Banks Face Research Articles

Bank Systemic Risk in Indonesia

Banks are the primary participants and play a crucial role in the financial systems of most economies, including Indonesia. Banks face systemic risk because of their dynamic structure and the complex economic environment in which they operate. This study aims to measure the systemic risk in the Indonesian banking industry. This study employs quarterly data from 2010 to 2022 for 39 banks listed on the Indonesian stock exchange. In order to obtain the systemic risk index, this study uses the approach of conditional value at risk (CoVar) as well as marginal expected shortfall (MES).

A bankszabályozás lehetőségei és korlátai az endogén pénzelmélet keretében

The article questions whether the current system of bank regulation can guarantee that banks are subject to a hard budget constraint. We use the framework of post-­Keynesian endogenous money theory. Banks deposit loans in companies’ bank accounts, and no external source is needed for the transaction, so banks can in principle create an unlimited amount of money if there is a demand for credit. However, banks’ ability to create money is limited by a number of factors. Using János Kornai’s concept of a soft budget constraint we analyze the factors that cause inherently soft budget constraints for banks. We point out that neither monetary policy, nor the profit goals of banks, nor the banks’ internal risk management practices would guarantee that banks face a hard budget constraint. This must be imposed on them by an external factor, the banking regulation. However, the current system of banking regulation is not well suited to do this, so the soft budget constraint is inherent to banking. This contributes to the fact that banking crises are natural part of the financial system.

The Role of Direct Credit Facilities in Financing Small and Medium Enterprises in Jordan Case Study (Islamic International Arab Bank)

Objectives: The study aimed to identify the role of Islamic banks operating in Jordan (Islamic International Arab Bank) in providing appropriate financing for small and medium-sized enterprises, and on the effectiveness of the financing methods adopted in the Jordanian Islamic banks to finance small and medium-sized projects, and on the most important obstacles and difficulties facing Islamic banks (Islamic International Arab Bank) when providing appropriate financing to small and medium-sized enterprises. Methods: The study relied on the descriptive approach in order to describe and explain the role of Islamic banks in financing small and medium enterprises and to identify the most important obstacles faced by Islamic banks. Results: The study concluded that there is a role for Islamic banks in financing small and medium enterprises, which is a strong relationship, since the correlation coefficient is 99.8, and there is an effectiveness of Islamic financing formulas in financing small and medium enterprises. There are some obstacles that Islamic banks (International Arab Islamic Bank) face when providing financing to small and medium enterprises. Conclusion: The study recommended the need for the competent authorities such as the Central Bank to work to provide the elements of success for Islamic banks because of their important role in providing financing for small and medium enterprises. And that Islamic banks should provide feasibility studies for the projects that provide financing to them.

Save the Bank: Centralized Digital Bank — Centralization and Digitalization as Strategic Imperatives

This thesis explores the transformation of traditional banks into centralized digital banking systems as a strategic response to the burgeoning challenges posed by decentralized finance (DeFi) technologies such as blockchain and cryptocurrencies. As these technologies disrupt traditional financial paradigms, offering more direct, efficient, and transparent financial services, traditional banks face increasing pressure to adapt and evolve. This work argues for the necessity and feasibility of centralized digital banking as a comprehensive countermeasure to DeFi. Through a detailed examination of current banking challenges, including inefficiencies in customer service, transaction processing, and compliance, the thesis proposes a model of banking that leverages centralization and digitalization to address these issues. The proposed model not only enhances operational efficiency and customer engagement but also fortifies the banks’ competitive edge in a digital economy. Furthermore, the thesis discusses the long-term implications of such transformations, predicting that centralized digital banks will not only coexist with DeFi platforms but may also lead the financial services industry by adopting innovative technologies that drive customer satisfaction and operational excellence. Recommendations are provided for both banks and policymakers to foster an environment conducive to the development of robust, secure, and customer-focused digital banking services. In summary, this thesis affirms that centralized digital banking is not merely a defensive strategy against the rise of DeFi but a forward-looking approach that will define the future of banking.

An Analysis of the Development of Investment Banks' IPO Business under the Registered System

Under the reformed registration system, the role of investment banks in the Initial Public Offering (IPO) business has evolved significantly from the approval system. As crucial "gatekeepers" of the capital market, these banks now bear the responsibility of thoroughly examining issuance application materials for truthfulness, accuracy, and completeness. While the IPO business promises a prosperous future for investment banks, it also presents considerable challenges. Some banks face issues such as insufficient adherence to prudent examination requirements, lax establishment or implementation of internal control systems, and the need for improved information management. To enhance their sponsorship business, it is recommended that investment banks optimize talent training, internal management control, risk management, and intelligent information system construction. Cultivating professional sponsorship talents with comprehensive skills, reinforcing ethical standards, and conducting thorough reviews of IPO companies are crucial. Furthermore, optimizing the management system, establishing effective communication mechanisms, and enhancing risk management capabilities are essential steps. Leveraging advancements in computer technology, the construction of a secure and reliable intelligent information system is advised. As the reform progresses, investment banks should bolster international exchanges, cooperation, and professional competitiveness to evolve into reputable international brand banks.

