Financial Performance Of Banks Research Articles

The influence of tangibility, reliability and responsibility on the financial performance of banks with mediating role of customer satisfaction

The study explores the relationship between customer satisfaction and the financial performance of banks, focusing on mediating factors. This study aims to investigate in detail the impact of responsibility, tangibility, and reliability on banks’ financial performance, with a particular emphasis on the mediating function of customer satisfaction. The primary objectives are to analyze how these service quality dimensions influence customer satisfaction and, subsequently, financial outcomes. The research is grounded in the theory that higher levels of customer satisfaction lead to improved financial performance through increased loyalty. Using Employing Partial Least Squares Structural Equation Modelling (PLS-SEM), the study analyzes data collected from commercial bank clients in Kazakhstan over a four-month period, from November 2023 to February 2024. The dataset includes responses from approximately 200 participants, ensuring demographic representation through a stratified random sampling method. Hypotheses regarding customer satisfaction, reliability, responsibility, and tangibility were tested. Findings reveal a significant positive relationship between customer satisfaction and financial performance, indicating that higher satisfaction levels contribute to improved financial outcomes for banks. These findings highlight the multidimensional nature of customer satisfaction and underscore the importance of addressing various factors to enhance financial performance in the banking sector. This study contributes theoretical insights and practical implications for banks aiming to optimize their financial performance through customer-centric strategies.

PENGARUH CORPORATE SOCIAL RESPONSIBILITY, GOOD CORPORATE GOVERNANCE DAN DIVIDEND POLICY TERHADAP KINERJA PERBANKAN DI INDONESIA

This research aims to examine the influence of corporate social responsibility, good corporate governance (institutional ownership and board size), and dividend policy on the financial performance of banking in Indonesia Stock Exchange (IDX) during the period of 2018 to 2022. A sample of 44 was selected using purposive sampling. The analysis was conducted using E-Views, and the results indicate that corporate social responsibility, good corporate governance, and dividend policy simultaneously affect financial performance. CSR and GCG (institutional ownership and board size) do not significantly influence banking performance in Indonesia, while dividend policy has a significant negative effect on banking performance. This study provides insights for banks and investors to consider dividend policy in managing their businesses and making investment decisions.

Firm Characteristics, Interest Rate And Financial Performance Of Microfinance Banks In Kenya

Microfinance Banks gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's Banks financial performance in Kenya has declined over time. The objective of this study is to investigate firm characteristics, interest rate and financial performance of microfinance banks in Kenya. The study was grounded on buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was analysed using descriptive and inferential statistics. The study used multiple regressions and Pearson’s Product Moment Correlation analysis. All ethical considerations were appropriately observed. Findings indicated that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research revealed that efficiency of management has an insignificant direct influence on financial performance of Microfinance banks. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacitybuilding initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on financial performance. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes and financial outcomes for microfinance institutions in Kenya does not appear to be subject to a substantial moderating influence from interest rate movements. Therefore, the survey recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations

Transforming banking: Examining the role of AI technology innovation in boosting banks financial performance

With the ongoing advancement of technology, artificial intelligence is increasingly being integrated into banking and finance, with the transformative potential to reshape the financial performance of economies worldwide. This research investigates the dynamic relationship between banking and finance artificial intelligence technology innovation and banks' financial performance across 20 countries using the feasible generalized least squares and the generalized method of moments techniques. The results show that banking and finance artificial intelligence technology innovation positively impacts banks' return on assets, highlighting its role in enhancing financial performance. The interaction term between artificial intelligence innovation and economic growth emphasizes their collaborative positive impact on financial performance. Mediation analysis highlights information and communication technology development's role in transforming artificial intelligence innovation into improved financial outcomes. Considering lagged effects, initial innovation surges correlate with improved financial performance, but prolonged exposure leads to diminishing returns. Moreover, the findings indicate that non-performing loans negatively affect financial performance, underscoring the importance of asset quality. Additionally, regulatory capital and economic growth are positively associated with financial performance, while government regulations exhibit a negative impact. This study highlights the essential role of artificial intelligence technology innovation in banking and finance, emphasizing the need to consider economic and technological factors for maximizing its benefits in enhancing financial performance. Policy recommendations include promoting an artificial intelligence innovation ecosystem, adapting regulatory frameworks, and investing in information and communication technology infrastructure to harness artificial intelligence innovation's benefits while addressing associated challenges.

