Efficiency Of Financial Institutions Research Articles

Data analytics in business process improvement: Enhancing decision-making and operational efficiency in financial institutions

This review paper examines the pivotal role of data analytics in enhancing decision-making and operational efficiency within financial institutions. The research highlights how data analytics tools and techniques optimize business processes, streamline operations, and improve resource allocation. Key areas such as risk assessment, customer segmentation, and fraud detection are explored to demonstrate the practical applications of data-driven decision-making. Additionally, the paper discusses the challenges financial institutions face in implementing data analytics, including issues related to data quality, system integration, and resistance to change. The paper concludes with recommendations for financial institutions to leverage data analytics effectively and suggests avenues for future research, particularly in emerging trends like artificial intelligence and machine learning.

The current state of Kazakhstan financial system: theoretical and practical aspects

Against the backdrop of the global challenges of the current economic situation, the financial system of the Republic of Kazakhstan is becoming an important tool for ensuring the sustainable development of the national economy, acting as a factor in stimulating its growth. This study was undertaken to analyze the state of the national financial system based on theoretical principles that determine its structure and significance in financial development. The financial system of Kazakhstan mainly solves the problem of providing the national economy with financial resources and promoting economic growth. At the same time, an analysis of the state of the financial system, based on theoretical principles regarding its significance and indicators of the country’s financial development, allows us to identify key problems and directions for its further development. In the context of ensuring economic growth, the role of the financial system is considered from the point of view of indicators characterizing the degree of its development. The study identifies structural components of the financial system that correlate with the Financial Development Index provided by the International Monetary Fund (IMF). This approach allows us to assess the current state of Kazakhstan's financial system, identify problems, and identify areas for further improvement. The study's results highlight the need to improve the efficiency of financial institutions, emphasizing the role of market mechanisms in the formation and distribution of the country's financial resources. Kazakhstan's financial system needs further reforms to achieve sustainable economic development.

Financial market uncertainty and the macro economy: the role of governance and institutional quality

PurposeThe study examines the impact of macroeconomic risk and volatility associated with key macroeconomic indicators on financial market uncertainty; and the extent to which governance and institutional structures moderate such relationships.Design/methodology/approachThe study employs data from 33 countries in Sub-Saharan Africa (SSA) for the period between 1996 and 2019. Variable derivation techniques such as the generalized autoregressive conditional heteroskedasticity (GARCH) for deriving volatility data, and the principal component analysis (PCA) for index construction were employed. The data is examined using the two-step system generalized method of moments (TS-SGMM) technique.FindingsEmpirical results suggest that macroeconomic risk and exchange rate volatility heighten financial market uncertainty among economies in the sub-region. Further empirical estimates show that institutional quality and government effectiveness have a negative moderating effect on the nexus between macroeconomic risk, inflation uncertainty, GDP growth, exchange rate, and financial market uncertainty.Practical implicationsThe key macroeconomic conditions with the propensity to foment financial market uncertainty are worth monitoring with adequate buffers to mitigate their impacts on the financial market.Originality/valueCompared to related studies, this study focuses on uncertainty associated with financial markets among emerging economies in sub-Saharan Africa (SSA) instead of the performance of the financial markets or specific financial market indicators such as the stock market; and the extent to which a host of macroeconomic conditions influence such uncertainty. For instance, Abaidoo and Agyapong (2023) focused on the impact of macroeconomic indicators or conditions on the performance of the financial market and the efficiency of financial institutions respectively instead of the uncertainty or risk associated with the financial market as pursued in the current study. This differing approach is pursued with the goal of proffering appropriate strategies for policy makers towards assuaging the financial market risk (uncertainty) due to macroeconomic dynamics. We further examine how the various fundamental relationships may be moderated by effective governance and institutional quality.

