Bank Managers Research Articles

Credit Risk Management and Profitability of Nepalese Commercial Banks

Banks are an essential component in the economy in the process of creating economic growth in both developed and developing countries. In order to contribute to its commitment to promote growth, banks should be able to lock in on the stability of their financial performance. This study has examined the relationship of credit risk management on performance of Nepalese commercial banks. The descriptive, Correlational research design and review have been adopted for the study. The pooled data of ten commercial banks out of total population of twenty commercial banks operating up to January 2024 has been analyzed. The findings indicate that specific financial indicators, such as credit to deposit ratio, non-performing loan, and interest spread rate, play crucial roles in influencing ROA and ROE. Major issue on non-performing loan and impairment cost were highlighted. Identified that gross domestic product growth rate has an insignificant positive impact on profitability of commercial banks in Nepal. These insights contribute to a deeper understanding of the dynamics within the banking sector, offering valuable implications for stakeholders and policymakers.

Corporate Social Responsibility, Bank Size and Customer Trust amongst Commercial Banks in Kenya

Despite the commercial banks’ significant position in Kenya's ever growing economy there is limited study on the influence of Corporate Social Responsibility (CSR) on consumer trust in the commercial banking industry. This study therefore sought to explore the impact of Corporate Social Responsibility (CSR) on customer trust in the commercial banking sector of Kenya. With focus on commercial banks, this research delved into how community investment, sustainable initiatives, stakeholder engagement, social welfare, and bank size influence customer trust. This study was anchored on Stakeholder Theory. A correlational research design was employed, targeting all the 39 commercial banks in Kenya. The analysis was centered on the banks as units of analysis, while observations were drawn from both customers and bank managers. The study used stratified sampling to select 384 bank customers population exceeding 1 million. Data was gathered through structured questionnaires and Key Informant Interview (KII), ensuring reliability and validity through Cronbach’s Alpha test and content/construct validity testing. Analysis was conducted using descriptive and inferential statistics, including regression analysis and ANOVA. The results were presented on tables, charts and bars. The findings revealed a coefficient of determination (R²) of 0.605 indicating that the CSR activities used in this study explain 60.5% of the variation in customer trust, suggesting a strong relationship between CSR and customer trust. The regression analysis demonstrated significant positive effects, with community investment (β = 0.354, p = 0.000), sustainable initiatives (β = 0.235, p = 0.003), stakeholder engagement (β = 0.275, p = 0.000), and social welfare (β = 0.329, p = 0.000) all positively influencing customer trust. Based on the findings, the study concludes that corporate social responsibility (CSR) activities, including community investment, sustainable initiatives, stakeholder engagement, and social welfare, significantly influence customer trust among commercial banks in Kenya. In view of the findings, the study recommends that commercial banks in Kenya should continue to invest in CSR activities as a strategic approach to enhance customer trust and loyalty. Policymakers should create supportive regulatory frameworks that encourage banks to adopt comprehensive CSR practices. Keywords: Corporate Social Responsibility, Community investment, Sustainable initiatives, Stakeholder engagement, Social welfare, Bank Size, Customer trust.

Pengaruh Struktur Modal dan Likuiditas Terhadap Profitabilitas Bank Konvensional yang Terdaftar pada Bursa Efek Indonesia

This study aims to investigate the relationship between capital structure and liquidity with profitability of conventional banks in Indonesia. This analysis uses secondary data from 24 banks listed on the Indonesia Stock Exchange between 2021 and 2023. The analytical approach used includes multiple linear regression with classical assumption tests and hypothesis testing. The findings show that while capital structure has a significant positive impact on profitability, liquidity has no impact on profitability. The limitation of this study lies in the differences in the results of financial ratio analysis which may be influenced by variations in calculation methods. This study suggests that banking companies should pay attention to capital structure management to improve profitability. The contribution of this study lies in providing insights that can be used by bank managers and researchers in making strategic decisions related to capital structure and liquidity. Further research is expected to consider more comprehensive data as well as more standardized methods to improve the accuracy of the research results.

