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Article
Publication date: 9 July 2021

Baah Aye Kusi

This study aims to examine the effect of private (PRST) and public (PUST) sector-led financial sector transparencies on bank interest margins (BIM) termed as social cost of…

Abstract

Purpose

This study aims to examine the effect of private (PRST) and public (PUST) sector-led financial sector transparencies on bank interest margins (BIM) termed as social cost of financial intermediation in different institutional quality setups.

Design/methodology/approach

This study uses a two-step dynamic generalized method of moments panel data and bootstrapped quantile models with 91 economies between 2004 and 2016. Data is sourced from World Development Indicator and Global Development Finance databases.

Findings

The results show that under strong and weak political and financial regulatory institutional setups, the reducing effect of PRST on BIM are observed and reported while the full sample reports no significant nexus between PRST and PUST on BIM. Furthermore, under political institutional quality sample, economies with strong corruption control and regulatory quality are able to reinforce the dampening effect of PRST on BIM while under the same political institutional quality sample, economies with weak rule of law are able to heighten the reducing effect of PRST on BIM. Moreover, under financial regulator institutional quality sample, economies with strong overall weighted and unweighted, chief executive officer and policy dependent central banks are able to intensify the diminishing effect of PRST on BIM while under the same financial regulator institutional quality sample, economies with weak limits on lending are able to amplify the reducing effect of PRST on BIM. However, PUST is reported to propel lower levels BIM in the bootstrap models, especially in strong institutional economies.

Practical implications

These findings imply that policymakers may rely on PRST to reduce BIM, especially under financial regulatory institutional quality. Additionally, economies must be careful on their reliance on PRST because the effectiveness of PRST to tame high BIM is dependent on the strength of political and financial regulatory institutions.

Originality/value

To the best of the authors’ knowledge, this study presents first time international evidence on the effect of private and public sector-led financial transparency on BIM in strong and weak political and financial regulatory institution economies.

Details

Journal of Financial Regulation and Compliance, vol. 29 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 26 June 2007

Carlos Serrano‐Cinca, Yolanda Fuertes‐Callén and Begoña Gutiérrez‐Nieto

A structural equation model is proposed to explain internet reporting by banks. The model relates three constructs of financial institutions (size, financial performance, and…

1616

Abstract

Purpose

A structural equation model is proposed to explain internet reporting by banks. The model relates three constructs of financial institutions (size, financial performance, and internet visibility) to their final influence on internet information disclosure (e‐transparency).

Design/methodology/approach

This paper's proposed model analyses a sample of Spanish financial institutions using publicly available data. The model is tested using partial least squares.

Findings

A positive and statistically significant relationship has been found between size, financial performance, internet visibility, and e‐transparency, with direct and indirect effects. The study shows that size accounts for most of the variance. Size has a positive effect on e‐transparency, financial performance, and internet visibility. However, the direct effect of financial performance and internet visibility on e‐transparency is small.

Research limitations/implications

The researchers have analysed only one year of data from one country and one sector. The direction of cause and effect assumed in the model is a logical one, but statistical methods cannot prove causality, only association. Even though any bank can disclose its financial information online for a very low cost, building a robust, interactive web site requires major resources. This gives larger banks a value added advantage.

Originality/value

The paper examines the relationship between size, financial performance, internet visibility and e‐transparency using a structural model. Although structural models are commonly used in many scientific disciplines, they have not yet been applied in disclosure research.

Details

Online Information Review, vol. 31 no. 3
Type: Research Article
ISSN: 1468-4527

Keywords

Article
Publication date: 17 August 2015

David Heald and Ron Hodges

The purpose of this paper is to analyse how austerity has impacted to date upon European Union (EU) financial reporting developments and how this might influence future reforms…

1991

Abstract

Purpose

The purpose of this paper is to analyse how austerity has impacted to date upon European Union (EU) financial reporting developments and how this might influence future reforms. It considers how a critical juncture in EU financial reporting might be recognized and factors which might prevent or delay such a juncture being realized.

Design/methodology/approach

The paper uses the theoretical conceptualization of the territorializing, mediating, adjudicating and subjectivizing roles of accounting (Miller and Power, 2013), linked to document analysis and interviews with members of the relevant policy communities. In technical terms, austerity makes accounting subject to greater demands for consistency and uniformity. In political terms, accounting is implicated in increasing external fiscal surveillance of sovereign states.