Research on the Role of Platform Economy in Credit for Small and Micro Enterprises - A Case Study of Alibaba

In the financial market, the financing needs of the micro-economy are concentrated at the long tail, and its development has always been a focus of social attention. In recent years, China has made significant efforts to address the financing challenges faced by small and micro enterprises. Despite these efforts, the financial support allocated to these enterprises remains disproportionate to their economic contributions. Unlike large and medium-sized enterprises, small and micro enterprises (SMEs) still struggle to obtain adequate financial resources, highlighting the incomplete coverage of the current Chinese financial system. As a result, these enterprises continue to encounter difficulties in securing necessary funding. Fintech can help these enterprises choose financing platforms and methods that match their development, enrich their financing channels, improve the loan issuance efficiency of financial institutions, precisely support their development, and ensure that the interests of stakeholders are realized. The report from the 20th National Congress emphasized the importance of establishing a supportive environment for the advancement of technology-driven SMEs. It also advocated for fostering the growth of specialized and innovative companies. This initiative sends a clear signal encouraging SMEs to innovate independently, which will undoubtedly have an important and far-reaching positive impact. However, SMEs are financially fragile, with prominent contradictions between their financing needs and the financial supply side. The integration of finance and technology has changed the operational mechanism of the financial industry. Fintech companies, through the application of emerging technologies, have expanded their business scope to long-tail small and micro clients, bringing new platforms for financing to these enterprises. This paper studies the case of Alibaba’s “Digital Hybrid Trade Show” initiative to further explore how fintech can be more effectively applied to the financing of SMEs, thereby aiding their stable and healthy development.

Financial Performance of Bank NTB Syariah: Before and After Becoming an Islamic Commercial Bank

This study evaluates the financial performance of Bank NTB Syariah before and after its conversion into an Islamic Commercial Bank (BUS) in 2018. The conversion aimed to foster more equitable economic growth and improve the overall status of the NTB community. Utilizing Financial Ratio Analysis (FRA), this research examines various financial ratios, including ROA, ROE, NIM, NPF, BOPO, FAR, FDR, ELR, EAR, CAR, DER, and DAR, to assess performance differences pre- and post-conversion. The findings indicate significant improvements in key financial indicators such as ROA, ROE, NIM, NPF Net, and BOPO after the conversion, demonstrating enhanced profitability and efficiency. However, there were no notable changes in the ratios of FAR, FDR, ELR, EAR, CAR, DER, DAR, and NPF Gross, suggesting stability in these areas. This comprehensive analysis highlights the positive impact of the conversion on Bank NTB Syariah's financial performance and provides valuable insights for investors, bank managers, and policymakers regarding the benefits of converting to an Islamic Commercial Bank. The study's findings underscore the importance of strategic structural changes in enhancing the financial health and operational efficiency of financial institutions.

The Impact of Financial Efficiency and Renewable Energy Consumption on CO2 Emission Reduction in GCC Economies: A Panel Data Quantile Regression Approach

As prominent oil producers, Gulf Cooperation Council (GCC) countries have played a significant role in the global energy market. However, as the world’s attention increasingly shifts towards environmental sustainability, understanding the implications of the GCC’s economic activities on CO2 emissions becomes indispensable. This research paper investigates the relationship between specific economic indicators and their impact on CO2 emissions in the GCC from 2001 to 2021. This study employs quantile regression, a robust statistical method that estimates the conditional quantiles of a response variable given a set of predictor variables. The findings reveal several essential insights: Financial institution efficiency is significant and negative at a 1% level at the lower (10th, −83,537.3) and higher quantiles (90th, −549,002.3). The relationship between the GDP per capita and CO2 emissions varies across quantiles, highlighting the complexity of the growth–environment nexus. Total patents exhibit a positive and significant relationship with emissions, underscoring the importance of directing innovation towards environmentally sustainable solutions. Renewable energy consumption displays a nuanced relationship with CO2 emissions, with a more substantial negative impact observed at higher consumption levels. This underscores the potential of renewable energy to mitigate emissions when integrated at scale. This study’s outcomes hold crucial policy implications for GCC countries as they seek to align economic growth with environmental sustainability. The findings emphasize the importance of fostering financial institution efficiency, promoting green innovation, and expanding renewable energy sources to reduce emissions.