Tác động của hoạt động tạo thanh khoản đến khả năng sinh lợi của các ngân hàng thương mại Việt Nam

This study investigates the effect of liquidity creation activities on the profitability of Vietnamese commercial banks. The research sample includes 308 observations from 28 commercial banks in Vietnam from 2012 to 2022. The estimated results from models with random effects (REM), fixed effects (FEM), and feasible generalized least squares (FGLS) show that liquidity creation (LC) has a negative impact on the profitability of commercial banks in Vietnam. Further analysis shows that liquidity creation on the asset side (LCA), liquidity creation on the liability and equity sides (LCC), and liquidity creation on the off-balance sheet side (LCOBS) have a negative effect on the profitability ratio of Vietnamese commercial banks. This study provides some policy implications for bank managers regarding profit maximization strategies in Vietnamese commercial banks

The Effect of Gender Diversity and Expertise of Risk Monitoring Committee on Equity Investment Risk in Islamic Banks

The study of risk in Islamic banks emphasizes more on the general risk of Islamic banks, this general risk in Islamic banks arises from transactions unrelated to special transactions of Islamic banks. The profit and loss sharing system implemented by Islamic banks raises equity investment risk (EIR). This study uses the agency theory approach in explaining EIR. In the agency theory approach, the risk monitoring committee has the responsibility of evaluating and monitoring the risk management in Islamic banks. The characteristics of risk monitoring committee members can affect the capability of the risk monitoring committee to provide risk management assessments and policies and can affect the effectiveness of the risk monitoring committee in carrying out its duties and responsibilities. The study population was 109 Islamic banks spread across 18 countries in ASEAN and the Gulf Cooperation Council, where the sample was observed in 2021 during the peak of COVID-19. The results of this study indicate that the gender diversity of the risk management committee and the risk management monitoring committee’s expertise in accounting/risk management have a significant negative effect on equity investment risk.

코어뱅킹(Core Banking)산업의 진화와 미래: 뱅크웨어글로벌의 사례를 중심으로

The study examines the Korean core banking industry's growth from Bankware Global to the present and its future problems. To this end, in-depth interviews with insiders and various data are analyzed to view the historical development of core banking, focusing on Bankware Global, a leader in 'cloud-based core banking', and its competition and strategic direction. This study will reveal the strategic importance of shifting core banking to the cloud and its consequences for bank and financial institution managers. Bankware Global was founded as banks and financial firms moved their computing infrastructure to the cloud from the fourth to the fifth generation. Based on a cloud-based core system, Bankware Global's core banking solution can easily assemble and grow financial goods and business operations including banks, cards, and capital. Bankware Global's flagship products support the most technologies compared to competitors, and its customized development method gives it a competitive advantage in quality, price, and time saved by more than 30%. These features should help Bankware Global maintain its lead in the limitless financial software market, which has no borders or large and small scale.

IMPACT OF CREDIT RISK MANAGEMENT ON PROFITABILITY OF COMMERCIAL BANKS: A CASE STUDY IN VIETNAM

The main purpose of this study is to examine the impact of credit risk management on profitability of commercial banks in Vietnam. While the existing literature emphasizes the necessity for a more in-depth study and additional empirical evidence to elucidate intricate relationships between market dynamics and credit risk, particularly in the context of commercial banks in Southeast Asia, there remains a gap in comprehensive studies, with a specific focus on Vietnam. The secondary data was collected from 20 commercial banks from the country for the period of 11 years, from 2012 to 2022. The study used non-performing loans ratio (NPLR), capital adequacy ratio (CAR) as well as loan-loss provision ratio (LLPR) as proxies of credit risk while the financial performance is measured by return on equity (ROE). Moreover, the bank's characteristics, such as its size (SIZE), the macroeconomic inflation rate (INF), and a dummy variable that looks at how ownership type (OWN) affects the bank's profitability are all applied to quantify the independent variables. The model does not exhibit the multicollinearity issue, according to the mean Variance Inflation Factor (VIF) data. The regression results reveal that SIZE, CAR and INF variables have a significant positive effect on ROE, while the NPLR variable has an opposite significant effect on ROE. Nevertheless, there is no connection between the ROE-measured financial performance of commercial banks and the OWN or LLPR variables. This offers further valuable insights to bankers and policy makers in credit risk management of commercial banks in Vietnam to enhance the stability of the Vietnamese banking system.

