Bank Behavior Research Articles

Analysis of Determinants Factors Affecting Organizational Citizenship Behaviour in Post-Merger Sharia Banks

Purpose: This study investigates the determinants of Organizational Citizenship Behavior (OCB), focusing on the relationship between Organizational Culture, Organizational Commitment, Career Development, and OCB. Method: Using a Literature Review approach, this study analyzes scholarly articles published from 2016 to 2020 to identify gaps in research and explore the mediation effect of Career Development on the relationship between Organizational Culture and Organizational Commitment in influencing OCB. Results and conclusion: The findings highlight the importance of Organizational Culture, Organizational Commitment, and Career Development in shaping OCB. While existing literature extensively examines OCB's relationship with organizational factors, such as culture and commitment, this study emphasizes the need for further research on the mediating role of career development. It also suggests that OCB is influenced by changes in organizational strategy and the implementation of human resource management practices, particularly in Indonesian companies. Research implications: The study provides theoretical insights into OCB determinants and practical implications for organizational management in fostering OCB. It underscores the significance of considering career development alongside cultural and commitment factors. Originality/value: This research contributes to the literature by addressing gaps in research and emphasizing the importance of career development in shaping OCB. It offers valuable insights for organizational management and contributes to the advancement of knowledge in organizational behavior and human resource management.

Measuring Procyclicality Behavior on Islamic and Conventional Banks in Indonesia

Research Originality: This study contributes to capturing credit cycle movements during the COVID-19 pandemic and compares sizes of credit and business cycles to promote banking stability.Research Objectives: This study attempts to examine banking behavior on amplitude and frequency indicators by focusing on the credit property of Islamic and conventional banks from 2014 to 2020.Research Methods: Ordinary Least Square, frequency base filter and turning point analysis are used.Empirical Results: This study unveiled that the size of an Islamic bank’s amplitude was higher than conventional bank’s amplitude. Meanwhile, the size of the frequency of Islamic banks had a longer frequency than conventional banks, given Islamic banks rely on real sector-based financing which has a longer period of economic expansion.Implications: It is also argued that conventional banks have a riskier leverage indicated by a higher percentage of amplitude. Thus, it is recommended to Indonesian banking sectors to promote the growth of Islamic banks to achieve financial stability. This research is significance in showing the Islamic banking’s contribution on stability given Indonesia is taking serious effort becoming the epicentrum of Islamic finance growth in the world.JEL Classification: E51, G01, G21How to Cite:Wiranatakusuma, D. B., & Muttaqin, E. I. (2024). Measuring Procyclicality Behavior on Islamic and Conventional Banks in Indonesia. Etikonomi, 23(1), 249 – 270. https://doi.org/10.15408/etk.v23i1.35293.

Ethical banking behavior among millennials and Gen-Z in Malaysia

PurposeThis study aims to determine the factors that influence ethical banking behavior among millennials and Gen-Z in Malaysia.Design/methodology/approachA stratified sample of 525 millennials and Gen-Z of Malaysian banking customers was used. Extended ethical decision-making (EDM) model was tested using partial least square-structural equation model for the analysis.FindingsThe findings indicated that the engagement of millennials and Gen-Z in ethical banking is influenced by factors such as intention, judgment and awareness, which shaped both generations’ ethical banking behavior.Practical implicationsThis study could be a central reference point and assist banking institutions in understanding the preferences of millennials and Gen-Z.Originality/valueThis study extends the previous EDM model that focused solely on consumer's belief systems. Three aspects differentiate this paper and contribute to its originality, namely, the uniqueness of millennials and Gen-Z behavior, incorporating new variables along with the EDM models and study in Malaysian context.

Effect of Leadership Behaviors and Job Satisfaction on Organizational Citizenship Behavior of Private Commercial Banks in Bangladesh: A Conceptual Framework

Effect of Leadership Behaviors and Job Satisfaction on Organizational Citizenship Behavior of Private Commercial Banks in Bangladesh: A Conceptual Framework

Interest Rate Sensitivity of Depositors in Non-Financial Banks: A Case of an emerging Economy