Economic policy uncertainty and financial system efficiency

Economic policy uncertainty (EPU) adversely affects financial system functioning with potentially critical repercussions for economies and corporations worldwide. Financial system efficiency (FSE) has a vital influence on fostering optimal economic growth and development; however, the impact of EPU on FSE remains under-explored. This study investigates the effect of EPU on FSE along with its components financial institution efficiency (FIE) and financial market efficiency (FME). Using data from 22 countries over a 20-year period (2002–2021), our analysis reveals a significant negative effect of EPU on FSE, FIE and FME. Notably, our split-sample analysis highlights the accentuated adverse effects of EPU in high-EPU regimes, emphasising the importance of vigilance during periods of elevated policy uncertainty. We conduct a series of sensitivity tests, including alternative measures of EPU, FSE, FIE and FME, and apply two-stage least squares and two-step dynamic system generalised method of moments estimators and introduce additional control variables. These tests consistently reaffirm the core conclusions of our study. Finally, we discuss the implications of our findings for policymakers.

Network Characteristics, Efficiency of Financial Institutions, and Risk-taking

Network Characteristics, Efficiency of Financial Institutions, and Risk-taking

Justice and finance: Does judicial efficiency contribute to financial system efficiency?

Efficient financial systems play a crucial role in promoting economic growth and development. This study explores the impact of judicial efficiency (JE) on financial system efficiency (FSE) and its components, financial institutions efficiency (FIE) and financial markets efficiency (FME), across 108 countries over the period from 2004 to 2020. Utilizing a fixed effect regression for our baseline analysis and a two-stage least squares (2SLS) regression to address endogeneity, we find robust evidence that JE has a positive and significant effect on FSE and its components, FIE and FME. Moreover, we find that JE's positive impact on FSE and its components holds across different levels of per capita income, including high-income, low-income, and emerging market economies. Our findings, which are confirmed by several robustness checks, highlight the universal importance of a well-functioning, efficient judicial system in driving FSE regardless of a country's economic context. The results show that countries should prioritize reforms to strengthen judicial institutions and enhance efficient contract enforcement. An efficient legal framework and judicial process are conducive to creating an environment in which an efficient financial system can develop, paving the way for sustainable economic growth.

Оцінка стратегічного планування через призму аналізу фінансових показників на прикладі АТ «Ощадбанк»

The article is devoted to the study of the impact of strategic planning on the financial indicators of a banking institution on the example of JSC «Oschadbank». In a dynamic market environment and increasing competition in the banking sector, strategic planning is becoming a key tool for ensuring the stable development and improving the efficiency of financial institutions. The aim of the study is to assess the efficiency of strategic planning through the analysis of key financial indicators of the bank, which allows to determine the impact of strategic decisions on the financial stability and competitiveness of the bank. The methodology of the study includes a comprehensive analysis of scientific literature on strategic management, as well as a quantitative assessment of the financial indicators of JSC «Oschadbank». The article examines in detail the theoretical aspects of strategic planning, its tasks and stages, which creates a solid basis for further analysis. Particular attention is paid to the specifics of strategic planning in the banking sector and its adaptation to modern economic challenges. A profound analysis of key financial indicators, including return on assets (ROA), return on equity (ROE), net interest margin (NIM) and cost-to-income ratio (CIR) for the period 2021–2023 was carried out. This made it possible to assess the dynamics of the bank’s financial efficiency in the context of the implementation of its strategic plans. The results of the study showed a significant improvement in the bank’s financial indicators in 2023, including a significant increase in ROA and ROE, as well as a noticeable decrease in CIR, which indicates the efficiency of the implementation of strategic plans, especially in a difficult external environment caused by geopolitical factors and economic instability. On the basis of the analysis, it is concluded that flexible strategic planning is critical to ensure the financial stability and competitiveness of the bank in conditions of economic uncertainty. The study emphasizes the need for constant adaptation of strategic plans to changes in the external environment and internal capabilities of the bank to achieve sustainable financial growth.

