Banking Research Articles

Modeling and stability analysis of liquidity risk contagion in the banking system with time delay

Modeling and stability analysis of liquidity risk contagion in the banking system with time delay

A Study on Neobanks in India

The financial sector is expanding rapidly owing to the application of new technologies, changes in consumers’ needs, and the appearance of new ideas among companies. This transformation is being led by the so–called neobanks, or online banks that have no physical branches and provide simple and user– friendly financial services. They are growing because of the increasing use of smartphones and the internet. The research focuses on market dynamics, customer actions, and issues such as ambiguous regulations and the reliability of online banking. This study also shows that neobanks are addressing some of the issues that have long plagued traditional banks, including slow service and a lack of convenience, by using technologies such as artificial intelligence and machine learning. However, neobanks have some drawbacks, including the issues of trust and security of transactions and they are still growing. This is partly because of government initiatives like UPI (Unified Payments Interface) and Jan Dhan Yojana that have made digital banking easier and accessible. Neo banks (online only banks) in India are coming into the limelight. The amount of money moving through these banks is expected to grow at a Compound Annual Growth Rate (CAGR) of 27.1% from 2021 to 2026. This means that more people are turning to the neo banks because these offer faster, easier and more inclusive banking services. This trend indicates that the neo banks are not only changing the banking system in India but may also have a significant impact on the global banking system.

Financial Connectedness and Contagion Risk in a Dual Banking System

The 2008 subprime mortgage crisis laid bare the vulnerabilities inherent in financial interdependencies, where shocks originating from one sector and entity rapidly disseminated through complex networks, engendering a contagion effect that reverberated across the banking system. The present paper offers a comprehensive exploration of systemic risk, financial interconnectedness, and contagion within the context of a dual banking system. This appears to be a particular problem because of the heterogeneous market structure, which raises major questions about financial stability. Recognizing the profound implications of the interplay between Islamic and conventional banks, this study employs a comprehensive framework to dissect the intricate dynamics at play. The results reveal the existence of significant interconnectivity, which experiences a notable augmentation during periods of turmoil. Additionally, we provide an analysis of the topological structure of the interlinkage between Islamic and conventional banks, indicating substantial transmission of volatility, both unidirectionally and bidirectionally, across intersectoral and intrasectoral domains. However, our findings indicate that both incoming and outgoing connectivities are primarily influenced by the conventional banking sector.

Does regulatory convergence shape banking resilience in Africa?

This study examines the effects of Basel III regulatory harmonization on banking stability across 21 African nations from 2011 to 2022, using a system-GMM estimation to address endogeneity and enhance causal interpretation. Stability is operationalized through Z-scores, non-performing loan ratios, and weighted composite indices, offering a robust, multi-dimensional perspective on systemic resilience. Findings suggest that Basel III compliance enhances stability across key metrics, yet reveal a trade-off wherein liquidity buffers may detract from operational efficiency unless optimally rectified to local conditions. Furthermore, institutional quality, particularly governance and property rights protections, amplifies regulatory impact, supporting transparency and resilience within the banking system. It is, thus, imperative to fortify regulatory and governance structures, optimizing financial resilience to underpin sustainable economic growth across the region. By integrating risk-weighted Tier 1 capital convergence within stability models, this research makes a substantial contribution to banking literature, refining stability frameworks and paving the way for deeper exploration of Basel III elements to provide robust, evidence-based insights into regulatory impacts on banking resilience.

