Investigating the impact of brand value on the financial performance of the banking sector: empirical evidence

Globalization and bank efficiency nexus: Symbiosis or parasites?

This study examines how Accounting Information Systems (AISs) Usage accounts for financial performance of the hospitality sector in Uganda and adopted a systematic review method of the hotel sector with focus on Fort Portal City. To assess financial performance of hotels in Fort Portal City, literature and published reports about financial performance of the sector were reviewed for a period of 7 years from 2017 – 20224. This period provided a trend in performance of the sector in the city. The study included studies focusing on the overall financial performance of the hotels sector on one hand as well as those that have had detailed focus on either adoption or use of accounting information systems to manage business information with intent of informing decisions. Data were sourced from Google Scholar and Science Direct databases for the period under review. The collected data were synthesized and findings summarized in a thematic manner to aid discussions. Results indicate that accounting information systems usage positively and significantly predict financial performance of Hotels through aiding timely capturing and processing of information which informs decisions that are important to enhance profitability, liquidity and return on assets. Further still, AISs usage results into: higher transparency, better risk management, and stronger financial controls translating into better investment decisions and portfolio allocations. Based on the findings, researchers conclude that AISs usage positively and significantly predict financial performance of firms. The study thus recommends that firms/ hotels should consider investing in more advanced and efficient systems to improve their financial performance.

PurposeThe purpose of this paper is to provide a new empirical evidence on the impact of economic globalization on the efficiency of the banking sector. The paper also investigates to what extent the internal (i.e. bank specific characteristics) and external (i.e. macroeconomic conditions) factors influence the efficiency of banks while controlling for the impact of the different dimensions of globalization.Design/methodology/approachThe analysis is confined into two stages. In the first stage, the authors employ the bias-corrected data envelopment analysis method to compute the efficiency of individual banks during the period 1999-2012. The authors then use bootstrap regressions to examine the impact of economic globalization on bank efficiency, while controlling for the potential impacts of contextual variables.FindingsThe empirical findings indicate that the impacts of personal contacts, information flows, and cultural proximity seem to work in favor of Malaysian banks’ efficiency. A plausible reason could be due to the fact that capital account liberalization is usually accompanied by liberalization of the financial services sector, resulting in a greater competition and subsequently eroding monopolistic profits. The empirical findings also bring forth the importance of and political globalization in determining the efficiency of banks operating in the Malaysian banking sector.Originality/valueThe present study aims to provide for the first time empirical evidence on the performance of the banking sector and to establish new empirical evidence on the impact of globalization. The empirical evidence on the impact of globalization on the banking sector is completely missing from the literature.

PurposeThe paper examines the impact of entry of foreign banks on the performance of the Malaysian Islamic banking sector during the period 2001‐2007.Design/methodology/approachTo maintain homogeneity, the empirical analysis is confined to two fully fledged domestic Islamic banks, three fully fledged foreign Islamic banks, 11 domestic window Islamic banks, and four foreign window Islamic banks during the period of 2001‐2007. The paper applies the ordinary least square method, where the standard errors are calculated by using White's transformation to control for cross section heteroscedasticity.FindingsThe empirical findings suggest that overhead cost is negatively related to Malaysian Islamic banks' profitability. On the other hand, Islamic banks which are better capitalized and have a higher level of liquidity tend to be more profitable. It is found that the De Novo commercial banks are relatively less profitable than their incumbent bank peers, which could be attributed to the different levels of knowledge of the market between the incumbent and the De Novo Islamic banks.Research limitations/implicationsFuture research could include more variables such as taxation and regulation indicators, exchange rates as well as indicators of the quality of the offered services. Another possible extension could be the examination of differences in the determinants of profitability between small and large or high and low profitability banks. In terms of methodology, a statistical cost accounting and/or frontier optimization technique, such as the non‐parametric data envelopment analysis, the stochastic frontier analysis, and/or the Malmquist productivity index approach, may be adopted to examine changes in efficiency and productivity of the Malaysian Islamic banking sector.Originality/valueWhile extensive literature exists to examine the performance of conventional banking sectors over recent years, empirical works on the Islamic banking sector are still in its infancy. Furthermore, studies on Islamic bank performance have focused on theoretical issues and the empirical works have relied mainly on the analysis of descriptive statistics rather than rigorous statistical estimation. The paper therefore attempts to fill the gap in the literature by providing new empirical evidence on the performance of the Islamic banking sector.