This study uses 62 years of data, from 1960 to 2021, including variables like deposits, interest rates, GDP, and inflation, to investigate the link between interest rates and deposit behavior in non-Islamic banks in Pakistan. The study finds that interest rates have a big influence on deposit behavior using time series analytic techniques as unit root testing, cointegration analysis, and Vector Error Correction Model (VECM). More specifically, people's decisions to deposit money in non-Islamic banks are observed to be influenced by interest rate variations. The results highlight the importance of interest rate changes in influencing deposit behavior, showing how people choose which non-Islamic institutions to deposit money with. These findings have significance for financial institutions, policymakers, and economists in general. They provide important new information about the ways in which monetary policy choices affect deposit mobilization and liquidity conditions in the banking industry. The report also proposes directions for further investigation, including the possible examination of differences in deposit behavior between demographic groupings or geographical areas. To further help understand the dynamics at work, it also suggests examining how interest rates affect deposits in various sample configurations. This research advances theoretical frameworks in the field by shedding light on the complex interactions between interest rates and deposit behavior. It also offers stakeholders practical guidance on how to deal with the effects of interest rate dynamics on deposit mobilization and banking sector liquidity.

Understanding the Dynamics of Oil Price Shocks and Stock Market Volatility in Pakistan: A Non-Linear Approach during COVID-19

Purpose: This article examines the complex relationship between oil price shocks and stock market volatility in Pakistan during the COVID-19 outbreak. Design/Methodology/Approach: The study used a Non-Linear Autoregressive Distributed Lag (NARDL) model to meticulously explore how oil price fluctuations, specifically supply and demand shocks, affect Pakistan's stock market. Monthly data sets from 2020 to 2022 were utilized for the analysis. Research Findings: The study's significant findings reveal that oil price shocks, except for a demand shock specific to the oil industry, have varying long- and short-term effects on stock market volatility, leading to asymmetry. This asymmetrical impact of oil supply and demand shocks on stock market volatility is confirmed, with no asymmetry observed from oil-specific demand shocks in the short term. These findings hold crucial implications for policymakers and investors in understanding and managing the economic dynamics of Pakistan post-COVID-19. Theoretical Contribution/Originality: This research stands out for its originality in understanding Pakistan's economic dynamics post-COVID-19. It provides unique insights for policymakers and investors to navigate future uncertainties related to oil price changes and market volatility, thereby sparking new avenues of thought and action in the field. Implications/Originality/Value: The practical implications of this study's findings empower policymakers and investors to make informed decisions to stabilize Pakistan’s economy after the pandemic. Specifically, the research provides guidance on managing the behaviour of stakeholders and banks in response to oil shocks, thereby contributing to the economic resilience of the country.

INSTITUTIONAL ENVIRONMENT AND MARKET STRUCTURE AS DRIVERS OF BANKING INDUSTRY PERFORMANCE

We analyze the effects of market concentration, income diversification, and institutional environment on banking industry performance. We used a sample of 168 countries for the 1994-2019 period and the GMM estimators for dynamic panel data regressions. Our results show that market concentration and diversification have a positive effect on bank performance. The institutional environment, both public-political and private-regulatory, has a negative effect on bank profitability, showing that these financial institutions obtain higher returns in countries with institutional weaknesses. When countries have a high institutional quality, the positive impact of market concentration and income diversification is reversed. Strengthening countries’ institutional quality makes it possible to combine competition between banks and specialization in traditional activities with higher performance. These results are relevant for bank stability and financial policy design, given that the institutional framework includes both direct and indirect channels that affect the general behavior and strategies of banks in the industry.We analyze the effects of market concentration, income diversification, and institutional environment on banking industry performance. We used a sample of 168 countries for the 1994-2019 period and the gmm estimators for dynamic panel data regressions. Our results show that market concentration and diversification have a positive effect on bank performance. The institutional environment, both public-political and private-regulatory, has a negative effect on bank profitability, showing that these financial institutions obtain higher returns in countries with institutional weaknesses. When countries have a high institutional quality, the positive impact of market concentration and income diversification is reversed. Strengthening countries’ institutional quality makes it possible to combine competition between banks and specialization in traditional activities with higher performance. These results are relevant for bank stability and financial policy design, given that the institutional framework includes both direct and indirect channels that affect the general behavior and strategies of banks in the industry.

Off-Balance Sheet and Bank Behavior: Does Market Power Matter?

