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1 – 10 of over 12000Rexford Abaidoo and Elvis Kwame Agyapong
The study evaluates the effects of governance and other regulatory structures on the development of financial institutions in the subregion of sub-Saharan Africa (SSA).
Abstract
Purpose
The study evaluates the effects of governance and other regulatory structures on the development of financial institutions in the subregion of sub-Saharan Africa (SSA).
Design/methodology/approach
Data for the analyses were compiled from relevant sources from 1996 to 2019 from a sample of 36 countries in the subregion. Empirical analyses were carried out using the Prais-Winsten panel corrected standard errors panel estimation technique augmented by pooled ordinary least squares with Driscoll and Kraay (1998) standard errors model.
Findings
Findings from the study suggest that governance and institutional quality index, as well as individual governance and regulatory variables, have positive effect on the development of financial institutions among economies in SSA. Further empirical estimates show that output growth volatility has negative moderating impact on the relationship between effective governance, control of corruption, rule of law, regulatory quality, voice and accountability, and development of financial institutions. Additionally, the results show that during periods of heightened macroeconomic risk, financial institutions could benefit from improved governance and effective regulatory structures.
Originality/value
Compared to related studies that have reviewed the discourse on financial institutions, this study rather focuses on how governance structures and institutions influence development of financial institutions instead of the impact of financial institution on the broader economy. The authors further augment this interaction by examining how the relationship in question may be moderated by macroeconomic shocks.
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Hanen Ben Fatma and Jamel Chouaibi
This study aims to examine the direct relationship between board gender diversity (BGD) and financial performance and the moderating role of corporate social responsibility (CSR…
Abstract
Purpose
This study aims to examine the direct relationship between board gender diversity (BGD) and financial performance and the moderating role of corporate social responsibility (CSR) in the said relationship.
Design/methodology/approach
Using data collected from the Thomson Reuters Eikon ASSET4 database from 42 UK financial institutions listed in the ESG index for the period 2005–2019, this study used multivariate regression analysis on panel data to test the effect of BGD on financial performance and estimate the moderating effect of CSR between them. Moreover, to control the endogeneity problem, the authors conducted an additional analysis by testing the dynamic dimension of the data set through the generalized moment method.
Findings
The empirical results show that BGD is positively related to financial performance and that BGD increases firm performance with the moderating effect of CSR. Regarding the endogeneity problem, the existence of continuity between financial institution performances over time is demonstrated.
Research limitations/implications
The current paper sheds light on the importance of BGD in improving firm performance and the moderating role of CSR in strengthening the relationship between BGD and firm performance, thereby contributing to the agency theory, the resource dependency theory and the stakeholder theory. Therefore, regulators and policymakers in the UK can use the outcomes of this study to enforce the representation of female directors on boards to enhance the financial performance of financial institutions. Moreover, the findings could be useful for regulatory bodies to encourage financial institutions to practice CSR activities and disclose them in their annual reports.
Originality/value
To the best of the authors’ knowledge, this is the first study investigating the moderating role of CSR on the relationship between BGD and financial performance in the context of the financial sector. It is also the first study documenting that CSR reinforces the relationship between gender-diverse boards and financial institutions' performance. This study fills a research gap as it expands the existing literature that has generally focused on the impact of BGD on financial performance and has not reached similar results.
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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 impact of…
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.
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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 the firm…
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.
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Anurag Chaturvedi and Archana Singh
The paper models the financial interconnectedness and systemic risk of shadow banks using Granger-causal network-based measures and takes the Indian shadow bank crisis of…
Abstract
Purpose
The paper models the financial interconnectedness and systemic risk of shadow banks using Granger-causal network-based measures and takes the Indian shadow bank crisis of 2018–2019 as a systemic event.
Design/methodology/approach
The paper employs pairwise linear Granger-causality tests adjusted for heteroskedasticity and return autocorrelation on a rolling window of weekly returns data of 52 financial institutions from 2016 to 2019 to construct network-based measures and calculate network centrality. The Granger-causal network-based measure ranking of financial institutions in the pre-crisis period (explanatory variable) is rank-regressed with the ranking of financial institutions based on maximum percentage loss suffered by them during the crises period (dependent variable).