This research investigates the influence of corporate governance (CG) practices and specific financial indicators on the performance of Kosovo's banking sector from 2015 to 2022. The study uses secondary data from nine commercial banks and employs the Ordinary Least Squares (OLS) estimation method to assess their impact on Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The findings highlight the significant impact of these variables on the banking sector's performance, with varying degrees of influence depending on the performance metric. Notably, NIM emerges as the most effective metric for evaluating a bank's overall performance, emphasizing the importance of managing interest margins effectively in the Kosovo market. These results have broader implications for discussions on governance structures within financial institutions and policy formulation. In Kosovo's banking sector, corporate governance has become pivotal for operational success and sustainability. This research offers valuable insights for stakeholders and policymakers by analyzing CG practices and their effects on key financial performance metrics.The dataset spans from 2015 to 2022, ensuring a comprehensive assessment of trends and developments within the banking sector. By employing the OLS estimation method, this study sheds light on the intricate relationship between corporate governance practices, financial indicators, and the sector's overall performance. In summary, this research comprehensively explores the interplay between corporate governance practices, financial indicators, and Kosovo's banking sector performance. The identification of NIM as a key performance metric underscores the importance of effective interest margin management. These findings have far-reaching implications, prompting critical discussions on governance structures within Kosovo's financial institutions for policymakers and industry leaders.

High and volatile inflation over a long haul is detrimental to an economy, particularly to a country’s financial sector. While most studies suggest a positive relationship between inflation and bank profitability, others argue for a negative impact. As such, it is evident that the impact of prolonged inflation on banking performance remains unsolved. This study aims at examining the impact of inflation on the financial performance of the banking sectors in Malaysia and Indonesia. These two countries are chosen because their banking markets were severely affected during Asian financial crisis in 1997. This study uses bank’s risk management framework as the underpinning model and yearly secondary data are extracted from World Bank database from year 2005 through 2022. To perform empirical modeling, we employ Johansen-Juselius Cointegration technique, as well as Engle-Granger Cointegration (EG) test as estimation tools. The empirical results show that there is a significant long-run relationship between non-performing loans (NPL) and inflation in both Malaysia and Indonesia. In the case of Indonesia, the effect of prolonged inflation is seen to be more perceptible than in Malaysia. With respect to short run dynamic, both countries strongly provide a statistically significant evidence to support the presence of short run relationship between NPL and the three explanatory variables. The policy implication from this study may suggest that inflation rate does have a significant economic influence on banking soundness in Malaysia and Indonesia. It is clear enough to see that an increase in inflation rate does not affect bank’s financial sustainability due to proactive risk management approach. Inflation targeting is one of the ideal measures that policymakers could adopt in addressing the issue of inflationary pressure on banking performance. There is always a need for worldwide banks to be consistently monitored by their monetary authorities so as to ensure the global banking sector remains resilient to varying market conditions in the long-run.

The Iraq Stock Exchange data for the period 2013–2021 were presented for the industrial, agricultural, hospitality, service, investment, insurance and banking sectors, as well as the gross domestic product data. Some financial indicators were applied, including market value rate, trading volume, total value rate, stock turnover rate and growth rate comparison during the study period. This showed the importance of the Iraq Stock Exchange index, which is considered one of the important and vital sources of stimulation for various sectors of the economy. The results also showed the weak performance of industrial and agricultural production compared to the dominance of the service sector in both trading volume and market value. This indicates a lack of public confidence in the performance of the manufacturing sectors. The study also revealed the weakness of the insurance sector, which is the main driver of the rest of the economic sectors. There are fluctuations in the performance of all sectors during the study period.