Economic freedom and its subcomponents: effects on Islamic bank performance

PurposeThis paper aims to examine the profitability of Islamic banks benefits from economic freedom and its subcomponents.Design/methodology/approachThis study uses a sample of 41 Islamic banks from the Organization of Islamic Cooperation (OIC) Countries selected from 2010–2020. It conducts an empirical approach based on the System Generalized Method of Moments (SGMM).FindingsOverall, economic freedom has a substantial impact on the profitability of Islamic banks. We then investigate the relationship between the subcomponents of economic freedom and the profitability of Islamic banks. The study’s breakdown components suggest that financial and investment freedoms are favorable indicators, while business and monetary freedoms have a negative effect.Practical implicationsThis research can serve as a guideline for Islamic bank management in terms of maintaining performance. The results of this study provide policy implications for the government to offer friendly regulations for economic actors to engage in financial transactions by looking at the economic freedom sub-component.Originality/valueTo the best of the authors' knowledge, the study of the role of economic freedom in Islamic banking performance is limited, particularly in the context of OIC Countries.

How and when does witnessing incivility lead to psychological distress in family-owned bank employees?

PurposeDrawing upon social exchange theory, this study investigates how witnessed incivility is related to psychological distress for employees. In addition, scholars dug deep into the potential moderating effect of self-esteem that links witnessed incivility, employee silence and psychological distress.Design/methodology/approachIn data were obtained from 292 bankers at family-owned banks. In this work, data analysis was performed using Smart-PLS covariance-based SEM version 4.FindingsThe study results indicate that employee silence mediates witnessed incivility and psychological distress. Findings also suggest that high self-esteem can mitigate the harmful effects of witnessed incivility, indirectly causing silence and psychological distress among employees.Practical implicationsFamily-owned bank management should encourage employees to speak up, demonstrate self-esteem and share their concerns. Thus, reducing witnessed incivility increases well-being, stress, and mental health in Pakistani family-owned enterprises which operate in diverse industries.Originality/valueIn the context of family-owned banks, our study adds context and theory to the existing body of knowledge by illuminating the underlying process that relates incivility with psychological distress By exploring the use of social exchange theory.

The Effect of Income Diversification on Default Risk in Conventional Banking Companies in Indonesia

This study aims to identify variables that affect the risk of bankruptcy in banks listed on the Indonesia Stock Exchange. The research method includes collecting data from 36 listed banks on the Indonesia Stock Exchange over a 5-year period (2018-2022) and using the panel data regression analysis method. The addition of novelty variables in this study, namely bank size, net interest margin, and deposit to total assets that have a negative effect on bankruptcy risk, while the diversification index and gross domestic product variables have no effect on bankruptcy risk. the implication for bank managers is as a reference and consideration in implementing income diversification strategies. this research also provides information that is expected to be used as reference material and expand information and insight in developing research in the banking sector.

Process improvement strategy (PIS) and employee productivity amid COVID-19 pandemic among bank employees

PurposeThis study aims to examine process improvement strategy (PIS) (proxied by remote work, workforce training, and technological innovation), and employee productivity amid the COVID-19 pandemic among bank employees.Design/methodology/approachThe study employed cross-sectional and descriptive design by applying multistage sampling techniques using convenience sampling to select the study organization and stratified and simple random sampling to select 900 respondents for the study. Data were collected by using validated measures of the study variables designed into a questionnaire. Pearson’s correlation and simple regression analysis were employed to establish relationships and causal effects among variables respectively.FindingsResults showed significant relationships between the PIS (work-from-home, workplace training, and technological innovation) and the outcome variable (employee productivity); and predictive capabilities between the PIS and the outcome variables (employee productivity). The study revealed that remote work accounted for the highest variability (R2 = 0.775) in employee productivity, followed by workplace training (R2 = 0.499), and finally investment in technological innovation (R2 = 0.486)] and as such PIS fosters employee productivity and may, therefore, be applied when faced with a similar pandemic in the future.Originality/valueThe study was recognized for its significance in examining how PIS supports enhancing employee productivity in banks and, by extension, other organizations during a pandemic. The research has proven to be crucial in providing insights into bank management in emerging economies and other organizations worldwide that have previously gone unnoticed during a pandemic. It has aided in the extension of existing literature on PIS and employee productivity by carefully developing a framework, thus covering practical knowledge gaps.

