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Open Access
Article
Publication date: 4 December 2017

JaeShup Oh and Ilho Shong

Blockchain is a distributed ledger, in which the blocks containing transaction details are connected chronologically to form a series of chains, thus raising the…

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Abstract

Purpose

Blockchain is a distributed ledger, in which the blocks containing transaction details are connected chronologically to form a series of chains, thus raising the possibility of improving the process and innovating business model for the financial institutions. The purpose of this paper is to study the actual cases of Blockchain applied in Korea in 2017, so that a vision of business model innovation of financial institutions can be drawn.

Design/methodology/approach

The financial institutions in Korea are in the technology verification stage to introduce Blockchain technology. Since there is an insufficient amount of actual measurement data, case study method was adopted. The authors interviewed ICT officers of major banks in Korea. The purpose of the interview was to understand the relationship between Blockchain and business models of financial institutions, and the effects and challenges that Blockchain has on the business model of financial institutions.

Findings

From the perspective of financial institutions, the emergence of Blockchain does not just have technical significance – emergence of highly efficient database system – but has the possibility that if the business model of existing financial intermediaries disappears or get reduced, the financial services relying on them can disappear altogether, or some of them can be replaced, and financial transaction patterns of consumers can be changed. As a case studies researched for this paper, it was discovered that the distributed characteristic of Blockchain cannot be applied when actually developing financial services.

Details

Asia Pacific Journal of Innovation and Entrepreneurship, vol. 11 no. 3
Type: Research Article
ISSN: 2071-1395

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Article
Publication date: 7 December 2021

Hanen Ben Fatma and Jamel Chouaibi

The purpose of this paper is to examine the impact of the characteristics of two corporate governance mechanisms, namely, board of directors and ownership structure, on…

Abstract

Purpose

The purpose of this paper is to examine the impact of the characteristics of two corporate governance mechanisms, namely, board of directors and ownership structure, on the firm value of European financial institutions.

Design/methodology/approach

Using the market-to-book ratio calculated by the Thomson Reuters Eikon ASSET4 database, this study measures the firm value of 111 financial institutions belonging to 12 European countries listed on the stock exchange during the period 2007–2019. Multivariate regression analysis on panel data is used to estimate the relationship between corporate governance attributes, such as board size, board independence, board gender diversity, ownership concentration and CEO ownership, and the firm value of European financial institutions.

Findings

The empirical results reveal that board gender diversity and CEO ownership are positively related to the firm value, whereas board size and ownership concentration are negatively related. Furthermore, the findings suggest that board independence is insignificantly correlated with the firm value. Regarding the control variables, the results show that financial institutions' size, age and legal system are significant factors in changing the firm value. Nevertheless, financial institutions' leverage and activity sector are not significantly correlated with their value.

Originality/value

This research contributes to the literature by providing the significant links between some corporate governance mechanisms and the firm value of companies from the financial industry, by addressing the information gap for this critical industry in the context of a developed market like Europe.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 5 July 2021

Muhammad Ahad and Zulfiqar Ali Imran

Governance quality has been a dominant factor to formulate policies for the development of financial institutions in the world. Therefore, this study aims to explore the…

Abstract

Purpose

Governance quality has been a dominant factor to formulate policies for the development of financial institutions in the world. Therefore, this study aims to explore the impact of governance quality on financial institutions along with globalization in the case of Pakistan.

Design/methodology/approach

Time series data from 1996 to 2018 are considered for analysis. The NG-Perron is applied to check the order of integration. In addition, Kim and Perron (2009) structural break unit root test is used to identify break years. The autoregressive distributive lags (ARDL) bound testing approach is used to detect the long-run association among governance quality, financial institutions and globalization.

Findings

The results of unit root analysis show that all series are stationary at a different level of integration, I(0)/I(1). However, the long-run association is detected in the presence of break years. The authors find a positive impact of governance quality to determine financial institutions in the long-short-run. Similarly, globalization also enhances financial institutions but only in long run.