Assessing Global Competitiveness: A Comparative Analysis of Financial Institutions Development through the Global Competitiveness Index

This study aims to investigate the relationship between a country’s financial development and its global competitiveness, specifically focusing on financial institution efficiency. The research utilizes the Global Competitiveness Index (GCI) and the Financial Market Development Index Dataset as primary sources, covering the period from 2007 to 2019. Additionally, the study seeks to analyse and compare the rankings of European Union (EU) member countries and the United Kingdom in terms of the financial markets pillar of the GCI, while also examining the disparities between the “old” GCI and GCI 4.0. This study focuses specifically on the eighth pillar of the GCI, namely “Financial mar­ket development”. It emphasizes the significance of an efficient financial sec­tor in allocating resources, facilitating business investment, and fostering pro­duc­tivity. A sophisticated financial market, encompassing elements such as sound banking, regulated stock exchanges, and venture capital, plays a pivotal role in driving private sector investments. Transparency, credibility, and ade­quate regulation within the banking sector and financial markets are essential for protecting investors and ensuring the overall stability of the economy. By focusing on the financial institutions pillar within the EU and using the Glo­bal Competitiveness Index as a benchmark, this study can contribute valuable in­sights to policymakers and stakeholders, aiding them in making informed decisions to strengthen the EU’s financial sector and overall economic competiti­veness.

Dynamicity and nonlinearity in the association between different facets of financial development and macroeconomic volatility: evidence from the World Economy

ABSTRACT This paper attempts to explore dynamicity and nonlinearity in the association between financial development and macroeconomic volatility, considering different aspects of financial development. The data to this end comprises a panel of 98 countries from 1991 to 2016. This paper uses an objective trichotomous development taxonomy to classify the countries according to their overall financial development and income. Dynamic panel regressions ensure that the role of overall financial development in smoothing macroeconomic volatility dwindles as the level of overall financial development increases. Overall financial development begins to amplify volatility after a certain point. Other aspects of financial development also affect volatility in a similar fashion. Nonlinear estimation results show that most of the measures of financial development are associated with macroeconomic volatility in a U-shaped manner. On the contrary, we find an inverted U-shaped association between financial institution efficiency and macroeconomic volatility. The findings are found to be robust to an alternative country classification system based on income and an alternative measure of volatility. To minimise macroeconomic volatility, policymakers should try to increase financial institution efficiency beyond its threshold point and keep all other aspects of financial development at their optimal level.

Financial Services Digitainability: Financial Inclusion and Efficiency in EU Countries

Digitalization of financial services is one of the biggest challenges of the last decade, both in the EU and globally. The rapid development of digital technologies undoubtedly creates a favourable environment for significant progress in the financial sector, moreover, the Global Financial Crisis (GFC) and the pandemic have served as additional catalysts. However, several aspects on the way to financial services digitainability are still insufficiently explored. Considering the latest trends in the financial sector and advances in digital transformation, this study aims to identify the key drivers for the implementation of digital financial services and initiatives that managers should pursue to effectively transform business processes. The methodological base of the research consists of an extensive analysis of current publications in such areas as digital transformation, sustainable development, digital financial services, etc. The article investigates two aspects of financial sustainability: financial inclusion and operational efficiency of financial institutions, based on Eurostat data on financial services provided in the EU during 2011 - 2021, the Digital Economy and Society Index variables, and European Central Bank data on operational expenses. Correlation and regression analysis methods are used to study the relationships between variables under investigation, as well as statistical tests to acquire necessary evidence for statistical inferences about the proposed hypotheses. The results of the study provide the possibility to judge current trends in the use of digital financial services in the EU countries, determine the main drivers of sustainable digital financial services, as well as to observe the benefits of digital transformation in the financial sector.