Analisis Faktor-Faktor yang Mempengaruhi Biaya Transaksi Nasabah pada PT Bank Perkreditan Rakyat Nusuma Gondang Legi Malang

This study aims to analyze the factors that affect customer transaction costs at PT Bank Perkreditan Rakyat Nusuma Gondang Legi, Malang, using qualitative methods through library research using secondary data from sources such as the bank's official website, books, journals, and related articles. The results show that the cost of obtaining third-party funds has a significant positive effect on transaction costs, while bank operational costs do not. Target profit margin and timely payment incentive costs have a significant positive effect, but loan risk costs and asset depreciation are not significant. In conclusion, factors related to bank management and operations, including cost of obtaining funds, operational costs, target profit margin, timely payment incentive costs, and asset depreciation costs, have a significant effect on customer transaction costs. Effective management is needed to minimize transaction costs and improve the efficiency of the banking industry, providing additional insights for further analysis development in supporting the growth of the banking sector

The Influence of Governance Characteristics and Enterprise Risk Management on Intellectual Capital in Banking in Indonesia

Intellectual capital (IC) is a crucial driver of developing knowledge-based economic value for an organization, such as a bank. With intellectual capital, company can generate knowledge-based economic value as a source of competitive advantage, influencing innovation and value for stakeholders. This research aims to analyze and explain the influence of governance characteristics and enterprise risk management on intellectual capital in banking in Indonesia. The independent variables are audit committee, board independence, institutional ownership, enterprise risk management, return on assets, leverage and corporate social responsibility as well as the dependent variable intellectual capital. The data used in this research is secondary data sourced from the annual reports of banking companies listed on the Indonesia Stock Exchange (BEI) during the period 2018 to 2022. The research sample was selected using a purposive sampling method so that 42 companies were sampled. The data analysis used to test the hypothesis is multiple regression analysis using e-views 9. The research results show that the audit committee has a positive effect, board independence has a negative effect, institutional ownership has a negative effect, enterprise risk management has no effect, return on assets has an effect positively, leverage has no effect, and corporate social responsibility has a negative effect on intellectual capital. Implications of this research to understand how bank managers affect intellectual capital, this study examines a variety of factors, including audit committee, board independence, institutional ownership, enterprise risk management, return on assets, leverage and corporate social responsibility. It suggests that managers should focus on enhancing their intellectual capital to make informed investment decisions and effectively manage their bank's resources, thereby enhancing their investment performance.

The Moderating Role of Merger on the Switching Intention to Use Islamic Bank: The Case of Indonesia

Objective –Since February 2021, the government decided to merge 3 Islamic banks to increase Islamic bank markets. This policy raises pros and cons in society. This research analyses the mediating role of mergers on the switching intention to use Islamic banks.Design/Methodology –This research is a quantitative study using the Structural Equation Model Partial Least Square (SEM-PLS). A total of 108 respondents' data were analyzed. The data was collected through an online survey utilizing social media which was shared directly with respondents in the city of Surabaya. The respondents' criteria were selected using purposive sampling techniques.Results –The moderating effects showed that the merger was a poor moderator of the reality between attitude, subjective norms, and perceived behavioral control on the switching intention to use Islamic banks. However, the direct effects showed a significant relationship between mergers and switching intention. Besides, this study shows that attitude, subjective norm, and perceived behavioral control have a significant influence on switching intention. Subjective norm is the most dominant factor.Research limitation/implication – This study uses limited variables and was carried out shortly after the merger of Islamic banks. However, this study provides a comprehensive analysis related to the relationship between mergers and switching intention. The implications of this research urge the government as a policymaker to do its best to increase public awareness of Islamic banks. Islamic bank managers must conduct massive socialization by utilizing various existing technologies and media to reach all levels of society to use Islamic banking services.Contribution – This study emphasizes the significance influence of subjective norm and switching intention. Thus, the government and Islamic banks must intensify socialization of Islamic bank to encourage Islamic bank users.Novelty/Originality –This study complements the literature by analysing the impact of Islamic bank mergers with switching intention to use Islamic banks as far as the authors' knowledge of merger research is still limited to analysing the performance of Islamic banks after the merger.

