence among banks of European and…
Abstract
Purpose
This paper investigates the development of efficiency and the progress of banking integration in the European Union by checking for convergence among banks of European and Eurozone countries as well as contrasting the results with those of United States banks.
Design/methodology/approach
Initially, we employ the two-stage semi-parametric double bootstrap DEA method, which absorbs the effects of possible integration barriers in the measurement of efficiency. Afterwards, we apply a panel data model, in order to investigate the process of banking integration by testing for convergence and for convergent clusters in banking efficiency.
Findings
Our main findings show that the bank efficiency of the US is considerably higher than that of the Eurozone and the European Union. Although there is no evidence of convergence across the banking groups, our results indicate the presence of club convergence. We also conclude that the US banking system is closer to convergence than the Eurozone and the European Union banks. Nevertheless, this outcome is subject to change in the future due to the fact that Eurozone and European Union banks' speed of convergence is higher than that of US banks.
Originality/value
Our survey is unique in trying to check for convergence while controlling for country-specific and bank-specific factors that affect the efficiency of European and Eurozone banks. Moreover, recent literature does not compare the convergence of efficiency of Eurozone, European and US banking. Finally, in our paper special consideration was given to the comparison of commercial, cooperative and savings banks, as subsets of our banking groups.
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Sibel Yamak and Ömür Süer
In this paper, we want to focus on the interactions of shareholder theory, stakeholder theory, institutional theory and agency theory in terms of corporate social responsibility…
Abstract
In this paper, we want to focus on the interactions of shareholder theory, stakeholder theory, institutional theory and agency theory in terms of corporate social responsibility. We will specifically study this issue in the context of commercial banks in the financial sector. Financial firms appear to be subject to strong technical and institutional pressures. They are also more opaque and subject to heavier regulation than their non‐financial counterparts. It appears that the application of agency‐based assumptions to the financial sector is inadequate in explaining corporate governance and related social responsibility practices. In this context, the structure of asymmetric information seems to be more complex and multi‐dimensional. It takes place first between the depositors, the bank and the regulatory authorities; second, between the shareholders, the bank and the regulatory authorities; last, between the borrowers, the managers and the regulatory authorities. These parties also constitute the firms’ stakeholders. In this respect, the state appears to be a major stakeholder and it is in a position to affect all other bank/stakeholder relations through its regulations and participation in the financial sector. These are the factors that intensify institutional pressures in this sector. The institutional embeddedness inherent in a special context is likely to affect stakeholder position and attitudes. Therefore, this paper aims to investigate the conflicting nature of being a stakeholder under institutional pressures and it articulates the factors that determine the behavior of the state as a stakeholder in shaping corporate social responsibility practices of firms.
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Jessica Paule-Vianez, Milagros Gutiérrez-Fernández and José Luis Coca-Pérez
The purpose of this study is to construct the first short-term financial distress prediction model for the Spanish banking sector.
Abstract
Purpose
The purpose of this study is to construct the first short-term financial distress prediction model for the Spanish banking sector.
Design/methodology/approach
The concept of financial distress covers a range of different types of financial problems, in addition to bankruptcy, which is not common in the sector. The methodology used to predict financial problems was artificial neural networks using traditional financial variables according to the capital, assets, management, earnings, liquidity and sensibility system, as well as a series of macroeconomic variables, the impact of which has been proven in a number of studies.
Findings
The results obtained show that artificial neural networks are a highly suitable method for studying financial distress in Spanish credit institutions and for predicting all cases in which an entity has short-term financial problems.
Originality/value
This is the first work that tries to build a model of artificial neural networks to predict the financial distress in the Spanish banking system, grouping under the concept of financial distress, apart from bankruptcy, other financial problems that affect the viability of these entities.
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