Resilience Of Banks Research Articles

The Impact of Blockchain Technology on the Future of Commercial Banking

This study investigates the ramifications of blockchain technology on the future landscape of commercial banks in the Kurdistan Region of Iraq, drawing insights from expert perspectives. The evolution of blockchain has significantly reshaped all facets of banking services and operations, resulting in a paradigm shift away from the traditional banking modus operandi in terms of systems, external events, and human intervention. Employing the Analytical Hierarchy Process (AHP) methodology and utilizing SPSS software (Version 26), the study analyzed data collected through questionnaires distributed among banks and universities in the Kurdistan Region of Iraq, totaling 90 responses. The findings reveal a notable, statistically significant inverse correlation between blockchain adoption and the future trajectory of commercial banks in the Kurdistan Region. Increased integration of blockchain technology enhances the resilience and viability of commercial banks, thereby reducing the likelihood of adverse impacts. Moreover, blockchain technology demonstrates tangible and positive prospects for the future of commercial banking, facilitating enhanced operational efficiency and cost reduction through streamlined processes and accelerated transactions, one of the key recommendations derived from the research is the necessity for banks to adopt blockchain technology. This technology contributes to reducing the costs of banking services provided in the Kurdistan region and enhances operational efficiency by minimizing intermediaries and expediting transfer and settlement processes.

Impact of Economic Crises on Banking Sector Performance- A Comparative Analysis of Conventional and Islamic Banks Across OIC Countries

This study investigates the impact of three significant economic crises—the Eurozone Debt Crisis (2010-2012), the COVID-19 Pandemic (2020-2021), and the Post-Pandemic Economic Recovery (2021-2022)—on the performance of conventional and Islamic banks in Organization of Islamic Cooperation (OIC) countries. Using a dataset of 4,381 observations from 34 OIC countries, panel regression techniques are employed to evaluate the influence of these crises on key financial performance metrics: Return on Shareholders' Funds (ROSF), Profit Margin (PM), Return on Total Assets (ROA), Current Ratio (CR), and Solvency Ratio (SR). The analysis reveals that while the Eurozone Debt Crisis did not significantly affect bank performance, the COVID-19 pandemic led to a notable decline in profitability but an improvement in liquidity. The results highlight that during the COVID-19 pandemic, banks faced substantial challenges in maintaining profitability, as evidenced by the significant decrease in PM. However, the improvement in CR suggests that banks enhanced their liquidity management strategies to cope with the crisis. The Post-Pandemic Economic Recovery phase brought positive changes in both profitability and liquidity, demonstrating the ability of banks to adapt and thrive as economic conditions stabilized. Macroeconomic variables, such as GDP growth and inflation, played crucial roles, with GDP growth positively affecting ROSF and inflation negatively impacting PM. These findings underscore the importance of a diversified banking system, including both conventional and Islamic banks, to enhance financial stability. Policymakers and financial regulators should consider the unique strengths of Islamic banking principles in regulatory frameworks and prioritize sound macroeconomic policies to promote stability and resilience in the banking sector. Future research should further explore the long-term impacts of economic crises on bank performance across different regions and banking models, as well as the interaction between regulatory environments and bank resilience. Keywords: Economic crises, bank performance, conventional banks, Islamic banks, OIC countries, COVID-19 pandemic, Eurozone Debt Crisis, post-pandemic recovery, financial stability, macroeconomic factors.