The major integration features of banking system

The internationalization of the banking sector in developing countries brings both significant benefits and challenges. Foreign banks promote competition, efficiency and financial inclusion, which accelerates the integration of local banking systems into the global economy. However, the arrival of large international players may increase risks and force local banks to make significant changes. Studies show that the influence of foreign banks is ambiguous and depends on the level of economic development of the country. When assessing the effects of globalization, it is important to consider the differences between developed and developing countries. In periods of economic crisis, foreign banks can play a stabilizing role, but they can also import shocks from their own countries. To maximize benefits and minimize risks, it is necessary to develop a strategy that ensures a balanced presence of foreign banks, supports competition and innovation, but does not allow excessive concentration of bank capital. In this context, the internationalization of financial services becomes an important tool for strengthening and liberalizing the financial systems of developing countries, opening new opportunities for their economic growth and sustainable development. Since the collapse of the Bretton Woods system and the beginning of the era of financial liberalization, one of the most important manifestations of the process of integration of the banking sector into the world economy has been the expansion of foreign banking capital into foreign markets. Financial sector liberalization is intended to provide equal opportunities for financial institutions to access the international market or reduce restrictions from local regulators. Liberalization of the banking industry is one of the most important financial sector liberalization programs.

The EVFTA and Increasing the Operational Efficiency of the Banking Industry

The article aims to understand the impact of The Vietnam –EUfree trade agreement (EVFTA) on the operations of the Vietnamese banking industry. Through the collection of agreement-related documents related to the banking sector and the actual operations of Vietnamese banks, the article employs a qualitative research methodology to identify opportunities and challenges. To assess the banking industry’s ability to access and take advantage of the agreement, the study surveyed 152 leaders from thirty-six Vietnamese commercial banks. The results show that when the agreement takes effect, Vietnamese commercial banks have the opportunity to attract investors from Europe, improve risk management capacity, diversify services, promote digital transformation, bancassurance, and diversify bank income. Besides, this agreement also brings many challenges to banks such as increased costs, competition, risks, conflict of interest, requires high quality human resources. The findings also highlight barriers to the agreement’s commitments in the areas of core banking, administrative capacity, and infrastructure system network. The article then offers strategies Vietnamese commercial banks can use to improve the effectiveness of their operations.

Porter's Five Forces and Swot Indonesia's Sharia Banking System Development Strategy in Digital Era

Islamic banking in Indonesia is expected to increase financial literacy and inclusion. Islamic banking can become an important driving force in Indonesia's Sharia economic growth in the digital era. This research makes a new and significant contribution to deepening the understanding of Islamic banking system development strategies in Indonesia, particularly in facing the challenges and opportunities of the digital era, as well as providing a strong foundation for advanced research. Research methods are Literature Study-Based Analysis Using Porter's Five Forces Model and SWOT. The research result is that Islamic banking in Indonesia has several strengths and opportunities that can be utilised to increase competitiveness and growth, such as innovation of products, digital services, operational effectiveness through digitalisation, strong customer loyalty, Islamic value-based marketing strategies, and adoption of sustainable financial practices.

Stabilizing The National Banking System Through Digital Financial Inclusion, Creative Innovations, And Green Finance In Low-Financially Developed Economies

Stabilizing The National Banking System Through Digital Financial Inclusion, Creative Innovations, And Green Finance In Low-Financially Developed Economies

Khung thực hiện kiểm tra sức chịu đựng rủi ro tín dụng trong giám sát ngân hàng: Kinh nghiệm quốc tế và bài học cho Việt Nam

Stress testing is one of the key supervisory tools used by banking sector regulators to assess the stability of the banking system, with credit risk being the most critical risk applied. Through a method of synthesis and text analysis, the study analyzes the process involved in the supervisory credit risk stress test. Accordingly, the author breaks down the framework for conducting credit risk stress tests into the following steps: (i) constructing macroeconomic scenarios, (ii) measuring the impact of these scenarios on credit risk, (iii) assessing the impact on banks, and (iv) the response of supervisory authorities. In addition, the author analyzes the experience of conducting supervisory credit risk stress test in Europe, the United Kingdom, and various Asian countries up to 2023 and then draws lessons for Vietnam

