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Article
Publication date: 16 February 2021

Diana López Avilés, Paula Piñeira, Víctor Andrés Roco Cáceres, Felipe Vergara and Nicolas Araya

The Financial Stability Board (FSB) determined that entities classified as shadow banking are of a credit nature because they are capable of affecting the financial system…

Abstract

Purpose

The Financial Stability Board (FSB) determined that entities classified as shadow banking are of a credit nature because they are capable of affecting the financial system through the entry and exit of capital. This study aims at measuring the impact of shadow banking in the systemic risk in Chile. A sample of 91 institutions (Run) belonging to the mutual funds was used, with a series showing a continuous behaviour between 2004 and 2018.

Design/methodology/approach

The measurement is carried out using the conditional value at risk (CoVaR) methodology, which analyses the behaviour of an institution in a regular state against the same institution in a state of stress.

Findings

The results obtained reflect that liquidity mismatches do not have a relevant effect on the systemic risk, while the 2008 crisis does contribute to its decline.

Originality/value

There are less number of literature studies that apply statistical models regarding shadow banking, at least at a quantitative level, so this research is a beginning for other studies, supporting future authors in their new research as a basis.

Propósito

El Consejo de Estabilidad Financiera determinó que las entidades clasificadas como Shadow Banking son de carácter crediticio debido a que son capaces de afectar al sistema financiero mediante la entrada y salida de capitales. Este estudio tiene como objetivo medir el impacto del Shadow Banking en el Riesgo Sistémico de Chile. Para esto se utilizó una muestra de 91 instituciones (Run) pertenecientes a los Fondos Mutuos, con series que muestran un comportamiento continuo entre 2004 y 2018.

Diseño/metodología/enfoque

La medición se lleva a cabo mediante la metodología CoVaR, la cual analiza la conducta de una institución en estado normal versus la misma institución en estado de estrés.

Hallazgos

Los resultados obtenidos reflejan que los desajustes de liquidez no tienen un efecto relevante en el Riesgo Sistémico, mientras que la crisis del 2008 si contribuye a la disminución de este.

Originalidad/Valor

Existe muy poca literatura que aplica modelos estadísticos respecto al Shadow Banking, al menos a nivel cuantitativo, por lo que esta investigación es un inicio para otros estudios, apoyando como base a futuros autores en sus nuevas investigaciones.

Book part
Publication date: 18 January 2021

Yusuf Kaya and Mehmet Utku

Financial crises in the international markets, which have global effects, have increased the importance of internal auditing especially in the banking sector in recent…

Abstract

Financial crises in the international markets, which have global effects, have increased the importance of internal auditing especially in the banking sector in recent years. Minimizing the negative effects of crises is closely related to the establishment and functioning of an effective internal control system. International internal audit standards (IIAS) issued by the International Internal Audit Standards Boards are internationally applicable standards that contain the basic requirements for the professional implementation and evaluation of the effectiveness of internal auditing. In developing countries where the effects of crises are intensely felt, public banks are one of the most important actors of the financial system. An effective internal control structure in public banks and in compliance with international standards is necessary for a strong and fragile financial system. The purpose of this study is to examine the internal audit activities in public banks in terms of compliance with international standards. In this study conducted at one of the leading state-owned bank in Turkey, the bank’s internal control procedures and internal control activities reports were examined. In addition, the Bank’s internal audit activities were analyzed by conducting interviews with bank officials for a better understanding of the internal control system. The IIAS, which are grouped under two main headings, are related to the internal audit activities of the related bank. It is thought that the study will guide banks and auditors in terms of demonstrating the application of IIAS, which usually consist of abstract statements.

Details

Contemporary Issues in Public Sector Accounting and Auditing
Type: Book
ISBN: 978-1-83909-508-5

Keywords

Article
Publication date: 26 April 2022

Ascarya Ascarya, Jardine A. Husman and Hendri Tanjung

This study aims to determine the characteristics of waqf-based Islamic financial institution (IFI) and subsequently propose some waqf-based IFIs.

Abstract

Purpose

This study aims to determine the characteristics of waqf-based Islamic financial institution (IFI) and subsequently propose some waqf-based IFIs.

Design/methodology/approach

This study uses the Delphi method, combined with the Likert scale, to determine and validate the agreed characteristics of waqf-based IFI models. Subsequently, based on the agreed characteristics, the authors propose waqf-based IFI models.

Findings

The results show that there are 28 important characteristics of waqf-based IFI, which respondents agree on 24 characteristics with significant Kendall’s concordance or rater agreement (W). The type of waqf-based IFI could be a bank, venture capital or cooperative; the business orientation should be a combination of commercial-social, and it could be implemented in the national, community or micro level. Based on the agreed characteristics, the authors propose several waqf-based IFI, including integrated commercial-social waqf-based bank, integrated commercial-social waqf-based venture capital and integrated commercial-social waqf-based cooperative.

