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Article
Publication date: 28 July 2020

Kamla Ali Al-Busaidi and Saeed Al-Muharrami

The national and global digital transformation makes investments in information and communications technology (ICT) by financial institutions a necessity, not only for…

Abstract

Purpose

The national and global digital transformation makes investments in information and communications technology (ICT) by financial institutions a necessity, not only for gaining a competitive advantage but also for expanding their knowledge and learning about their customers. This study assesses the business value of ICT investments by financial institutions using a mixed-method approach.

Design/methodology/approach

This study adopted a mixed-method approach. First, financial data were gathered from Omani banks' annual financial reports and through a longitudinal quantitative analysis in order to assess the value of ICT in financial institutions' profitability performances. Second, a Delphi qualitative approach was utilized in order to further assess how top managers view the impact of ICT investments in different aspects of business. We used an extended balanced scorecard (finance, customer, internal process and learning and growth) and a sector perspective to address how future ICT investments can offer value that goes beyond traditional metrics of profitability.

Findings

The results of the longitudinal study demonstrated significant evidence of the impact of ICT investment on finance performance indicators; ICT value is significantly positive. Furthermore, the results indicated that there is an acceptable consensus among business and ICT managers that ICT is linked to performance indicators beyond financial; ICT value is linked also to customer indicators, internal process indicators and learning and growth indicators in addition to sector indicators.

Originality/value

ICT is vital for a diversified and knowledge-based economy, especially for developing countries, because modern banking and financial institutions are relatively new in economies such as those that had previously relied on cash and informal financing institutions. Therefore, continued ICT investments face challenges and may not succeed. Most of the existing literature on ICT value has focused on tangible financial performance indicators. The financial evaluation of intangible performance indicators of ICT investments still remains a problematic area of high relevance to decision-makers. The present study provides an integrated assessment that enables financial institutions to develop their strategies and assessments in terms of ICT investments and to go beyond typical, tangible financial profitability indicators. Furthermore, it integrates assessment indicators that are beyond organizations themselves and reaches sectors and countries. This type of investigation is limited in the literature yet important for the financial sector as it is highly integrated by nature and critical to the development of a nation's economy.

Details

Journal of Enterprise Information Management, vol. 34 no. 3
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 3 June 2019

Saeed Al-Muharrami

In 2013-2014, Bank Muscat and National Bank of Oman requested a merger and Bank Sohar and Bank Dhofar lodged a similar request. This paper aims to investigate the shape of…

Abstract

Purpose

In 2013-2014, Bank Muscat and National Bank of Oman requested a merger and Bank Sohar and Bank Dhofar lodged a similar request. This paper aims to investigate the shape of the market structure, and it tries to answer whether approving such requests is good for the industry, economy and society.

Design/methodology/approach

The study examines the market structure of Oman Banking Industry, and it also presents the shape of the market structure if there had been an approval for these mergers’ requests. The Herfindahl–Hirschman Index (HHI) and the biggest k-banks Concentration Ratio (CRk), which measure concentration changes over 17 years during the period 1998-2014, are used in this study.

Findings

The study finds that Oman’s Banking Industry is highly concentrated, which should cause concerns over these two requests of mergers or similar requests in the future. In general, the concentration ratio shows decreasing trend. The concentration ratio in the deposit market implies a concentrated market with CR2 and CR3 recording 67 and 85%, respectively, while HHI reached 2,864 points in the 1998. However, in 2014, the concentration ratio had decreased, to CR2 and CR3 recording 52 and 65% respectively, and HHI standing at 2,112 points.

Research limitations/implications

The researcher suggests future investigation and further research in setting a benchmark index as a guideline for mergers’ requests.

Practical implications

Exercising monopoly power, by fewer banks, is very harmful to the economy. Charging higher interest rates on business loans escalates the cost of production of products and services which will cause inflation; therefore, monopoly power will lead to slow growth of the economy.

Social implications

Regulators in Central Bank of Oman (CBO) or in any central bank should be very careful in granting mergers, especially among big banks, because it enables newly bigger banks to exercise monopoly power, thereby harming depositors who will be getting low deposit interest rates and harming borrowers by charging them high loan interest rate.

