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1 – 10 of over 7000This research aims to analyze and compare the effectiveness of liquidity risk management of Islamic and conventional banking in Egypt to ascertain which of the two banking systems…
Abstract
Purpose
This research aims to analyze and compare the effectiveness of liquidity risk management of Islamic and conventional banking in Egypt to ascertain which of the two banking systems are performing better.
Design/methodology/approach
A sample of six conventional banks (CBs) and two Islamic banks (IBs) in Egypt was selected. Using the liquidity ratios, the investigation involves analyzing the financial statements for the period of 2004-2011. The data were obtained from Bank scope database.
Findings
The research found that in Egypt, CBs perform better in terms of liquidity risk management than IBs. The liquidity risk management significant differences between IBs and CBs could be attributed more cash availability to CBs than to IBs, in addition, Egyptian Central Bank regulations on capital and liquidity requirements for IBs disconcert IBs’ performance.
Practical implications
This research facilitates the bankers, academician, scholars and bankers to have an alluded picture about Egyptian banking developments in liquidity risk management. The results can be used by bankers’ policy decision-makers to improve and enhance their consideration for liquidity risk management.
Originality/value
This research covers a period and a country that compares CBs’ and IBs’ liquidity risk management. Its value is attributed to the increasing differentiation between CBs and IBs.
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Keywords
We investigate the profitability and risk management in banking in two prominent countries in Middle East and North Africa (MENA), Egypt and Lebanon, where banks operate under…
Abstract
We investigate the profitability and risk management in banking in two prominent countries in Middle East and North Africa (MENA), Egypt and Lebanon, where banks operate under market-oriented economic regimes. The study covers the 1990s which witnessed banking sector reforms towards a more efficient financial system. Noting the differences in the structure of the banking system and the monetary changes in Egypt and Lebanon, we investigate the impact of liquidity, credit, and capital on bank profitability in each country's banking sector. Based on our findings, we draw conclusions on the strength of risk management practices and enforcement of banking regulations.
Frederick Robert Buchanan and Syed Zamberi Ahmad
Business Management, Global Marketing Strategy, Strategic Management, International Business, International Management.
Abstract
Subject area
Business Management, Global Marketing Strategy, Strategic Management, International Business, International Management.
Study level/applicability
The case is suitable for undergraduate and post-graduate business and management students. The case is based on secondary data collection and all the facts are real.
Expected learning outcomes
The expected learning outcomes include the selection of a foreign market; the determinants of the foreign mode of entry strategy; the process of integrating an internationalization strategy; how to choose the most appropriate partner; and the monitoring of international markets. The case provides a space to think about practice and help learners, therefore, to connect theory and practice.
Supplementary materials
Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
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Computerized accounting information systems (CAIS) are becoming more readily available to all types and sizes of business. The increased growth in real‐time and online data…
Abstract
Computerized accounting information systems (CAIS) are becoming more readily available to all types and sizes of business. The increased growth in real‐time and online data processing in CAIS has made access to these systems more available and easier for many users. Therefore, implementing adequate security controls over organisations, CAIS and their related facilities has become a necessity. The main objective of this article is to investigate the adequacy security controls implemented in the Egyptian banking industry (EBI) to preserve the confidentiality, integrity and availability of the banks' data and their CAIS through a proposed security controls check‐list. The security controls check‐list of CAIS was developed based on the available literature and the empirical results of previous studies. It includes many security counter‐measures that are empirically tested here for the first time. The entire population of the EBI has been surveyed in this research. The significant differences between the two respondent groups had been investigated. The statistical results revealed that the vast majority of Egyptian banks had adequate CAIS security controls in place. The results also revealed that the heads of computer departments (HoCD) paid relatively more attention to technical problems of CAIS security controls. This study has provided invaluable empirical results regarding inadequacies of implemented CAIS security controls in the EBI. Accordingly some recommendations were suggested to strengthen the security controls in the Egyptian banking sector.