Internal Audit Function and Budgeting Efficiency in Financial Institutions: A Case of Rwanda Social Security Board

The main purpose of this research is to examine Internal audit function and budgeting efficiency in financial institutions in Rwanda specifically in Rwanda Social Security Board (RSSB). The research used descriptive research design with a mixed approach of qualitative and quantitative data. The formula developed by Taro Yamane was employed to determine the sample size (n=52). The findings showed that internal audit plan provides guidelines for auditors’ regular audits (mean 4.29); and internal audit reviews for budgets were made available (mean 4.32). It was also revealed that internal audit advised on budgeting (mean 4.25); internal audit provided assurance to the budgeting efficiency (mean 4.15); the internal audit assured budget management that there was an effective internal control for budgeting (mean 4.21); the internal auditor established audit objectives and scopes accordingly (mean 4.41); and internal audit prevented risks and fraudulent malpractices occurring when budgeting (mean 4.34). and those internal auditors follow up on the agreed management action plan based on audit recommendations (mean 4.24); internal auditors provide follow-up reports within a specified duration of time as guided by the organization’s policies for the exercise (mean 4.01); follow-up reports were shared (mean 4.61). According to the research, there is a strong positive correlation between RSSB's internal audit frequent review and budgeting efficiency (r= .713 r= .000); strong positive degree of relationship between internal audit recommendation and budgeting efficiency (r = .634, r = .004) and strong positive correlation between internal audit follow up and budgeting efficiency (r= .784; r = .000). The study concluded that internal audit, through regular reviews, provision of recommendations, and follow-up contributed to the efficiency of budgeting at RSSB. The study recommended that RSSB should strengthen its internal audit plan as a measure of ensuring that auditors are guided on the strategic follow-up plans to adopt and capture recommendations effectively. Key words: Internal audit, Budgeting efficiency, Public institutions, RSSB

Can financial efficiency and environmental regulation promote R&D innovation? From the perspective of value chain decomposition.

There is a plethora of current research on economic or financial resources for fostering innovation. These studies lack the micro-analysis and, more importantly, disregard the effect of environmental control. This study will offer a new analytical paradigm by linking financial growth, environmental regulation, and innovation growth throughout the value chain. Using the information on 30 Chinese provinces collected between 1990 and 2020, we develop a dynamic panel data model to examine the interplay between financial effectiveness, ecological regulation, and research and development (R&D) innovation. We assess the impact that the efficiency of financial organizations and the stock market have on R&D's ability to influence R&D innovation. There are positive spillover effects for stock market efficiency, which boosts the development and conversion of R&D innovation; there are positive spillover effects for financial institution efficiency, which hurts the conversion of R&D innovation, and there is an adverse effect on environmental regulation efficiency. To what extent environmental rules affect the commercialization of research and development innovation is unclear; human capital is an effective motivator for the advancement of R&D innovation, and the volume of FDI may increase the commercialization of R&D innovation.

Modeling the tourism-financial development association in developing countries

ABSTRACT This article explores the relationship between tourism demand and financial development using Fiji as a case study over the period 1980–2017. The ARDL bounds approach is used for estimation and causality is identified using the Toda-Yamamoto augmented VAR approach. We develop a financial development index using Principal Component Analysis that considers the size of the financial market, financial institution depth, and financial institution efficiency. The results show that tourism demand promotes financial development very strongly. The Granger causality results suggest that tourism demand Granger causes financial development. The findings imply that financial development is dependent on tourism demand in Fiji.

Inflation uncertainty, macroeconomic instability and the efficiency of financial institutions

