Banking Market Research Articles

Explaining Non-Performing Loans of Commercial Banks in Malaysia

This study examines the influence of bank size, capital adequacy, profitability and liquidity on non-performing loans (NPLs). The growing risk of non-performing loans leading to banks’ potential losses motivates this study to be conducted. This study includes commercial banks in the Main Market of Bursa Malaysia from 2010 to 2021. To test the hypotheses, this study employs a Fixed Effect model. The results show that bank size and capital adequacy have a significant and negative relationship with non-performing loans, indicating that banks with larger and higher capital adequacy have lower NPLs. Generally, this study found a limited number of commercial banks listed in the Malaysian market, providing a smaller sample. Nonetheless, the results of this study may benefit commercial banks in the significant factors to prevent the occurrence of non-performing loans.

Prediksi Keberhasilan Pemasaran Layanan Jasa Perbankan Mengunnakan Algoritma Logistic Regreesion

Determining public interest in marketing banking services using data mining techniques. Prospect segmentation is one of the processes used in the marketing strategy of the banking industry. Data mining support plays an important role in classifying potential bank customers and evaluating the success of marketing their services. This is important to support the conclusion about the success rate of telemarketers in carrying out bank marketing tasks. a product whose way of working requires information about potential customers. This is a classification technique that is often used to classify prospects using logistic regression according to research maps supporting prospect data mining. Defining an accurate data mining classification algorithm to predict telemarketing success based on a 2010 experiment. In marketing banking service products, the results of the evaluation process of this algorithm are determined by cross-validation, Confusion Matrix, ROC curve and T-test. The logistic regression algorithm is more accurate with an accuracy of 92.32% and an AUC value of 0.962, so the algorithm used is included in the good classification group.

Does fintech lending expansion disturb financial system stability? Evidence from Indonesia

Literature suggests two contradictory views regarding the impacts of fintech lending on banks. The competition-instability proponents believe that fintech lending expansion erodes bank market and threatens banks as traditional intermediaries, thereby intensifying bank risk-taking and potentially disturbing financial stability. In contrast, the competition-stability proponents believe fintech lending reduces asymmetric information in the credit market, thus reducing bank risk-taking and increasing bank resilience to a systematic shock. This paper aims to examine the impacts of fintech lending expansion on bank-risk taking, i.e., credit channeling activity and bank risk. This study utilizes the OLS, random effects, fixed effects, and two-step GMM regressions to test the conjectures. Consistent with the competition-stability hypothesis, our evidence indicates that shadow banking increases as banks actively seek channels to diversify their risks but are less likely to use fintech lending as a credit channel. This paper also corroborates the notion that fintech lending expansion encourages banks to diversify their risks. Pertaining to the relationship between fintech lending and bank risk, our results suggest that fintech lending expansion encourages banks to work more efficiently to improve their credit quality rather than to intensify bank risk-taking. These findings also indicate that synergy between fintech lending and banks would increase bank credit quality. This paper also examines the reasonable credit limits for fintech lending firms based on MSMEs’ characteristics. Employing the threshold regression, we find that IDR5 billion is the maximum credit provision to induce the profitability of MSMEs whereas IDR6 billion is the maximum credit provision to minimize the default risk of MSMEs.