Originality/value

Even though, this study discussed two requests of mergers between banks in Oman; however, it has presented formal approaches to the measurement of market structure in any country. Overall, it provides the policymakers in making the final decisions on mergers between banks in the future which are not limited to these banks or to Oman’s Banking Industry.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 12 no. 2
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 17 July 2017

Saeed Al-muharrami and Y. Sree Rama Murthy

Average bank net interest margins vary widely across Gulf Cooperation Council (GCC) countries, net interest margins of Omani banks are significantly higher. The resultant…

Abstract

Purpose

Average bank net interest margins vary widely across Gulf Cooperation Council (GCC) countries, net interest margins of Omani banks are significantly higher. The resultant low level of financial intermediation implies reduced investment and economic growth. Understanding the reason for these high and persistent spreads is important to develop a policy for improving effectiveness of the banking system. The paper aims to discuss these issues.

Design/methodology/approach

Net interest margins of Arab GCC banks during the period 1999-2012 are examined using the balanced panel regression model with bank specific, financial/market structure specific and macroeconomic factors as determinants. The method used for estimation used is the estimated generalized least squares (EGLS) method with both fixed effects and random effects.

Findings

Bank-specific variables, which explain net interest margins in GCC, are bank capitalization ratios, loan ratios and overhead expenses. Spread of banking sector (as measured by ratio of total bank credit to GDP) is positive and highly significant, implying that along with the expansion of the banking sector in GCC economies, interest margins of banks also improved. Omani banks were able to increase interest margins by aggressively marketing high yield personal and credit card loans, and, zero interest paying deposit products. The study also finds a negative relationship between concentration and net interest margin, and attempts to explain this finding which is at variance with other country studies using the price leadership model of oligopoly.

Research limitations/implications

The standard, accepted econometric model of net interest margins which has been used in earlier studies is unable to explain the high net interest margins of banks in Oman although it is able to explain interest margins in other GCC countries. There is a need to develop non econometric models. More work is needed on the implications of NIM spreads for how they affect an economy.

Practical implications

The study shows that as the banking sector spreads in the economy, individual banks have more opportunities to market their products while at the same time maintaining interest margins. Bank managements should note this point and look for opportunities to expand.

Originality/value

There is no evidence of any empirical studies which focused on net interest margins in the GCC countries. This study attempts to fill in this gap with a view to nudge policy makers to look at the issue of high interest margins and its detrimental impact on economic growth and development in the Gulf region. The paper is useful for policy makers to understand and rectify the problem of excessive interest spreads which is hurting the financial intermediation process.

Details

International Journal of Emerging Markets, vol. 12 no. 3
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 16 August 2021

Khaldoon Nusair, Hamed Alazri, Usamah F. Alfarhan and Saeed Al-Muharrami

The purpose of this paper is to contribute to international tourism market segmentation research by proposing a comprehensive framework that examines behavioral, benefits…

Abstract

Purpose

The purpose of this paper is to contribute to international tourism market segmentation research by proposing a comprehensive framework that examines behavioral, benefits and lifestyle segmentations. The moderating roles of geographic segmentation (nationality) and advertising media types are also discussed.

Design/methodology/approach

Tourists volunteered to participate in a self-administered survey at random during peak seasons. Total number of collected questionnaires was 966. The authors used WarpPLS 6.0 software to analyze data.

Findings

Results from a sample of 919 tourists show that tourists in the benefit segmentation cluster had intentions to revisit the destination but they were unlikely to recommend it to others. Another finding indicates that marketing campaigns on different advertising media types might have different results when targeting different activities.

Originality/value

Leaning on the foundations of the marketing literature and the market segmentation theory, this research attempts to create a theoretical contribution that can be used to segment international tourists based on their travel motivations. Additionally, this study highlights the power of conditional probability approach, as it could be of more value than the predominant path coefficient approach.

