Efficiency Of Banking System Research Articles

Comparative Analysis of the Efficiency of Islamic and Conventional Banking Systems: A literature review

The article aims to conduct an Efficiency Comparison between Islamic and Conventional Banking Systems by synthesizing a literature review within the realm of Financial Management. Employing a literature study methodology, the author meticulously examines prior research findings to construct a robust conceptual framework. This approach comprehensively outlines the pertinent theoretical landscape, elucidates recent advancements, and establishes a robust foundation for discourse, drawing from contemporary references accessed through Google Scholars and Mendeley citation searches.Through the analysis of previous studies, the article references significant disparities in the efficiency systems of Islamic banks and conventional banks across their distinct features, each presenting unique advantages. This underscores the need for further analysis of components like sharia compliance, capital structure, and social values, which play pivotal roles in enhancing the efficiency of Islamic banking.

Assessing Macroeconomic Determinants of Banks’ Efficiency in the West African Monetary Zone

Purpose: This study assesses how six selected macroeconomic variables, namely, size of the banking system, liquid liability of the system, interest rate, inflation, gross domestic product and exchange rate affect banking system efficiency in the West African Monetary Zone countries group. Spanning a twenty-nine-year period (1992 – 2020).
 Methodology: the study used fixed and random effect models of panel least squares to analyze the relationship between these macroeconomic variables and bank efficiency of the countries as a group. Further, the study analyzed the country-by-country net effect of the selected macroeconomic variables on bank efficiency.
 Findings: We find that when examined as a group, only the positive effect of exchange rate on bank efficiency is significant. We also find reveal that the macroeconomic variables have negative effect on bank efficiency in Gambia, Ghana and Sierra Leone while they positively affected bank efficiency in Guinea, Liberia and Nigeria. Finally, we find that interest rate and inflation have causal relationship with bank efficiency in the countries as a group.
 Unique Contribution to Theory, Practice and Policy (Recommendations: We advocate that bankers in the WAMZ critically appraise their size, liquidity and interest rates vis-à-vis their efficiency goal. We also recommend that the governments of Gambia, Ghana and Sierra Leone formulate bank friendly policies especially with respect to interest rates and inflation variables that have causal relationship with bank

The effect of mergers and acquisitions on the efficiency of Vietnam banking system during the restructuring period

Since 2011, the Vietnamese banking system has performed many M&A deals. Some small banks which had weak competitiveness and experienced operating activities risk were on the verge of bankruptcy, and had been acquired by potential financial institutions. Although M&A transactions are known for numerous advantages which are brought back for banking industry, most banks still have not actively participated. Therefore, gaining more information about how M&A activities changed our banking system is essential for providing suitable implications and developments for the future. This report first aims to investigate the efficiency level of 30 Vietnamese commercial banks during 2011–2019 period under intermediation and operating approach using Bootstrap Data Envelopment Analysis. Next, applying Robust Truncated Regression, this paper shows that M&As negatively affect banking efficiency. Meanwhile, a set of explanatory variables following CAMELS standards can contribute to increase the efficiency level.

Efficiency assessment of banking systems’ performance

Globalization processes define the modern trends in world economic development, including both international financial markets and the banking systems of different countries. The study aims to evaluate the efficiency of the banking systems of Ukraine and 17 European countries in order to choose the appropriate measures, concerning its increasing. The Data Envelopment Analysis (DEA) was chosen as a tool for evaluating the efficiency of the banking systems; the calculations were made using the Banxia Frontier Analyst software. Also, the BBC and CCR models of linear programming were used to define the existing relationship between the studied indicators. As a result of the study, the groups of efficient and inefficient banking systems were identified, which allowed determining the existing reserves, possible managerial tools and decisions for improving the inefficient banking systems’ performance. Besides, graphical interpretation of the current position (rank) of certain country bank system in relation to other countries’ banking systems was presented. The developed approach is aimed at improving bank management at the macro level and enhancing the efficiency of banking systems.

The impact of Covid-19 on the banking industry efficiency: Comparison between Indonesia and Malaysian banks

Purpose − This study aims to measure and compare the efficiency of Islamic and conventional banks in Indonesia and Malaysia, from 2015 to 2020.Methodology − Data Envelopment Analysis (DEA) was employed as a research method for measuring efficiency. The DEA results are also used to identify input or output variables that must be improved if the Decision-Making Unit (DMU) needs to improve efficiency in form of potential improvement.Findings − This study shows that Covid-19 had an impact on decreasing the efficiency level of Indonesian and Malaysian Banks. This study also shows that Indonesian Banks are relatively efficient compared to Malaysian Banks. Nevertheless, Islamic bank is more affected by Covid-19 compared to conventional. In addition, the most important variable performance to be improved by banks during the Covid-19 pandemic is total financing.Implication − It can be used as a guideline for both nations to improve their shortcomings in each type of bank and to strengthen the banking system during economic downturns in order to speed up the recovery process.Originality − This is the initial study to examine the banking efficiency of Indonesia and Malaysia during the covid pandemic-induced economic crisis. As a result, it is expected to capture the impact of the covid-19 epidemic on banking efficiency.

