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1 – 10 of 65Bojan Srbinoski, Klime Poposki and Vasko Bogdanovski
The purpose of this paper is to examine the evolution of interconnectedness of European insurers among themselves, as well as with other non-financial firms, for the period…
Abstract
Purpose
The purpose of this paper is to examine the evolution of interconnectedness of European insurers among themselves, as well as with other non-financial firms, for the period 2000–2021 and to analyze the stock return movements around the costliest catastrophic events (hurricanes) in the past two decades.
Design/methodology/approach
This paper follows the “simple” approach of Patro et al.(2013) and examines the daily stock return correlations of the largest 30 insurers and the largest 30 non-financial firms headquartered in Europe. In addition, the study uses event study methodology to examine stock return movements around the costliest hurricanes.
Findings
We find that the European insurance sector has become highly interconnected during the past two decades; however, its increasing connectedness with non-financial firms is limited to a few firms. In addition, we find weak evidence of the destabilizing effects of catastrophic events on European insurers and non-financial firms; however, the potential for cat risk contagion effects exists as the insurance industry becomes heavily interconnected.
Originality/value
The extant literature is largely concerned with the contribution of the insurance sector to the systemic risk of the financial sector. We focus on a specific region (Europe) and analyze the evolution of interconnectedness of the largest insurers within the insurance sector as well as with the largest non-financial firms encapsulating important crisis periods. In addition, we relate to the literature that examines the market reactions around catastrophic events to test the relevance of traditional insurance activities in instigating potential contagion shocks.
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Federica Miglietta, Matteo Foglia and Gang-Jin Wang
This study aims to examine information (stock return, volatility and extreme risk) spillovers and interconnectedness within dual-banking systems.
Abstract
Purpose
This study aims to examine information (stock return, volatility and extreme risk) spillovers and interconnectedness within dual-banking systems.
Design/methodology/approach
Using multilayer information spillover networks, this paper conduct a deep analysis of contagion dynamics among 24 Islamic and 46 conventional banks from 2006 to 2022.
Findings
The findings show the network’s rapid response to financial shocks. Through cross-sector analysis, this paper identify information spillovers between and within Islamic and conventional banking systems. Furthermore, this research illustrates distinct roles played by Islamic and conventional banks within the multilayer network structure, contingent upon the nature of the financial shock.
Practical implications
Understanding the differential roles of Islamic and conventional banks in information transmission can aid policymakers and financial institutions in devising more effective risk management strategies, thereby enhancing financial stability within dual-banking systems.
Originality/value
This study contributes to the literature by emphasizing the necessity of examining contagion mechanisms beyond traditional single-layer network structures, shedding light on the shadow dynamics of information transmission in dual-banking systems.
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This study empirically demonstrates a contradiction between pillar 3 of Basel norms III and the designation of Systemically Important Banks (SIBs), also known as Too Big to Fail…
Abstract
Purpose
This study empirically demonstrates a contradiction between pillar 3 of Basel norms III and the designation of Systemically Important Banks (SIBs), also known as Too Big to Fail (TBTF). The objective of this study is threefold, which has been approached in a phased manner. The first is to determine the systemic importance of the banks under study; second, to examine if market discipline exists at different levels of systemic importance of banks and lastly, to examine if the strength of market discipline varies at different levels of systemic importance.
Design/methodology/approach
This study is based on all the public and private sector banks operating in the Indian banking sector. The Gaussian Mixture Model algorithm has been utilized to classify banks into distinct levels of systemic importance. Thereafter, market discipline has been observed by analyzing depositors' sentiments toward banks' risk (CAMEL indicators). The analysis has been performed by employing the system Generalized Method of Moments (GMM) to estimate models with different dependent variables.
Findings
The findings affirm the existence of market discipline across all levels of systemic importance. However, the strength of market discipline varies with the systemic importance of the banks, with weak market discipline being a negative externality of the SIBs designation.