REVIEW OF COVID-19 CRISIS AND TELEWORK: MEASURING THE PERFORMANCE OF BANKS’ MARKETERS IN AKWA IBOM STATE, NIGERIA

<p>This study measured the relationship between telework during the Covid-19 pandemic lockdown and bank marketers’ performance within Akwa Ibom State, Nigeria. Relevant related literature was reviewed and regular home-based, high mobile and relocated back-office teleworking were adopted as dimensions of telework. The ex-post facto research design was used to investigate the relationships between telework during COVID-19 Pandemic and bank marketers’ performance using the following constructs; ability to achieve sales targets, ability to convert leads to customers, and ability to retain both customers and high net-worth customers. The sample size was determined as 254, using Krejcie and Morgan (1970) sampling table with a 95% confidence level, while 154 usable copies of the questionnaire were submitted indicating a 60.63% respondent rate. Convenience sampling was used to administer the questionnaire via Microsoft form URLs to emails and WhatsApp of respondents. The data were cleaned and analyzed using MS Excel and Power BI respectively, to test the three null hypotheses. The empirical analysis revealed that all three null hypotheses were rejected. This implies a significant positive relationship between the dependent and independent variables in the three hypotheses measured. Although, the ability to retain customers and high net-worth customers had the most significant relationship, with a 0.97 positive influence, however, all female participants (27% of participants) disagreed with meeting their sales target during the Covid-19 pandemic lockdown. This means that the female bank marketers were of the opinion that there is a negative significant relation between telework and bank marketers’ performance. Surprisingly, 33% of females were still willing to continue with extended teleworking probably because of other benefits. Since 55% of respondents agreed to engage in regular home-based telework, 55% also did high mobile teleworking while 36% were involved in relocated back-office telework, which signifies that some bank marketers were involved in more than one dimension of telework. Another minor finding was the fact that there is a very high correlation between high-income earners and willingness to continue teleworking. An area recommended for further studies is the effect of telework on gender-based performance.</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0031/a.php" alt="Hit counter" /></p>

The Validity of P/E Ratio Valuation: Evidence from A-share Listed Bank Companies

Contemporarily, financial development with Chinese characteristics has been the core of the development of Chinese society. Meanwhile, the banking industry was the core of its financial system for more than ten years. With the adjustment of China’s policy in recent years, more and more urban and rural commercial banks have been listed in the A-share market. By the end of 2022, there are 42 listed banks in A-share market and 11 more companies were on the waiting list. The P/E ratio, as an index that also refers to stock price and financial report data, has been the focus of domestic and overseas capital markets. With the maturity of China’s capital market and the listing of more and more banks in the A-share market, evaluating the actual value of listed companies is crucial. By analyzing the cross-sectional 2021 financial reporting data of listed bank companies, this paper examines the relevant economic data that affect the P/E ratios of listed bank companies in China. According to the analysis, it provides reasonable suggestions for the decision-making of investors and the pricing of the initial public offering of the bank companies to be listed. In general, these results provide a basis for guiding the effectiveness of P/E valuation of listed banking companies in China, especially the pricing of IPOs of urban and rural commercial banks.

Earnings and market ratio: Additional evidence from Jordanian banks

The primary objective of this study is to investigate the correlation between profitability and the banks market value, while controlling for bank size as indicated by total assets. Two main models are analyzed, namely the benchmark model and the main model, to estimate the impact of high and low profitability on market value. The sample for this study consists of Jordanian banks covering the period from 2010 to 2020. The study results reveal that banks with high profitability exhibit a higher market value compared to those with low profitability, underscoring the crucial role of profitability as a determinant of bank value. Furthermore, the study establishes a link between low and high ROE and market value, indicating that variations in ROE significantly affect market value. Moreover, the study demonstrates a positive link between earnings and market value, emphasizing the significance of bank earnings in influencing market value. Lastly, the study emphasizes the role of bank size in shaping the link between ROE and market value, highlighting the importance of considering bank size when examining the link between profitability and market value. AcknowledgmentI thank Amman Arab University for funding this research.

Capital flow deflection under the magnifying glass

AbstractLeveraging on a new quarterly dataset of capital control adjustments, we find renewed evidence that the introduction or tightening of capital controls in one economy increases capital inflows to other similar borrowing economies, an effect often called capital flow deflection. However, not all flows are deflected alike. Capital flow deflection is primarily driven by portfolio investment and bank credit, and only controls targeting these types of flows generate this externality. Moreover, analysing bilateral capital flows in order to capture investing countries' characteristics, we find that capital controls tend to deflect flows from advanced economies' portfolio equity investors, while controls on bank‐related flows primarily deflects lending from emerging market banks.