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Trevor Chamberlain, Sutan Hidayat and Abdul Rahman Khokhar
This study aims to investigate the differences in the credit profiles of Islamic and conventional banks in the Gulf Cooperation Council (GCC) region and attempts to identify the…
Abstract
Purpose
This study aims to investigate the differences in the credit profiles of Islamic and conventional banks in the Gulf Cooperation Council (GCC) region and attempts to identify the factors responsible for those differences.
Design/methodology/approach
Financial data sourced from the Bankscope database for a sample of 25 Islamic and 56 conventional banks headquartered in the GCC region between 1987 and 2014 are used. The credit risk of Islamic versus conventional banks is compared using a variety of univariate (mean difference test and correlation analysis) and multivariate tests (pooled ordinary least squares (OLS) regressions with robust standard errors and year fixed effects, regressions with interaction variables and logistic regressions).
Findings
Pooled OLS regressions find that Islamic banks have lower credit risk than conventional banks. Robustness checks using logistic functions and interaction variables confirm this result. Using multiple econometric specifications, we also find that higher capitalization, greater liquidity and cost inefficiency contribute to the lower risk profile of Islamic banks.
Research limitations/implications
The study is unable to disaggregate data for banks offering both Islamic and conventional banking services and hence does not include conventional banks with Islamic windows. In addition, there are differences across countries even within the GCC region as to what is considered Sharia’h-compliant and what is not.
Practical implications
The results are of potential interest to not only researchers, but also market participants, regulators and legislators. The methods used in this study could be extended to other two-tiered banking systems and, in the case of Islamic and conventional banking, to other markets.
Originality/value
The authors use a unique sample of banks headquartered in the GCC countries, whose banking markets are similar, if not homogeneous, thus excluding operations of multinational banks. By focusing on the Gulf region, differences in the credit profiles of Islamic and conventional banks can be examined without the confounding effects of unobserved factors like culture, accounting regime or regulatory environment.
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Rafik Harkati, Syed Musa Alhabshi and Salina Kassim
The purpose of this study is to investigate the influence of capital adequacy ratio (CAR) prescribed in Basel III on the risk-taking behaviour of Islamic and conventional…
Abstract
Purpose
The purpose of this study is to investigate the influence of capital adequacy ratio (CAR) prescribed in Basel III on the risk-taking behaviour of Islamic and conventional commercial banks in Malaysia. It also investigates the claim that the risk-taking behaviour of Islamic banks (IBs) and conventional banks (CBs) managers is identically influenced by CAR.
Design/methodology/approach
Secondary data for all CBs operating in the Malaysian banking sector are gathered from FitchConnect database for the 2011–2017 period. Both dynamic ordinary least squares and generalised method of moments techniques are used to estimate a panel data of 43 commercial banks, namely, 17 IBs and 26 CBs.
Findings
The findings of this study lend support to the favourable influence of CAR set in Basel III accord on risk-taking behaviour of both types of banks. CBs appeared to be remarkably better off in terms of capital buffers. Evidence is established on the identicality of the risk-taking behaviour of IBs and CBs managers under CAR influence.
Practical implications
Even though a high CAR is observed to hamper risk-taking of banks, the findings may serve as a signal to regulators to be mindful of the implications of holding a high CAR. Similarly, managers may capitalise on the findings in terms of strategising for efficient use of the considerable capital buffers. Shareholders are also concerned about managers’ use of the considerable capital buffers.
Originality/value
This study is among a few studies that endeavoured to provide empirical evidence on the claim that IBs mimic the conduct of CBs in light of the influence of CAR prescribed in Basel III on risk-taking behaviour, particularly banks operating within the same banking environment.
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This paper aims to investigate the efficiency and effectiveness of alternative credit‐scoring models for consumer loans in the banking sector. In particular, the focus is upon the…
Abstract
Purpose
This paper aims to investigate the efficiency and effectiveness of alternative credit‐scoring models for consumer loans in the banking sector. In particular, the focus is upon the financial risks associated with both the efficiency of alternative models in terms of correct classification rates, and their effectiveness in terms of misclassification costs (MCs).