Findings

The authors have shown how the Miller-Power framework illuminates these developments. The territorializing role of accounting in sovereign states creates an environment which facilitates the mediating, adjudicating and subjectivizing roles. Austerity promotes re-territorializing, yet also creates incentives for governments to hide risks and guarantees: the comparability of financial reports and national accounts may be achieved only at a rhetorical level. Evidence for a critical juncture would be termination of national traditions of financial reporting, greater harmonization of accounting across tiers of government, weakening of the linkages to private sector accounting, and stronger alignment of government financial reporting with statistical accounting.

Originality/value

The paper provides a theoretically based analysis of how austerity influences government financial reporting and statistical accounting and brings them into closer contact. This analysis is located within broader tensions between technocracy and democracy that are institutionalized in EU fiscal surveillance.

Details

Accounting, Auditing & Accountability Journal, vol. 28 no. 6
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 18 May 2022

Shidi Dong, Lei Xu and Ron P. McIver

Based on institutional theory, this paper aims to examine whether, and if so which, institutional forces influence the quality of China’s listed financial institutions’ (FIs…

1119

Abstract

Purpose

Based on institutional theory, this paper aims to examine whether, and if so which, institutional forces influence the quality of China’s listed financial institutions’ (FIs) sustainability disclosures.

Design/methodology/approach

Using univariate statistical and multiple regression analyses, this study quantitatively examines the impacts of coercive pressure from the government and stock exchanges, imitation within subsectors and normative pressure from industry associations and regulators on the quality of China’s listed FIs’ sustainability disclosures. Assessment of the robustness of regression results uses panel random-effects and generalized methods of moments estimation.

Findings

Financial sector corporate social responsibility (CSR) disclosure quality did not increase dramatically following issue of the “Guiding Opinions on Establishing a Green Finance System.” However, a convergence in quality is found over time. State ownership concentration and state links to dominant shareholders negatively impact the quality of financial sector sustainability disclosures, whereas stock exchange index listing requirements and industry association reporting guidance have positive influences.

Research limitations/implications

First, data availability limits the sample to listed financial firms with RKS quality scores. Thus, results may not be generalizable to the broader listed and unlisted financial sector. Second, this study only examines the influence of external forces based on institutional theory. However, internal institutional forces, such as corporate governance, may require examination. This study’s results indicate that coercive pressure, as represented by issue of the “Green Finance” policy, has not yet prompted the financial sector to improve reporting quality; however, normative pressure has had significant influence in influencing FIs’ CSR practices, with China’s banks potentially taking a leading role.

Originality/value

The financial sector has a lower direct environmental impact than traditional polluting industries and different operating and reporting structures, features often used to argue for its exclusion in prior studies. However, its indirect environmental impact via lending and investing activities is significant, suggesting evidence on the determinants of sustainability disclosure quality is required. This study uses evidence from China’s financial sector to reduce this gap in the literature.

Details

Meditari Accountancy Research, vol. 31 no. 5
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 25 October 2021

Benson Igboke and Razaq Raj

Accounting literature is definite about the content and presentation of traditional financial statements, but the basic information to be provided in the narrative reports of…

Abstract

Purpose

Accounting literature is definite about the content and presentation of traditional financial statements, but the basic information to be provided in the narrative reports of public sector entities remains unsettled. This paper aims to investigate the needs and expectations of stakeholders (primary users and preparers) regarding the content and presentation of narrative reports in the public sector of Nigeria.

Design/methodology/approach

The research used a qualitative approach that draws on stakeholder and contingency theories to collect primary data through in-depth individual interviews using semi-structured questionnaires. Data were analysed by a thematic method using the NVivo 11 Pro software package.

Findings

The study reveals that financial statements constitute the statutory financial reports of public sector entities in Nigeria as narrative reporting is undeveloped, both as a concept and in practice. Stakeholders believe that narrative reporting is required to enhance the accountability usefulness of the annual financial reports published by the government and public agencies. Data analysis further reveals that public perception about the management of government financial resources influences the information needs of stakeholders regarding financial reporting. In addition, stakeholders consider the approved budget as the cornerstone of public financial reporting. Accordingly, users and other stakeholders expect public sector narrative reports to provide budget-based performance information that relates the accounting data presented in the financial statements to the key budgetary provisions, in both financial outlays and service delivery achievements. Stakeholders also expect narrative reports to be presented in plain language and provide information about the impact of financial decisions and actions on the basic socioeconomic variables that signpost citizens’ well-being, such as education, health care, employment and security.

