Asian Bank Research Articles

The effect of financial performance on islamic ethical identity disclosure of ASEAN sharia banks

This research aims to analyze the influence of Risk Profile, Good Corporate Governance, Earnings and Capital (RGEC) on the disclosure of Islamic ethical identity in Sharia banks in ASEAN. The method used in this analysis is descriptive analysis and regression testing on 23 Islamic banks from 11 ASEAN countries. The research results show that non-performing financing (NPF), which measures risk profile, negatively influences the disclosure of Islamic ethical identity. In contrast, audit committee competency (KAA), as an indicator of good corporate governance, has a positive influence. Likewise, the return on assets (ROA) ratio, which measures earnings, positively influences the disclosure of Islamic ethical identity. However, as a capital indicator, the Capital Adequacy Ratio (CAR) does not have a significant influence. Based on this research, Sharia banks in ASEAN are expected to increase the optimization of their Islamic ethical identity disclosure through risk management, good corporate governance, improving financial performance, and paying attention to capital adequacy. However, this study has limitations, such as a limited sample size and high variability in the dependent variable. Therefore, further research is recommended to expand the sample, add variables, and reduce subjectivity in identifying disclosures of Islamic ethical identity.

The Impact of Capital Regulations on Bank Margins of ASEAN Banking Sector

Basel Committee on banking supervision (BCBS) has issued Basel which requires the banks to comply with the minimum capital requirement after the crisis. Nevertheless, whether the requirement imposes impact the banking sector which comprises a dual banking system, in a positive manner is still questionable. Given the higher capital costs from the strict capital requirements, banks are being forced to raise bank margins. This study investigates the effect of capital regulations on conventional and Islamic banks’ margins covering the ASEAN banking system from 2009 to 2017. The empirical analysis uses dynamic panel data frameworks to reveal several factors affecting bank margins. Overall, the results suggest that the total regulatory capital ratio helps reduce the margins of conventional banks but does not influence the margins of Islamic banks. As for the Tier-1 capital ratio, the variable increases the Islamic bank margins but does not significantly affect conventional bank margins. Based on the analysis results, regulators of conventional banks need to impose capital requirements as suggested by Basel III to reduce bank margins. Meanwhile, as for Islamic banks, the bank margins can be reduced if regulators can introduce a separate set of requirements tailored explicitly for Islamic banks.

Volatility impacts on global banks: Insights from the GFC, COVID-19, and the Russia-Ukraine war

This study analyzes the volatility impact of the Chicago Board Options Exchange Volatility Index (VIX) on the global banking sector during the Global Financial Crisis (GFC), COVID-19, and the Russia-Ukraine War. Using a Dynamic Conditional Correlation (DCC) model with asymmetric Generalized Autoregressive Conditional Heteroskedasticity (GARCH) volatility, we examine three geographical regions, focusing on large banks. The key findings include significant symmetric Granger causality between volatility changes and negative bank returns during the GFC, asymmetric impacts of volatility increases and decreases in the lower quartile of bank returns, with COVID-19 exhibiting the strongest asymmetry, and volatility shocks affecting the downside risk of the banking sector, where the highest value-at-risk (VaR) levels occur in the GFC and the lowest during the war period. Finally, Asian banks demonstrated greater resilience to volatility impacts than European banks, which were the most affected by COVID-19 and the war. Overall, we find that volatility has less impact on the global banking sector in the war sample than in other crises. Our findings provide valuable insights for policymakers, investors, and regulators to help effectively manage future crises and ensure the stability of the global banking sector.