Kajian Tentang Tingkat Pemahaman Masyarakat Terhadap Sistem Perbankan Syariah

Despite the progress made by Islamic banks, they still contend with the dominance of conventional banking, which implements an interest-based system. This study aims to assess the public's understanding of Islamic banking, particularly in Jakarta. Field research conducted in the capital city revealed that while people are aware of the existence of Islamic banks, their understanding of the intricacies remains limited. Many are unfamiliar with the products and services offered by Islamic banks, attributing this to a lack of information disseminated through various media channels. This study sheds light on the challenges Islamic banks face in raising public awareness and understanding.

Effect of Corporate Environmental Performance on Banks’ Loan Pricing

Effect of Corporate Environmental Performance on Banks’ Loan Pricing

Influence of operational excellence strategy on organisations’ competitiveness among tier III category of Commercial Banks in Kenya

Tier 3 Kenyan commercial banks face significant challenges, including intense competition, financial distress, and declining profits despite consistent loan growth. This study investigates the impact of operational excellence strategies on the competitiveness of these banks using a pragmatic research approach that combines qualitative and quantitative methods. The study is grounded in the dynamic capabilities theory and collected data from 288 respondents across various management roles within the banks through semi-structured questionnaires. The data were analyzed using thematic analysis for qualitative data and SPSS for quantitative data, including descriptive statistics, regression analysis, and ANOVA. The regression model revealed a moderate positive relationship between operational excellence and organizational competitiveness, with a correlation coefficient (R) of 0.685. The coefficient of determination (R Square) was 0.469, indicating that operational excellence accounts for 46.9% of the variability in competitiveness. The coefficient for Operational Excellence is 1.260 (standard error = 0.087, beta = 0.685), with a t-value of 14.493 and a significance level of 0.000. The constant coefficient is -1.565 (standard error = 0.353, t-value = -4.437). This study underscores the importance of strategic investments in operational excellence practices to enhance organizational efficiency and sustainable competitive advantages. However, the study's scope is limited to tier III commercial banks in Kenya, and future research should explore additional factors influencing competitiveness and include a broader sample for improved generalizability.

Post-Merger Commercial Bank Performance Trends: A Case of Kenya

Commercial banks face performance challenges since most of them react to these challenges in a fairly standardized manner. This is because most of the commercial banks offer similar products and services. In so doing, they face high competitions and as a result, they engage activities in pursuit of a competitive edge in order to keep their current customers and attract new ones. Some of the strategic activities these companies have engaged in the recent past have been Mergers and acquisitions (M&A). M&A have become an effective strategic tool to consolidate the Banks and Financial Institutions (BFIs) in Kenya to increase their capital base, expand their business, and bring financial stability. However, despite venturing into mergers and acquisitions, evidence from elsewhere indicates that financial performance stability and improvement still remains a challenge forming a good basis for further empirical investigation. This paper provides an assessment of the post-merger commercial bank performance in Kenya over the period 2008 to 2019 using return on equity as a proxy for bank performance. The target population for this study comprised all 13 commercial banks operating in Kenya between the year 2008 and the year 2019. The study used purposive sampling to select thirteen (13) commercial banks that had undergone mergers and acquisitions in Kenya over eleven years (from 2008 to the year 2019). The study finds that the post-merger effect of mergers and acquisitions on financial performance is mixed. Some commercial banks reported improved ROEs while a few reported declining ROEs during the study period. To enhance performance, the study recommended that commercial banks should prioritize M&A opportunities that align with their long-term strategic goals. This might include expanding into new geographic regions, entering new markets, diversifying product offerings, or gaining access to new technologies. Banks should assess the potential risks associated with the M&A transaction, including credit risk, operational risk, and reputational risk. Develop strategies for mitigating these risks and ensuring a smooth transition. Keyword: Mergers, Strategy, Acquisitions, Performance, Return on Equity, Synergies, profitability.