Purpose: This paper examines the significant effect of off-balance sheets (OBS) on earnings management in the banking industry in Indonesia. Furthermore, this study also examines the role of market power as a moderating variable that moderates the relationship between off-balance sheet activities and earnings management. Design/methodology/approach: The off-balance sheet is measured through loan commitment facilities by observing the unused commitment facilities. Moreover, earnings management is measured through discretionary loan loss provisions (DLLP) by seeing the policy management makes in forming loan loss provisions (LLP) as income reduction accounts on the income statement. Multiple regression testing is used to measure the significant effect of off-balance sheet activities on discretionary behavior in LLP and the role of market power as a moderating variable. Findings: The study results show that off-balance sheet activity and market power are related to earnings management. Off-balance sheets have a positive effect on earnings management. Conversely, market power has a negative effect on earnings management. Another finding found that market power weakens the relationship between off-balance sheets and earnings management. Research limitations/implications: This research did not conduct an overall analysis of off-balance sheet exposure in banking financial statements. Thus, future research on total commitments and contingencies such as letters of credit and bank guarantees will be interesting to examine. Originality/value: Previous studies have observed LLP in earnings management and competition policies. However, they had not examined the relationship between the practice of earnings management through LLP toward off-balance sheets and market competition. Therefore, the research gap will be discussed in this study. In addition, the research has two contributions, the first is related to earnings management literature in the banking industry and the second is to assess whether higher bank market power tends to influence earnings management practices through off-balance sheet activities.

The U. S. Commercial and Investment Banks, the Eurocurrency Markets, and the International Economy: from the Late 1970s Through the Start of the 1980s

This article, through the case study of Merrill Lynch and Lehman Brothers, investigates the role of U. S. commercial and investment banks in the development of the Eurocurrency markets from the 1970s to the start of the new decade, as well as the investment activities of U. S. financial institutions in the new financial environment of the 1980s based on the appearance of new financial actors and instruments. The first purpose is to frame the investment activities of American banking in the Eurodollar and other non resident markets against the backdrop of changing market pressures on the dollar from the first oil shock through to the monetary and financial consequences of combined second oil crisis and the historic decision by the newly appointed Chairman of the Board of Governors of the Federal Reserve System Paul A. Volcker to raise interest rates at unprecedented highs since 1980. Therefore, this article links the investment behaviour of American banks to the trajectory of U. S. dollar in the foreign exchange markets between the two oil crises of the 1970s. Secondly, this contribution pinpoints the variety of financial activities of American bankers during this period, which went way beyond the Eurodollar markets and involved, at least by the mid-1970s, a wide array of financial instruments both overseas and on domestic markets, from government securities to commercial paper assets. In the third instance, the aim is, as much as possible, to shed some preliminary lights on how the process of securitising, typical of the 1980s, was on the investment portfolios of American investors by the start of this decade. At the outset of this three-fold research target, the final objective is to make sense of the limited role of Eurodollar dealings and offerings in the context of trading and investment activities of U. S. financial institutions during the time frame considered, and particularly since the start of the new decade. In turn, this article suggests the multi-fold scope of financial activities of American banks in the context of macroeconomic and monetary transformations following the end of fixed exchange rates, the tottering of the dollar in the foreign exchange markets, and the meteoric rise of unregulated money markets since the 1970s, as well as the rise of securitisation since circa the year 1980.

The Impact of Risk Retention on Moral Hazard in the Securitization Market

Based on European RMBS deals with 24 million quarterly loan observations, we examine the effect of risk retention on bank behavior. We show that retention deals perform better due to improved monitoring effort and workout processes. We find that the probability of rating changes and collateral revaluations is higher for retention loans, and ratings are more accurate; retention loans have a lower probability of becoming non-performing, a lower delinquency amount, and a shorter time in arrears. Moreover, non-performing and defaulted retention loans are more likely to recover. Reduced losses for deals with retention are associated with lower default rates, lower exposures at default, and higher recovery rates. Our results suggest that retention reduces moral hazard and incentivizes banks to exert higher effort, which results in superior securitized asset performance.

MACROPRUDENTIAL POLICIES AND BANK RISK: DOES LANGUAGE MATTER?

The role of macroprudential policies (MPPs) in influencing bank behavior has expanded significantly in recent years. However, the evidence regarding the impact of MPPs in influencing bank behavior across countries with different Future time reference (FTR) of languages has not been adequately examined. To inform this debate, utilizing bank-level data during 2010–2019, we examine how MPPs affect bank return and risk across countries with varying FTR of languages. The findings show that using MPPs lowers risk in countries with strong FTR. This is manifest in baseline regressions as well as in robustness tests that incorporate additional dimensions of a country’s economic and institutional environment. Over and above, the results show that although borrower- and lender-focused macroprudential measures are equally effective, their efficacy differs, with the former set of instruments being more useful in Emerging Market and Developing Economies (EMDEs). In contrast, the latter holds greater traction in advanced economies.