Research on the Development Process and Competitiveness of Central Asian bank in Indonesia

This study aims to analyze the development process and current status of the Indonesian banking industry. In addition, we will investigate the founder, development process and current status of Bank Central Asia, an overseas Chinese bank that plays a central role in the Indonesian banking industry and analyze its competitiveness. Based on this analysis, we would like to propose practical implications and development strategies. Based on literature research, we will investigate the development process and current status of the Indonesian banking industry, the founders of Bank Central Asia, the development process and current status, and analyze its competitiveness. Using Porter's five forces analysis model, we want to analyze the competitiveness of Bank Central Asia. By utilizing SWOT analysis, we analyze the internal and external environment of Bank Central Asia. Bank Central Asia, although founded by overseas Chinese, is a leader in Indonesia's financial industry. Bank Central Asia has weaknesses in digital transformation, product innovation, customer experience, risk management, cooperation and innovation, but has strengths in network expansion, talent training, promotion and development system improvement. Based on this competitiveness, we have maintained a leading position in the Indonesian financial market. When formulating and executing strategies, Bank Central Asia must fully consider market trends, competitor dynamics, and changes in policies and regulations, make sound decisions, and monitor and adjust plans at any time. Bank Central Asia has maintained a good reputation and sustainable development based on external networks and internal competitiveness. A study on these overseas Chinese banks helps to understand the Southeast Asian economy.

Endogenous and exogenous performance sources in Asian Banking: A hybrid stochastic Multi-Criteria Decision-Making approach based on sign decomposition and transfer entropy

Endogenous and exogenous performance sources in Asian Banking: A hybrid stochastic Multi-Criteria Decision-Making approach based on sign decomposition and transfer entropy

Does Capital Structure Impact Financial Performance? (Banking Enterprise in ASEAN 2017- 2021)

This study intends to investigate how capital structure affects the financial health of ASEAN banking organizations. Demands for improving banking performance must always be carried out so that their survival can be maintained properly. A company's financial performance is influenced by various factors, and capital structure is one of them. The sample used in this study is the ranking of the top 10 banking companies with the largest assets in ASEAN in 2021 during the 2017-2021 period. The dependent variable in this study is financial performance which is proxied by ROA, ROE, and Tobin's Q. Leverage, DER, and collateralizable assets are used as proxies for the independent variable, capital structure. The method used in this research is panel data regression analysis. The results of this study are that there is a negative effect of leverage on ROA, DER has no effect on ROA, CA has a positive effect on ROA, Leverage has a positive effect on ROE, DER has a negative effect on ROE, CA has a positive effect on ROE, leverage has a positive effect on Tobin's q, DER and CA has no effect on Tobin's q.

Nexus of Finacial Inclusion and Human Development as an Important Role in Economic Growth: Evidence from ASEAN Countries

This study aims to analyze the interaction between the financial inclusion index and HDI, the financial inclusion index and HDI nexus with GDP. The financial stability problem in developing ASEAN countries is still motivated by the high level of banking NPLs. This study uses panel data with the Generalized Method of Moment as an analytical method. The selection of the vulnerable research year is motivated by the phenomenon. The result showed ATM and Human Development Index have a positive impact on GDP growth and also shows that financial inclusion and the human development index are important drivers of ASEAN-7 economic growth. Determining financial inclusion as a national strategy in several countries places the financial sector as a vital indicator of change. However, it should be remembered for the relevant authorities that the fact that ASEAN banks still have problems with NPLs is too high, so further attention is needed on the concept of prudence in the process of increasing the implementation of financial inclusion indicators so as not to become a boomerang for banking liquidity.

Non-performing loans - a threat to the fi nancial stability of Asia countries

The article deals with one of the complex problems of the functioning of the modern banking system in East and Southeast Asia — a high level of non-performing loans. The accumulation of this debt by credit institutions causes a deterioration in bank balance sheets, limiting lending to the real sector. Despite large country diff erences in this indicator, after a long course of the pandemic, it already reaches a critical level in a number of them. Due to the strong negative impact of COVID-19 on fi nancial stability, regulators are having to develop specific procedures to identify, mitigate risks, ensure adequate liquidity and maintain market confidence. As government support programs, moratoriums and loan guarantee schemes to overcome the crisis consequences of the pandemic end, banks are increasingly beginning to be aff ected by the economic recession. A number of lowincome countries in Asia are already preparing to settle or cancel debts related to COVID-19. The policy of the US Federal Reserve in the fi eld of raising interest rates exacerbates the position of Asian banks, leading to large fi nancial losses. According to experts. after the end of the pandemic, NPL ratios for the bulk of Asian banks will be between the relatively low levels recorded during the global economic crisis and the stress indicators that arose during the 1997 Asian fi nancial crisis. Hidden asset quality risks include a weaker outlook for the corporate sector, a rising share of interest moratoriums in South and Southeast Asia, losses for banks due to stress on China’s commercial real estate sector, and high household debt due to higher interest rates in South Korea.