Competition and Regulation: The Case of the UK Banking Industry

This study examines the impact of the Basel Accords on competition within the UK banking sector, considering variations based on bank size. The Basel Accords, designed to enhance financial stability, introduce provisions that may affect competition dynamics. Empirical analysis reveals divergent outcomes: large banks tend towards monopolization, while other banks shift towards a more competitive environment. Large banks benefit from regulatory barriers and technological advancements, while other banks face challenges from increased compliance costs. These findings highlight the complex relationship between regulation and competition in banking, emphasizing the need for balanced regulations that promote stability while fostering healthy competition.

CHANGE MANAGEMENT MECHANISM AND ITS EFFECT ON THE PERFORMANCE OF BANKS IN GHANA

Purpose- This research examines how Ghanaian banks use change management strategies, communication, and employee involvement. The study examines the current practices, and challenges banks face when implementing these strategies and how they affect overall organizational performance. Design/methodology/approach- First, most respondents worked for banks listed on the Ghanaian stock exchange and had seven or more years of experience in the same bank. This experience is critical because it provides a solid understanding of the bank's goals and objectives, as evidenced by the high percentage of respondents who believe they understand the bank's goals and objectives. A qualitative research design was used, with in-depth semi-structured interviews with senior management and employees of the selected Ghanaian banks. The collected data were analyzed using a thematic approach to identify patterns and themes related to change management strategies, communication, and bank employee involvement. Findings- According to the results, banks face challenges in implementing change management strategies, including resistance to change, communication, and employee involvement. However, the study revealed that effective communication, employee involvement, and appropriate change management strategies could improve organizational performance and customer satisfaction. Research limitations/implications- Because the study was limited to a few banks in Ghana, the findings may not be representative of all banks in the country. The study's findings, however, have implications for organizations in Ghana and other developing countries, emphasizing the importance of effective change management strategies, communication, and employee involvement in improving organizational performance. Practical implications- The study's findings benefit banks in Ghana and other developing countries because they suggest that improving communication, employee involvement, and appropriate change management strategies can assist organizations in overcoming resistance to change and improving organizational performance. Originality- This study offers unique insights into change management strategies, communication, and employee involvement in Ghanaian banks, providing valuable information for organizations and policymakers in developing countries. The study emphasizes the importance of effective change management strategies and the role of communication and employee involvement in improving organizational performance.

Inter-firm relationships and the special role of common banks

Using a novel dataset that combines information on customer-supplier trade relationships with information on firm-bank lending relationships, we show that common banks that lend to firms at both ends of a trade link grow and strengthen such trade relationships. To establish causality, we use bank mergers, which generate exogenous variations in the presence of common banks, and show that common bank relationships between customers and suppliers increase trade relationships by 49.6%. We find that the role of a common bank is greater when it is more informed and when supply chains suffer from larger information and holdup problems. We also document that suppliers with common banks face lower spillover risks from a distressed customer. Overall, our findings show the unique role of banks in driving inter-firm growth and investment by mitigating information and holdup problems, which arguably leads to greater economic growth.

A critical overview of Islamic Performance Bonds

Banks might finance international trade activities, including import and export, through letters of credit and letters of guarantee (performance bonds). This contract provides a high level of safety and stability for international trade because of the banks' unwavering assurances. This research intends to determine the degree to which Islamic Shariah regulations are followed by Islamic banks' activities while outlining the challenges these institutions face while using performance bonds. This study has highlighted the performance bond issues that importers and exporters are dealing with and has proposed solutions to the issues. This research uses a qualitative and doctrinal legal approach to investigate the structure of Islamic banks in relation to Islamic economic restrictions. This study analyses the organization of Islamic banks regarding Islamic economic controls. It also examines, how far Islamic banks can benefit from the blockchain and smart contract technology to harmonize Islamic economic controls with Islamic banks' practice in such funding & guarantees instruments. Concerning the Islamic letter of credit, the findings reveal that Islamic banks face many risks resulting from the conditions and controls set by the Islamic Trade Guidelines. Therefore, Islamic banks can face more risks than conventional banks due to the nature of Islamic finance, which prohibits dealing with interest (Ribā) and conventional insurance. furthermore, the study reveals that Blockchain Technology and smart contract has a Positive Impact on Islamic banking practise.