A Study on Digital Finance Impact on Financial Service Industry

This study investigates the impact of digital finance on the financial services industry, emphasizing its transformative potential to revolutionize operations and customer experiences. Digital finance, driven by advancements in technologies like blockchain, mobile payments, and artificial intelligence (AI), has emerged as a key disruptor of traditional banking systems. The research highlights how these technologies enhance efficiency, reduce operational costs, and expand accessibility, fostering financial inclusion on a global scale. By empowering underserved populations with financial tools, digital finance has the potential to bridge socio-economic gaps However, this transformation is not without challenges. The study examines critical issues such as regulatory compliance, cybersecurity risks, and the ethical implications of AI in financial services. As digital finance continues to evolve, financial institutions must navigate these hurdles to ensure sustainable growth and consumer trust. The findings suggest that adaptability and innovation are crucial for stakeholders to thrive in this dynamic environment. Overall, digital finance is not just a disruptor but a catalyst for building a more inclusive and technologically advanced financial ecosystem, redefining the future of financial services.

EVALUATING THE EFFECTIVENESS OF MULTI-FACTOR AUTHENTICATION IN MITIGATING CYBER THREATS IN DIGITAL BANKING PLATFORM IN GHANA

With the rapid growth of digital banking platforms in Ghana, cyber threats have become a major concern for financial institutions and consumers alike. Multi-Factor Authentication (MFA) has emerged as a critical security measure to protect sensitive financial data and prevent unauthorized access to digital banking systems. This study aims to evaluate the effectiveness of MFA in mitigating cyber threats within the Ghanaian digital banking ecosystem. The research investigates how various MFA methods, including SMS-based one-time passwords (OTPs), biometric verification, and hardware tokens, contribute to enhancing the security posture of banks operating in Ghana. Through a combination of quantitative data analysis and expert interviews, the study examines the extent to which MFA reduces risks such as phishing attacks, account takeovers, and unauthorized transactions. It also explores the user experience and adoption challenges associated with MFA, including its impact on customer convenience and trust. By analysing real-world cyber incidents in Ghanaian banks, the study identifies gaps in current MFA implementations and suggests areas for improvement. The findings reveal that while MFA significantly lowers the risk of cyberattacks, factors such as user education, infrastructure reliability, and the sophistication of cybercriminals impact its overall effectiveness. The study concludes with policy recommendations for financial institutions, suggesting a more layered approach to security, the integration of advanced authentication techniques, and the importance of fostering user awareness to combat evolving cyber threats in Ghana's digital banking sector.

Artificial Intelligence in the Indian Banking System: A Systematic Literature Review

Artificial Intelligence in the Indian Banking System: A Systematic Literature Review

Creation of Money in a Full Reserve Banking System and the Separation of Money from Interest – Presentation of the Balance Sheets of the Central Bank and Commercial Banks in Bosnia and Herzegovina

This paper evaluates the impact of a paradigm shift in the monetary system by introducing a model of full reserve banking, focusing on the outcome of separating the generation of money from interest, which can only be achieved by abolishing the system of creating money through debt creation in the banking system. The main thesis argues that the current system, in which private commercial banks create money by issuing loans, results in deposits that mix savings achieved through economic activity with newly created money, leading to economic inefficiency and potential instability because debt and interest are always greater than the economic value created. The 100% sovereign money system corrects this by ensuring that only the central bank has the authority to create money, simplifying the financial landscape and restoring money to its rightful status as a public good and stable unit of measure. The study uses a comparative analysis between the current banking system with fractional reserves and the proposed banking system with 100% sovereign money, which is entirely reserve money. Balance sheet modeling demonstrates the impact of segregating investment and deposit accounts on the books of banks and the central bank. The methodology includes a hypothetical presentation of the balance sheet under the new system, emphasizing the accounting separation of “deposit” and “investment” accounts to end the creation of money by private commercial banks. The balance sheet analysis indicates that adopting a 100% sovereign money system requires state intervention through state deposits into the banking system to achieve the desired level of credit activity.

Object-Oriented Analysis of a Modern Scalable and Secure Banking System Using UML

This study explores UML (Unified Modelling Language) and Object-Oriented Analysis and Design (OOAD) usage to build a banking system that is both secure and scalable. The paper suggests a modern approach for banking applications, focusing on important aspects like transaction security, the ability to handle system growth, and real-time monitoring. The paper also shows how object-oriented methods can handle the complexity of banking systems. It explores technologies like microservices and blockchain to make the system more reliable and efficient. Lastly, it highlights the importance of security and fraud prevention, especially with real-time transaction tracking in today’s fast-moving financial worlds.