The Role of Corruption, Transparency, and Regulations on Asian Banks’ Performance: An Empirical Analysis

The Role of Corruption, Transparency, and Regulations on Asian Banks’ Performance: An Empirical Analysis

Do Tax Avoidance and Firm Ownership Matter for Sustainable Finance Disclosure? Evidence From the Listed Banks in Asean Countries

Purpose: The rise of sustainability concern has brought the sustainable finance disclosure to the financial industry. Our study examines the effect of tax avoidance and firm ownership on sustainable finance disclosure in the Listed Banks in ASEAN Countries. Theoretical framework: The study explores the sustainable finance phenomenon by following the concept of agency theory and institutional theory. Design/methodology/approach: Using purposive sampling method, we generate a set of panel data with a total of 327 observations from 109 banks during 2017-2019, analyzed with panel data regression. Findings: We discover that the level of sustainable finance disclosure in ASEAN banking industry is still low in overall, despite the practice in Singapore has been considerably high. Empirical analysis with panel data regression reveals that government ownership has positive effect on sustainable finance disclosure, emphasizing the role of government shareholders in boosting sustainable finance disclosure practice. Meanwhile, family ownership and tax avoidance exhibit no significant effect. This research contributes to the development of the literature as one of the initial studies investigating sustianable finance disclosure in ASEAN. Research, Practical & Social implications: We also bring several implications for the improvement of sustainable finance disclosure in ASEAN banking sector. The enforcement for sustainable finance disclosure should be increased by maximizing the role of the government and business regulators. Banks should also participate properly in sustainable finance disclosure regardless of the financial and ownership aspects and thus can help achieve sustainable development goals. Originality/value: The study provides new insights regarding the impact of tax avoidance and firm ownership in ASEAN banking sector.

Unraveling the Fintech Landscape: A Systematic Mapping Study on the Impact of Financial Technology Innovation on Investment Decision-Making in ASEAN Banking

This systematic mapping study identifies and analyses fintech innovations that influence investment decision-making in ASEAN banking. Through a rigorous literature search and screening process, 128 relevant studies were analyzed, identifying four key fintech innovations that impact investment decision-making in ASEAN banking: advisory platforms, blockchain technology, peer-to-peer lending, and mobile banking. The analysis of these innovations reveals their potential to improve investment decision-making in terms of cost efficiency, speed, accessibility, and transparency. However, the study also identified several challenges associated with these innovations, including cybersecurity risks, regulatory issues, and a lack of customer trust. This study provides valuable insights into the current state of fintech innovation in ASEAN banking and its impact on investment decision-making. The findings can help policymakers, regulators, and financial institutions make informed decisions about developing and adopting fintech innovations in the region.

The Mutual Impact of Credit Risk and Bank Stability in Iranian and West Asian Banks

Banks play an important role in the country's economy, so increasing bank’s financial stability through the management of financial risks, including credit risk, is one of the most important factors in maintaining the stability of the economy. The mutual effect of credit risk and banking stability in 14 Iranian and 13 West Asian banks in period of 2012-2018 has been studied in this research using GMM approach. Findings show than both credit risk and bank stability have a mutual negative and statistically meaningful effect on eachother. Results also show that there is no meaningful difference between Iranian and West Asian banks about effect of credit risk on bank stability, but the negative impact of bank stability on Iraninan banks is greater. The results of this study can be used by banking sector policymakers to reduce credit risk and enhance bank stability.