Practical implications

The study suggests that the inclusion of narrative information in the statutory financial reports of public entities in Nigeria is imperative and should engage the attention of policymakers and relevant regulatory authorities. In addition, a more elaborate systematic investigation of the information needs of stakeholders in Nigeria should be undertaken by relevant units of government.

Originality/value

To the best of the authors’ knowledge, this is the first documented research on narrative reporting and the information needs of a broad range of stakeholders in the public sector of Nigeria. The paper identifies the approved budget as the focal point of governmental financial reporting, and a clear linkage between budget provisions, accounting results and service delivery achievements as the basic content of a narrative report in developing countries.

Details

Accounting Research Journal, vol. 35 no. 4
Type: Research Article
ISSN: 1030-9616

Keywords

Book part
Publication date: 2 March 2011

Carlo Gola and Francesco Spadafora

The global financial crisis has magnified the role of Financial Sector Surveillance (FSS) in the International Monetary Fund's activities. This chapter surveys the various steps…

Abstract

The global financial crisis has magnified the role of Financial Sector Surveillance (FSS) in the International Monetary Fund's activities. This chapter surveys the various steps and initiatives through which the Fund has increasingly deepened its involvement in FSS. Overall, this process can be characterised by a preliminary stage and two main phases. The preliminary stage dates back to the 1980s and early 1990s, and was mainly related to the Fund's research and technical assistance activities within the process of monetary and financial deregulation embraced by several member countries. The first ‘official’ phase of the Fund's involvement in FSS started in the aftermath of the Mexican crisis, and relates to the international call to include financial sector issues among the core areas of Fund surveillance. The second phase focuses on the objectives of bringing the coverage of financial sector issues ‘up-to-par’ with the coverage of other traditional core areas of surveillance, and of integrating financial analysis into the Fund's analytical macroeconomic framework. By urging the Fund to give greater attention to its member countries' financial systems, the international community's response to the global crisis may mark the beginning of a new phase of FSS. The Fund's financial sector surveillance, particularly on advanced economies, is of paramount importance for emerging market and developing countries, as they are vulnerable to spillover effects from crises originated in advanced economies. Emerging market and developing economies, which constitute the majority of the Fund's 187 members, are currently the recipients of over 50 programmes of financial support from the Fund (including those of a precautionary nature), totalling over $250 billion.

Details

The Impact of the Global Financial Crisis on Emerging Financial Markets
Type: Book
ISBN: 978-0-85724-754-4

Keywords

Article
Publication date: 14 September 2022

Baah Aye Kusi, Joseph Ato Forson, Eunice Adu-Darko and Elikplimi Agbloyor

Financial crises (FC) remain a global threat to the financial stability of financial institutions and international bank regulatory capital requirement (IBRCR) by the Committee on…

Abstract

Purpose

Financial crises (FC) remain a global threat to the financial stability of financial institutions and international bank regulatory capital requirement (IBRCR) by the Committee on Banking Supervision provides mechanism for curbing the adverse effect of FC on financial stability. Hence, the purpose of this study is to provide, evidence on how IBRCR tones down the adverse FC effects on bank financial stability (BFS).

Design/methodology/approach

The study uses 102 economies between 2006 and 2016 in a two-step dynamic generalized method of moments model.

Findings

The results show that while FC and IBRCR negatively and positively impact BFS, respectively, it is observed that under the increasing presence of IBRCR, the negative effect of FC on BFS declines. Additionally, the results show that economies that maintain minimum IBRCR above 10.5% recommended by BASEL III are able to reinforce a significant reduction in the negative effect of FC on BFS.

Practical implications

These findings imply that in as much as financial crisis is injurious to BFS, regulators and policymakers can rely on IBRCR to avert the injurious effects of FC on BFS. Clearly, while IBRCR is necessary for reinforcing BFS through FC, bank managers who maintain IBRCR above the recommended 10.5% stands a better chance to taming the avert effect of FC on BFS. Additionally, economies that have not full adopted the BASEL minimum capital requirement may have to do so given its potential of dampening the adverse effect of FC on BFS.

Originality/value

The study presents an international perspective of how BASEL capital requirements can help tame global financial crisis using a global sample of 102 economies.

Details

Journal of Financial Regulation and Compliance, vol. 31 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 28 August 2023

George Kladakis, Sotirios K. Bellos and Alexandros Skouralis

This paper aims to examine the relationship between societal trust and bank asset opacity using an international sample of banks.