Originality/value

This study fills the gap in the economic literature by exploring the linkages between the financial institution and disaggregated governance indicators in the case of Pakistan. Moreover, a role of structural break is also captured during analysis. This study also opens some new insights for policymaking.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

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Article
Publication date: 24 August 2021

Yueling Xu, Haijun Bao, Wenyu Zhang and Shuai Zhang

Recently, the concept of financial technology (FinTech) has attracted extensive attention from international organisations and regulators, in particular, how to achieve a…

Abstract

Purpose

Recently, the concept of financial technology (FinTech) has attracted extensive attention from international organisations and regulators, in particular, how to achieve a “win–win” situation between financial institutions' FinTech innovation and effective regulation has become a hot topic. This study purposes to explore the evolutionary game relationship between FinTech innovation and regulation by constructing both static and dynamic earmarking game models.

Design/methodology/approach

A simulation experiment was conducted using primary data obtained from a commercial bank in China.

Findings

The results of the theoretical analysis of evolutionary game models were consistent with the corresponding simulation results, proving the validity of the proposed evolutionary game models. It was also found that the dynamic earmarking game model was more stable and effective than the static earmarking game model in promoting FinTech innovation and regulation. Furthermore, when the regulators utilised a dynamic earmarking mechanism, the evolutionary path of financial institutions and regulators' behaviour strategies took the shape of a spiral and eventually converged to a central point, indicating the existence of an evolutionary stable strategy and Nash equilibrium. Finally, because the behaviour strategies of financial institutions were mainly influenced by the regulators' policies, the regulators were inspired to adjust the corresponding regulation policies on FinTech innovation.

Originality/value

This study bridges the knowledge gap in the existing literature on financial innovation and regulation, in particular by establishing evolutionary game models from the perspective of financial earmarking policies. Also, the case study for simulation experiments can gain a more intuitive insight into FinTech innovation and financial earmarking policies.

Details

Industrial Management & Data Systems, vol. 121 no. 10
Type: Research Article
ISSN: 0263-5577

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Article
Publication date: 8 February 2021

Howard Chitimira

Money laundering activities were allegedly rampant and poorly regulated in the South African financial markets and financial institutions prior to 1998. In other words…

Abstract

Purpose

Money laundering activities were allegedly rampant and poorly regulated in the South African financial markets and financial institutions prior to 1998. In other words, prior to the enactment of the Prevention of Organised Crime Act 121 of 1998 as amended (POCA), there was no statute that expressly and adequately provided for the regulation of money laundering in South Africa. Consequently, the POCA was enacted to curb organised criminal activities such as money laundering in South Africa. Thereafter, the Financial Intelligence Centre Act 38 of 2001 as amended (FICA) was enacted in a bid to, inter alia, enhance financial regulation and the combating of money laundering in the South African financial institutions and financial markets.

Design/methodology/approach

The paper provides an overview analysis of the current legislation regulating money laundering in South Africa. In this regard, prohibited offences and measures that are used to curb money laundering under each relevant statute are discussed. The paper further discusses the regulation and use of customer due diligence measures to combat money laundering activities in South Africa. Accordingly, the regulation of customer due diligence under the FICA and the Banks Act 94 of 1990 as amended (Banks Act) is provided.

Findings

It is hoped that policymakers and other relevant persons will use the recommendations provided in the paper to enhance the curbing of money laundering in South Africa.

Research limitations/implications

The paper does not provide empirical research.

Practical implications

The paper is useful to all policymakers, lawyers, law students, regulatory bodies, especially, in South Africa.

Social implications

The paper seeks to curb money laundering in the economy and society at large, especially in the South African financial markets.

Originality/value

The paper is original research on the South African anti-money laundering regime.

Details

Journal of Money Laundering Control, vol. 24 no. 4
Type: Research Article
ISSN: 1368-5201

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Book part
Publication date: 25 September 2020

Peterson K. Ozili

Climate change is emerging as an important issue increasing uncertainty in the business circle, and financial institutions through their inaction seem to be unmoved by…

Abstract

Climate change is emerging as an important issue increasing uncertainty in the business circle, and financial institutions through their inaction seem to be unmoved by climate change risk despite the potential for climate change events to affect the financial institutions and the financial system. In this chapter, the effect of climate change on financial institutions and the financial system are highlighted and discussed.