The impact of natural disasters on bank performance and the moderating role of financial integration

ABSTRACT Using a sample of East Asian banks covering the period 1999–2014, this paper analyses the impact of natural disasters on commercial bank performance and how financial integration moderates this relationship. A dynamic GMM model reveals that natural disasters significantly lower deposit ratios but have no contemporaneous relationship with liquidity, credit risk, profitability and default risk. There is also evidence of a lagged effect of disasters, increasing deposits and lowering liquidity one year after the event. Furthermore, foreign banking claims, specifically those extended by regional Asian lenders, help to alleviate the deposits decline in the aftermath of natural disasters. These baseline findings are mainly driven by severely affected countries. Overall, the paper highlights the role of commercial bank deposits and foreign banking claims as sources of finance for post-disaster recovery. In particular, the resilience of Asian foreign claims in the event of natural disasters provides evidence to support intra-regional financial integration in East Asia.

PENGARUH CR, TATO, NPM, DAN EPS TERHADAP NILAI PERUSAHAAN DI ERA BANI

This study aims to determine the effect of Current Ratio (CR), Total Asset Turn Over, Net Profit Margin (NPM), and Earning Per Share (EPS) on firm value in ASEAN banking in the era of B.A.N.I. This research uses quantitative research – non case by using secondary data. The secondary data used is the annual report of banking companies in ASEAN in 2020-2021. The report is obtained from the official website of each stock exchange in every country in ASEAN. As for other secondary data used in this study in the form of journals, books, and other literature related to research. The results of this study are CR, TATO, NPM and EPS have an effect on Company value.

COVID-19 and financial performance: Pre and post effect of COVID-19 on organization performance; A study based on South Asian economy.

The COVID-19 epidemic has damaged developing as well as developed economies and reduced the profitability of several companies. Technological advancement plays a vital role in the company's performance in this current situation. All activities carry on virtually. In this study, the financial performance of enterprises in the South Asian banking industry will be compared before and after the COVID-19 epidemic. Furthermore, the full influence of the pandemic will take place in the long run. This study also explains the technological effect on improving performance, especially during the period of the COVID-19 pandemic. It has an impact on people's social lives as well as the economic world. This study examined a sample of 34 banks from the South Asian region from 2016 to 2021. A Wilcox rank test was used to determine whether there was a significant difference before and after the epidemic era. The overall conclusion of this study is that the COVID-19 pandemic had a significant influence on the bank's financial performance, particularly in terms of profitability. But technological advancement has a positive effect on organizational performance, ultimately increasing the financial performance of South Asian banks. And there is a big difference between pre-pandemic and post-pandemic organizational performance. The findings of this study have significant policy implications since it is clear that cooperation among governments, banks, regulatory agencies, and central banks is necessary to address the financial and economic effects of the COVID-19 pandemic.

Evaluating ASEAN and EU Banking Sector Efficiency Using DEA (Data Envelopment Analysis)

Abstract. This study compares ASEAN and EU banking efficiency using Data Envelopment Analysis (DEA) and an intermediary approach. Three input variables (staff expense, fixed assets, total customer deposits) and two output variables (loans to customer and operating income other than interest) are analyzed using RStudio and R. EU and ASEAN banks had efficiency scores of 0.7 and 0.65, respectively, showing opportunity for improvement. Based on cost analyses, ASEAN banks are more efficient than their EU counterparts. Inefficiencies occur when output surpasses input or is much lower than another output variable. However, both regions may improve banking efficiency to do better. The 10-year trends exhibit oscillations, showing that regulatory issues affect banking efficiency. Stricter laws, higher capital requirements, and risk management changes may have hampered ASEAN credit. The dynamics and objectives of the EU and ASEAN economic blocs shape their financial systems. ASEAN is working toward regulatory convergence, while the EU has integrated and harmonized more. To maintain a stable and efficient financial industry, the region's banks must adapt to changing economic landscapes, technological advances, and mounting challenges. Keywords: ASEAN, bank performance, data envelopment analysis, efficiency, EU