THE TAIWAN BANKING SECTOR - THE IMPACT OF LIBERALIZATION AND MACRO ECONOMIC FACTORS. AN EMPIRICAL STUDY OF TAIWAN

ABSTRACT National culture is a well-researched and significantly impactful factor as nations transition from developing to emerging to fully developed status. Adam Smith set forth the idea that certain “norms” were required for capitalism to grow, and subsequent research has indicated that cultural factors are significant in both bilateral trade and the participation in stock markets. While many factors significantly influence the efficiency of emerging market banking and the internationalization of currency, perhaps none is more important than the financial liberalization of a nations' banking system. This paper investigates the process of liberalization of Taiwan's banking sector since the Asian financial crisis in 1997 and into present day. The steps undertaken by the country are reviewed and what foreign banks may offer in terms of increasing competitiveness amidst the domestic banks, is examined. The effects of liberalization are analyzed by developing a model and tested by an empirical framework using linear regression. Results indicate significant direct effects of liberalization on emerging market banking efficiency, and a significant negative moderation effect of NPAs. Lessons are drawn for other markets currently engaged in efforts of liberalization of their financial services industry. Keywords Liberalization, Emerging Markets, Banking System Efficiency, Capital Adequacy, Non-performing assets

A long-term analysis of efficiency in the Italian banking system from 1861 to 2010

In this paper, we analyse the performance of the Italian banking system in the 1861–2010 period. In this regard, we apply a stochastic frontier analysis cum ARDL procedure. First, we implement stochastic frontier analysis to the cost function of the Italian banking system in order to identify the years in which the banking system allocated its resources most efficiently. To this end, we propose a version of the stochastic frontier in which the inefficiency term is modelled as a linear function of the capital ratio and of the non-core ratio. The underlying hypothesis is that the efficiency of the banking system is guided by its degree of solvency and stability (capital ratio and non-core ratio, respectively). Finally, in order to verify the existence and stability of a long-term relationship between banking efficiency and capital ratio and non-core-ratio, we implement ARDL estimation. In so doing, we verify whether solvency and stability are two important factors in determining the efficiency of the Italian banking system in the long run. We show that the efficiency of the banking system is influenced negatively by the non-core ratio and positively by the capital ratio, respectively. Finally, only the non-core ratio influences the efficiency of the Italian banking system in the long run.

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

Fintech Credit and Bank Efficiency: International Evidence

The expansion of fintech credit around the world is challenging the global banking system. This study investigates the interrelationships between the development of fintech credit and the efficiency of banking systems in 80 countries from 2013 to 2017. The findings indicate a two-way relationship between them. More specifically, a negative relationship between bank efficiency and fintech credit implies that fintech credit is more developed in countries with less efficient banking systems. Meanwhile, a positive impact of fintech credit on the efficiency of banking systems suggests that fintech credit may serve as a wake-up call to the banking system. Therefore, fintech credit should be encouraged by the authorities around the world.

Innovative approaches to the assessment of banking competition in ukraine in terms of digital transformation

The article considers the issues on banking competition interaction, the banking system's stability and efficiency. This research aims to conduct a comprehensive assessment of the banking competition that consists of structural and non-structural methods under the institutional changes' impact. The paper presents how this influences the banking system of Ukraine through its reformation in the banking competition level and how it interacts with indicators of stability and efficiency of the banks. In this study's frame, the authors applied a developed approach to the modified model of Panzar-Rosse regarding the banking activity in Ukraine after it has been rebooted and «cleansed of». The systematization of the scientific background and approaches to assessing the level of banking competition in Ukraine noted that, generally, native authors used only one of the methods to assess the level of competition in the banking industry of Ukraine. Besides, their studies focused on the pre-crisis period, when these innovations hadn't significantly affected the banks' activity changes. The importance of solving this scientific problem is identifying problems in the banking system and taking measures to eliminate them, using the comprehensive assessment of the banking competition level, considering the explanatory indicators of the banks' stability. This issue became critical after a significant reduction in the number of banking institutions in Ukraine and the change in the institutional structure of the banking system of Ukraine under the influence of financial innovations. The study into assessing the level of competition in the banking market of Ukraine is carried out in the following logical sequence: 1) considering the studies on the given subject; 2) describing the existing methods for assessing competition in the banking industry; 3) describing the proposed modified methods of the assessing the level of banking competition; 4) providing proposals regarding the improving banking competition in Ukraine. The study's period is 2015-2019. The research object is the banking system of Ukraine. The article presents an empirical analysis of the current level of competition in the banking market of Ukraine. The findings showed that the banking sector of Ukraine is characterized by monopolistic competition, which is characterized by increasing concentration in the market of the state-owned banks. The study empirically confirms and theoretically proves that some Ukrainian banks have increased their market share due to a decrease in the number of banks in recent years due to the influence of digital transformation. The results of this study could be beneficial for the use of proposed innovative approaches to assessing the level of banking competition in Ukraine in the future, for the bank owners (including small ones), also on proposals for the perspective development of neo-banks in Ukraine, in which there is a need not only for the banking system but also for the users of banking services.

