Effect Of Financial Innovation Research Articles

The role of financial innovation in carbon intensity reduction: perspectives from energy structure transition and fiscal policies.

Carbon emissions are important factors causing global warming, which requires global efforts to deal with. In this paper, we investigate the mechanism of financial innovation on reducing carbon emissions in China by constructing a financial innovation development index with factors of green finance as well as fintech development. Empirical results show that financial innovation contributes to reduce carbon intensity by promoting energy structure transition as well as public fiscal expenditure on energy conservation and environmental protection. Moreover, heterogeneity exists in the effect of financial innovation on carbon emission reduction. Financial innovation has a significant role in reducing carbon intensity in eastern regions, but has a relatively small influence on central and western regions. Furthermore, financial innovation has a lag effect on reducing carbon intensity.

The Effect of Financial Innovation on the Financial Performance of Financial Institutions in Cameroon

Purpose: The study sought to investigate the effect of financial innovations on financial performance of depository financial institutions in Cameroon. The specif objectives of the study were to examine the effect of product, process and institutional innovation on the financial performance of financial institutions Methodology: The study adopted a cross sectional research design. Purposive and convenience sampling methods were used to select 210 respondents from 75 financial institutions in Cameroon. Primary data was collected using a self-administered questionnaire. Data collected was sorted, coded and analyzed using the Statistical Package for Social Sciences (SPSS v22.0). Data collected was analysed descriptively with the use of mean and inferentially with the use of ordered logit regression model and Pearson correlation metrix to establish the relationship between the dependent variable and the independent variables and the results were presented in tables. Findings: The findings show that increased financial innovation through process and institutional innovation can increase financial performances. For the basic regression used to find banks’ performance, the analysis indicates that process and product innovation, measured by the ATM, POS, mobile banking and credit card, significantly influences financial performance of financial institutions. Although there is no significant effect of institutional innovation on financial performance, there is still a positive effect. Unique Contribution to Theory, Policy and Practice: The study therefore recommended that further study can be carried out on the effect of financial innovation on performance of depository financial institutions using different methods. In addition, depository financial institutions should transform banking service by adapting to process innovation so as to increase access to financial services.

The Effect of Financial Innovation on Economic Growth in Transition Countries

The Effect of Financial Innovation on Economic Growth in Transition Countries

The Effect of Financial Innovation on Bank Profitability: Assessing the Role of Country-Level Corporate Governance in Asian Countries

The Effect of Financial Innovation on Bank Profitability: Assessing the Role of Country-Level Corporate Governance in Asian Countries

Effect of Financial Innovation on Money Demand in the East African Community

Tremendous financial changes have been witnessed in the East African Community’s (EAC’s) macroeconomic landscape over the past few years. These changes can shift various parameters of the money demand model. Many previous empirical studies examined the effect of scale and opportunity cost of holding money variables on money demand. However, most of them left out financial innovation which is one of the key factors influencing money demand. Additionally, they are just country specific studies and used time series data analysis technique. It is in this backdrop that a cross-country case study that investigates how financial innovation affects money demand function was carried out using the recent data and a different analysis technique which is panel data analysis. The objective of the study was to examine the effect of mobile financial innovation on money demand in the EAC. The study used secondary data for the period 2007 to 2020 and this data was obtained from the World Bank and International Monetary Fund. Both descriptive and inferential analyses were carried out. Levin-Lin-Chu test for panel unit root was done and all the study variables were found to be stationary at level. The results of balanced panel fixed effects regression analysis indicated that mobile money, ATMs, and real GDP were affecting money demand positively and their effects were also statistically significant. However, interest rate affected money demand negatively. Mobile money and ATMs were proxies for financial innovation whereas real GDP and interest rates were control variables. Therefore, it was observed that financial innovation has had a positive effect on money demand in the EAC. The findings of this study might be of great importance to monetary authorities and policy makers in the EAC. Future research studies can expand the period of study similar to this one and also increase the number of countries involved.

Effects of Financial Innovations on Performance of Commercial Banks in Kenya

Understanding how financial innovations affect Kenya's commercial banks' performance is the main goal of the current study. The United States has long been a leader in financial innovation. However, in terms of financial innovation, China and African nations like Kenya and Nigeria have taken the lead globally. Kenya presently leads the world in mobile money services. The conflicting results of the positive and negative performance of commercial banks as a result of financial innovations served as the impetus for the current study. A literature review technique was adopted in the research. The study's overall conclusions demonstrate that financial innovations improve financial performance, as seen by an increase in transactions, the creation of convenience, and decreased maintenance costs. Banks that are incorporating financial innovations are therefore better positioned to boost their revenue and customer satisfaction, both of which are linked to increased performance. According to the report, authorities should make sure that there are laws in place that can foster an environment where banks may keep innovating.