Findings
The empirical result demonstrated that the shadow bank complex network during the crisis is denser, more interconnected and more correlated than the tranquil period. The closeness, eigenvector, and PageRank centrality established the systemic risk transmitter and receiver roles of institutions. The financial institutions that are more central and hold prestigious positions due to their incoming links suffered maximum loss. The shadow bank network also showed small-world phenomena similar to social networks. Granger-causal network-based measures have out-of-sample predictive properties and can predict the systemic risk of financial institutions.
Research limitations/implications
The study considers only the publicly listed financial institutions. Also, the proposed measures are susceptible to the size of the rolling window, frequency of return and significance level of Granger-causality tests.
Practical implications
Supervisors and financial regulators can use the proposed measures to monitor the development of systemic risk and swiftly identify and isolate contagious financial institutions in the event of a crisis. Also, it is helpful to policymakers and researchers of an emerging economy where bilateral exposures' data between financial institutions are often not present in the public domain, plus there is a gap or delay in financial reporting.
Originality/value
The paper is one of the first to study systemic risk of shadow banks using a financial network comprising of commercial banks and mutual funds. It is also the first one to study systemic risk of Indian shadow banks.
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Tough Chinoda and Forget Mingiri Kapingura
This study examines the role of institutions and governance on the digital financial inclusion and economic growth nexus in Sub-Saharan Africa (SSA) from 2014 to 2020.
Abstract
Purpose
This study examines the role of institutions and governance on the digital financial inclusion and economic growth nexus in Sub-Saharan Africa (SSA) from 2014 to 2020.
Design/methodology/approach
This study adopts the generalised method of moments technique which controls for endogeneity. The authors employed four main variables namely, index of digital financial inclusion, gross domestic product per capita growth, institutions and governance.
Findings
The results suggest a significant positive effect of institutional quality and governance on the digital financial inclusion-economic growth nexus in SSA. Furthermore, the authors find that effect of trade and population growth on economic growth was significantly positive while inflation reduces economic growth in the region.
Research limitations/implications
This study also ignored the effect of digital financial inclusion on environmental quality. Future researches should focus on addressing these drawbacks and replicating the study in Africa as a whole and other developing countries across the world that are experiencing digital financial inclusion and economic growth challenges. The results from the study imply that a positive relationship between digital financial inclusion and economic growth. It is important to note that the study was carried out on the premise that institutions play a pivotal role in enhancing economic growth in SSA.
Practical implications
The results confirm the significance of policies that enhances institutional quality and governance which are other avenues the authorities can pursue to enhance economic growth in SSA.
Social implications
The paper documents the importance of institutions in boosting economic growth which impacts on social life rather than digital financial inclusion only.
Originality/value
The paper makes a contribution through analysing the role of institutions and governance on the digital financial inclusion-economic growth nexus rather than the traditional financial inclusion–economic growth nexus which is common to the majority of the available empirical studies.
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Rexford Abaidoo and Elvis Kwame Agyapong
The study examines the effect of macroeconomic risk, inflation uncertainty and instability associated with key macroeconomic indicators on the efficiency of financial institutions…
Abstract
Purpose
The study examines the effect of macroeconomic risk, inflation uncertainty and instability associated with key macroeconomic indicators on the efficiency of financial institutions among economies in sub-Saharan Africa (SSA).
Design/methodology/approach
Data for the empirical inquiry were compiled from 35 SSA economies from 1996 to 2019. The empirical estimates were carried out using pooled ordinary least squares (POLS) with Driscoll and Kraay’s (1998) standard errors.
Findings
Reported empirical estimates show that macroeconomic risk and exchange rate volatility constrain the efficiency of financial institutions. Further results suggest that inflation uncertainty has a significant influence on the efficiency of financial institutions among economies in the subregion. Additionally, reviewed empirical estimates show that institutional quality positively moderates the nexus between inflation uncertainty and financial institution efficiency. At the same time, political instability is found to worsen the adverse effect of macroeconomic risk on the efficiency of financial institutions.
Practical implications
For policymakers and governments, improved institutional structures are recommended to ensure the operational efficiency of financial institutions, especially during an inflationary period. For decision-makers among financial institutions, the study recommends policies that have the potential to make their institutions less vulnerable to macroeconomic risk and exchange rate fluctuations.
Originality/value
The approach adopted in this study differs significantly from related studies in that the study examines and reviews interactions and relationships not readily found in the reviewed literature.