Research limitations/implications

Respondents of this study comprise experts and practitioners who reside in Indonesia so that the results of proposed waqf-based IFIs are most suitable to be implemented in Indonesia.

Practical implications

The conceptual framework and method used in this study could be applied to determine the characteristics of waqf-based IFI and propose the most suitable waqf-based IFI models in other countries.

Originality/value

This study starts with determining the essential characteristics of waqf-based IFI, which then be used to propose waqf-based IFI models.

Details

International Journal of Ethics and Systems, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2514-9369

Keywords

Article
Publication date: 18 March 2022

Kumbirai Mabwe and Kalsoom Jaffar

This paper aims to present an analysis of the UK bank loans and deposits in tandem, linking the loan-to-deposit (LTD) ratio to macroprudential policy and funding…

Abstract

Purpose

This paper aims to present an analysis of the UK bank loans and deposits in tandem, linking the loan-to-deposit (LTD) ratio to macroprudential policy and funding restrictions. LTD ratio is used by micro and macroprudential authorities to address both structural (long-term) and cyclical (short-term) liquidity risks. It is an outcome of several political and economic factors and should be evaluated against this background.

Design/methodology/approach

The authors use trend analysis and panel regression to investigate LTD ratio of Major British Banking Groups from 1945 to 2012 in the midst of changing the UK Government policies.

Findings

The results show that wholesale funding, government intervention and repression were the major forces behind LTD trends.

Originality/value

The authors recommend the use of LTD as a complement to other liquidity ratios in micro and macro-prudential regulation, particularly in the context of current reforms to banking capital requirements.

Details

Journal of Financial Regulation and Compliance, vol. 30 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 26 October 2021

Muhammad Umar and Muhammad Akhtar

This study aims to investigate the relationship between financial inclusion and risk-taking by Chinese banks.

Abstract

Purpose

This study aims to investigate the relationship between financial inclusion and risk-taking by Chinese banks.

Design/methodology/approach

It uses the panel data from Chinese banks ranging from 2011 to 2019 and applies system generalized method of moments to measure coefficients. To get in-depth understanding of the relationship between above-mentioned variables, the analysis for commercial, cooperative, listed, unlisted, small and large banks has been done. Financial inclusion index has been measured based on demographic and geographic aspects by using the principal component analysis, and bank risk-taking has been proxied by z-score.

Findings

The findings reveal an inverse relationship between financial inclusion and bank risk-taking which implies that an increase in financial inclusion results in lesser risk for the banks, i.e. diversification hypothesis applies. However, the results for unlisted and large banks show a different story where an increase in financial inclusion results in higher bank risk and vice versa.

Originality/value

The present study offers several valid and convincing implications for consumers, policymakers and banking sector regulators.

Details

China Finance Review International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 30 April 2021

Achille Dargaud Fofack, Serge Djoudji Temkeng and Clement Oppong

This paper aims at analyzing the asymmetries created by the Great Recession in the US real estate sector.

Abstract

Purpose

This paper aims at analyzing the asymmetries created by the Great Recession in the US real estate sector.

Design/methodology/approach

This paper uses a Markov-switching dynamic regression model in which parameters change when the housing market moves from one regime to the other.

Findings

The results show that the effect of real estate loans, interest rate, quantitative easing and working age population are asymmetric across bull and bear regimes. It is also found that the estimated parameters are larger in bull regime than bear regime, indicating a tendency to create house price bubbles in bull market.

Practical implications

Since three of those asymmetric variables (real estate loans, interest rate and quantitative easing) are related to monetary policy, the Fed can mitigate their impact on an interest-sensitive sector such as housing by engaging in a countercyclical monetary policy.

Originality/value

The estimated intercept and the variance parameter both vary from one regime to the other, thus justifying the use of a regime-dependent model.

Details

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

Keywords

Article
Publication date: 5 September 2016

Sougata Ray and Sushanta Mahapatra

The Indian microfinance industry witnessed one of the fastest growths in the recent times. However, the striking feature of this growth is that the Microfinance…

Abstract

Purpose

The Indian microfinance industry witnessed one of the fastest growths in the recent times. However, the striking feature of this growth is that the Microfinance Institutions (MFIs) are concentrated only in some specific regions of the country. There is a huge geographical skew in the distribution of the MFIs. In this paper, an attempt has been made to explain these geographical skew by using the macro variables of the states. The objective of the study is to identify the causes for this regional disparity in the growth of MFIs.

Design/methodology/approach

We try to explain the level of penetration of microfinance in the states by using regression models.

Findings

Our analysis suggests that state-level macro factors are significant in explaining the geographical skew. MFIs in India have concentrated in states which are richer, have good rural infrastructure, but lack in adequate banking facility, and have low human capital.