The Effect of Financial Innovation on Bank Performance: Evidence from Commercial Banks of Sri Lanka

This study investigates the impact of financial innovation on bank performance in the context of commercial banks in Sri Lanka. Automated Teller Machines (ATM), mobile banking, internet banking, and debit cards are used as proxies to measure financial innovation while bank performance is measured by ROA and ROE. Pooled OLS regressions are estimated using data for a balanced panel of 11 commercial banks over 10 years from 2010 to 2019. All the proxies for financial innovation have significant effects on bank performance. However, the effects are not uniform across the performance measures. The results show that the financial innovations proxies of ATMs, internet banking, and debit cards have a significantly positive impact on ROA, while mobile banking has a negative impact. Internet banking has a significant positive impact on ROE, while ATMs and mobile banking are negatively related to ROE. These findings underscore the important role played by financial innovation in bank performance.

Corporate Governance, Financial Innovation and Performance: Evidence from Taiwan’s Banking Industry

This study explores the effect of corporate governance on financial innovation and the effect of financial innovation on performance in Taiwan’s banking industry from 2011 to 2019. The results find that the banks have higher shareholding of institutional investors, ratio of independent directors, attendance rate of directors, average education level of directors and more directors with a financial or accounting background, the greater innovative financial services offered by banks. After 2015, the impact of corporate governance on banks’ innovative financial services has increased. Moreover, the greater financial innovation services, the higher the bank profitability and value, especially after 2015. Finally, offering more innovative financial services can enhance the value of financial-holding subsidiary banks; by contrast, doing the same might negatively affect the profitability of nonfinancial-holding banks.

Information and communication technology in the Brazilian banking industry: does functionality matter?

Abstract A banking system is functional when it expands the potential to provide more liquidity to the economy, especially for development finance. The advances of Information and Communication Technology (ICT) can contribute to increasing banks’ potential to offer more products and services, expanding their capacity to be more functional. Diversifying financial instruments can encourage them to operate with more profitable operations in the short term to the detriment of the supply of credit in the long term, decreasing their ability to be more functional. This article aims to analyze the relationship between ICT and the functionality of Brazilian banks between 1995 and 2016. We created an index of functionality. The Panel Data estimation verified an ambiguous impact of ICT on banks’ functionality. The use of electronic devices and services for software-driven data processing and transmission has had a positive effect on this index. However, the influence of ICT on functionality was to enhance the negative effects of financial innovations on the supply of credit by banks because of the agents” incentives to invest in short-term and more liquid assets, vis à vis of financing long-term investments, harming the capacity for financing Brazilian development.

The Effect of Financial Innovation and Supervision on the Performance -Evidence from Commercial Banks in China-

As one of the three modules of the financial industry, the banking industry has a wide impact, and a special and important position in the entire financial system and the national economy. In the context of the turbulent international financial situation and the rapid changes in financial technology, China’s banking industry is facing challenges in various aspects. Chinese commercial banks need to accelerate the pace of innovation within the appropriate regulatory scope to improve their core competitiveness. This study investigates the impact of financial innovation and financial supervision on commercial banks’ business performance. We use panel data on 40 listed commercial banks in China during 2011-2020 and utilize a regression model. The findings show that both financial innovation and financial supervision have a positive impact on commercial banks’ commercial performance. Furthermore, strengthening financial supervision has a facilitating effect on financial innovation to improve bank performance.

The Effect of Financial Innovations on Financial Performance of Banks: The Case of Commercial Banks in Ethiopia

The Effect of Financial Innovations on Financial Performance of Banks: The Case of Commercial Banks in Ethiopia

The Effect of Financial Innovation and Bank Competition on Firm Value: A Comparative Study of Malaysian and Nigerian Banks

The Effect of Financial Innovation and Bank Competition on Firm Value: A Comparative Study of Malaysian and Nigerian Banks