Forecasting Tingkat Kesehatan dan Ketahanan Perbankan di Indonesia

The number of commercial banks in Indonesia after the 2008 global crisis declined. The decrease in this number was caused by mergers, consolidations, acquisitions, integrations and conversions in the context of forming a resilient national banking industry structure. To ensure a stable banking sector, these banks must be evaluated through a Risk-based Bank Rating. When the 2008 global crisis economic shock and the COVID-19 pandemic occurred, the banking intermediary function was disrupted. In these conditions, the financial performance of banks also experienced a decline. This study aimed to assess the bank rating and resilience of banks in 2008-2020, forecast the bank rating and resilience of banks in Indonesia in 2021-2030 and analyze the effect of bank rating on bank resilience. This study used secondary data, that is a annual financial reports published by the Financial Services Authority. The data was analysed by ARIMA and panel data regression. The results showed that the bank rating and resilience of commercial banks declined during the economic shocks of the 2008 global crisis and the 2020 Covid pandemic. It is predicted that the resilience of commercial banks will increase in 2021-2030. Earnings as measured by ROA had a positive effect on bank resilience. Credit risk (NPL) had a negative effect on resilience, while liquidity risk (LDR) showed a positive effect on the resilience of commercial banks in Indonesia. GCG and Capital had no effect on bank resilience

Asset Allocation and Bank Resilience: China Insights

This research is based on the panel data from the annual reports of Chinese commercial banks for the years 2010-2020. A panel data model is constructed to empirically investigate the influence of commercial banks' asset allocation on financial stability. The study innovatively explores the differences between large-scale banks and general-scale banks in this context, as well as the interaction effects between large-scale banks and their methods of capital application. The findings indicate that: firstly, the higher the proportion of corporate loans in commercial banks, the stronger the stability. With the support of national policies, the operating environment for emerging industries has improved, leading to a reduction in bankruptcy risks and further decreasing the credit risk of related banks, which contributes to the enhancement of banks' financial stability. Additionally, compared to securities investments affected by market fluctuations, corporate loans are less susceptible to significant capital changes, and their risks are primarily determined by the operating conditions of the related enterprises, making them relatively controllable. Secondly, the higher the proportion of personal loans in commercial banks, the stronger the stability. The largest part of personal loans consists of housing mortgage loans, which have a low non-performing loan rate and high quality in China. Therefore, an increase in personal loans helps to enhance the financial stability of banks. Thirdly, large-scale banks exhibit lower financial stability. Due to the redundancy in management personnel in large-scale banks, management costs, adjustment costs, and transaction costs are relatively high. Furthermore, it is worth noting that because large-scale banks hold a significant amount of surplus funds, they are prone to excessive securities investments. Fluctuations in the securities market increase external risks and decrease financial stability.

Financial Performance Analysis of Bank Aceh's During the Covid-19: RGEC Approaches

The Covid-19 pandemic has had a significant impact on various sectors in Indonesia, including the banking industry. This study aims to compare the financial performance of PT Bank Aceh Syariah before and during the Covid-19 pandemic using the RGEC (Risk Profile, Good Corporate Governance, Earnings, Capital) analysis method. Secondary data used in this research were obtained from the financial statements of Bank Aceh Syariah published on the bank's official website. Data analysis was conducted using the independent sample t-test hypothesis testing. The results indicate that there were no significant differences in the ratios of Non-Performing Financing (NPF), Financing to Deposit Ratio (FDR), Good Corporate Governance (GCG), Return on Assets (ROA), Return on Equity (ROE), Operating Expenses to Operating Income (BOPO), and Capital Adequacy Ratio (CAR) between the periods before and during the Covid-19 pandemic. These findings suggest that Bank Aceh Syariah has been able to maintain its financial performance despite the challenges posed by the pandemic. This study contributes to the understanding of the resilience and adaptability of Islamic banks in the face of economic shocks and highlights the importance of robust risk management and governance practices in ensuring financial stability during times of crisis.

Intellectual Capital Development and Organizational Resilience of Commercial Banks in Nigeria

Intellectual Capital Development and Organizational Resilience of Commercial Banks in Nigeria

Non-Performing Assets: A Study on Indian Banking

This article attempts to study an existing literature on NPA by reviewing fifty articles and thus highlight the root causes of NPAs, their economic implications, and suggests viable remedial measures to mitigate the rising NPA crisis. This research work may propose a roadmap for future research and policy considerations, emphasizing the urgency of collaborative efforts to fortify the resilience of Indian banks and foster sustainable financial health

Global Uncertainty: The Influence of Monetary Policies Order and Inflation Volatility on Bank Profitability African Bank and Middle East Bank