Originality/value
By employing the Gaussian Mixture Model algorithm to develop a framework for categorizing banks on the basis of their systemic importance, this study is the first to go beyond the conventional method as outlined by the Reserve Bank of India (RBI).
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This study aims to explore the intricate relationship between financial literacy, digital transformation, Fintech adoption, competitiveness and sustainable firm performance…
Abstract
Purpose
This study aims to explore the intricate relationship between financial literacy, digital transformation, Fintech adoption, competitiveness and sustainable firm performance, particularly focusing on how financial literacy empowers firms in the evolving digital landscape. Leveraging technological innovation systems (TIS) and resource-based view (RBV), this research suggests a model that incorporates these concepts, focusing on the moderating role of financial literacy in essential interactions.
Design/methodology/approach
This study employed a survey-based methodology, collecting data from employees across five major Pakistani banks. The survey yielded 426 responses, from which 387 valid ones were selected for analysis. The analysis utilized partial least squares-structural equation modeling (PLS-SEM), complemented by the Hayes Process Model for moderated mediation analysis. This approach ensured robust examination of the relationships between the constructs of the proposed model.
Findings
The study's findings validate that digital transformation significantly enhances sustainable performance, with Fintech adoption and competitiveness acting as crucial mediators. Financial literacy is highlighted as a key moderator, influencing the effects of digital transformation on Fintech adoption and competitiveness, although its direct impact on sustainable performance is less pronounced. This comprehensive analysis underscores the complex interplay among these factors in driving sustainable performance in the banking sector.
Originality/value
This research enriches the theoretical and practical comprehension of how digital transformation and Fintech integration, underpinned by financial literacy, bolster sustainable business outcomes. It sheds light on the synergy between technology, strategy and organizational success, offering key insights for the banking industry's navigation through the digital era's challenges.
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Mustafa Raza Rabbani, Madiha Kiran, Abul Bashar Bhuiyan and Ahmad Al-Hiyari
This study aims to investigate the impact of gender diversity in top management teams and boards on environmental, social and governance (ESG) performance. The authors propose a…
Abstract
Purpose
This study aims to investigate the impact of gender diversity in top management teams and boards on environmental, social and governance (ESG) performance. The authors propose a corporate social responsibility (CSR) committee as a moderating variable in this relationship, drawing on resource dependence and legitimacy theories. This study is crucial in understanding the dynamics of gender diversity and its impact on ESG performance in the banking sector.
Design/methodology/approach
The study examines a sample of Islamic and conventional banks from 10 Middle Eastern and North African countries during 2008–2022. Initial analysis was conducted using fixed effects panel regression, whereas the robustness test used the generalized method of movement dynamic system.
Findings
The findings, which are significant for both conventional and Islamic banks, indicate that female directors are crucial in promoting ESG performance in conventional banks. In contrast, female executives do not appear to contribute significantly. However, for Islamic banks, neither board nor executive gender diversity significantly affects ESG performance. Moreover, the find that the positive moderating role of the CSR committee is significant only for the nexus between board gender diversity and conventional banks’ ESG performance and for the connection between executive gender diversity and Islamic banks’ ESG performance.
Originality/value
Despite the widespread belief that gender diversity in top management teams is pivotal in promoting ESG performance, empirical studies supporting these claims are scarce, particularly in the banking sector. The study, therefore, brings a novel perspective to this discourse. These findings have the potential to significantly assist stakeholders in evaluating how gender diversity in top management teams influences banks’ sustainability practices, thereby empowering them to make more informed and impactful investment decisions.
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Faten Ben Bouheni, Mouwafac Sidaoui, Dima Leshchinskii, Bryan Zaremba and Mousa Albashrawi
The purpose of this study is to investigate how the implementation of digital banking services (mobile applications) by globally systemically important banks (G-SIBs) affects…
Abstract
Purpose
The purpose of this study is to investigate how the implementation of digital banking services (mobile applications) by globally systemically important banks (G-SIBs) affects banks’ performance in the USA and Europe from 2005 to 2022.
