Financial Performance Of Banking Sector Research Articles

IMPACT OF FREE CASH FLOW ON THE FINANCIAL PERFORMANCE: EVIDENCE FROM COMMERCIAL BANKS OF PAKISTAN

Free cash flows and financial performance is an area of interest for research especially in financial sector that plays a mediatory role between lenders and borrowers. Financial health of any economy depends upon the sustainability of banking sector that is based upon their sound and efficient financial performance. The link between free cash flows and financial performance of financial sector is empirically investigated in the study. Regression results of the study support that free cash flows have significant positive and negative impact on financial performance of banking sector during time frame 2011-2020. The banks having strong financial position are able to achieve competitive edge in the financial market. So managers at top position and policy makers should design strategies for efficient utilization of free cash flows that not only increases the financial performance but also contribute to stock holders’ wealth maximization. Keywords: Financial performance, Bank size, Return on equity, Return on asset, Agency problems.

The Effect of COVID-19 on the Profitability of Commercial Banks in Bangladesh

Purpose: Every component of the global financial system has suffered serious harm due to the present COVID-19 pandemic, and Bangladesh is not an exception. The banking sector’s performance and profitability have been impacted as a result. In this paper, we analyze the effect of COVID-19 pandemic on the financial performance of banking sector in Bangladesh before and throughout the present era of COVID-19. Methodology: In this regard, the study considered the 14 banks over the period of 2014-2021. The random-effects regression model is utilized to identify the profitability drivers. The random effect model investigates the influence of bank-specific variables and macroeconomic variables on the profitability of banks. Findings: During the pandemic era of COVID-19, our article found that a high degree of nonperforming loans, retaining more liquid assets, and a significant amount of hedging funds reduced banks' profitability. In contrast, a suitable bank size, non-interest revenue, inflation rate, and population growth increased the bank's performance indicators throughout this time. Practical Implications: This study's findings will aid financial policymakers in identifying profit-enhancing loopholes and implementing preventative actions during crisis periods such as COVID-19. Originality: The profit influencing factor include both bank and economic oriented, some of which were not previously considered in Bangladesh-specific studies. Incorporating these additional criteria and the independent examination of the pandemic era helps us to get new perspectives on the elements that influence commercial banks’ profitability.

Contribution of Financial Services Quality on Financial Performance of Banking Sector in Rwanda: A Case of Bank of Kigali Limited (BK)

The study examined the contribution of financial services quality on financial performance of banking sector taking Bank of Kigali (BK), Rwanda. Specifically, this study assessed the effects of saving quality on financial performance of Bank of Kigali Limited-Rwanda, ascertained effects of loan quality on the financial performance of Bank of Kigali Limited-Rwanda and analyzed effects of e-banking service quality on financial performance of Bank of Kigali Limited-Rwanda. The research used a cross-sectional design using both qualitative and quantitative approaches. The study target population was 320 staff members and clients of the bank of Kigali operating in the City of Kigali. The sample size was 178 respondents determined using the Slovene formula. Simple random sampling technique was used for sample selection. The findings revealed there is positive relationship between saving services quality and the financial performance of the bank of Kigali as indicated saving service quality and market share (r=.759, p =.000), increase return on investment (r=.401, p= .000); increase earnings per share (.702**; p=.000) increase customer retention (r=.708**, p=.000). It was concluded that saving service quality can explains 72.7% of the variations in financial performance and that improvement in saving service quality by one unit leads to an increase of financial performance by 0.557 units in the Bank of Kigali. Further, it was concluded that majority of the respondents appreciated the quality of loan services provided at the bank of Kigali, and that there is a strong positive relationship between loan services quality and financial performance as indicated by loan service quality and return on investment (r=.631; p=.000); earnings per share; (r= .528*, p=.000) and customer retention (r=.644*; p=.045), it was also conclude that the combined effect of the loan service quality explains 55.3% of the financial performance of the Bank of Kigali, and that increase in quality of loan provided at the BK by one unit lead to the improve 0.194 unit on the financial performance of the Bank of Kigali. It was established there is strong positive relationship between e-banking services quality and market share increase (r=.694; p=.000); return on investment (r=.729; p=.000), earnings per share (r=.121; p=.008), and that the combined effects of e-banking service quality explain 75.3% of the variations on financial performance of the Bank of Kigali. The study recommended that other commercial banks should put more emphasis on electronic banking in order to perform well. More features of electronic banking should be introduced in commercial banks to attract more customers and perform well. The government of the republic of Rwanda through the national bank of Rwanda should help commercial banks by training their staff and clients on the benefits of electronic banking. Keywords: Saving quality, loan quality, banking service quality, financial performance, Bank of Kigali-Limited, Rwanda.