The objective of this paper is to examine the factors that influence the resilience and adaptability of banks to economic disruption. The aim is to encourage a collaborative and cooperative approach to these challenges. This study analyses the impact of monetary policies, inflation trends, and bank-specific determinants on bank profitability in the African and Middle Eastern regions. A quantitative research approach was used to assess macro and micro factors affecting bank profitability, using secondary data. The macro variables were obtained from the International Monetary Fund (IMF), and the micro variables were extracted from the banks' annual accounts. The research findings indicate that monetary policy and inflation have significant impacts on banks' profitability. Additionally, the System Generalized Method of Moments (GMM) model revealed that the annual interest rate (IR), inflation (INF), capital adequacy ratio (CAR), and previous financial performance (Lagged ROA/ROE) have positive and significant effects on both ROA and ROE. In addition, the loan-to-deposit ratio (LDR) had a significant positive effect on ROE, while the non-performing loan ratio (NPLr) had a significant negative effect. The validity and suitability of the GMM regression model used in this study were confirmed by the AR(2) and Sargan Test results. These findings provide valuable insights for decision-makers in the banking sector to respond to changes in monetary policy and manage risks associated with inflation fluctuations. The study emphasizes the importance of capital management and credit risk management in sustaining bank profitability amidst economic uncertainty.

PEMBIAYAAN BAGI HASIL: ANALISIS PENGARUH FAKTOR INTERNAL DAN FAKTOR EKSTERNAL BANK SYARIAH

The rapid development of the Islamic banking industry in Indonesia is evident in the substantial share of profit and loss sharing (PLS), particularly when compared to other nations. However, on regional scale, PLS as a primary product of Islamic banks has yet to assert dominance of disbursed financing. Analysis of internal and external factors that influence PLS of Islamic banks in Indonesia will be the focus of the research. The Error Correction Model method was chosen to determine the effects in the short and long term. Time series analysis was carried out in the time period January 2015 to December 2022. This research found that internal factors, Third-Party Funds had a positive and significant effect on PLS in the short and long term. Then Allowance for Impairment Losses in the short term does not have a significant effect but in the long term it has a negative and significant effect. Interestingly, PLS is not sensitive to CAR and economic growth. This research shows the resilience of Islamic banks in facing the crisis caused by the Covid-19 pandemic. PLS grew higher in the period after the Covid-19 Pandemic compared to before the Covid-19 Pandemic. The implications of these findings encourage Islamic banks to develop products and services, tighten risk management in the long term, and expand the market share of Islamic banks.

Relevansi Single Presence Policy dalam Menjaga Kesehatan, Ketahanan, dan Daya Saing Perbankan Indonesia Menghadapi Resesi

Abstract. The Single Presence Policy (SPP) was implemented in Indonesia since 1998 with the aim of maintaining the stability and resilience of the national financial system. Amid the threat of a predicted global recession, the relevance of SPP in maintaining the health, resilience, and competitiveness of Indonesian banking becomes important to be studied. This research uses a normative juridical legal research method with a qualitative approach. Data was collected through library research and analyzed descriptively. The purpose of this research is to analyze the relevance of SPP in maintaining the health, resilience, and competitiveness of Indonesian banking in facing a recession. The research results are expected to provide input for regulators and banks in formulating appropriate policies to maintain the stability and resilience of the national financial system. Keywords: Single Presence Policy, bank health, bank resilience, bank competitiveness, recession).