Design/methodology/approach
The study employs advanced econometric methods to analyze the link between deposits and banking performance, utilizing linear regressions and multivariate Bayesian regressions.
Findings
Our results indicate that customer deposits positively impact a bank’s performance after the introduction of the mobile application feature of check deposits, whereas social risk negatively impacts banking financial performance. These findings support the hypothesis that technology implementation improves the profitability and growth of traditional banks.
Research limitations/implications
While findings are robust econometrically in linear and Bayesian regressions, variables reflecting the digitalization of banks remain limited. For instance, the number of mobile users or the volume of digital transactions per bank since the implementation of the mobile app is not available.
Practical implications
In a rapidly growing technology and constantly changing customers behaviors, this research has practical implications from bankers’ perspective to continue the technological innovation efforts and from regulators’ perspective to strengthen requirements for the digital banking services.
Social implications
We provide empirical evidence that including a banking app for smartphones’ users for remote banking services benefit the financial performance of banks. However, the social risk remains significant for banks in terms of customers' satisfaction, data privacy and cybersecurity.
Originality/value
This paper employs an innovative approach to create a mobile app “discriminatory” factor and examine the relationship between deposits and banks’ performance before and after the introduction of a mobile app for too-big-to-fail banks in Europe and the USA. Additionally, we consider the social risk component of the ESG score, as a bank’s decision to implement mobile applications and technology for its customers potentially affects social risks associated with customer satisfaction and technology usability.
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This study aims to develop a comprehensive framework for discussing sustainability within the insurance industry, extending the traditional Environmental, Social, and Governance…
Abstract
Purpose
This study aims to develop a comprehensive framework for discussing sustainability within the insurance industry, extending the traditional Environmental, Social, and Governance (ESG) dimensions to include economic and technological considerations. This inclusion is vital, recognizing that financial stability and the adoption of innovative technologies are fundamental to meeting other sustainability targets.
Design/methodology/approach
We base our findings on an extensive literature review, case studies, and interactive workshops with key stakeholders in the insurance industry. Our analytical framework employs Porter's (1985) insurance-specific value chain, complemented by Berliner's (1982) insurability criteria, to distinguish between insurable and non-insurable risks.
Findings
Our results show that the insurance industry is sustainable because it actively incorporates and contributes to sustainability goals across environmental, social, economic, and technological dimensions. This is illustrated through the identification of 50 distinct contributions across the insurance value chain, showcasing the sector’s unique position to significantly influence the sustainability discourse.
Practical implications
Addressing the pressing challenges of sustainability and insurability necessitates a strategic, collective response from the global insurance and risk management community. This paper proposes several policy recommendations, including enhancing risk assessment methodologies, diversifying insurance product offerings, encouraging cross-sectoral collaboration, and prioritizing investments in resilience and preventive measures.
Originality/value
By broadening the sustainability discussion to encompass economic and technological facets, this paper enriches the dialogue surrounding the insurance industry’s role in sustainability. It aims to inform decision-makers across the industry, political spheres, and broader society about the necessity of sustainability, fostering pertinent political discussions and highlighting avenues for future research.
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Maryam Javed, Kashif Mehmood, Abdul Ghafoor and Asma Parveen
The board structure (BS) is pivotal in modern corporate governance (CG). This study aims to investigate BS variables (BSIZE, BIND and chief executive officer [CEO] duality) and…
Abstract
Purpose
The board structure (BS) is pivotal in modern corporate governance (CG). This study aims to investigate BS variables (BSIZE, BIND and chief executive officer [CEO] duality) and their correlation with risk-taking behavior indicators, enriching the understanding of how CG shapes financial institutions’ (FIs) decision-making in Pakistan.