Article
Publication date: 31 July 2021

Khaldoon Nusair, Hamed Ibrahim Al-Azri, Usamah F. Alfarhan, Saeed Al-Muharrami and S.R. Nikhashemi

This paper aims to examine small- and medium-sized enterprises’ (SMEs) strategic capabilities in terms of their marketing and management capabilities, their sources of…

Abstract

Purpose

This paper aims to examine small- and medium-sized enterprises’ (SMEs) strategic capabilities in terms of their marketing and management capabilities, their sources of environmental uncertainty and their organizational capabilities. Additionally, to what extent the effect differs across two sectors (manufacturing and service).

Design/methodology/approach

Partial least squares structural equation modeling was used to conduct multigroup analysis for the two sectors. Data was collected from a sample of 315 Omani SMEs, 166 from manufacturing and 149 from services.

Findings

The results show that strategic capabilities have a significant positive effect on customer satisfaction. However, the effect differs between manufacturing and service SMEs; the effect is greater in service than in manufacturing SMEs. Furthermore, the effect of organizational capabilities on customer satisfaction was found to be positive. However, the effect is higher in manufacturing as the difference is statistically significant.

Originality/value

Due to the growing importance of the service and manufacturing SMEs in developing countries and their considerable involvement in economic development, it is important to understand the characteristics of the strategic capabilities in both sectors. Thus, according to the authors’ knowledge, this paper is one of the first to propose a comprehensive framework that measures collectively the direct impact of strategic capabilities, organizational capabilities and environmental uncertainties on SMEs customer satisfaction and effectiveness.

Details

Journal of Entrepreneurship in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2053-4604

Keywords

Article
Publication date: 6 March 2017

Sujeet Kumar Sharma, Srikrishna Madhumohan Govindaluri, Saeed Al-Muharrami and Ali Tarhini

Mobile banking (Mbanking) is one of the most widely used mobile technology applications in recent times. This research aims to develop and test a research model by…

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Abstract

Purpose

Mobile banking (Mbanking) is one of the most widely used mobile technology applications in recent times. This research aims to develop and test a research model by integrating social influence, trust and compatibility along with demographic variables into the original technology acceptance model (TAM) for Mbanking adoption which can be useful for understanding individual behaviours from an international business perspective.

Design/methodology/approach

Data were collected through a structured survey from 208 Omani Mbanking users and analysed using a two-staged regression and neural network (NN) model.

Findings

The results showed that perceived ease of use and demographic variables were not statistically significant in the multiple linear regression model, whereas the importance of the aforementioned variables was relatively high in the results obtained from the NN model. Furthermore, other predictors, namely, trust, perceived usefulness, compatibility and social influence included in the proposed research model that were established as significant by the regression model were assigned high relative importance by the NN model as well.

Practical implications

The study reflects the customer’s opinion from a developing country perspective. In addition, the research makes a significant theoretical contribution by using predictive modelling instead of causal or explanatory modelling for the development of a new and extended TAM model. The findings can be gainfully used by international business to understand Omani customer- and design-appropriate strategies for market penetration.

Originality/value

This study offers deeper understanding about Mbanking adoption from a developing country perspective and identifies and integrates important variables that influence the adoption in the aforementioned context.

Details

Review of International Business and Strategy, vol. 27 no. 1
Type: Research Article
ISSN: 2059-6014

Keywords

Article
Publication date: 25 September 2009

Saeed Al‐Muharrami

The purpose of this paper is twofold: to investigate the market structure of Saudi Arabia banking industry; and to evaluate the monopoly power of banks during the years 1993‐2006.

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Abstract

Purpose

The purpose of this paper is twofold: to investigate the market structure of Saudi Arabia banking industry; and to evaluate the monopoly power of banks during the years 1993‐2006.

Design/methodology/approach

The paper is examining the market structure using the most frequently applied measures of concentration k‐bank concentration ratio (CRk) and Herfindahl‐Hirschman Index (HHI) and it is evaluating the monopoly power of banks using the “H‐statistic” by Panzar and Rosse.

Findings

The results show that Saudi Arabia has a moderately concentrated market and is moving to a less concentrated position. Both the concentration indices indicate that the country is moving toward a better position in terms of the market concentration. The Panzar and Rosse “H‐statistic” suggests that banks in Saudi Arabia operate under monopolistic competition.