FINANCIAL PERFORMANCE ANALYSIS OF PRE- AND POST-MERGER OF KOTAK MAHINDRA BANK AND STATE BANK OF INDIA

The banking sector is one of the most important and fastest growing sectors in India. It occupies a unique place in the growth of the economy. The economic development of a country is evident from the reliability of the banking system. Mergers in the banking sector lead to significant growth in business, help in reducing costs and reduce competition as mergers lead to elimination of competitors in the banking sector. Today, every bank strives to be financially strong and more effective and efficient in its operations. Public sector banks face strong challenges from private sector banks and are under great pressure to keep up with the facilities offered by private sector banks. The study is conducted to understand the performance of Kotak Mahindra Bank and SBI before and after merger. One private sector bank and one public sector bank were selected for the study. Kotak Mahindra Bank is one of the leading and growing private sector banks, while SBI is the largest bank in India with a market share of more than 23% in assets and 25% in loans and deposits. The analysis before and after the merger of SBI with its partner banks and Kotak Mahindra Bank with ING Vysya Bank shows that the net profit margin, return on capital employed, return on equity and leverage ratio have no significant difference in these ratios. There is a significant difference in operating profit margin for Kotak Mahindra Bank but not for SBI and its partners.

Optimal fiscal and monetary policy with collateral constraints

We study the Ramsey optimal fiscal and monetary policy in an economy where banks face collateral constraints. Inflation reduces the net worth of banks and tightens their collateral constraint by revaluing their nominal assets and liabilities. The optimal policy balances tax distortions with the costs of inflation on banks, thereby deviating from perfect tax smoothing. Our quantitative analysis reveals that inflation plays a much smaller role in financing fiscal needs in the optimal policy compared to existing literature. When considering price stickiness and long-term government debt, optimal inflation is modest and persistent, and the role of inflation in fiscal financing increases with the maturity of government debt.

Prospects and Problems of Electronic Human Resource Management in Banking Sector -An Evidence from Kerala

Purpose: The purpose of this paper is to discuss the prospects and problems of electronic human resources management practices in banking sector of Kerala, in addition to these four dimensions of "Electronic Human Resource Management" are identified in the study. Design/Methodology/Approach: This paper presents the perspectives of managers in selected private and public banks in Kerala. Study participants included State Bank of India, Canara Bank, ICICI Bank, and HDFC Bank. Geographical scope of study is limited to Malappuram District of Kerala. Findings: This study identifies the areas of electronic human resources management in banking sector of Kerala along with Public and private banks are compared in terms of their practices, prospects, and problems with "Electronic HRM". Results of the study indicates that both public and private sector banks implement E-HRM, but private banks face more implementation problems than public sector banks. Conclusion: E-HRM is implemented by both public and private banks, but private banks have more problems when implementing it. Banks in the public and private sectors don't rely on traditional HR processes to manage performance, employee self-service and compensation Among them, "Electronic Human Resource Management" was implemented with 100% accuracy, followed by others with 90% accuracy.

Prospects and Problems of Electronic Human Resource Management in Banking Sector -An Evidence from Kerala

Purpose: The purpose of this paper is to discuss the prospects and problems of electronic human resources management practices in banking sector of Kerala, in addition to these four dimensions of "Electronic Human Resource Management" are identified in the study. Design/Methodology/Approach: This paper presents the perspectives of managers in selected private and public banks in Kerala. Study participants included State Bank of India, Canara Bank, ICICI Bank, and HDFC Bank. Geographical scope of study is limited to Malappuram District of Kerala. Findings: This study identifies the areas of electronic human resources management in banking sector of Kerala along with Public and private banks are compared in terms of their practices, prospects, and problems with "Electronic HRM". Results of the study indicates that both public and private sector banks implement E-HRM, but private banks face more implementation problems than public sector banks. Conclusion: E-HRM is implemented by both public and private banks, but private banks have more problems when implementing it. Banks in the public and private sectors don't rely on traditional HR processes to manage performance, employee self-service and compensation Among them, "Electronic Human Resource Management" was implemented with 100% accuracy, followed by others with 90% accuracy.

Effect of Financial Technology on Financial Performance of Deposit Money Banks in Southwest, Nigeria

Financial Technology in the recent times, has significantly intensified competition in Nigerian Banking Industry, hence Deposit Money Banks (DMBs) face persistent pressures from a wide and diverse range of competitors, while the regulatory environment becomes less protective of the financial institutions. This study therefore examined the effect of financial technology on the financial performance of deposit money banks in southwest, Nigeria. The study employed an Ex-Post Facto research design to establish functional relationship among customers and employees of the DMBs branches in the South West geopolitical zone in Nigeria. The descriptive statistics, which involved the current levels of financial performance on deposit money banks showed an improvement in the return on assets due to the deployment of financial technology with the weighted average of 216 or 35.94% while more than 97% of respondents perceive the level of improvement in equities of banks in Nigeria as moderate followed by the rate of improvement in net income margin of banks with weighted mean of 192 or 31.9%. The empirical results showed that the deployment of automated teller machine, mobile banking, internet banking and point of sales on the financial performance of banks have significantly and positively improve banks’ return on asset, equity and the net income. This is an indication that the financial performance of Nigerian banks’ are highly sensitive to changes in the alternative banking channels as 1%, rises in automated teller machine increase the return on asset by 0.18%. In the same vein, increase in mobile banking to the tune of 1% raised the level of return on asset by 0.29%. Thus the study concludes that the deployment of mobile banking and internet bank drive virtually all the indicators of bank financial performance in Nigeria. However, the paper recommends that, the deployment of mobile banking was more pronounced, and particularly in the area of banks’ return on equity although all the alternative banking channels contributes to bank financial performance in Nigeria.