Resilience of agricultural banks during economic downturns

PurposeAgricultural banks likely respond differently to economic downturns compared to nonagricultural banks. Limited previous research has examined the performance of agricultural banks under economic crisis and in the presence of banking regulations. This study aims to explore agricultural banks' responses to economic and regulation shocks relative to nonagricultural banks.Design/methodology/approachThis study uses bank-quarter level data from 2002 to 2022 for virtually all commercial banks in the U.S. In this research, the Z-score measures the bank’s default risk, the return on assets measures bank profitability and changes in amount of farm loans indicate the wider impact on the agricultural sector. Effects of the financial crisis, Basel III reforms to banking regulation and the coronavirus (COVID-19) pandemic on these banking measures are assessed using distinct empirical frameworks. The empirical estimations use various subsamples based on bank types, bank sizes and time periods.FindingsEconomic downturns are associated with fluctuations in returns and the risk of default of commercial banks. Agricultural banks appeared to be more resilient to economic downturns than nonagricultural banks. However, Basel III regulated agricultural banks were more likely to fail amidst the pandemic-related economic shocks than the regulated non-agricultural banks.Originality/valueThis study examines the resiliency of agricultural banks during economic downturns and under postfinancial crisis regulation. This is one of the first empirical works to analyze the effectiveness of Basel III regulation across bank types and sizes considering the COVID-19 pandemic. The key finding suggests that banking regulation should consider not only size heterogeneity but also the heterogeneity in lending portfolios.

Khuôn khổ giám sát rủi ro tài chính liên quan đến biến đổi khí hậu của Ngân hàng Nhà nước Việt Nam

Climate change is happening rapidly and poses a significant risk to the global economy. International organizations have issued many regulations to manage and supervise climate-related financial risk (CRFR) to ensure the financial system’s safety. This paper uses the content analysis method to evaluate the CRFR monitoring framework of the State Bank of Vietnam compared with the Basel Committee on Banking Supervision. The results show that the CRFR supervision framework in Vietnam is still under development; the regulations and guidelines are not specific and not yet in line with the international framework, such as not clearly defining the responsibilities of senior management in CRFR monitoring, not providing guidance on the implementation, evaluation, and monitoring of the results of scenario analysis and stress testing on the resilience of banks to climate change, not clearly announcing the monitoring objectives and improving the quality of supervisors, and not requiring financial institutions to disclose information related to CRFR.

Banking on resilience: EU macroprudential policy and systemic risk

This study examines the effectiveness of macroprudential policies on banking systemic risk for 172 European banks across 20 EU countries from 2000 to 2017. Using a dynamic panel framework, it assesses the effectiveness of policy on two dimensions of systemic risk: banks' contribution to aggregate systemic risk (ΔCoVaR) and their vulnerability in stressed markets (Exposure-ΔCoVaR). Results show policy actions reduce bank systemic risk, especially in terms of Exposure-ΔCoVaR. However, this effect varies between tightening and loosening measures. Interestingly, the analysis indicates that policies don't significantly affect banks' contribution to systemic risk as measured by ΔCoVaR. Borrower-based policies and exposure limits in particular enhance bank resilience. This study has important implications for policymakers regarding the calibration and evaluation of macroprudential measures.

Перспективы наднационализации банковского регулирования и надзора в ЕАЭС в формате «мини-Базель III»

The objectives of economic integration suggest countries’ mutual efforts to their implementation. In fact, the post-crisis recovery demonstrated that there is virtually no alternative to Basel III standards and recommendations in protecting against external shocks and strengthening the stress resilience of banks. Besides, in the EU, the Basel III mechanism has become the basis for the standardization of regulatory policies. However, in the EAEU, integration processes are still missing any banking regulation accords, while the variety of the national regulatory regimes hinders integration and slows down the process of supranationalization of the regulatory architecture, threatening the exacerbation of systemic risks and, ultimately, the erosion of strategic focus within the framework of the EAEU’s single financial market and the EAEU integration at large. This article is the first attempt to propose the perspectives of bringing together the national regulatory regimes in the EAEU based on Basel III as well as reaching the consensus in the “Mini-Basel III” concept in order to further strengthening the economic basis of integration processes, including minimization of systemic risks and ensuring financial stability. Based on the analysis of banking supervision standards in the EAEU member states and their quantitative metrics in 2015–2024 (i.e., from the moment the Basel III standards have been phasing-in in the EAEU member states), we came to the conclusion that different regulatory regimes are the main source of systemic risks, while single regulatory regime will minimize systemic stress subject to implementation of the Mini-Basel III framework. Furthermore, taking into consideration the increasing uncertainty and riskiness in the Eurasian financial market, we have developed scenarios of financial integration that are based on the Mini-Basel III concept and without it. At the same time, the dominance of implicit and often apparent advantages of the different vs. single regulatory regimes, as well as sanctions imposed on Russia and the threat of secondary sanctions against the remaining EAEU member states will impede implementation of the Mini-Basel III concept. The proposed Mini-Basel III concept could be used by financial regulators in developing an EAEU supranational banking regulation mechanism, including for regulation of the prospective regional banking union.