Moderating Effect of Board Characteristics on the Association between Asset Liability Management and Financial Performance of Commercial Banks in Nigeria

Asset liability management and consistent improvement in financial performance are the responsibility of the Board of Directors of commercial banks, yet studies on the impact of asset liability management on the financial performance of commercial banks in Sub-Saharan Africa have excluded board characteristics variable from their statistical model. This study examines the moderating effect of board characteristics and asset liability management on the financial performance of commercial banks in Nigeria. Commercial banks. It was based on secondary data, obtained from annual reports of commercial banks in Nigeria, the study covered the period starting from 2012 to 2021 and it purposively selected eleven (11) commercial banks out of fourteen (14) commercial banks in Nigeria. The statistical analysis was done using LASSO (Least Absolute Shrinkage Selection Operator). The findings of the study revealed that the moderating effect of board characteristics and asset liability management had a statistically significant impact on the financial performance of commercial banks in Nigeria because the p-values (0.04;0.03,0.02,0.01, and 0.005) obtained using LASSO were less than the 5% statistical threshold used in this study. The study concluded that the board of directors of commercial banks in Nigeria should ensure that they appoint board members who have expertise and experience in the establishment of asset liability management since its interaction with board characteristics showed a statistically significant impact on the financial performance of the bank.

Forecasting Tingkat Kesehatan dan Ketahanan Perbankan di Indonesia

The number of commercial banks in Indonesia after the 2008 global crisis declined. The decrease in this number was caused by mergers, consolidations, acquisitions, integrations and conversions in the context of forming a resilient national banking industry structure. To ensure a stable banking sector, these banks must be evaluated through a Risk-based Bank Rating. When the 2008 global crisis economic shock and the COVID-19 pandemic occurred, the banking intermediary function was disrupted. In these conditions, the financial performance of banks also experienced a decline. This study aimed to assess the bank rating and resilience of banks in 2008-2020, forecast the bank rating and resilience of banks in Indonesia in 2021-2030 and analyze the effect of bank rating on bank resilience. This study used secondary data, that is a annual financial reports published by the Financial Services Authority. The data was analysed by ARIMA and panel data regression. The results showed that the bank rating and resilience of commercial banks declined during the economic shocks of the 2008 global crisis and the 2020 Covid pandemic. It is predicted that the resilience of commercial banks will increase in 2021-2030. Earnings as measured by ROA had a positive effect on bank resilience. Credit risk (NPL) had a negative effect on resilience, while liquidity risk (LDR) showed a positive effect on the resilience of commercial banks in Indonesia. GCG and Capital had no effect on bank resilience

The Influence of Good Corporate Governance on Financial Performance in Indonesian Islamic Banking

This study examines the impact of Good Corporate Governance (GCG) on the financial performance of Sharia banking in Indonesia Tbk. Analyzed GCG variables include the Board of Commissioners, Board of Directors, Independent Commissioners, Sharia Supervisory Board, and Audit Committee. Using a quantitative method with multiple linear regression analysis, the study employs secondary data from annual reports of Sharia banking in Indonesia Tbk. Normality tests were conducted using the One-Sample Kolmogorov-Smirnov test, while heteroscedasticity tests were performed using a scatterplot of residuals against standardized predicted values.Results indicate that none of the independent variables significantly impact financial performance, with p-values well above 0.05. Additionally, the F-test (ANOVA) shows that the independent variables collectively do not significantly impact financial performance, with an F value of 0.243 and a p-value of 0.939. The very low coefficient of determination (R²) of 0.048 suggests that the regression model explains only 4.8% of the variation in financial performance.The implementation of GCG principles at Bank Muamalat Syariah Tbk has not effectively improved financial performance. Therefore, evaluation and improvement of GCG implementation are needed, along with consideration of other factors potentially influencing financial performance. Recommended measures include enhancing the capacity of the Board of Commissioners and Board of Directors, optimizing the role of Independent Commissioners, and increasing the effectiveness of the Sharia Supervisory Board and Audit Committee to improve the bank's financial performance.

Analysis of Sharia Bank Financial Performance in the Digital Era

The digital era has brought significant changes in various industrial sectors, including the banking industry. Sharia banks as one of the financial institutions that adopt sharia principles are also not immune from the impact of this change. This article aims to analyze the financial performance of Islamic banks in the digital era by focusing on aspects such as technological innovation, changes in consumption patterns, as well as the impact on profitability and efficiency. The research method used is descriptive analysis with a quantitative approach, using secondary data from financial reports of Islamic banks registered with the OJK. The research results show that digitalization contributes positively to the financial performance of Islamic banks, although there are challenges that need to be overcome. It is hoped that these findings will provide insight for practitioners and academics in understanding the dynamics of Islamic bank financial performance amidst technological advances.