Measuring and analyzing the impact of bank deposits on paid loans and financial investment for the period 2003-2020

The financial system is generally divided into deposit financial institutions and non-deposit financial institutions. The difference between the two types is that the first type relies mainly on deposits and is one of the sources of obtaining funds to use those resources, whether by lending or investing them directly in the banking system. In contrast, the second type relies mainly on its expertise and financial resources. What concerns us in this research is determining the role of deposits of various types in activating and activating investment and the extent of the ability and potential of the Iraqi banking system to employ those deposits, whether at the level of direct investment or the banking system granting those funds in the form of direct loans. The ARDL model was utilized to determine the existence of a joint integration relationship between deposits, loans granted and financial investments. It was found that current deposits occupied the most significant proportion of total deposits, with joint integration between deposits and loans paid on the one hand and financial investments on the other.

Impact of Accessibility of Digital Financial Services on Financial Inclusion Among SMEs in Taita Taveta County, Kenya.

Despite its potential, the impact of digital finance on small and medium enterprises’ access to funding remained underexplored, with limited empirical evidence and an incomplete understanding of how digitalization addressed information-related challenges. In Kenya, small and medium enterprises were critical to economic growth. However, many small enterprises faced financial exclusion due to limited access to traditional banking systems. This study investigated the impact of accessibility to digital financial services on financial inclusion among small and medium enterprises in Taita Taveta County, a county characterized by a burgeoning digital economy and a significant reliance on mobile financial solutions. With the rapid growth of mobile money platforms, particularly M-Pesa, and digital lending services, small enterprises gained unprecedented access to financial resources that were previously out of reach. The research employed a quantitative approach, utilizing a structured questionnaire to gather data from 125 SMEs across various sectors in Taita Taveta County. The findings revealed that digital financial services, particularly mobile money platforms like M-Pesa and digital lending services such as Tala and M-Shwari, substantially enhanced small enterprises' access to financial resources, thereby mitigating traditional barriers to finance. The study identified key factors influencing the adoption and utilization of digital financial services, including technological literacy, cost-effectiveness, and the perceived ease of use. Furthermore, it explored the implications of these services on small and medium enterprises' operational efficiency, growth potential, and overall contribution to economic development. This research not only contributed to the theoretical discourse on financial inclusion but also provided practical insights for policymakers and financial institutions aiming to foster an inclusive financial ecosystem for small and medium enterprises in Kenya. Additionally, the study highlighted the role of digital financial services in improving transaction efficiency and reducing reliance on traditional banking infrastructure. The results underscored the importance of digital financial services in promoting financial inclusion, ultimately contributing to the economic development of small and medium enterprises in Taita Taveta County.

Obliterating The Financial Challenges Extenuating SMEs in Lagos, Nigeria Through The Instrumentality of Mushārakah: A Qualitative Assessment

Purpose: The rate at which financial challenges are mitigating the growth of SMEs in Nigeria requires diligent attention from researchers. This research work hereby aims to obliterate the financial challenges extenuating SMEs in Lagos, Nigeria, through the instrumentality of Mushārakah. Methodology: A qualitative case study approach was employed to achieve this objective. Nineteen (19) respondents who fit the criteria were interviewed, and their responses were analyzed using a qualitative method of data analysis. Findings: The study revealed that many SME owners are not fully aware of the operation of Islamic banks in Nigeria. Respondents equally revealed that they used private funds when they started their business. However, they are now better exposed to the benefits of the Islamic banking system. SMEs in Nigeria do not maintain proper books of account; during the loan inspection process, SME owners were advised to keep an appropriate record of the goods they sold and their earnings. This study concluded that entrepreneurs are not fully aware of the terms of Islamic Financing; SME owners are willing to embrace Islamic funding since it is free from interest and less expensive. This study recommended that more SMEs approach Islamic banks for financial assistance to obliterate the financial challenges extenuating SMEs in Lagos, Nigeria, through the instrumentality of Mushārakah. Significance: This research is among the few studies highlighting the financial challenges extenuating SME operations in Lagos, Nigeria, and established Mushārakah as a vital instrument to address the financial challenges extenuating SME operations in Lagos.