How do depositors respond to banks' discretionary behaviors? Evidence from market discipline, deposit insurance, and scale effects

We investigate how depositors respond to the U.S. bank's discretionary behaviors. We document higher deposit rates for banks that engage more in earnings management, suggesting evidence of market discipline. The quantile regressions, which dissect bank behavior at the right tail of deposit costs distribution, point out that the leveraged effect of earnings management is more significant in low- and high-deposit costs banks. Additionally, we note that depositors monitor banks' discretionary behavior to a greater extent before and during the crisis; however, they become less severe after the crisis. Interestingly, there is strong evidence of depositors monitoring large banks before, during, and after the crisis, suggesting the “too-big-to-fail” perception does not hold for our sample. The study also documents evidence of monitoring by insured and uninsured depositors over the sample period. After the crisis, we find a “wake-up call” for uninsured depositors, and more importantly, insured depositors remain sensitive to banks' reporting quality despite a weakening of incentives due to the increase of deposit insurance limit. The evidence is crucial when confirming that a deposit insurance scheme does not completely remove the deposit discipline. Our findings are useful for regulators and policymakers concerned about strengthening the market discipline.

THE IMPACT OF THE BANKING SYSTEM LIQUIDITY ON THE VOLUME OF LENDING AND INVESTMENT IN GOVERNMENT SECURITIES DURING THE WAR

In the context of escalating military and political uncertainties, a crucial component of banking system stability is the establishment of an adequate level of resource provision – liquidity. The research aims to analyze the transmission impact of the banking system's liquidity and its structure on the volumes of financing for the real sector of the economy in the second year of the war in Ukraine. In the conditions of war and the corresponding intensification of military-political threats and uncertainties, the regulator has made numerous complex decisions and restrictions aimed at balancing the challenges with the current situation in financial markets.The research found that the banking sector of Ukraine currently accumulates a significant amount of excess liquidity and demonstrates high profitability. However, in the conditions of war, the transmission mechanism works improperly, requiring constant intervention from the regulator to balance the liquidity of the banking sector and state finances, which, in turn, affects the behavior of commercial banks and changes the structure of their asset portfolios. An analysis of the structure of active operations portfolios of the banking, corporate, and private sectors provides grounds to assert that there is no reason to expect a change in investment behavior from these groups in the perspective of the next year due to the specificity of the conditions imposed by the Ministry of Finance and the regulator. To maintain macroeconomic stability in the national economy in the conditions of martial law it is necessary to introduce conditions to reduce demand for foreign currency and, as an alternative, offer the preservation of savings solvency through simplifying access to investments in government securities for households. The low financial literacy of the population and the underdeveloped stock market in Ukraine, as well as the more complex mechanism of purchasing government bonds or military bonds compared to deposit services, make such investments by the population insignificant and limited in demand.

Switching Behavior of Banks' Customers: Does It Exist?

Ideally, Indonesia with the largest Muslim population in the world is able to optimize its potential to become the prominent global player in Islamic finance industry. Unexpectedly, Indonesia is ranked at 9th position of global Islamic banking market. Despite the strong support from both government and society, it is ironic that the market share of Islamic bank in Indonesia has just reached 7.09% in 2022, far below its conventional counterpart, in its three decades of age. Employing descriptive quantitative approach, this study examines the presence of switching behavior of society in Indonesia by addressing why the impact of switching behavior has small impact on the market share improvement in the context of Indonesia. A total of 128 respondents were filling the questionnaire based on purposive random sampling fulfilling the criteria of being customer of both Islamic and conventional bank as well as currently working.

Consumer behavior in Islamic banking: a systematic literature review and agenda for future research

PurposeThis study aims to conduct a systematic literature review on consumer behavior (CB) in Islamic banking (IB), encompassing an overview of researched contexts and topics, identifying literature gaps and proposing a comprehensive future research agenda.Design/methodology/approachBy using bibliometric citation and content analysis, this study investigates 135 documents sourced from Scopus indexed publications.FindingsThis study delves into the growing field of CB in IB, offering a comprehensive understanding that encompasses influential journals, theories, research context, characteristics and methods used in IB research.Originality/valueTo the best of the authors’ knowledge, this study is the first to provide a comprehensive review of CB studies in the IB domain detailing research topics, prevailing theories, research settings, important variables and research methods.