Originality/value

The study provides an insight which would help in framing the necessary regulations to ensure that MFIs operate in all regions of the country.

Details

International Journal of Development Issues, vol. 15 no. 3
Type: Research Article
ISSN: 1446-8956

Keywords

Article
Publication date: 8 May 2017

Semir Ibrahimovic and Ulrik Franke

This paper aims to examine the connection between information system (IS) availability and operational risk losses and the capital requirements. As most businesses today…

Abstract

Purpose

This paper aims to examine the connection between information system (IS) availability and operational risk losses and the capital requirements. As most businesses today become increasingly dependent on information technology (IT) services for continuous operations, IS availability is becoming more important for most industries. However, the banking sector has particular sector-specific concerns that go beyond the direct and indirect losses resulting from unavailability. According to the first pillar of the Basel II accord, IT outages in the banking sector lead to increased capital requirements and thus create an additional regulatory cost, over and above the direct and indirect costs of an outage.

Design/methodology/approach

A Bayesian belief network (BBN) with nodes representing causal factors has been used for identification of the factors with the greatest influence on IS availability, thus helping in investment decisions.

Findings

Using the BBN model for making IS availability-related decisions action (e.g. bringing a causal factor up to the best practice level), organization, according to the presented mapping table, would have less operational risk events related to IS availability. This would have direct impact by decreasing losses, related to those events, as well as to decrease the capital requirements, prescribed by the Basel II accord, for covering operational risk losses.

Practical implications

An institution using the proposed framework can use the mapping table to see which measures for improving IS availability will have a direct impact on operational risk events, thus improving operational risk management.

Originality/value

The authors mapped the factors causing unavailability of IS system to the rudimentary IT risk management framework implied by the Basel II regulations and, thus, established an otherwise absent link from the IT availability management to operational risk management according to the Basel II framework.

Details

Journal of Financial Regulation and Compliance, vol. 25 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 13 June 2022

Amir Saadaoui and Olfa Ben Salah

For the dimensions of the corporate social responsibility (CSR) score, only environmental practices have shown a significant negative link with banking performance…

Abstract

Purpose

For the dimensions of the corporate social responsibility (CSR) score, only environmental practices have shown a significant negative link with banking performance. However, the social and government dimensions did not have a significant effect on this variable. The authors also find that the financial performance of banks depends primarily on the financial stability of the bank, in particular, on capital adequacy and on the management of liquidity risk.

Design/methodology/approach

The recurrence of banking and financial crises has revealed the complexity and vulnerability of the financial and banking system. In this article, the authors empirically study the impact of CSR on the financial performance of banks as well as the individual effect of each dimension of CSR (social, governance and environmental) with particular attention to the moderating role of financial stability. Based on a sample of 23 French banks over the period from 2010 to 2018, the results indicate a negative and significant effect of CSR measured by the overall CSR score on the performance of banks.

Findings

This study provides insight into the essential role of financial stability in moderating the benefits of CSR disclosure while virtually no previous study examines this effect.

Originality/value

This article offers several contributions to the literature. First, this study builds on previous research by providing a more comprehensive view and evidence on the relationship between CSR and bank performance. The authors affirm and show that the financial stability of the bank moderates the effect of CSR on the performance of banks. The link between social responsibility and performance demonstrated in this study is more complicated than the direct–direct relationship as widely assumed in the previous literature.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

Book part
Publication date: 19 December 2016

Mohammad Ashraful Ferdous Chowdhury and Mohamed Eskandar Shah Mohd Rasid

The main objective of this study is to identify the main determinants of the Islamic banks’ performance in Gulf Cooperation Council (GCC) regions.

Abstract

Purpose

The main objective of this study is to identify the main determinants of the Islamic banks’ performance in Gulf Cooperation Council (GCC) regions.

Methodology/approach

The research uses both static model (fixed effects and random effects) and Generalized method of Moments (GMM). The data for this study are obtained from the annual reports of 29 Islamic banks from GCC countries using Bankscope database for the period from 2005 to 2013.

Findings

The empirical findings reveal that Islamic banks’ specific factors such as the equity financing and bank size are positive and statistically significant to the profitability of Islamic banks. The operating efficiency ratio is negatively and statistically significant to return on asset. It is also found that macroeconomic variables such as money supply and inflation are negatively and statistically significant to the performance of Islamic banks whereas oil price has been found positive and statistically significant to the performance of Islamic banks in the GCC region.

Research implications

The present study seeks to fill a demanding gap in the literature by providing new empirical evidence on the factors that influence the profitability of the Islamic banking sector in GCC regions.

Originality/value

These findings have significant contribution to the literature by comprehensively clarifying and critically analyzing the current state of profitability among the Islamic banks in GCC regions.

Details

Advances in Islamic Finance, Marketing, and Management
Type: Book
ISBN: 978-1-78635-899-8

Keywords

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