Measuring the Resilience of Rural Banks Against COVID-19 Pandemic: Evidence from West Java, Indonesia

The potential disruption of operational activities in rural banks is linked to MSME actors' inability to repay loans amid the COVID-19 pandemic. The quality of credit and financing provided by these banks is vital in ensuring income and interest continuity, thereby impacting profitability. This study aims to analyze the financial performance dynamics and factors influencing rural banks' profitability in West Java, Indonesia, during COVID-19. The research utilized multiple linear regression with REM estimation. Despite the pandemic's challenges, the ROA, CAR, and equity values of the rural banks met minimum standards, though NPL values exceeded maximum limits. The combined factors of CAR, NPL, equity, net income, and the pandemic collectively influence profitability. Specifically, NPL and the pandemic have significant negative effects, while net income positively impacts profitability. To bolster the resilience of rural banks during crises, suggested policy measures include strengthening capital reserves, tightening credit policies, implementing good governance practices, and enhancing operational cost efficiency.

The information content of stress test announcements

We exploit institutional features of the U.S. bank stress tests to disentangle different types of information garnered by market participants when the stress test results are released. By examining the reaction of different asset prices, we find evidence that market participants value the stress test announcements not only for the information on possible future capital distributions but also for the signals about bank resilience. These results back the use of stress tests by central banks to inform the broader public about the soundness of the banking system.

The Not-so-Hidden Risks of ‘Hidden-to-Maturity’ Accounting: On Depositor Runs and Bank Resilience

The Not-so-Hidden Risks of ‘Hidden-to-Maturity’ Accounting: On Depositor Runs and Bank Resilience

Analyzing the Financial Resilience of Islamic Banks in Indonesia Amid the COVID-19 Pandemic: A Comparative Study of Stock Price Dynamics

Analyzing the Financial Resilience of Islamic Banks in Indonesia Amid the COVID-19 Pandemic: A Comparative Study of Stock Price Dynamics

The impact of Islamic banks’ resilience and culture on market share: Evidence from Muslim countries in MENA and ASEAN

This study examines whether the resilience of Islamic banks, measured using competitiveness, diversification, capitalization, and credit risk, affects market share. In particular, culture captured using Hofstede’s dimension is also included. This study covers a broader spectrum of Muslim countries in MENA and ASEAN. It used a sample of 82 Islamic banks with six years of data from 16 countries. The nexus between variables was tested using a fixed effect model. This study also employed robustness and sensitivity analysis. The empirical results show that the resilience of Islamic banks under market competitiveness plays a positive role in market share. Market competitiveness tends to lead to an increase in the level of market share; otherwise, diversification, capitalization, and credit risk are not found to influence. This study also finds that culture significantly positively affects market share. It demonstrates that the more individualistic the culture in a nation, the more likely the market share will increase. Based on the result, this study provides additional insight that the resilience dimension through Islamic banks’ competitiveness has the significant role in supporting the increase of market share. At the same time, culture is a considerable dimension in driving the improvement of market share.

Social responsibility and bank resiliency

We find strong evidence that measures of social responsibility contribute to increasing the resilience of banks. This finding holds when social responsibility is measured by aggregated ESG scores provided by Thomson Reuters, both according to their older Asset 4 categorization and to the reformed ESG Refinitiv classification, and resilience is proxied by various measures of systemic and systematic risk. The results hold on the level of subcategories of the ESG pillars, where we find that, particularly, variables related to the long-term perspective enhance resilience. Moreover, in our international study, we find significant transatlantic differences.