Modelling a shared-resource network DEA with bad output in measuring technical efficiency of banking system

Modelling a shared-resource network DEA with bad output in measuring technical efficiency of banking system

Modelling a shared-resource network DEA with bad output in measuring technical efficiency of banking system

This paper develops a serial three-stage network data envelopment analysis (DEA) model to estimate the efficiency of banks who transform their resources into final products, incomes. Different from previous studies, which oversimplified the banking's production, we divide it into three stages, namely, capital organisation, capital allocation, and capital turnover. The shared resources and undesirable outputs are also integrated into the evaluation framework to better reflect the nature of banking business. The novel contribution of our network structure is its ability to disclose the inefficient of each stage as well as its relative importance in the whole operation. The model is then employed to appraise the technical efficiency of 35 banks in Taiwan. Some managerial implications are offered to optimise their performance.

Financial Crisis, Globalisation and Development in Africa

This study unites two streams of research by simultaneously focusing on the impact of financial globalisation on financial development and pre- and post-crisis dynamics of the investigated relationship. The empirical evidence is based on 53 African countries for the period 2004–2011 and Generalised Method of Moments. The following findings are established. First, whereas marginal effects from financial globalisation are positive on financial dynamics of activity and size, corresponding net effects (positive thresholds) are negative (within range). Second, while decreasing financial globalisation returns are apparent for financial dynamics of depth and efficiency, corresponding net effects (negative thresholds) are positive (not within range). Third, financial development dynamics are more weakly stationary and strongly convergent in the pre-crisis period. Fourth, the net effect from the: pre-crisis period is lower on money supply and banking system efficiency; post-crisis period is positive on financial system efficiency and pre-crisis period is positive on financial size. JEL Codes: F02, F21, F30, F40, O10

Comparative Efficiency Study between Islamic and Traditional Banks

Islamic banking caught attention due to its resilience to the significant shocks that hit the economy in late 2008. This research aims to evaluate the efficiency of a sample of 66 banks including both Islamic and traditional banks in various countries ranging from Egypt, Pakistan, Bangladesh, Saudi Arabia, Kuwait, Qatar, Iraq, Emirates, Sudan, Turkey, Bahrain and Jordan throughout 2009-2014. This research aims at identifying which banking regime proves to be more efficient and its significance using Financial Ratio Analysis (FRA), composed of cost efficiency, revenue efficiency and profit efficiency ratios along with the One-way ANOVA test. The impact of efficiency of the performance of the banks in terms of Return on Assets (ROA) and Return on Equity (ROE) is also evaluated through multiple regression analysis. Lastly, inflation’s effect on the different banking efficiency measures will be tested using regression analysis. The findings indicate that the traditional banking system is superior in terms of cost, revenue and profit efficiencies, furthermore, the results of the multiple regression analysis on the banks’ return on assets and return on equity imply that the efficiency of Islamic banks have more influence on their profitability compared to their traditional counterparts. Inflation had minimal effect on the efficiency of both banking system. The overall results imply the superiority of traditional banks to the relatively new banking system.

The comparative African regional economics of globalization in financial allocation efficiency: the pre-crisis era revisited

This study assesses the role of globalization-fueled regionalization policies on the financial allocation efficiency of four economic and monetary regions in Africa from 1980 to 2008. Banking and financial system efficiency proxies are used as dependent variables and seven bundled and unbundled globalization variables are employed as independent indicators. The bundling is achieved by principal component analysis, while the empirical evidence is based on interactive fixed effects regressions. The findings are as follows. First, financial allocation efficiency is more sensitive to financial openness compared to trade openness and most sensitive to globalization. The relationship between allocation efficiency and globalization-fueled regionalization policies is defined by: (i) a Kuznets or inverted U-shaped curve in the UEMOA and CEMAC zones (evidence of decreasing returns for allocation efficiency from globalization-fueled regionalization) and (ii) a U-shaped relationship overwhelmingly in the COMESA and scantily in the EAC (increasing returns to allocation efficiency due to globalization-fueled regionalization). These relationships are relevant to the specific globalization dynamics within regions. Economic and monetary regions are more prone to surplus liquidity than pure economic regions are. Policy implications and measures for reducing surplus liquidity are also discussed.