Indonesian Banking Financial Performance on Profitability Using Panel Data Regression

This study's goal is to determine if the return on assets (ROA) variable posted on the Indonesia Stock Exchange, together with the loan-to-deposit ratio (LDR), capital adequacy ratio (CAR), and non-performing loans (NPL), are correlated with profitability. The impact of return on assets (ROA) factors on the banking sector is investigated in this study. The research used a data sample of 245 from 49 financial institutions that have continuously fulfilled the necessary data requirements for a minimum of five years. Panel data, testing of panel data, testing of classical assumptions, and multiple regression analysis employing econometric views (E-views 12) are among the chosen analytical techniques. The ROA variable is unaffected by the LDR variable's t-test findings. In a similar vein, the ROA variable is unaffected by the t-test findings for the CAR variable. Moreover, the ROA variable is unaffected by the NPL variable's t-test findings. Nonetheless, the ROA variable is concurrently impacted by the LDR, CAR, and NPL factors.

Banking-as-a-service? American and European G-SIBs performance

PurposeThe purpose of this study is to investigate how the implementation of digital banking services (mobile applications) by globally systemically important banks (G-SIBs) affects banks’ performance in the USA and Europe from 2005 to 2022.Design/methodology/approachThe study employs advanced econometric methods to analyze the link between deposits and banking performance, utilizing linear regressions and multivariate Bayesian regressions.FindingsOur results indicate that customer deposits positively impact a bank’s performance after the introduction of the mobile application feature of check deposits, whereas social risk negatively impacts banking financial performance. These findings support the hypothesis that technology implementation improves the profitability and growth of traditional banks.Research limitations/implicationsWhile findings are robust econometrically in linear and Bayesian regressions, variables reflecting the digitalization of banks remain limited. For instance, the number of mobile users or the volume of digital transactions per bank since the implementation of the mobile app is not available.Practical implicationsIn a rapidly growing technology and constantly changing customers behaviors, this research has practical implications from bankers’ perspective to continue the technological innovation efforts and from regulators’ perspective to strengthen requirements for the digital banking services.Social implicationsWe provide empirical evidence that including a banking app for smartphones’ users for remote banking services benefit the financial performance of banks. However, the social risk remains significant for banks in terms of customers' satisfaction, data privacy and cybersecurity.Originality/valueThis paper employs an innovative approach to create a mobile app “discriminatory” factor and examine the relationship between deposits and banks’ performance before and after the introduction of a mobile app for too-big-to-fail banks in Europe and the USA. Additionally, we consider the social risk component of the ESG score, as a bank’s decision to implement mobile applications and technology for its customers potentially affects social risks associated with customer satisfaction and technology usability.

Banking on ESG: How ownership influences financial outcomes in 5-ASEAN countries

This study investigates the effect of Environmental, Social, and Governance (ESG) scores on bank performance in five Association of Southeast Asian Nations (ASEAN) countries: Indonesia, Malaysia, Singapore, Thailand, and the Philippines. This study aims to examine the effect of ESG scores on bank financial performance and investigate whether the influence of bank ownership can strengthen both. This study uses a sample of 26 banks in 5-ASEAN countries during 2016–2021. This amount is the result of data sorting conducted on 86 banks by adjusting to the research sample criteria. Using multiple linear regression analysis, this study shows that ESG scores have a significant positive effect on bank financial performance as measured by Return on Assets (ROA), Return on Equity (ROE), and Price to Book Value (PBV). Furthermore, this study found that the positive impact of ESG scores on bank performance is stronger for state-owned banks compared to private banks. However, bank ownership does not affect the relationship between ESG scores and ROA. These findings suggest that law enforcement by the government through regulators plays an important role in encouraging banks to view ESG as a driving value to improve their performance.