Bankacılık Sektöründe Finansal İnovasyonun Bölgelerin Büyümesine Etkileri

Çalışma, finansal gelişme ve büyüme arasındaki ilişkiye, finans piyasaları içinde önemli yere sahip olan bankacılık sektöründeki finansal inovasyonun etkileri üzerinden yoğunlaşmaktadır. Bankalar, küreselleşmenin getirdiği rekabet etkisi ile, teknolojinin gelişmesine paralel olarak teknoloji alt yapılı inovatif ürün ve hizmetlere ağırlık vermek zorunda kalmışlardır. Bu çerçevede çalışma, bankacılık sektöründe finansal inovasyonlar ile Türkiye ekonomisi ve daha ayrıntılı şekilde Türkiye’nin bölgesel ekonomisinin büyümesi arasındaki ilişki ortaya konulmayı amaçlamaktadır. Türkiye ve bölgeler için kullanılan inovasyon değişkenlerinin sayı olarak fazlalığı sebebiyle ve ilgili değişkenleri mümkün olduğunca daha az sayıyla temsil etmek adına Temel Bileşen Analiz (PrincipalComponent Analysis) metodu kullanılarak yeni inovasyon endeksleri oluşturulmuştur. Türkiye için yapılan analizinde 1998-2017 dönemi yıllık verileri kullanılmıştır. Her değişken için Genelleştirilmiş Dickey Fuller Birim Kök testi yapıldıktan sonra ARDL Eşbütünleşme Testi uygulanmıştır. Türkiye’nin bölgeleri için yapılan analizde ise; 2007-2017 dönemi yıllık veriler kullanılarak, dinamik panel veri yöntemlerinden Arellano-Bond GMM birinci farklar tahmin yöntemi, Arellono ve Bover/Blundell ve Bond’un İki Aşamalı Sistem GMM ve Havuzlanmış Veri (Pooled Data) yöntemi uygulanmıştır. Analiz sonuçlarına göre, Türkiye ve Türkiye’nin bazı bölgelerinde bankacılık sektöründe yaşanan teknolojik gelişme, küreselleşme ve bilginin öncülüğünde gelişim gösteren inovasyon temelli ürün ve hizmetler ekonomiye olumlu ve pozitif katkı sunmaktadır. Bu sonuç Schumpeter’in görüşünü ve içsel büyüme teorilerini destekler niteliktedir.

Financial Innovations and Performance of Commercial Banks in Kenya

Commercial banks in Kenya have embraced alternative banking channels which represent a shift in delivery of banking and financial services since the alternative banking have become synonymous with commercial banks in Kenya. While banks have succeeded in leveraging available technology and provide alternative avenues to customers for banking services, the challenge it faces today is optimizing the usage of these channels so as to improve on their performance. The general objective of this study was to investigate the effects of financial innovations on the performance of commercial banks in Kenya. The specific objectives of the study were to examine the influence of internet banking, mobile banking, agency banking and ATM banking on the performance of commercial banks in Kenya. The study was guided by agency theory, balanced score card and diffusion of innovation theory. This study employed a descriptive research design. The study targeted44 commercial banks in Kenya as at 2017. The 16 banks which embrace all the four financial innovations from 2013 to 2017were selected using purposive sampling method. The sample size was 80 respondents who comprised of 5 senior management employees in each of the selected banks.This study used questionnaire to collect primary data from the respondents. Content analysis technique was used to analyze qualitative data collected from open ended questions in and reported in narrative form. Descriptive statistics such as mean and standard deviation were used to analyse the quantitative data. Multiple regression analysis was used to show the relationship between independent variables against dependent variable. The study revealed that internet banking, mobile banking, agency banking and ATM banking had a positive and significant effect on the performance of commercial banks. Thisstudy concludes that the banking industry has benefited tremendously from the development of the Internet. The Internet fundamentally changed the way in which banking networks are designed to meet the client demands and expectations. Mobile banking provides a good opportunity to commercial banks in Kenya to reach many mobile phone subscribers in Kenya who had remained unbanked and unreached due to limited access to bank branch networks in the country. The access to the large masses through mobile banking of the population gives banks the opportunity to grow by reaching the unbanked population. Agency banking has led to accessibility of financial service to many customer in remote areas and hence an increase in effectiveness and efficiency in service delivery. Customers are satisfied with the automated teller machine services because of ease of use, transaction cost and service security but not satisfy with automated teller machine dispense of cash. The study recommends that the public and businesses must be encouraged to use Internet banking in their daily activities, including deposits, payments and money transfers. Commercial banks in Kenya should ensure convenience and security of mobile banking through written guidelines on convenience and security of mobile banking. Commercial banks in Kenya should increase the number of agents in estates and in the rural areas. This can be done by reducing the requirements of becoming a bank agent. The banks should employ customized software that records relevant information on automated teller machine cards so that banks can establish whether unauthorized transaction has taken place or not.