Conceptualizing Improved Cash Forecasting Accuracy for Effective Currency Reserve Management in Nigerian Banks

Effective currency reserve management is critical for maintaining financial stability and operational efficiency in Nigerian banks. Cash forecasting accuracy plays a vital role in ensuring the optimal allocation of currency reserves, minimizing liquidity risks, and meeting customer demands. However, Nigerian banks face persistent challenges in cash forecasting, including inaccuracies due to inadequate data integration, manual processes, and limited adoption of advanced technologies. This study aims to conceptualize an improved cash forecasting framework to enhance currency reserve management in Nigerian banks. The proposed framework incorporates advanced technologies such as artificial intelligence (AI), machine learning, and big data analytics to address forecasting challenges. AI-driven predictive models enable more accurate demand forecasting by analyzing historical transaction data, seasonal trends, and macroeconomic indicators. Machine learning algorithms adapt to dynamic market conditions, enhancing real-time decision-making capabilities. Big data analytics facilitates the integration of diverse datasets from banking operations, external financial environments, and customer behavior to create comprehensive forecasting models. The framework also emphasizes the importance of institutional capacity building, focusing on upskilling bank personnel through training programs to maximize the benefits of these advanced technologies. Additionally, regulatory compliance and alignment with the Central Bank of Nigeria's policies are critical to ensure seamless implementation and scalability of the framework across the banking sector. Preliminary analysis indicates that the adoption of the proposed framework can reduce forecasting errors by up to 50%, optimize cash allocation, and enhance the overall efficiency of currency reserve management. Furthermore, it supports improved customer satisfaction by ensuring the availability of cash during peak demand periods and reducing transaction delays. This conceptual framework provides a roadmap for Nigerian banks to address cash forecasting inaccuracies, aligning with global best practices and fostering financial stability. Future research will focus on pilot-testing the framework in selected banks and assessing its long-term impact on currency reserve management.

МОНЕТАРНА ПОЛІТИКА І ДЕРЖАВНА ДОПОМОГА СУБ'ЄКТАМ ГОСПОДАРЮВАННЯ В ПРОЦЕСІ ЗЕЛЕНОЇ ТРАНСФОРМАЦІЇ ЕКОНОМІКИ

Climate change is one of the 21st century's greatest challenges, driven by human activities and population growth over the past 100-150 years. Its effects, such as global warming and extreme weather events, have serious implications, necessitating urgent climate protection measures. The Paris Agreement, signed in 2015, aims to limit global temperature rise to below 2°C, with efforts to keep it to 1.5°C. Despite growing commitments, more action is needed to meet these goals, as the global economy must undergo significant transformation to achieve sustainability. Central banks are increasingly engaging with environmental sustainability to mitigate economic risks posed by climate change. According to a UBS survey, 32% of central banks view climate change as a global economic risk, and 70 of 135 central banks have mandates related to sustainability. However, the green transition presents challenges, especially given current inflationary pressures, rising energy prices, and geopolitical shifts, such as those caused by the Russia-Ukraine war. This study explores the relationship between the green transition and monetary policy. Central bank mandates influence monetary conditions and the greening of the financial system, ideally leading to price stability and a green economy. However, determining the appropriate instruments and understanding the broader economic impact is complex. Key strategic questions include how the green transition affects price stability, the implications of potential conflicts between green goals and price stability, and the challenges central banks face in ensuring sustainability. Recent research highlights the inflationary effects of climate change into "climateflation," "fossilflation," and "greenflation." These effects increase inflation volatility, complicating monetary policy. The role of central banks in ensuring macroeconomic stability and supporting green transformation by balancing the goals of price stabilization and stimulating business entities to transition to alternative energy sources is substantiated. Monetary instruments for stimulating energy conservation of business entities in Ukraine are shown, in particular, the provision of soft loans, the development of auctions for the support of new commercial renewable energy facilities, market premium mechanisms (feed-in-premium), price difference contracts, incentives based on the principle of self-production.