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Howard Chitimira and Sharon Munedzi
This paper explores the historical aspects of customer due diligence and related anti-money laundering measures in South Africa. Customer due diligence measures are usually…
Abstract
Purpose
This paper explores the historical aspects of customer due diligence and related anti-money laundering measures in South Africa. Customer due diligence measures are usually employed to ensure that financial institutions know their customers well by assessing them against the possible risks they might pose such as fraud, money laundering, Ponzi schemes and terrorist financing. Accordingly, customer due diligence measures enable banks and other financial institutions to assess their customers before they conclude any transactions with them. Customer due diligence measures that are utilised in South Africa include identification and verification of customer identity, keeping records of transactions concluded between customers and financial institutions, ongoing monitoring of customer account activities, reporting unusual and suspicious transactions and risk assessment programmes. The Financial Intelligence Centre Act 38 of 2001 (FICA) as amended by the Financial Intelligence Centre Amendment Act 1 of 2017 (Amendment Act) is the primary statute that provides for the adoption and use of customer due diligence measures to detect and combat money laundering in South Africa. Prior to the enactment of the FICA, several other statutes were enacted in a bid to prohibit money laundering in South Africa. Against this background, the article provides a historical overview analysis of these statutes to, inter alia, explore their adequacy and examine whether they consistently complied with the Financial Action Task Force Recommendations on the regulation of money laundering.
Design/methodology/approach
The paper provides an overview analysis of the historical aspects of the regulation and use of customer due diligence to combat money laundering in South Africa. In this regard, a qualitative research method as well as the doctrinal research method are used.
Findings
It is hoped that policymakers and other relevant persons will adopt 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 and regulatory bodies, especially, in South Africa.
Social implications
The paper advocates for the use of customer due diligence measures to curb money laundering in the South African financial markets and financial institutions.
Originality/value
The paper is original research on the South African anti-money laundering regime and the use of customer due diligence measures to curb money laundering in South Africa.
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The criminalization of online financial fraud is examined by analyzing the existing literature, policies and state statutes within the context of the cybercrime ecosystem…
Abstract
Purpose
The criminalization of online financial fraud is examined by analyzing the existing literature, policies and state statutes within the context of the cybercrime ecosystem. Therefore, this paper aims to investigate online fraud policies within the USA and the prevalence of such incidents to explore the effectiveness of current fraud policies.
Design/methodology/approach
This examination explores policies related to online fraud within the USA by defining online financial fraud incidents within the context of the cybercrime ecosystem and analyzing such incidents with routine activities theory to emphasize the current legislative inadequacies with provisional policy recommendations.
Findings
This research suggests online financial fraud is not unanimously conceptualized among regulating or criminal institutions. Although federal regulators have governed financial institutions, federal institutions have failed to account for the capabilities of computer-mediated and technological device use (12 USC §1829).
Research limitations/implications
The limited research analyzing the effectiveness of guardianship that prevents or deters internet-mitigated or dependent financial fraud crimes.
Practical implications
Policy recommendations include but are not limited to mandating federal and privatized financial institutions to disclose all fraudulent activity to all stakeholders (e.g. customers and local and federal criminal justice agencies).
Originality/value
This paper provides an innovative approach using a criminological theory and policy framework to examine the prevalence of online fraud and the regulations enacted to counteract such violations.
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Mahmoud Agha, Md Mosharraf Hossain and Md Shajul Islam
This study examines the impact of chief executive officer (CEO) power, institutional investors and their interaction on green financing provided by Bangladeshi financial…
Abstract
Purpose
This study examines the impact of chief executive officer (CEO) power, institutional investors and their interaction on green financing provided by Bangladeshi financial institutions and the moderating effect of government policy and CEO political connections on these relations.
Design/methodology/approach
We employ ordinary least squares (OLS) regressions and interaction terms among variables of interest for the empirical analysis.
Findings
Green financing decreases with CEO power, implying that CEOs of this country’s financial institutions are averse to green loans, whereas institutional investors increase green financing extended by these institutions. The government policy, which includes financial incentives for complying financial institutions, strengthens institutional investors' positive impact on green financing, but it does not change CEOs' aversion to green loans. Institutional investors have a positive moderating effect on the relationship between green finance (GF) and CEO power, but this positive moderating effect is negated in banks where the government owns a stake, possibly because CEOs of state-owned financial institutions are politically connected, which reduces institutional investors’ influence over them.
Originality/value
This study is unique in that it is the first to examine how the interaction among different stakeholders affects green financing in a unique setting. As the literature is almost silent on this topic, the findings of this paper are expected to raise policymakers’ awareness of the obstacles that hamper the efforts of developing countries to go green.
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