Banking Market Consolidation and Tax Planning Intermediation: Evidence from Client Firm Tax Haven Operations

ABSTRACT This study examines the effect of banking market consolidations via mergers and acquisitions (M&As) on the role of banks in intermediating corporate tax planning through offshore tax haven operations. We find that bank clients significantly increase their tax haven operations after their banks are merged with others. In addition, such an increase is greater when a commercial bank merges with an investment bank and when the clients have greater tax planning opportunities. We also employ network analyses to show that the propensity for a client to expand its operations into a new tax haven country increases significantly when its relationship bank enters into this country through an M&A. Collectively, our findings reveal that bank M&As enhance banks’ tax intermediation capability.

The FinTech Banking Role of Improving Banking Market Share in Emerging Markets: Evidence from Egypt

The FinTech Banking Role of Improving Banking Market Share in Emerging Markets: Evidence from Egypt

Digital twins in banking: Problems and prospects

Aim. To identify key conditions and factors that determine the prospects of implementing digital twins as part of improving the mechanisms of information support for management decision-making (controlling) in banks and business processes for customer service.Tasks. Research theoretical and methodological foundations of the concept of digital twins, peculiarities of their implementation in the banking business processes; estimate market capacity and potential; identify prerequisites for the concept; analyze the effectiveness of digital twins; reveal the main approaches to the concept of digital twins in Russian banks, systematize directions of application and development.Methods. We used general scientific methods to analyze articles and publications, held surveys (including Yandex forms) and interviews that were systematized and generalized.Results. The need to optimize the historically high operating costs of the banks and the importance of ordering disparate databases to support the management decision making has been confirmed. One of the variants for solving these problems is implementation of digital twin technology by banks, which is implemented primarily in replacing physical processes with digital ones (credit conveyors, automated modules of account opening by companies, borrower and project monitoring systems, business analytics systems, antifraud monitoring, etc.). Examples were identified and expert opinions were obtained confirming high efficiency of this technology and its elements which in its turn defines its perspectives against the background of intense competition on the banking market. The key factors of implementation are determined: optimization of banks’ operational business processes, improving the quality of modeling and stress testing. Shortage of qualified specialists in IT sphere, lack of Russian analogues of software and equipment, high cost of implementing technological solutions, departure of foreign developers and integrators from the Russian market were singled out as the most significant problems, associated with the technology implementation. The majority of respondents point to the inevitability of progress, but condition the final decisions based on the formed practice of implementation. It was determined that, given the significant costs of the complex implementation of digital twin technology, it is currently appropriate for banks to focus on individual processes, tasks.Conclusions. The use of digital twins as an integrated multifactor model based on modern digital technology in banking improves the efficiency of bank controlling, customer service and ensures the reduction of the cost of business processes. It is this concept, using modern technological solutions, will contribute to the replacement of a number of physical processes by virtual ones, which will affect the cost of operations and provide banks with direct economic effect.

ФОРМУВАННЯ ПОРТФЕЛЯ ФІНАНСОВИХ ПЛАТІЖНИХ ЗОБОВ’ЯЗАНЬ, ЗАХИЩЕНОГО ВІД СИСТЕМАТИЧНИХ РИЗИКІВ

Developing a model for studying banking operations related to financial risk seems to be very promising. Banks with heterogeneous fundamental funds often face a potential outflow of their creditors. The ability to affect a particular bank depends on the intermediate liquid value of its assets, whereas the latter value endogenously depends on the status of other banks in the asset market. Mathematical modeling of economic risks forms an idea of the peculiarities of modern economic risks, including financial ones. The study of various ECONOMIC-MATHEMATICAL MODELING Issue IІ (90), 2023 119 aspects of financial risk is one of the fundamental concepts of modern economic theory and management, as well as is increasingly being applied in practice in all areas of economic activity. Obviously, it is not necessary to use experience and intuition in economic activity. However, it is essential to possess the information about the causes of risk situations and to carry out qualitative and quantitative risk analysis. The purpose of the article is to develop a mathematical model of immunizing a portfolio of financial transactions and to study the immunization of a portfolio of financial payment obligations regarding the risk of changes in market interest rates. The article identifies the basic typical models of investment portfolios and studies the methods of portfolio optimization, using different types of financial instruments. Initially, it is necessary to study the net present value of payments (NVP), for which the NVP formula is introduced. Next, the main factor of change in the yield curve should be taken into account - a parallel shift by the value of h (NPV(h)) so that NPV(h)- NPV(0) is minimal, using a more complex deformation of the yield curve. To mitigate this risk, it is important to apply factor immunization, however, with a due regard to the three factors that describe almost all changes in structural interest rates. All studies are formulated in the form optimization problems. To protect a portfolio from market risk, its structure needs to be rebuilt. Therefore, the possible volatility and liquidity risks for the existing portfolio of financial liabilities have to be taken into consideration as well.