Details

Uncertainty and Challenges in Contemporary Economic Behaviour
Type: Book
ISBN: 978-1-80043-095-2

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Article
Publication date: 12 November 2020

Zakariya Mustapha, Sherin Binti Kunhibava and Aishath Muneeza

The purpose of this paper is to review the literature on Islamic finance vis-à-vis legal and Sharīʿah non-compliance risks in its transactions and judicial dispute…

Abstract

Purpose

The purpose of this paper is to review the literature on Islamic finance vis-à-vis legal and Sharīʿah non-compliance risks in its transactions and judicial dispute resolution in Nigeria. This is with a view to putting forward direction for future studies on the duo of legal and Sharīʿah non-compliance risks and their impact in Islamic finance.

Design/methodology/approach

This review is designed as an exploratory study and qualitative methodology is used in examining relevant literature comprising of primary and secondary data while identifying legal risk and Sharīʿah non-compliance risks of Nigeria’s Islamic finance industry. Using the doctrinal approach together with content analysis, relevant Nigerian laws and judicial precedents applicable to Islamic finance practice and related publications were examined in determining the identified risks.

Findings

Undeveloped laws, the uncertainty of Sharīʿah governance and enforceability issues are identified as legal gaps for Islamic finance under the Nigerian legal system. The gaps are inimical to and undermine investor confidence in Nigeria’s Islamic finance industry. The review reveals the necessity of tailor-made Sharīʿah-based regulations in addition to corresponding governance and oversight for a legally safe and Sharīʿah-compliant Islamic finance practice. It brings to light the imperative for mitigating the legal and Sharīʿah non-compliance risks associated with Islamic finance operations as crucial for Islamic finance businesses, Islamic finance institutions and their sustainable development.

Research limitations/implications

Based on content analysis, the review is wholly doctrinal and does not involve empirical data. Legal safety and Sharīʿah compliance are not to be compromised in Islamic finance operations. The review would assist relevant regulators and investors in Islamic financial enterprises to understand and determine the impact and potential ramifications of legal safety and Sharīʿah non-compliance on Islamic Finance Institutions.

Practical implications

This study provides an insight into the dimensions and ramifications of legal and Sharīʿah non-compliance risks of Nigeria’s Islamic finance industry. This study is premised on the imperative for research studies whose outcome would inform regulations that strike a balance between establishing Islamic financial institution/business and ensuring legal certainty and Sharīʿah compliance of their operations. This study paves way for this kind of research studies.

Originality/value

The findings and discussions provide a guide for regulators and researchers on the identification and mitigation of legal and Sharīʿah non-compliance risks in Islamic finance via a literature review. This study, the first of its kind in Nigeria, advances the idea that research into legal and Sharīʿah non-compliance risks of Islamic financial entities is key to mitigating the risks and fostering the entities and their businesses.

Details

International Journal of Law and Management, vol. 63 no. 2
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 10 May 2011

Robert J. Dijkstra and Michael G. Faure

The purpose of this paper is to understand the incentive effects of existing compensation mechanisms in case of the bankruptcy of a financial institution.

Abstract

Purpose

The purpose of this paper is to understand the incentive effects of existing compensation mechanisms in case of the bankruptcy of a financial institution.

Design/methodology/approach

The paper uses insights of law and economics to predict the effects of compensation mechanisms on the incentives of depositors, financial institutions, financial regulators and government.

Findings

The paper shows that the current compensation system in The Netherlands will not provide sufficient incentives for all stakeholders to prevent the failure of a financial institution. Adjustments to this system are necessary to improve these incentives.

Original/value

The paper examines for the first time the impact of different compensation mechanisms on the incentives of multiple stakeholders. It also shows how these mechanisms influence each other regarding their incentive generating capability. These findings offer important insights for policy makers.