PENGARUH NET OPERATING MARGIN (NOM) DAN FINANCING TO DEPOSIT RATIO (FDR) TERHADAP CAPITAL ADEQUACY RATIO (CAR) PADA BANK UMUM SYARIAH DI INDONESIA

This research employs a quantitative method with a caisal-comparative design. The population for this study consists of Sharia Commercial Banks registered with the Financial Services Authority, selected through purposive sampling criteria determined by the researcher. The 2018-2022 period was chosen because it represents the most recent years, during which the global economy was impacted by the negative effects of the Covid-19 pandemic. This period saw a weakening of the banking system, particularly affecting Islamic banks in Indonesia. Based on the established criteria, there are 9 Sharia Commercial Banks that meet the researcher’s criteria. The total sample size for this study is 45 data points. The results of the study indicate that, in partial testing Net Operating Margin has an influence on Capital Adequacy Ratio, while Financing To Deposit Ratio does not have an influence Capital Adeqyacy Ratio. Net Operating ­Margin and Financing To Deposit Ratio collectively contrubute to 23,3% of the influence on Capital Adequacy Ratio, with the remaining 76,7% influenced by variables outside the scope of this study.

GLOBAL FINANCIAL CRISES AND THEIR MACROECONOMIC CONSEQUENCES FOR NATIONAL ECONOMIES: THE CASE OF UKRAINE

The article provides a comprehensive and in-depth analysis of the nature, types and causes of financial crises, which can threaten both individual national economies and global economic stability. The study analyses the origin and development of financial crises, which, in turn, are given special attention as they are becoming increasingly common amid deepening globalization and the growing integration of world markets. Particular emphasis is placed on theoretical aspects, in particular, on different approaches to the classification of financial crises, as well as on their key characteristics and determining factors that contribute to their emergence and development. The author examines the impact of global financial crises on macroeconomic indicators, including recession, instability of national currencies, rising unemployment and a general decline in economic activity, which have long-term consequences for the global economy. Particular attention is paid to the analysis of the impact of the financial crisis on the Ukrainian economy, taking into account its specific socio-economic conditions and structural problems that impede the overcoming of the crisis. The main challenges facing Ukraine in the context of the financial crisis are identified, including low productivity, instability of the banking system and weak competitiveness in global markets. The study also examines strategies for preventing and overcoming financial crises, including improving the regulatory framework, developing effective macroeconomic policies and strengthening the role of the state in managing economic processes. In addition, the international experience of overcoming financial crises and the possibility of adapting it to Ukrainian realities to ensure sustainable economic growth and financial stability were considered. The final part contains recommendations aimed at restoring Ukraine's economic sectors in order to reduce their vulnerability to future financial crises and increase their overall economic potential.

The Impact of Financial Inclusion on Economic Growth in Algeria

This research explores the impact of financial inclusion on economic growth in Algeria during the period 2004–2021. To achieve this objective, the researcher utilized the Bootstrapped coefficient estimates method, recognized for its accuracy in analyzing relationships within economic data. The study establishes a significant and noticeable relationship between financial inclusion and economic growth, highlighting the critical role of inclusive financial services in fostering economic development. Specifically, the findings emphasize that borrowing from commercial banks and the availability of ATMs have a positive and meaningful effect on economic expansion. These elements facilitate access to credit and enhance financial accessibility, which are crucial drivers of growth. On the other hand, the study identifies a surprising negative influence of the total number of bank branches on economic growth. This could point to inefficiencies or structural challenges within the banking system that warrant further investigation. The findings underline the need for tailored financial policies.