Information environment and participation of foreign banks in U.S. syndicated loan market

This study examines how financial information quality affects the participation and lending behavior of foreign banks in the loan syndicate of U.S borrowers. We utilize the implementation of the Sarbanes-Oxley Act (SOX) in the U.S. as our research setting. We demonstrate a significant increase in foreign banks loan shares to public firms in the post-SOX period. In parallel, we find that this increase in lending by foreign banks is accompanied by more favorable price and non-price contract terms. By contrast, we find no evidence of either more loans or more favorable loan contract terms offered to U.S. privately held borrowers by foreign banks. Further analysis shows that the impact of such an exogenous change on loan contract terms are more pronounced among public listed borrowers with higher ex ante information asymmetry. Overall, our findings imply that the increase in quality and reliability of corporate financial information brought about by SOX reduces the information disadvantage of foreign lenders.

The Effects of Regulatory Office Closures on Bank Behavior

AbstractWe investigate if the decentralized structure of regulatory office networks influences supervisory outcomes and bank behavior. Following the closure of an office, banks previously supervised by that office increase their lending and risk‐taking. As a result, affected banks have larger loan losses and higher failure rates during the 2008–09 financial crisis. Analysis of the channels suggests that proximate supervisors enforce timelier provisioning practices, restrict large cash payouts, and provide advice that increases a bank's risk‐adjusted returns. Overall, our findings imply that geographical proximity reduces informational frictions in supervisory monitoring and leads to more stable banks.

An environmentally conscious waste management system in an effort to create a sustainable city (study of waste management systems at Syiah Kuala University)

Final Processing Site (TPA) is a place designated as a final stage waste management location. The increasing accumulation of waste can result in an increase in the volume and discharge of leachate generated through landfill management. Waste management can be implemented, one of which is supported by the existence of waste bank activities. Waste banking is a method implemented through the 3R concept (Reuse, Reduce and Recycle). This research aims to determine the waste management system at the Universitas Syiah Kuala Waste Bank, as well as supporting factors and strategies for increasing waste reduction. Improvements in waste bank management are analyzed using statistical tests, correlations and so on. The method used to determine whether waste bank management has improved is material flow analysis and structural equation modeling (SEM) testing. The results of the material flow analysis show that based on the mass balance the reduction potential of waste that can be managed by the Universitas Syiah Kuala Waste Bank is 45.4%. The results of statistical tests show that the waste management system at the Universitas Syiah Kuala waste bank, Banda Aceh is quite good, seen from the knowledge factor reaching 90.6%, attitude at 88.4% and waste bank behavior at 91.3%.

A STUDY ON THE IMPACT OF MOBILE BANKING ON CONSUMER SATISFACTION IN EMERGING MARKETS

Introduction: The research addresses the impact of mobile banking on consumer satisfaction in emerging markets, investigating adoption patterns, usage trends, and demographic influences. Against the backdrop of a rapidly evolving financial landscape, understanding the dynamics of mobile banking is crucial for optimizing services and fostering financial inclusion. Methods: The study employed a convenience sampling method, recruiting 150 participants from diverse backgrounds. Utilizing Likert scale questions, the research assessed mobile banking behaviors and satisfaction levels. The One-Way ANOVA (Welchs) and Independent Samples T-Tests were applied to analyze age and gender influences on adoption and satisfaction. Results: Key findings reveal a high frequency of mobile banking usage, positive perceptions of accessibility, ease of use, and security. Age emerged as a significant factor influencing adoption patterns and satisfaction levels. Statistical analyses indicated a notable difference in mean scores across age groups. Gender, however, did not exhibit a significant impact on mobile banking behaviors. Conclusion: The study concludes that mobile banking holds substantial promise for enhancing consumer satisfaction in emerging markets. Age-specific strategies are recommended for targeted marketing and outreach. The findings contribute valuable insights for financial institutions, policymakers, and researchers navigating the dynamic landscape of mobile banking in emerging economies.

Bank depositors in Arab economies amidst the COVID-19 pandemic

This study investigates the multifaceted impacts of COVID-19, GDP, exchange rates, unemployment, and economic policy uncertainty on bank depositors in Arab economies: Algeria, Comoros, Djibouti, Egypt, Iraq, Jordan, Lebanon, Libya, Mauritania, Morocco, Palestine, Somalia, Sudan, Syria, Tunisia, and Yemen, between 2017 and 2022. Using ordinary least square analysis, the research uncovers significant relationships between these variables and banking indicators. COVID-19 has emerged as a dominant force, displaying a substantial and adverse link to the number of deposit accounts and depositors. While GDP, exchange rates, unemployment, and economic policy uncertainty also exhibit influences on banking metrics, their effects are comparatively smaller. This underscores the pandemic’s exceptional sway over banking behaviors within the region, emphasizing the pressing need to address COVID-19’s implications for financial stability and strategies to reinforce banking resilience amidst diverse economic challenges.