The animal feed sector in India is not new but performance of the sector is not well understood or documented, even though value-chain analysis provides a methodological tool to do so. To provide a better understanding of the sector, a study was carried out to evaluate the value chain performance of the animal feed sector in two eastern states of India, in terms of value addition, employment and profitability. Quantitative data were collected for each link in the value-chain on operational and financial performance. The strength and weaknesses of each link of the value chain were assessed and appropriate upgrading, management and development strategies were suggested. The results indicated that the animal feed value chain is relatively simple including only five main stakeholders groups; major feed input supplier, minor feed input supplier, animal feed producer, feed marketers and service providers. About 58.26 and 36.47 percent of input is supplied by trader and miller respectively. Capacity utilization in small firms (production capacity 35000 tonnes per year) is 51percent. Wholesaler is the main actor in forward value chain marketing 46 percent of the feed. Employment generation in small mill was 67 jobs per mill where as large mill created about 144 jobs per mill. Male represent 98percent of the labour force in the feed producing mills. Feed ingredients cost represent 80–90 percent of the total operating cost of the firms. The major factors impacting on the performance of the value chain relate to inputs, to feed production, to marketing, transportation, sale of product, low value addition on successive links in the chain, and low export. This paper highlights the benefits of value-chain analysis as a useful tool to understand sector performance and argues for its wider use in identifying critical factors and actions to support animal feed sector improvements.

The foreign exchange exposure of Chinese banks

The drivers of financial success of the insurance industry are of interest to several players in any economy including the government; policymakers; policyholders; and investors. In Kenya; there have been relatively few studies on this topic; most of which look at narrow elements that determine insurance companies’ performance. This article sought to explore the components contributing to the financial performance of insurance firms. We employed a sample consisting of 37 general insurers and 16 life insurers for the period running from 2009 to 2018 and utilised panel data methods in order to establish the determinants of financial performance of Kenyan insurers. The pooled OLS; fixed effects and random effects models were estimated with the financial performance measures (proxied by either ROA or ROE) as the dependent variables. The results of the study documented that insurer financial performance and size were positively related. The study also found that insurer financial performance was negatively related to the age variable. The study also unraveled that higher leveraged insurance companies performed better than their lowly geared peers. This article provides broad analyses of the various drivers of financial performance of the insurance industry in Kenya. The findings of this study contribute to the academic literature on the financial performance of the insurance sector in Kenya and Africa as a whole. Furthermore; it gives pointers to the management of insurance companies on the aspects of their business that would need greater attention to drive and sustain superior financial performance.

The objective of this study is to determine the impact of oil price fluctuations on the financial performance of banking sector in 8 oil producing and exporting countries in Middle East region (Kingdom Saudi Arabia, United Arab Emirates, Qatar, Bahrein, Kuwait, Jordan, Oman, Iran) in the period between January 2012 and December 2017. The results do not reveal the same impact of oil price fluctuations on the financial performance of banking sector in each studied country. A significant direct impact of oil prices on the financial performance of banking sector has been found in Bahrein, Oman and Iran. In Jordan, Kuwait, Qatar, Saudi Arabia and United Arab Emirates, the results do not reveal any direct impact of oil price fluctuations on the financial performance of banking sector. The analysis also showed that the size of the economy in each country and its diversification in non-oil sectors have a direct impact on the relationship between oil price fluctuations and financial performance of banking sector. The existence of well diversified economy in non-oil sector reduces the direct impact of oil price fluctuations on the financial performance of banking sector. Keywords: Oil prices, Banks, Financial Performance, Macroeconomics Factors. JEL Classifications : E02, E44, E6, G21, Q41 DOI: https://doi.org/10.32479/ijeep.8075