Research limitations/implications

These findings may be a temporary effect, evident during the sampled period only. To draw firmer conclusions a longer sample period is needed.

Originality/value

Studies of banking market structure in the developed economies' banking are commonplace, however, very few studies are conducted for Saudi Arabia's banking industry.

Details

Journal of Economic Studies, vol. 36 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 10 August 2015

Saeed Al-Muharrami

– The purpose of this study is to try to answer whether the banking system in Oman is fair for both depositors and entrepreneurs.

Abstract

Purpose

The purpose of this study is to try to answer whether the banking system in Oman is fair for both depositors and entrepreneurs.

Design/methodology/approach

The interest margin decomposition is based on the methodology proposed in Randall (1998). The income statement of banks defines profits before taxes (P) as interest income (II), plus non-interest income (NII), minus interest expense (IP), minus operating costs (OC) and minus provision for loan losses (Prov). After rearranging this identity, the net interest revenue can be expressed as follows: II – IP = OC + Prov + P – NII. The above expression decomposes the margin into the following cost and profit components: reserve requirement costs, operational costs, loan loss provision costs, profitability and non-interest income (with a negative sign).

Findings

A trend analysis of commercial banks’ interest rate spreads in Oman exposes the following facts: First, the implicit interest margin is relatively small (in the neighborhood of 1 percentage point); second, profits constitute a substantial proportion of the margin; third, the share of operating costs in the margin has been broadly constant over time; fourth, reserve requirement costs have been reduced following the decline of the reserve requirement ratio; and fifth, the weighted average interest rate on deposits base is lower than the rate of inflation.

Originality/value

This work is original.

Book part
Publication date: 21 November 2014

Saeed Al-Muharrami and Daniel C. Hardy

Islamic and cooperative banks – including credit unions – are broadly similar in that they both share risk with savers. However, risk sharing goes along with ownership…

Abstract

Islamic and cooperative banks – including credit unions – are broadly similar in that they both share risk with savers. However, risk sharing goes along with ownership control in cooperatives, whilst Islamic banks share risk with borrowers also, and full downside risk with depositors. Islamic banking is consistent with mutual ownership, which may ease some of the governance and efficiency concerns implied by Shari’ah constraints. Greater risk sharing among cooperative bank stakeholders, along the lines of products offered by Islamic banks, may strengthen cooperatives’ financial resilience.

Details

International Perspectives on Participation
Type: Book
ISBN: 978-1-78441-169-5

Keywords

Article
Publication date: 6 November 2007

Saeed Al‐Muharrami

The purpose of this paper is to examine historic rates of productivity change in Arab GCC banks. The paper planned to answer the following research questions: How did…

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Abstract

Purpose

The purpose of this paper is to examine historic rates of productivity change in Arab GCC banks. The paper planned to answer the following research questions: How did productivity develop during the period 1993‐2002? What was the cause for this change?

Design/methodology/approach

Using data of 52 banks over ten years, total factor productivity (TFP) changes were calculated using the Malmquist DEA. The Malmquist DEA productivity index measures the ratio of two distance functions pertaining to distinct time periods.

Findings

The Malmquist DEA slight downward shift in average efficiency of the banks in the sector during 1993 to 2002, stemming from change in the technical efficiency of banks (catching up effect), and technology equally decreasing during the period. Looking at the behaviour of total assets, deposits, and loans, the results revealed that there was a downward trend in total of assets, deposits, and loans.

Research limitations/implications

These findings may have been a temporary effect, evident during the sampled period only. To draw firmer conclusions a longer sample period is needed.

Originality/value

Studies of production performance in the developed economies banking are commonplace, however, to the researcher's knowledge, there has been no study conducted for GCC economies. In fact, this study is pioneer for the region in using pooled data of the six GCC countries to measure productivity change for ten years.

Details

International Journal of Productivity and Performance Management, vol. 56 no. 8
Type: Research Article
ISSN: 1741-0401

Keywords

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