Operating Efficiency and Financial Performance of Deposit Money Banks in Nigeria

This study has examined the influence of operating efficiency on the financial performance of Deposit Money Banks (DMBs) in Nigeria. Data used were extracted from the Annual Reports and Accounts of selected twelve (12) listed banks as on May 13, 2021 from 2011 to 2020. The Pearson Product Moment Correlation analysis was employed to determine the relationship between operating efficiency and financial performance of sampled banks. Panel Least Square regression was deployed to analyse the effect of operating efficiency on financial performance of the DMBs while the one-way ANOVA test was engaged in ascertaining significant differences in financial performances of the Systemically Important (D-SIBs) and the Non-Systemically Important (D-NSIBs) Banks. Findings revealed positive significant effect of operating efficiency on financial performance of all DMBs while there was no significant difference in the mean financial performances of the D-SIBs and D-NSIBs in Nigeria over the study period. It is therefore recommended that bank managements exercise due diligence in controlling operating costs of banks and Regulators should pay equal supervisory and regulatory attention to all banks without discrimination as all DMBs have the potential to exhibit systemic importance in the long run.

Human Resource Management in Nepalese Commercial Banks

This study examines the importance of human resource management in Nepalese commercial banks. Employee productivity is selected as the dependent variable. The independent variables are recruitment and selection, employee participation in decision making, performance appraisal, training and development, salary/compensation and promotion. The primary source of data is used to assess the opinions of the respondents regarding recruitment and selection, employee participation in decision making, performance appraisal, training and development, salary/compensation and promotion in Nepalese commercial banks. The study is based on primary data with 121 respondents. To achieve the purpose of the study, structured questionnaire is prepared. The correlation coefficients and regression models are estimated to test the significance and importance of different factors associated with human resource management in Nepalese commercial banks. The study showed that recruitment and selection have a positive impact on employee productivity in context of Nepalese commercial banks. It indicates that better and unbiased recruitment process leads to increase in employee productivity. Similarly, employee participation in decision making has a positive impact on employee productivity. It implies that the employee participation in decision making leads to increase in employee productivity. Similarly, performance appraisal has a positive impact on employee productivity. It means that better the appraisal of performance of employee, higher would be the employee productivity. The study also showed that training and development has a positive impact on individual’s choice. It indicates that proper trainings and development programs helps in stimulating the employee productivity. Likewise, salary/compensation has a positive impact on employee productivity. It indicates that good salary motivates employees to be more productive. Furthermore, promotion has a positive impact on employee productivity. It indicates that promotion plays an important role in stimulating the productivity of an employee.

Corporate Governance and Pay-For-Performance: The Impact on Earnings Management in Nepalese Commercial Banks