PENGARUH E-BANKING TERHADAP KINERJA KEUANGAN (STUDI KASUS PADA PERBANKAN DENGAN MARKET CAP TERATAS DI INDONESIA)

The use of technology in the banking sector is currently growing rapidly with the presence of E-banking. E-banking may affect financial performance and can increase banking profits. The purpose of this study is to determine the effect of E-banking on the financial performance of banks with the top market cap. ROA is used as the dependent variable to represent financial performance. The independent variables used are ATM, M-banking, DPK and BOPO by adding bank size as a control variable. The samples used are BBCA, BBRI, BMRI, BBNI and MEGA. The type of data used is secondary data with panel data regression analysis of the annual financial report data of each bank from 2015-2022. The results of this study are ATM, M-banking and BOPO have a significant effect on ROA while DPK has no significant effect on ROA. Simultaneously, ATM, M-banking, DPK, BOPO and Bank Size variables have a significant effect on ROA. Therefore, the implication of this research is that banks focus on improving and developing E-banking in order to increase bank profits which will improve the bank's financial performance.

Analisis Deskriptif Penerapan Kecerdasan Buatan, Prediksi Integritas, Kinerja Keuangan dan Ukuran Perusahaan di Perbankan Indonesia dan Singapura Tahun 2021 – 2023

This study aims to analyze the application of artificial intelligence, integrity prediction, financial performance, and company size in the Indonesian and Singapore banking sectors during the 2021-2023 period. Secondary data is used in this study, including annual reports, financial reports, and other relevant data sources. The quantitative descriptive method was applied to analyze the collected data. The results show that the adoption of artificial intelligence in the banking sector has had a positive impact on operational efficiency, fraud detection, and risk management. In addition, corporate integrity prediction plays an important role in maintaining the stability and reputation of financial institutions, with artificial intelligence technology assisting in detecting potential risks and fraudulent activities. This study also found that firm size, as measured by total assets, contributes significantly to bank financial performance. These findings make an important contribution to the literature and provide insights for policy makers and banking practitioners to optimize the use of artificial intelligence technology and integrity prediction in improving firm performance and competitiveness.

Does gender diversity on boards improve bank financial performance in a bank-based financial system? A pre-registered report

This pre-registered report aims to reveal whether board gender diversity enhance bank performance in a bank-based (financial) system. Using publicly listed banks in the period (2010−2021), we plan to measure bank performance and adopt a difference in difference method for the analysis. We focus on whether Japan's Corporate Governance (CG) code strengthens the advisory or monitoring roles of women on board (WOB) in the banking industry. We shed light on the effectiveness of Japan's CG code, which aims to increase the number of female directors. Furthermore, we contribute to the discussion of “Who monitors the monitors?” in a bank-based system.

Leveraging Banking Financial Performance through Shari’ah Board’s Characteristics: Empirical Investigation

This study examines the impact of board characteristics on the financial outcomes of Shari'ah-compliant banks in Pakistan, with a particular focus on supervisory attributes such as board size, frequency of meetings, and independence in decision-making. The empirical analysis utilizes data from all Islamic banks of Pakistan over the period from 2021 to 2023, a timeframe chosen to evaluate financial performance in the context of post-pandemic economic challenges. Employing panel data analysis through multiple regression models, the study reveals that bank size does not have a significant effect on the financial outcomes. In contrast, the board size plays a crucial role in influencing financial success. Specifically, boards that are composed of independent members that meet regularly for strategic evaluations tend to achieve better financial performance. These results emphasize the importance of enhancing Shari'ah-compliant governance structures, particularly in the context of economic recovery. The implications of these findings suggest that to improve the decision-making process, Islamic banks should focus on quality and independence in board composition and prioritize frequent strategic assessments to improve financial outcomes.

Integration of Corporate Governance and Social as a Catalyst for Islamic Banking Financial Performance; Evidence in Indonesia

Corporate governance can be assessed from how the company has been run openly and transparently, to gain public trust in market mechanisms. Islamic banking in Indonesia shows a pattern that social activities are an obligation that must be carried out. Social is a characteristic of Indonesian banking, a financial institution that has implemented the concept of sharia. In this study, the sample used amounted to 132 data on BUS's financial statements for 11 years from 2010-2020. As a result, improved governance, actually led to a decline in financial performance, by the regression value of -0.1682. Meanwhile, the social variable shows that if social performance increases, financial performance also increases by 0.282.