Innovation approaches to estimate financial performance of banking sector: the case for Saudi Arabia

A robust financial structure is considered essential for the swift development and growth and of an economic system. The banking structure is a vital constituent of the financial structure of a nation. The banking system performance assessment is an influential determinant and indicator of the economy's financial strength. Financial Innovation approaches resulting from new technology helps in better estimation of Financial Performances of the banking sector. Banks need to be more closely and accurately watched as they play the role of facilitator of monetary policy of the economy. The prime objective is to examine the financial performance of Saudi Arabia's banking sector through Innovative approaches. With this view, a case study of XYZ Bank has been undertaken. For financial performance evaluation, the CAMEL model has been applied as one of the innovative approaches. This tool is a widely accepted criterion in the field of financial performance evaluation of the banking sector. CAMEL is a ratio-supported mechanism that evaluates bank performance through capital adequacy, quality of assets, management efficiency, quality of earnings, and liquidity. For analyzing the CAMEL model, the various ratios of the model in terms of proxy ratios are given below: For the analysis, nine-year data from 2009 to 2018 has been analyzed using a multiple linear regression model using the SPSS package. The study observed that this innovative approach, i.e., CAMEL specific factors, has mixed influence on the financial performance of XYZ Bank. Capital adequacy and asset quality have a positive effect on bank performance. Moreover, the study also highlights that management efficiency insignificantly affects the profitability of the bank. Moreover, earning quality also signifies a negative influence on profitability. The correlation between asset quality and ROA is negative. It is inferred that those banks with more operating profits and better liquidity management could report high profits. The study further advocates that XYZ Bank must improve its earning quality and management efficiency to come at the same level with the banks having good financial performance and should use innovative methods to estimate financial performance from time to time.

Impact of talent management practices on financial performance: evidence from GCC banking sector

This paper attempts to address less researched but important sector of the financial industry providing insight of talent management practices. The purpose of this research is to examine talent management (TM) practices in the banking sector of Kingdom of Saudi Arabia and Oman. A sample of 200 respondents was taken by using purposive sampling from national and multinational banks of both countries. The impact of three dimensions of talent management, i.e., competence training, development and reward management was measured on financial performance. Confirmatory factor analysis was performed to measure the impact and Harman one factor/common method bias was performed for treating the biasness. It was revealed that competence training and reward management have positive impact on financial performance of banking sector. However, there is no effect of development on financial performance which is quite context specific. Findings have important implications for banking sector in the region. Banks should manage and deploy their talent appropriately for profitability, long term growth and sustainability.

Interaction between Online Banking and its Impact on Financial Performanceof Banking Sector:- Evidence from Indian Public Sector Banks.

The online banking is emerging to the enormous strength. There are many industries set up to provide technological assistance to the banks so that this facility easily provides to the urban as well rural areas of the nation. In today’s dynamic world huge customers prefer to do the transaction through banks, they are using money transfer, bill payment, account statement and so on via. “Online banking”. This paper focuses on the effects of online banking based on the performance of top ten public sector banks in India according to the reports of RBI, Market Capitalization, total assets of the Indian bank enterprises. For this the financial ratios of the banks analyzed and this research paper is based on secondary banking data in nature.

THE IMPACT OF OIL PRICES ON THE FINANCIAL PERFORMANCE OF BANKING SECTOR IN MIDDLE EAST REGION

The objective of this study is to determine the impact of oil price fluctuations on the financial performance of banking sector in 8 oil producing and exporting countries in Middle East region (Kingdom Saudi Arabia, United Arab Emirates, Qatar, Bahrein, Kuwait, Jordan, Oman, Iran) in the period between January 2012 and December 2017. The results do not reveal the same impact of oil price fluctuations on the financial performance of banking sector in each studied country. A significant direct impact of oil prices on the financial performance of banking sector has been found in Bahrein, Oman and Iran. In Jordan, Kuwait, Qatar, Saudi Arabia and United Arab Emirates, the results do not reveal any direct impact of oil price fluctuations on the financial performance of banking sector. The analysis also showed that the size of the economy in each country and its diversification in non-oil sectors have a direct impact on the relationship between oil price fluctuations and financial performance of banking sector. The existence of well diversified economy in non-oil sector reduces the direct impact of oil price fluctuations on the financial performance of banking sector. Keywords: Oil prices, Banks, Financial Performance, Macroeconomics Factors. JEL Classifications : E02, E44, E6, G21, Q41 DOI: https://doi.org/10.32479/ijeep.8075