Marketing Information System (MKIS) and Optimization of Banking Service Delivery

This study examined marketing information system and optimization of banking service delivery. It sought to assess the influence of internal records, marketing intelligence and marketing research on banking service delivery. The study adopted cross-sectional survey research design. The sampling technique used was total population sampling which enabled the collection of primary data from 282 marketing and managerial personnel of commercial banks through an adapted structured questionnaire. Instrument validity was confirmed through content validity while Cronbach’s alpha reliability method was used for reliability testing. Multiple linear regression was adopted to test the hypotheses developed for the study. Consequently, the findings revealed that internal records, marketing intelligence and marketing research had significant positive influences on banking service delivery, with varying magnitudes of influence. Hence, the study concluded that marketing information system has a significant positive influence on the optimization of banking service delivery. Therefore, the study presented practical implications for the banking industry and research suggestions for future researchers.

Analisis Pengaruh Kantor, ATM dan Imbal Hasil terhadap Dana Pihak Ketiga Bank Syariah di Indonesia

Signal Theory conveys that financial reports are very important tools for stakeholders. In the banking industry, especially Islamic Banks (BUS) are the main benchmark in increasing the Islamic banking market. This success appeared in the form of a signal in the form of a continuous increase in the position of Third Party Funds (DPK) over time. This study aims to analyze the effect of the number of offices, the number of ATM machines and the rate of return on DPK BUS in Indonesia. The methodology used is multiple linear regression analysis. The result of the analysis is that BRANCH (number of offices) has a negative but not significant effect on FUND (DPK), while ATM (ATM machines) has a significant positive effect on FUND and RETURN (yield rate) has a significant negative effect on FUND. The simultaneous test results, namely BRANCH, ATM and RETURN simultaneously affect FUND

Interactive marketing and relationship quality in Islamic banking: A Parepare case study

Purpose − This research aims to analyze the effects of interactive marketing and relationship quality on customer satisfaction and loyalty in Islamic banking.Methodology − A quantitative research approach was employed, and data was collected through a survey questionnaire administered to customers of Islamic banks in Parepare. The data analysis method used in this study is Partial Least Squares-Structural Equation Modeling (PLS-SEM).Findings − The study findings indicate that, indirectly, interactive marketing and relationship quality do not have a direct significant influence on customer loyalty in Islamic banks. However, it is observed that interactive marketing and relationship quality can affect customer loyalty through satisfaction. These findings suggest that the process of maintaining and enhancing customer loyalty in Islamic banks requires careful attention to multiple factors and stages.Implications − This research emphasizes the significance of integrating interactive marketing strategies, fostering relationship quality, and prioritizing customer satisfaction in the context of Islamic banks. These factors are essential for maintaining and strengthening customer loyalty, ultimately contributing to the long-term success and competitiveness of Islamic banks in Kota Parepare.Originality − The originality of this research lies in its contextual focus and integration of variables. Firstly, the study specifically examines the impact of interactive marketing and relationship quality on customer satisfaction and loyalty within the context of Islamic banks in Kota Parepare. Secondly, the study integrates multiple variables, including interactive marketing, relationship quality, customer satisfaction, and customer loyalty, providing a comprehensive understanding of the factors that contribute to customer loyalty in the context of Islamic banks.