Design/methodology/approach
By scrutinizing data from 67 financial entities listed on the Stock Exchange of Pakistan spanning from 2011 to 2022 through panel data regression techniques, the research emphasizes that BS holds a substantial influence over the risk tendencies exhibited by these firms.
Findings
Key findings suggest that board size has a positive influence, aligned with previous CG research. Smaller boards perform better and avoid excessive risk-taking, contrasting some negative relationship claims. More independent directors are recommended to curtail risk and financial disruption. Holding both CEO and chair roles reduces risk exposure, resonating with reputational and employment risk theory. It is essential to recognize that BS’s impact on risk-taking is nuanced and context-dependent.
Practical implications
Policymakers, scholars, practitioners and investors working in the market for financial companies might greatly benefit from the empirical findings of this study. Imposing mandates on FIs to uphold adequate capital reserves functions as a safeguard against unforeseen losses, thereby diminishing the probability of unwarranted risk-taking.
Originality/value
Prior studies in this domain predominantly focus on nonfinancial sectors. In addition, existing research often explores the relationship between BS and firm risk-taking solely within the banking sector, overlooking other FIs. This study contributes by using a comprehensive data set encompassing all types of FIs, thus extending the existing literature.
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Godwin Ahiase, Maya Sari, Denny Andriana, Nugraha Nugraha, Budi Supriatono Purnomo and Toni Heryana
This study examines the moderating role of debt sustainability on the nexus between financial and economic growth in African countries.
Abstract
Purpose
This study examines the moderating role of debt sustainability on the nexus between financial and economic growth in African countries.
Design/methodology/approach
This study utilised data from various sources, such as the World Bank and International Monetary Fund databases, specifically the World Development Indicators and Financial Access Survey. The data covered the period from 2004 to 2021 and focused on 53 African countries to examine the moderating effect of debt sustainability on the relationship between financial inclusion and economic growth using a two-step generalised method of moments system with forward orthogonal deviations.
Findings
The study findings indicate a direct link between financial inclusion and economic growth in African nations. In particular, the availability and utilisation of mobile money services are significant factors in promoting financial inclusion. Our study also highlights that excessive debt can impede economic growth by limiting the capacity of financial institutions to offer loans and other vital financial services.
Practical implications
Policymakers in Africa should promote economic growth by prioritising financial inclusion through mobile money and ATMs while ensuring sustainable debt levels.
Originality/value
This study adds to the ongoing discussion on the relationship between FI and economic growth in African countries. It explores how debt sustainability affects this relationship, and emphasises the importance of finding a balance between financial inclusion and debt management for long-term economic growth and development.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2024-0062
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Neha Chhabra Roy and Sreeleakha P.
This study addresses the ever-increasing cyber risks confronting the global banking sector, particularly in India, amid rapid technological advancements. The purpose of this study…
Abstract
Purpose
This study addresses the ever-increasing cyber risks confronting the global banking sector, particularly in India, amid rapid technological advancements. The purpose of this study is to de velop an innovative cyber fraud (CF) response system that effectively controls cyber threats, prioritizes fraud, detects early warning signs (EWS) and suggests mitigation measures.
Design/methodology/approach
The methodology involves a detailed literature review on fraud identification, assessment methods, prevention techniques and a theoretical model for fraud prevention. Machine learning-based data analysis, using self-organizing maps, is used to assess the severity of CF dynamically and in real-time.
Findings
Findings reveal the multifaceted nature of CF, emphasizing the need for tailored control measures and a shift from reactive to proactive mitigation. The study introduces a paradigm shift by viewing each CF as a unique “fraud event,” incorporating EWS as a proactive intervention. This innovative approach distinguishes the study, allowing for the efficient prioritization of CFs.
Practical implications
The practical implications of such a study lie in its potential to enhance the banking sector’s resilience to cyber threats, safeguarding stability, reputation and overall risk management.
Originality/value
The originality stems from proposing a comprehensive framework that combines machine learning, EWS and a proactive mitigation model, addressing critical gaps in existing cyber security systems.
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