Hubungan Makroekonomi terhadap Kinerja Keuangan pada Bank Konvensional dan Bank Syariah di Jawa Timur

Macroeconomic factors can be said to have a relationship with the financial performance of banks, both conventional banks and Islamic banks. The condition of the banking sector in East Java is very vulnerable to economic shocks that occur. So it requires a very independent and good liquidity management. The existing banking sector is still very dependent on the policies made by the central bank and the government. Then if there is a financial difficulty caused by unfavorable macroeconomic conditions, then the bank's financial performance may also be disrupted. Based on the analysis of data that has been explained that macroeconomic factors such as GRDP, inflation rate, unemployment rate, BI Rate and exchange rate, which have a very large relationship to the performance of conventional banks and Islamic banks in East Java is the BI rate. This shows that the banking sector in East Java must pay special attention to the dynamics of macroeconomic factors that occur. Whereas the financial performance between Islamic banks and conventional banks shows a difference. This is because the management of bank financial performance between Islamic banks and conventional banks has a different policy.

ANALSIS KOMPARASI KINERJA KEUANGAN BANK MEGA SYARIAH MENGGUNAKAN METODE RGEC PADA MASA SEBELUM DAN SELAMA PANDEMI COVID-19

The COVID-19 pandemic has had an impact on all industrial sectors in Indonesia, one of which is the sharia banking sector. During the pandemic, banking performance experienced fluctuations in terms of deposits and debt financing; Bank Mega Syariah also experienced fluctuations in financial ratios and deposits, which could have an impact on the bank's financial performance. The purpose of this study is to evaluate Bank Mega Syariah's financial results utilizing the RGEC approach both before and after the COVID-19 epidemic. This study used quantitative research using a descriptive methodology. Data was acquired through the use of documentation methods. Financial ratio analysis utilizing the RGEC method is the data analysis method employed. The findings demonstrate that Bank Mega Syariah's financial performance, as measured by the RGEC technique, was superior to its pre-COVID-19 pandemic financial performance during the pandemic-affected period. This is shown by Bank Mega Syariah's ability to continue turning in a profit despite the COVID-19 pandemic's negative impact on the business environment. This accomplishment is demonstrated by the growth in several key business metrics, which were maintained, including bank profitability, finance distribution, and Third Party Funds.Keywords: Financial Performance; Bank Health Level; RGEC Method

Does Mediation Matter in Explaining the Relationship between ESG and Bank Financial Performance? A Scoping Review

This study identifies and synthesizes patterns and trends in the emerging body of literature of environmental, social, and corporate governance (ESG) endeavors on the financial performance (FP) of the banking firms. It specifically aims to highlight the relationship of ESG–FP. The scoping review analysis is based on 1856 journal articles from two online databases, namely Scopus and Web of Science (WoS) for the period of 2015 to 2023. The analysis reveals inconsistent results regarding the ESG–FP relationship, with some studies reporting positive impacts, others negative, and several showing no significant relationship. Notably, non-linear studies consistently identify an inverted U-shaped relationship, suggesting that there is a threshold level of ESG investment beyond which additional investments do not yield proportional benefits. This indicates that threshold-based policies may be more effective at maximizing ESG benefits. The study also found that numerous studies suggested exploring the indirect effect or mediating variables in the ESG–FP relationship to better explain the FP variance. Thus, the study identifies a need for future research to explore indirect relationships by testing potential moderators or mediators, particularly bank risk-taking, to better understand the ESG–FP dynamics. Policymakers and regulators should adopt non-linear analytical approaches and set threshold-based ESG investment policies, while bank management should strategically invest in ESG activities, integrating ESG considerations into risk management frameworks. Continuous monitoring and evaluation, along with stakeholder engagement, are crucial for optimizing ESG investments. By adopting these strategies, banks can enhance financial performance and contribute to sustainable and responsible banking practices.

Pengaruh Rasio Capital Adequacy Ratio, Net Interest Margin, Non Performing Loan Terhadap Return on Asset Bank Konvensional Periode 2014 - 2022

This research serves to fill in the gaps in knowledge from previous studies that discuss different opinions about each ratio. The focus is on the phenomenon of gaps in the relationship between ROA and bank financial performance. The purpose is to evaluate the effect of Capital Adequacy Ratio, Net Interest Margin, and Non Performing Loan on ROA both separately and together at these banks during the period 2014-2022. This research method is a quantitative approach purposive sampling technique to select a sample consisting of five leading conventional banks in Indonesia. The results of the analysis using multiple linear regression and hypothesis testing, the effect of Capital Adequacy Ratio on ROA is not significant, Net Interest Margin has a significant positive effect on ROA, Non Performing Loan on ROA has a significant negative effect, Capital Adequacy Ratio, Net Interest Margin, Non Performing Loan as a whole has an effect on ROA.