دمج البوتستراب الاحتمالي الموزون مع طريقة لارس الحصينة لاختيار المُتغيّرات في أنموذج الانحدار الخطّي بوجود مشكلتي الأبعاد العالية والقيم الشاذّة.

In this research, a new algorithm was proposed to select the important variables in the regression model with the presence of two problems of high dimensions and outliers by employing and integrating the weighted bootstrap probability - Robust Least Angle Regression Selecting (WBP-LARS) and comparing it with another selection method. It is a method of impregnable Lars based on the regular bootstrap method, known as (B-LARS), empirically simulated and applied, based on real data related to the market value of some private banks in the stock market for the period 2010-2017. The comparison in the simulation included two cases for the required number of explanatory variables Choosing (K = 5, K = 7) as well as two cases when (n>P) (n<P) and sample sizes (50, 70, 20, 26) with a correlation value of 0.95 and with different contamination rates α = (0.05, 0.10, 0.15) The research concluded with conclusions, the most important of which is determining the number of important variables between the numbers 7-10, the preference of the (WBP-LARS) method over the (B-LARS) method when (n>P), while a slight preference for the (B-LARS) method appeared over the proposed method when ( n<P) and the sample size is far from the total number of variables in the model, but the efficiency converges whenever the sample size is very close to the number of variables and can be relied upon in the selection process for the variables in this case

Đo lường cạnh tranh ngân hàng tại Việt Nam: Liệu có quá nhiều khác biệt giữa các thước đo?

The study aimed to measure the factors affecting banking competition in Vietnam through competitive efficiency is proposed by (Bolt & Humphrey, 2010, 2015a, 2015b). Through secondary data collected from 19 commercial banks in Vietnam in the period 2011-2021, with data processing method through SFA method to estimate competitive efficiency indicators. Then, using the D-GMM model for both the competitive efficiency method and the Lerner index to examine the correlation between the two measures. The research results show that there is still a small difference between the two measures, which is reflected in the existence of three factors with inconsistent results including the ratio of equity to total assets, market capitalization market and banking market share. The research results also suggest that factors such as Net Profit to Total Assets Ratio, Bank Size, Annual GDP Growth Rate, Annual Inflation Rate, Market Concentration Index, Revenue Fees and credit risks have an impact on banking competition in Vietnam.

Merger Bank Syariah BUMN: Strategi Peningkatan Pangsa Pasar Keuangan Syariah

The market share of Islamic finance in Indonesia is currently still low, in stark contrast to the condition of the Muslim majority in Indonesia with the largest number in the world. As an effort to increase the market share of Islamic finance in Indonesia, the government through the Ministry of BUMN made a breakthrough by merging three state-owned Islamic banks namely BNI Syariah, BRI Syariah and Bank Syariah Mandiri into Bank Syariah Indonesia in order to expand the Islamic banking market which is the locomotive driving economic development. sharia in Indonesia. This study aims to analyze the role of the merger of state-owned Islamic banks in increasing the share of the Islamic financial market in Indonesia through a qualitative approach with a type of library research that focuses on collecting secondary data in the form of books, research results, news, magazines, journals, and other references. Based on the results of the study, the merger strategy in state-owned Islamic banks seeks to increase the share of the Islamic financial market through various advantages possessed by Bank Syariah Indonesia, among others: first, the system and work professionalism supported by the system, technological sophistication and qualified service features so as to provide various conveniences in financial transactions. Second, the amount of capital assets accompanied by various product innovations resulting in high sharia-based funding, stable liabilities and impressive profitability. Third, the superiority of local and regional understanding that is able to reach various economic sectors in society.