Design/methodology/approach
A data set of 630 loan applicants was provided by an Egyptian private bank. A two‐thirds training sample was selected for building the proposed models, leaving a one‐third testing sample to evaluate the predictive ability of the models. In this paper, an investigation is conducted into both neural nets (NNs), such as probabilistic and multi‐layer feed‐forward neural nets, and conventional techniques, such as the weight of evidence measure, discriminant analysis and logistic regression.
Findings
The results revealed that a best net search, which selected a multi‐layer feed‐forward net with five nodes, generated both the most efficient classification rate and the most effective MC. In general, NNs gave better average correct classification rates and lower MCs than traditional techniques.
Practical implications
By reducing the financial risks associated with loan defaults, banks can achieve a more effective management of such a crucial component of their operations, namely, the provision of consumer loans.
Originality/value
The use of NNs and conventional techniques in evaluating consumer loans within the Egyptian private banking sector utilizes rigorous techniques in an environment which merits investigation.
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Keywords
Foreign investment regulations in North Africa.
Details
DOI: 10.1108/OXAN-DB221882
ISSN: 2633-304X
Keywords
Geographic
Topical
Tarek I. Eldomiaty and Mohamed H. Azim
The purpose of this paper is to examine firms' strategies to change long‐ and short‐term debt financing in Egypt. It aims to examine a list of capital structure determinants that…
Abstract
Purpose
The purpose of this paper is to examine firms' strategies to change long‐ and short‐term debt financing in Egypt. It aims to examine a list of capital structure determinants that include the basic assumptions of the three well‐known theories of capital structure: tradeoff, pecking order, and free cash.
Design/methodology/approach
The paper utilizes the properties of partial adjustment model for three heterogeneous systematic risk classes: high, medium and low. The sensitivity analysis is carried out using the “extreme bound analysis”.
Findings
The results indicate that Egyptian firms adjust short‐ and long‐term debt according to the class of systematic risk; long‐term debt is a source of financing at all classes of systematic risk; firms have obvious tendency to extent short‐ to long‐term one; medium risk firms adjust long‐term debt according to the industry average debt, and depend heavily on long‐term debt financing; firms depend significantly and constantly on the liquidity position to adjust short‐term debt levels; and medium risk firms are relatively affected by the basic assumptions of free cash flow and low‐risk firms are relatively affected by the assumptions of the pecking order theory.
Research limitations/implications
In general, the results provide evidence that the three theories have transitory effect from developed markets to transitional markets. In addition, the firm‐specific variables (industry characteristic, size and time) provide an additional support to the robustness of the results.
Originality/value
Few, if any studies, have been carried out in Egyptian data.
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Adamu Yahaya, Fauziah Mahat, Yahya M.H. and Bolaji Tunde Matemilola
This study aims to examine the effect of liquidity risk on deposit money banks’ (DMBs) performance in Sub-Saharan Africa. This study also tests the interaction effect of liquidity…
Abstract
Purpose
This study aims to examine the effect of liquidity risk on deposit money banks’ (DMBs) performance in Sub-Saharan Africa. This study also tests the interaction effect of liquidity risk and nonperforming loans on the performance of DMBs’ in Sub-Saharan Africa.
Design/methodology/approach
This study uses a two-step system generalized method of moment to test the influence of liquidity risk on DMBs’ performance in Sub-Saharan Africa. A sample of 50 listed banks across six Sub-Saharan African countries, including Nigeria, Ghana, South Africa, Zambia, Kenya and Tanzania, were used. The bank performance proxy used are return on asset and return on equity, while net interest margin is used for robustness check.
Findings
The study’s findings reveal a significant and negative association between liquidity risk and bank performance. Moreover, the relationship between the nonperforming loan and bank performance is negative and significant. Furthermore, the interaction effect of liquidity risk and nonperforming loans on bank performance is found to be significantly negative for the two proxies of bank performance. The result is robust for the alternative bank performance measurements and econometric model, which adequately addresses endogeneity tendency.
Originality/value
To the best of the researchers’ knowledge, this is one of the earliest empirical studies that examine the effect of liquidity risk on DMBs’ performance across Sub-Saharan African countries. This study further differs from previous studies with the interaction term of liquidity risk and nonperforming loan included in the model.
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