This study examines the impact of corporate governance and pay for performance on earnings management in Nepalese commercial banks. Efficiency ratio and basic earning power are selected as the dependent variables. The selected independent variables are board size, tenure of CEO, age of CEO, size of firm, board meetings, compensation, independent directors and foreign ownership. The study is based on secondary data of 17 commercial banks with 102 observations for the study period from 2017/18 to 2022/23. The data were collected from Banking and Financial statistics published by Nepal Rastra bank and the annual reports of the selected commercial banks. The correlation coefficients and regression models are estimated to test the significance and importance of corporate governance and pay for performance on earnings management in Nepalese commercial banks. The study showed that board size has a negative impact on efficiency ratio and basic earning power. It indicates that increase in board size leads to decrease in efficiency ratio and basic earning power. Similarly, tenure of CEO has a negative impact on efficiency ratio and basic earning power. It indicates that increase in tenure of CEO leads to decrease in efficiency ratio and basic earning power. Likewise, age of CEO has a positive impact on efficiency ratio and basic earning power. It indicates that higher age of the CEO in the organization leads to increase in efficiency ratio and basic earning power. Further, size of firm has a positive impact on efficiency ratio and basic earning power. It indicates that larger the size of firm, higher would be the efficiency ratio and basic earning power. In addition, board meetings has a positive impact on efficiency ratio and basic earning power. It indicates that higher the number of board meetings, higher would be the efficiency ratio and basic earning power. Moreover, compensation has a positive impact on efficiency ratio and basic earning power. It indicates that better the compensation facilities, higher would be the efficiency ratio and basic earning power. Likewise, independent directors has a positive impact on efficiency ratio and basic earning power. It indicates that increase in independent directors in the board leads to increase in efficiency ratio and basic earning power. Further, foreign ownership has a positive impact on efficiency ratio and basic earning power. It indicates that higher the proportion of foreign ownership, higher would be efficiency ratio and basic earning power.

Strategic alliances and competitive advantage of commercial banks in Kenya

Commercial banks in Kenya operate in quite dynamic financial market environment and continue to experience stiff competition in the provision of financial services. The liberation of the financial markets has resulted into an upsurge in the number of institutions providing financial products and services, threatening the future of Kenyan commercial banks. This study aimed at determining the effect of strategic alliances on competitive advantage of commercial banks in Kenya. The objectives were to determine effect of joint ventures, equity alliances, and joint research and development on the competitiveness of Kenyan banks. The following theories informed this research; Resource Based View theory, competitive theory, and resource dependence theory. Causal research design was adopted where all the 42 Kenyan commercial banks formed the target population. Census survey sampling design was applied and semi-structured questionnaire used. Reliability and validity results were used to improve the research instrument prior to the actual data collection. Data was analyzed using descriptive and inferential statistics. Study found that joint venture (?=0.435, p=0.000) equity alliances (?=0.227, p=0.018), and joint research and development (?=0.0.612, p=0.000) had positive significant effects on competitive advantage. With a coefficient of determination (R-square) of 68.9% and overall p-value of 0.000, the study concluded strategic alliances have a statistical significant effect on competitive advantage. The study recommends that managements of commercial banks should fast-truck implementation of such alliances to for improved competitiveness.

Contribution of leadership styles to organizational performance in the South African banking sector

The main aim of this study was to assess the efficacy of different leadership styles on the performance of organisations in the banking sector of South Africa. The outcomes are expected to be utilised in order to construct leadership development initiatives, which will facilitate the cultivation of leadership competencies that contribute to the success of a company. The research conducted a synthesis of 50 empirical studies through the use of secondary source content analysis. A one-sample t-test was used to assess the presence of a statistically significant association between organisational success and a manager's lifestyle. A unidirectional analysis of variance (ANOVA) was conducted to determine the correlation between different leadership styles and organisational performance. The Pearson's Correlation Coefficient was employed to examine the correlation between leadership styles and organisational performance. Research has confirmed that Transformational leadership has a positive impact on financial success, customer satisfaction, and staff engagement. Transformational leaders foster innovation and exceptional performance through their inspiring vision and tailored assistance. Transactional leadership ensures operational stability and adherence to regulations, but it does not have a substantial impact on staff engagement and innovation. Servant leadership emphasises the establishment of a supportive work environment through the enhancement of staff morale and customer service. An optimal approach for enhancing organisational performance in the South African Banking sector is to adopt a well-rounded strategy that incorporates transformational, transactional, and servant leadership principles. The Transformational leadership style has been determined to be the most effective in the banking sector, as it has shown the highest improvement in organisational performance. Banks executives and managers should consider embracing transformational leadership, cultivating innovation, and allocating resources towards staff development.

The Role of Risk Management in Banking

The Role of Risk Management in Banking