PurposeThe study examines the effect of macroeconomic risk, inflation uncertainty and instability associated with key macroeconomic indicators on the efficiency of financial institutions among economies in sub-Saharan Africa (SSA).Design/methodology/approachData for the empirical inquiry were compiled from 35 SSA economies from 1996 to 2019. The empirical estimates were carried out using pooled ordinary least squares (POLS) with Driscoll and Kraay’s (1998) standard errors.FindingsReported empirical estimates show that macroeconomic risk and exchange rate volatility constrain the efficiency of financial institutions. Further results suggest that inflation uncertainty has a significant influence on the efficiency of financial institutions among economies in the subregion. Additionally, reviewed empirical estimates show that institutional quality positively moderates the nexus between inflation uncertainty and financial institution efficiency. At the same time, political instability is found to worsen the adverse effect of macroeconomic risk on the efficiency of financial institutions.Practical implicationsFor policymakers and governments, improved institutional structures are recommended to ensure the operational efficiency of financial institutions, especially during an inflationary period. For decision-makers among financial institutions, the study recommends policies that have the potential to make their institutions less vulnerable to macroeconomic risk and exchange rate fluctuations.Originality/valueThe approach adopted in this study differs significantly from related studies in that the study examines and reviews interactions and relationships not readily found in the reviewed literature.

Empirical Investigation of the Impact of Energy intensity and Financial Institutions Efficiency on Environmental Degradation in Pakistan

Pakistan’s is relentlessly affected by climate change and is looking for foreign assistant to deal with climate change challenges. Also, Pakistan is trying to tackle with climate change domestically. Environmental degradation consequently leads to climate change domestically as well as globally. Environmental degradation is extensively studied in empirical literature. Efficient use of resources only can ensure to lessen environmental degradation and its effects in terms of climate change. Henceforth, the current empirical study is analyzing the impact of energy intensity and financial institutions efficiency on environmental degradation in Pakistan. The energy intensity is considered as a factor of environmental degradation as it is one of the proxy for energy efficiency. Moreover, for overall economic activities impact on environmental degradation, this study considered GDP as a control variable. The time series techniques such as unit root and bounds cointegration techniques are applied for non-stationarity, cointegration and results estimates. The result of this study documented that energy intensity, financial institutions efficiency and GDP are factors of environmental degradation and energy intensity and GDP are aggravating environmental degradation whereas financial institutions efficiency has abstained it in Pakistan.

Risk Hazard of Banking in Emerging Countries

The development of Islamic banking has been examined. Many researchers have been dedicated to researching how this growth generates microeconomic consequences on financial institution efficiency. This paper embodies a comprehensive analysis of Basel II standard implementation impacts gap in hazards between Islamic and conventional banks in Asia countries (Indonesia, Malaysia, Singapore, Thailand, and Philippines, Brunei Darussalam). Basel II requirements make contributions to expand the distance in hazard between conventional banks and Islamic Banks at the rate of the latter. Four arguments may be supplied to provide an explanation for why Basel II requirements can contribute to making Islamic banks exceptionally riskier than conventional banks. the connection between Islamic banking and hazard is conditional on the regulatory framework. A mapping descriptive examination analyzing the international locations of every form of bank and the 12 months of implementation of Basel II regulation. This method was utilized in the Basel II implementation in a few of the Asia nations of our pattern for the duration of the length of examination from 2015 to 2020. The treatment group consists of banks in nations with an implementation of Basel II for the precise year with a substantial 10%; those findings also are located whilst one by one thinking about small banks and massive banks, therefore, assisting the view that the connection between Islamic Banking And Hazard is conditional to the regulatory framework.

Post-liberalisation Efficiency and Productivity of the Banking Sector in Pakistan

It has been long debated in economic literature whether financial markets play a significant role in economic growth and development. [For review see Gertler (1988) and Levine (1997)]. Findings of some recent empirical literature show that well-functioning financial system plays an instrumental role in economic growth, and the causality runs from finance to growth [for cross country evidences see King and Levine (1993, 1993a); Levine and Zervos (1998); Levine, Loayza and Beck (1999); Beck, Levine, and Loayza (1999)]. This, in turn, has led to a search for the key factors that determine the better functioning financial markets. Within the banking sector, efficiency is the core concern of both academics and bank officials. A number of studies have sought to measure the efficiency of financial institutions, to identify the factors that contribute to efficiency of financial system, and to recommend the ways to attain the peer group efficiency levels [Berg (1993); Leaven (1999); Berger and Mester (1997); Miller and Noulas (1996)].