Financial Innovation and Restriction Hypothesis in the Banking Industry: Evidence from ASEAN- 5

This study investigates the financial innovation impact on bank market power in ASEAN banking from 2008 to 2018. It uses income diversification as a representative of financial innovation. The impact of countries’ development of financial innovation on market power is measured by the number of ATM, internet, and cellular phone users. The data panel regression model reveals that diversified banks may enjoy higher market power. This result rejects the banking restriction activity hypothesis, which states that a bank that diversifies its income stream results in increased competition. A higher number of available ATMs and more internet users lowers the percentage disparity of price and marginal cost and consequently increases the market competitiveness. Nevertheless, an increasing number of cellular users in the country increases market power. Conjecturally, more people use the online bank platform on their cellular phones, which creates a greater flow of fees to the bank.

Exploring the nexus among the Macroprudential Policies, Funding Liquidity Risk and bank risk of Commercial Banks in Leading South East Asian Economies

The present study explains the behavior of liquidity management, and the macro prudential Policies index and their impact on commercial banks’ risk, particularly on the selected conventional banks in ASEAN countries. The MPP are relatively new in the operations of commercial banks. Hence, more information is needed to understand their impacts on commercial banks’ performance, particularly in the selected conventional banks in ASEAN countries. The major issues in the banking sector of ASEAN countries are asset quality, liquidity risk, and the increasing regulatory pressure from the macro prudential perspectives. Moreover, the study takes a recently developed macro prudential index and its sub-indexes to assess the impact of these on the bank’s risk. Therefore, regulators will be able to utilize this study to enhance the quality of bank assets and choose the most lucrative portfolio. It is vital to highlight that the sample consists mostly of ASEAN-typical institutions. This research will shed light on the general and particular effects of this financing liquidity and MPP index on the BR of ASEAN banks. The dynamic panel is recommended over the static with the assumption that the MPP is likely to change slowly with respect to the change in the whole banking sector that’s why the lag length can help in determining the behavior of whole banking system. Our findings are in line with the new Basel III requirements that necessitate banks to utilize long-term funding sources to equal their fund utilization and to capture further capital in the future considering that these steps can help curtail the risk-taking of banks. Our findings present valuable implications for both market participants and policymakers. By understanding the consequences of the banks’ decision to fund LR and their risk-taking behavior, regulators may find ways to enhance banking regulatory frameworks in order to better control the behaviour of bank managers and to improve financial resilience.
 

SPILLOVER EFFECTS OF ASIAN BANKING SECTOR ON SYSTEMIC RISK IN THE INSURANCE SECTOR: BASED ON A DOUBLE-CoVaR MODEL

This study explored the spillover effect of the banking sector on the systemic risk of the insurance sector. We selected 27 listed insurers from China, South Korea, Japan and Singapore, and built a double-CoVaR model based on monthly data for 2012–2021. We explored the impact mechanism by decomposing the spillover effect and conducted regression analysis to determine factors influencing net spillover. First, the banking sector has positive spillover on insurance systemic risk. Second, the banking sector affects insurance systemic risk mainly through direct risk spillover. Third, the size, asset similarity and leverage of insurers significantly impact net spillover. This paper contributes to the previous literature and regulation by providing a methodology for predicting risk spillovers using a new model and an up-to-date data.

How does bank capital influence lending and securities holdings? Evidence from Asian banks

Using panel dataset of 370 banks from 15 Asian countries over the period 2010-2018, this paper provides empirical evidence on the impact of bank capital on lending, and securities holdings. Our findings suggest that the increase in bank capital reduces lending supply, especially lending with a maturity between 1 and 5 years. Moreover, we highlight that the incentives to hold more securities (such as investment and trading securities) increase as banks’ capital increases. We also show that the banks that responded most were highly deposit-dependent and small. Overall, our results suggest that Asian banks respond to a capital increase by decreasing the supply of loans against an increase in securities holding.