Financial innovation and the performance of small and medium scale enterprises in Nigeria

The liberalization of the Nigerian financial sector inevitably resulted in the phenomenon of financial innovation. While studies exist that investigate the effect of financial innovation on economic growth in Nigeria, only a few have addressed its impact on the performance of SMEs. Yet, the few existing ones are micro studies that emphasize more on specific regional firms. The dearth of empirical studies at the economy-wide level, therefore, mandates this study, which fills this gap in the literature. This study employs autoregressive distributed lag methodology on quarterly data of financial innovation measures. Our findings indicate that financial innovation has a positive and significant effect on SMEs’ productivity in Nigeria. In particular, of the seven financial innovation instruments used (Automated Teller Machine, Point of Sales, Web or Internet Banking, Cheques, Nigeria Inter-bank Settlement System Electronic Fund Transfer, Nigeria Inter-Bank Settlement System Instant Payment, and Mobile Money Operations), all but one turned out in both the short run and long run as significant predictors of SMEs’ performance in Nigeria. Furthermore, the Toda-Yamamoto causality test reveals unidirectional causation running from financial innovation instruments to SMEs’ performance. These results have implications for SMEs’ growth and the current cashless policy of the Central Bank of Nigeria.

Effects of Financial Innovations on the Profitability of Deposit Money Banks in Nigeria

Effects of Financial Innovations on the Profitability of Deposit Money Banks in Nigeria

Effects of Financial Innovations on Profitability for Deposit Taking Microfinancing Institutions in Kenya

Recent studies have documented that innovations improve profitability of firms. This article documents that deposit taking micro financial institutions that have adopted financial innovations have increased their profitability. The study covered five years between 2009-2013. Both primary and secondary data were used in the study. Primary data was obtained through administration of drop and pick questionnaires to selected employees of the institutions. Secondary data was obtained from financial statements and management reports of these deposit taking microfinance institutions. Data was analyzed using descriptive statistics, return on asset and multi-liner regression model to determine the effect of each financial innovation applied on profitability on the micro-financial institution. The results showed that most deposit taking microfinance institutions adopted these financial innovations in their current operations. There was strong positive relationship between individual innovations and profitability. In line with profitability ROA also showed improvement each year after the adoption of these financial innovations.

Failure to learn from failure: The 2008 mortgage crisis as a déjà vu of the mortgage meltdown of 1994

This article traces the developments in the market for residential mortgage-backed securities (MBS) during the period 1970–2008. Drawing on an analysis of trade publications, business press, and interviews with practitioners, it shows that an MBS market meltdown in 1994 provided clear signals of problems with MBS. The market participants did not re-evaluate their use of risk management tools or adjust security design in response to the 1994 crisis, suggesting a lack of understanding of the implications of the crisis. The 1994 meltdown showed that MBS were vulnerable to systematic risks and that these risks could precipitate an MBS market crash. Furthermore, the 1994 meltdown demonstrated that large-scale investment in MBS could affect the primary mortgage market, thereby rendering the MBS risks unpredictable. After 1994, MBS investment shifted to MBS backed by mortgages with default risk – a development that led to the crash of 2008. By drawing parallels between the 1994 and 2008 crises, this article shows how the MBS market failed to self-correct. The results suggest that financial market participants do not always incorporate relevant information in their decision-making and that market participants have difficulties in both foreseeing the effect of financial innovations on markets and interpreting these effects.

New trends in the system regulating the market of bank services

The severity of the last financial crisis for the European financial markets, the economy, and society makes the scientists and financial analysts start to seek answers with great openness not only to the question of how to reduce its negative effects in the future, but also of how the system regulating financial institutions will look like in the future. The article discusses three options of the positions on the future regulatory tendencies: theoretical alternative, option presented in reports and expert studies, and the version arising from observations of the current practices of functioning of the European banks. The aim of the article is to confront the views on the future trends in the regulation of the banking sector from theoretical, consulting point of view, and the view formulated on the basis of evalua-tion of banking practices.

The effect of financial innovation on European banks' risk

This study examines the effect of the use of securitization and credit derivatives on the risk profile of European banks. Using information from 134 listed European banks during the period of 2006–2010, the results show that securitization and trading with credit derivatives have a negative effect on financial stability. The main findings also show the dominance of trading positions over hedging positions for credit derivatives. The results of this study support the higher capital requirements of the new Basel III international banking regulations. Furthermore, accounting measures do not readily indicate market risks, and thus the results support central banks' use of market-solvency measures to monitor financial stability.