Abstract

Purpose

This paper aims to examine the relationship between societal trust and bank asset opacity using an international sample of banks.

Design/methodology/approach

The authors use an international data set of banks and panel regressions. For robustness purposes, the authors use multiple measures of both societal trust and bank opacity as well as two-stage least squares regressions to address endogeneity concerns.

Findings

The authors find that societal trust is negatively associated with the opacity of bank portfolios.

Practical implications

Results of this study inform regulators on the importance of trust for the banking sector and support policies towards enhancing trust in banks. Also, a sustained environment of high levels of trust in banks can prevent the introduction of extensive prudential regulations that policymakers often use to establish trust, as well as lower the additional resources required when trust levels are low.

Originality/value

To the best of the authors’ knowledge, this is the first study that examines this relationship. The literature provides only limited evidence and not for the banking sector, for which opacity is of outmost importance.

Details

Journal of Financial Regulation and Compliance, vol. 31 no. 5
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 28 June 2021

Baah Aye Kusi, Elikplimi Komla Agbloyor, Asongu Anutechia Simplice and Joshua Abor

The purpose of this paper is to examine the effect of foreign bank assets (FBA) and (FBP) presence is examined on banking stability in the economies with strong and weak…

Abstract

Purpose

The purpose of this paper is to examine the effect of foreign bank assets (FBA) and (FBP) presence is examined on banking stability in the economies with strong and weak country-level corporate governance (CLCG) in Africa between 2006 and 2015.

Design/methodology/approach

Using a Prais–Winsten panel data model of 86 banks in about 30 African economies, findings on how FBA and presence influence banking stability in strong and weak corporate governance economies under different regulatory regimes are reported for the first in Africa.

Findings

The findings show that foreign bank presence (FBP) and assets promote banking stability. However, the positive effect of FBA and presence is enhanced in economies with strong CLCG, whereas the positive effect of FBA and presence is weakened in economies with weak CLCG. After introducing different regulatory regimes, it is observed that the enhancing effect of FBP and assets on banking stability in the full sample and economies with strong and weak CLCG systems is deepened or improved under the loan loss provision regulation regime. However, under the private and public sector-led financial transparency regulations, the reducing effect of FBP and assets on banking stability in economies with weak corporate governance systems is further dampened.

Practical implications

These findings show that the relationship between FBP and assets is deeply shaped by corporate governance systems and regulatory regimes in Africa. Hence, policymakers must build strong corporate governance and sound regulatory regimes to enhance how foreign bank operations promote banking stability.

Originality/value

This study presents first-time evidence on how FBA and presence influence banking stability under strong and weak governance systems while considering different regulatory regimes.

Article
Publication date: 20 November 2009

Abu Umar Faruq Ahmad and M. Kabir Hassan

The purpose of this paper is to contribute to the existing body of work in the area of Islamic finance by examining the regulation of Islamic finance in Australia.

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Abstract

Purpose

The purpose of this paper is to contribute to the existing body of work in the area of Islamic finance by examining the regulation of Islamic finance in Australia.

Design/methodology/approach

The method employed in this paper is a mixture of direct observation from legal and regulatory perspectives and authors' personal experience, curiosity, and association with this industry.

Findings

In Australia, where Muslims are minorities and full‐fledged Islamic banks are absent, it is expected that regulatory authorities would ensure there is a level playing field, so that neither Islamic financial services providers (IFSPs) nor conventional financial institutions are disadvantaged. They have also been expected to approve and monitor Islamic financial products, including those offered by Islamic managed funds.

Research limitations/implications

The study is undertaken through the Shari'ah, where law, finance, economics, and business form a single dimension only, even though a very significant one. No attempt is made to evaluate the economic efficiency and profitability or otherwise, of IFSPs in Australia. Also, the approach for the study is not supplemented by any empirical work (e.g. by quantitative analysis of data or by survey or other qualitative methodologies).

Practical implications

The paper practically examines: the impact of banking and financial services regulation on Islamic banking and financing practice in Australia; and what further legislative measures and changes are needed to accommodate Islamic financing practice into Australian society to make it a truly viable alternative system of financing for Muslims in Australia.

Originality/value

Examination of the issues of the study is originally undertaken through one of the authors' personal expertise and working experience with some IFSPs in Australia, aiming at developing the relevant regulations by the Australian regulatory regime to make Islamic finance a viable alternative system of financing for Muslims in Australia.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 2 no. 4
Type: Research Article
ISSN: 1753-8394

Keywords

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