Investiciono bankarstvo i tržište hartija od vrednosti

An increasing number of analyses have given proof that an effective financial system differs from an ineffective one in that it drives the long-term economic growth forward by allocating financial resources to more profitable investments. As a result, demands for financial sector reforms to increase its efficiency have intensified, in order to promote economic progress. Stable and efficient banking systems are an important component of every financial system. By reducing the efficiency of a country's banking or entire financial system, the ability to allocate resources for productive investment is reduced. The aim of the paper is to examine the importance and future possibilities of investment banking in the context of modern capital markets.

PDF (УКРАЇНСЬКА) THE ROLE OF FINANCIAL MARKET CONFIDENCE INDICATORS IN THE BANKS' ACTIVITIES

The problem of public confidence in the banking sector is considered. It is substantiated that in the modern world the basis of banking system efficiency is confidence in banks. Today, confidence in the banking sector is low. An unstable financial situation causes a decline in public confidence in commercial banks. 2005-2018 revealed the dependence of the influence of macroeconomic indicators of the state on the state of confidence in the central bank and, accordingly, the impact of confidence on the results of banking activities. Based on the Fechner correlation analysis method, the relationship between the level of confidence in the regulator and inflation-adjusted external debt, bank liabilities, the change in the interest rate and the level of confidence in the NBU are established; the relationship between the shadow economy and the banks' obligations. Balance of confidence / mistrust with the NBU in December 2019 tilted towards the distrust expressed by (-29 %) citizens. A similar but slightly lower balance of confidence / distrust in banking institutions (-50.8 %), which is one of the lowest in the world. The confidence / distrust balance of the regulator and banks in Ukraine has improved markedly over 2019, driven by appreciation of the national currency and positive financial performance of the banking sector. There is also a direct correlation between the level of confidence in the NBU and changes in inflation-adjusted bank liabilities. Low confidence in the financial regulator hinders the development of the entire financial sector. At present, low level of trust in banking institutions makes it impossible to fully utilize Ukraine's financial potential to create an efficient and competitive financial system. One of the most important tasks for restoring confidence in the domestic banking system is to increase the financial literacy of the population, to ensure openness of banks, to expand the range of banking services and to ensure their accessibility, to actively use marketing technologies and communications, to enhance the image of banking institutions. Therefore, the state and the citizens of Ukraine must make the necessary efforts to overcome this problem, in particular, it is necessary to improve the system of national risk assessment, which should take into account the level of confidence as one of the key elements of the investment environment. Keywords: banks, confidence, National Bank of Ukraine, indicators of confidence in banks, public debt, shadow economy, bank liabilities, financial literacy.

Инновации как инструмент обеспечения информационной безопасности и повышения эффективности деятельности банковской системы

Инновации как инструмент обеспечения информационной безопасности и повышения эффективности деятельности банковской системы

A Technical Recitation on Efficiency of Islamic and Traditional Banking System in Kingdom of Bahrain

Banking industry plays a vital role in the for economic development of a country. This research aims at identifying which banking regime proves to be more efficient and its significance using Financial Ratio Analysis (FRA), composed of cost efficiency, revenue efficiency and profit efficiency ratios along with the One-way ANOVA test. The traditional banking system governs the financial sector by dealing with the majority of financial transactions of a country and the existence of Islamic and conventional banks has contributed for the development of the economy. The present study focuses on the comparative analysis of financial performance of Islamic and traditional banks in terms of cost and income in Bahrain. The study uses financial tools like profitability, liquidity and solvency, commitment to economy and community, efficiency and productivity of both streams of banks. The findings indicate that the traditional banking system is superior in terms of cost, revenue and profit efficiencies, furthermore, the results of the multiple regression analysis on the banks’ return on assets and return on equity imply that the efficiency of Islamic banks have more influence on their profitability compared to their traditional counterparts. Inflation had minimal effect on the efficiency of both banking system

Financial liberalisation, bank ownership type and performance in a transition economy: The case of Vietnam

Employing a sample of Vietnamese banks covering the period 2005 to 2015, this study investigates the influence of partial, and selective, financial liberalisation on bank efficiency by ownership type in a transition economy. The key findings are: (1) state-owned banks outperformed all other ownership types; (2) selective privatisation of state-owned banks exerted a positive influence on bank efficiency; (3) rural-to-urban private bank transformation decreased banking system efficiency; (4) minority foreign ownership exerted an insignificant impact on bank efficiency; (5) business group ownership improved the provision of intermediation services but deteriorated overall bank operating efficiency. Overall, the findings suggest that the post-WTO partial-liberalisation of the banking system in Vietnam impacted banks' efficiency differently subject to ownership type, with potentially adverse implications for long term economic growth and development.