Details

Journal of Financial Regulation and Compliance, vol. 19 no. 2
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 1 May 2007

Paulo Peneda Saraiva and Zélia Maria Silva Serrasqueiro

This work draws on important issues that are related to all socio‐economic agents. We refer to Sustainability, Corporate Social Responsibility (CSR) and Socially…

Abstract

Purpose

This work draws on important issues that are related to all socio‐economic agents. We refer to Sustainability, Corporate Social Responsibility (CSR) and Socially Responsible Investments (SRIs), arguing on the clear benefits they provide to companies and financial institutions. The main empirical objective of this work is to show a theoretical framework for the existence and supply of non‐financial information on financial products by financial institutions in the Portuguese Investment Market (comprising of Banks and Fund and Investment Companies – FIMCs).

Design/methodology/approach

Overall, 55 Banks and 41 FIMCs, were analysed, totalling 96 observations for analysis. The paper studies the supply of non‐financial information (i.e. social and environmental information) regarding the financial products in the Portuguese investment market (comprising of Banks and Fund and Investment Management Companies). Through surveys’ analysis, which were sent to 96 of these financial institutions, we conclude that the supply of these informations’ sets is practically inexistent.

Findings

Overall, the conclusions point to the fact that financial institutions surveyed are very much behind in this new framework and related tools, when considering similar financial institutions outside Portugal. There are some institutions that do provide, but when compared to other European and non‐European countries, the discrepancy is huge. It is concluded that much needs to be done in this field, starting with a clear definition of the benefits and costs of providing non‐financial information.

Originality/value

At the academic level, the authors have not found any good study neither on CSR nor on SRIs done by Portuguese researchers nor on its Market. A priori the authors felt that the Portuguese Banks and The Fund and Investment Management Companies were not committed to Sustainability issues, because they believe that for these business agents, Sustainable Development still means, Environmentalism. Through this study the authors seek to provide an image of how the Investment Market is to regards to Sustainable issues, in Portugal, and thus help financial institutions and economic agents (e.g. bank managers, portfolio managers, among others) to know more about these issues that are important to any company.

Details

Social Responsibility Journal, vol. 3 no. 2
Type: Research Article
ISSN: 1747-1117

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Article
Publication date: 5 January 2010

Konyin Ajayi and Hamid Abdulkareem

The purpose of this paper is to discuss the issues faced by financial institutions in detecting threats to their stability and integrity, and taking adequate steps to…

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Abstract

Purpose

The purpose of this paper is to discuss the issues faced by financial institutions in detecting threats to their stability and integrity, and taking adequate steps to ensure that those who engage in abuse are detected and sanctioned. The focus is on financial institutions in Nigeria. The paper proffers practical recommendations towards greater effectiveness of Nigeria's anti‐money laundering (AML) and counter terrorist‐financing regimes.

Design/methodology/approach

The paper explores Nigerian legislation on money laundering, terrorism, and related crimes. Data are also drawn from analysis of reports of relevant law‐enforcement agencies, regulatory agencies, as well as English and Nigerian case law.

Findings

The paper highlights the deficiencies in current money laundering and counter‐terrorist financing (CTF) legislation in Nigeria. It reveals that financial institutions may still be liable to their customers in the course of complying with applicable legislation. The paper suggests that the power of law‐enforcement agencies to “freeze” assets be expanded, while legislation should be enacted with explicit guidance on treatment of politically exposed persons, and terrorism.

Practical implications

The paper calls for a progressively risk‐based approach to reporting of suspicious transactions by Nigeria's financial institutions, as well as greater attention to the provision of training to compliance personnel.

Originality/value

This paper highlights issues requiring urgent legislative intervention; it also draws attention to areas where law‐enforcement agencies and financial institutions could collaborate better in managing cost of compliance and securing the overall effectiveness of the AML and CTF regimes.

Details

Journal of Money Laundering Control, vol. 13 no. 1
Type: Research Article
ISSN: 1368-5201

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