From credit boom to credit crunch in CESEE countries

A development in the banking market and bank credit oriented towards the private sector is a key factor for the economic development of the country. Before the appearance of the financial crisis of 2008, credit growth in the CESEE countries was double-digit, raising the concern of an excessive credit growth which could cause the economy to overheat. The global financial crisis significantly reduced bank credit rates to the private sector mainly as a result of the reduction in capital movements that parent banks made to their subsidiaries in the CESEE countries. The purpose of the paper is to convey how these reductions in credit rates caused effects on important economic variables such as economic growth, inflation, non-performing loans. We also try to see what the response of the monetary authorities was during the crisis, where some countries also faced inflationary pressures.

Banking system stability in the MENA region: the impact of market power and capital requirements on banks’ risk-taking behavior

PurposeThis paper aims to investigate the impact of capital requirements and bank competition on banks' risk-taking behavior in the Middle East and North Africa (MENA) region.Design/methodology/approachThe study combines both descriptive and analytical approaches. It considers panel data sets and adopts panel data econometric techniques like fixed effects/random effects and generalized method of moments estimator.FindingsRegulatory capital and market competition have different effects according to the bank’s type (Islamic or conventional). The results show that the capital adequacy ratio has a significant impact on the credit risk of conventional banks (CBs) while this effect is irrelevant for Islamic banks (IBs). However, market competition plays a significant role in shaping risk-taking behavior of Islamic banking institutions. Our results indicate that banks with strong market power may pursue risky strategies in the face of increased regulatory pressure (e.g. increased minimum capital requirements). The results were robust to alternative profitability measures and endogeneity checks.Research limitations/implicationsThe most important limitation is the lack of data for some banks and years, and this paper had to exclude some variables because of missing observations. The second limitation concerns the number of IBs in the sample. However, this can be overcome by including more countries from MENA and other regions where Islamic banking is a growing phenomenon.Practical implicationsOur findings call for a change in Islamic banking’s traditional business model based on the prohibition of interest. The analysis indicates that market concentration moderates the association between capital requirements and the insolvency risk of IBs but not CBs. Therefore, regulatory authorities concerned with improving financial stability in the MENA region should set up their policies differently depending on the level of banking market concentration. Finally, bank managers are requested to apply a more disciplined approach to their lending decisions and build sufficient capital conservation buffers to limit the impact of downside risk from the depletion of capital buffers during the pandemic.Originality/valueThis study addresses banks’ risk-taking behavior and stability in the MENA region, which includes banks of different types (Islamic and conventional). This paper also contributes to the literature on bank stability by identifying the most critical factors that affect bank risk and stability in the MENA region, which can be relevant in the context of the new global (COVID-19) crisis.

FORECASTING OF THE MAIN SEGMENTS OF THE FINANCIAL MARKET OF UKRAINE

The article analyzes and builds economic and mathematical models for forecasting the main segments of the financial market of Ukraine:: the banking market; stock market; insurance market. The role of the financial market in modern civilized society is huge. Its functions include the mobilization of capital, its distribution among industries, control and support of the reproductive process, as well as increasing the efficiency of the economic system as a whole. The turning point for the Ukrainian financial market was 2022, namely the beginning of a full-scale Russian invasion, which led to the isolation of the financial market of Ukraine due to the introduction of martial law. In order to identify the key challenges for the development of the financial market, it is necessary to forecast the dynamics of its main segments using the tools of economic and mathematical modeling. A feature of the development of the domestic financial market is that the main part of the state’s financial resources is concentrated in such subjects of the financial system as deposit (commercial) banks; non-deposit financial intermediaries (insurance companies); subsidiary financial corporations (stock exchanges). According to the constructed forecasting models, it can be concluded that, all things being equal, in 2023 and 2024, the tendency to decrease the number of operating banks will continue and will be 59 and 54, respectively. As for the share of commercial banks with domestic capital, it will remain at the same level in 2023 and decrease by 4% in 2024. The number of insurance companies will decrease to 111 in 2023 and increase by 8 in 2024. Regarding the size of their assets, in 2023 there will be a decrease to the level of UAH 68,557 million, and a slight increase to the level of UAH 69,283 million in 2024. The share of the exchange market in the total volume of trades on the securities market will increase to 62% in 2022 and to 66% in 2023.