PurposeThis paper aims to examine the effect of insurance specific characteristics, corporate governance and risk reporting attributes, Shari’ah board and inflation rate on the financial performance of Takaful and cooperative insurance industries.Design/methodology/approachBased on a dynamic panel generalized method of moment’s system estimation, the author investigates determinants of financial performance as measured by the net premium written, earning ratio and profit margin.FindingsCompany size, insurance penetration, risk reporting and board size significantly explain the financial performance of both types of insurance companies. The effect of Shari’ah board and capital intensity on the financial performance of Takaful insurance is overall positive. The non-executive directors may negatively affect the financial performance. Additionally, positive relationship was also found between inflation rate and financial performance of cooperative insurance.Research limitations/implicationsThe typical shortcomings of a content analysis-based research apply to the measurement of operational risk reporting variable. Some modifications need to be made if it were to be used for exploring the financial performance of other Islamic financial institutions. The structural model used in this paper can be used as a generic platform to develop a specific framework for other types of organizations.Practical implicationsSome suggestions may be functional for Islamic insurance regulatory authorities to intensify the transparency, and for insurers to channel an additional source of investment funding toward economic sectors.Originality/valueThe present study seeks to fill a demanding gap in the literature by providing new empirical evidence on the factors that influence the financial performance of the Islamic insurance sector. Moreover, the paper tries to distinguish and identify the determinants of the performance for Takaful and cooperative insurance companies operating in Saudi Arabia.

Organizations concentrate to maximize their value. Therefore, their management are interested in their financial performance. However, management is also interested in minimization of the operational cost. This study examines the cost leadership strategy (CLS) and financial performance in a sample of 132 textile sector firms listed on the Pakistan stock exchange (PSX) during 2008-2016. For analyses used panel data random effect model and the results demonstrate that CLS significantly and positively affect the financial performance of textile sector listed firms of Pakistan. Moreover, control variables such as leverage and dividend payout ratio are significantly affect organizational performance. Finally reveals that study supports the theoretical association of return on assets with independent and control variables. Hence, recommended to follow the CLS to reduce operational costs further and to perform efficiently in the competitive market.

The aim of this study is to evaluate impact of corporate financial policies and the dynamics of leverage on financial performance of non-financial sector in Pakistan. In this study we used the data from Fertilizer, Chemical and Cement sector for the period 2008-2017. Abnormal return has been taken as dependent variable and Change in cash to lagged market values, Change in EBIT to lagged market values, Change in dividend to lagged market value, Net Financing to lagged market value, Lagged cash values to lagged market values, Lagged cash values to lagged market values crossed by change in cash to lagged market value, Change in total assets net of cash to lagged market values, Change in interest to lagged market values, Operating leverage, Financial leverage, Total leverage, Leverage ratio, Leverage ratio to change in cash crossed by lagged market values and WACC are taken as explanatory variables. OLS, Fixed effect and Random effect models has been used to express the impact of these variables on return. Hence it is concluded that leverage dynamics are significant contributors in designing the corporate financial policies. Corporate financial policies have significant impact on the financial performance of the non-financial sector of Pakistan.

Purpose– The paper aims to explore the impact of economic freedom on the efficiency of the Malaysian banking sector.Design/methodology/approach– The analysis is confined into two stages. In the first stage, the bias-corrected data envelopment analysis method is used to compute the efficiency of individual banks. Then bootstrap regressions are used to examine the impact of economic freedom on bank efficiency, while controlling for the potential impacts of contextual variables.Findings– It was found that greater freedom to start new businesses tend to impede the efficiency of banks operating in the Malaysian banking sector. The results indicate that restrictions on the activities of which banks could undertake exert negative impact on their efficiency levels. The empirical findings seem to support for official regulation and supervision of banks by setting the limits on activities which banks could undertake. In addition evidence supporting for government interventions in the foreign exchange and money markets was found.Originality/value– The purpose of the present paper is to extend the earlier works on the performance of the banking sector in a developing economy and establish empirical evidence on the impact of economic freedom. Although empirical evidence which examines the performance of banking sectors is abundant in the literature, to the best of our knowledge, virtually nothing has been published to address the impact of economic freedom.