A Comparative study of financial performance of banking sector in Sri Lanka – An application of CAMEL rating system

Purpose of this study is to compare the financial performance of state and private sector banks. The banking sector of developing countries is different from the developed countries. The banking sector of Sri Lanka plays a vital role in the Sri Lankan Economy specially commercial banks a re playing a major role in the banking sector of Sri Lanka. There are two types of commercials banks in Sri Lanka such as state and private commercial banks here the private commercial banks can be divided into domestic and foreign private commercial banks. The focus of this study is to compare the financial performance of state and private commercial banks using the Capital Adequacy, Assets Quality, Management Soundness, Earnings, Liquidity (CAMEL) rating system in Sri Lanka 2013-2017. Many studies are conducted in different countries to compare the financial performance of banking sector with the use of various statistical methods. In this study CAMEL rating system used to compare the financial performance of banks, it is one of the quantitative techniques and it is widely used in the current world. State banks should focus to increase their financial performance to compete and survive successfully in the current world and also private commercial banks try to achieve their target financial performance for their long survival.

Merger & acquisition strategy for growth, improved performance and survival in the financial sector

This paper aims to provide comparative information on mergers & acquisition activities in the banking sector of Pakistan. This study used accounting ratios to analyze the financial performance of banks in Pakistan after merger and acquisitions. The study utilized secondary data which were taken from Thomson Financial Services Worldwide M&A database, financial statements of bank’s corporate website and Pakistan stock exchange. In this study, financials for eleven years (2005-2016) were analyzed by using ratios. In spite of certain limitations, accounting ratios are still reflected as an easy and reliable analytical tool. Ratio analysis, being a time-tested method, is most frequently employed in all financial decision-making processes. The results show that the financial performance of banking sector of Pakistan in the capacities of profitability, and leverage, has been quite satisfactory before the merger deal. It means that merger deal fails to improve the financial performance of the bank, and banks merge with other small or equal size banks only to capture market share, to open Islamic window, for cost-cutting, to create synergy, to gain efficient resources and to unlock hidden values

Empirical assessment of frauds on the financial performance of banking sector in Nigeria

Empirical assessment of frauds on the financial performance of banking sector in Nigeria

Advertising effectiveness on financial performance of banking sector: Turkey case

PurposeThe purpose of this paper is to analyze the association between banks’ advertising expenses and accounting measures of income and profitability for banking sector.Design/methodology/approachIn this study the authors have used distributed lag models to investigate the association between advertising expenses and banks’ financial performance. To investigate the long-term effect of advertising expenses on financial performance of banking sector Koyck’s distributed lag models have been used.FindingsThe results confirm a significant and positive association between advertising expenses and financial performance. Besides its positive effect, the authors provide a basis for detecting the extent to which advertising has long-term benefits. The results show a positive association between advertising expenses and financial performance that extend that extends over time, thereby suggesting that advertising expenses should be capitalized and then amortized instead of being incurred as an expense immediately.Originality/valueAlthough there are lots of studies about advertising and its effect on financial position of firms, research about advertising effects on financial performance of banking sector is very scarce. Therefore, this study has a potential to shed light on research about marketing aspect of financial sector. Besides, empirical results show a positive association between advertising expenses and financial performance that extend that extends over time (interest income, total operating income and return on assets), thereby suggesting that advertising expenses should be capitalized and then amortized instead of being incurred as an expense immediately. To sum it all, the paper finds an evidence for banking sector that advertising inholds “future economic benefits” which is the key criterion necessary for asset recognition.

Assessment of Banking Performance Using Capital Adequacy in Ethiopia

The data used in this study were collected from financial reports of eight sample banks and National bank of Ethiopia (NBE) for the period of 2000-2013. The objectives of the study were to evaluate the financial performance of banking sector in the Ethiopia and also to see the relation between capital adequacy and bank’s performance. In order to address these, both descriptive and econometric analyses were employed so as to assess the financial performance of the sector and the relationship between capital adequacy and bank performance. The descriptive analyses were made using CAMEL approach and central tendency measures. The descriptive data analysis shows that, as compared to other banks NIB’s overall performance was good.In addition to the descriptive data analysis, the study also employed regression model, GLS, which is used to see whether capital adequacy which is measured by the amount of shareholders fund affect the bank performance which is measured by Return on asset (ROA). The finding shows that, shareholders’ fund is the main factor that determines the performance of banking industry hence, the null hypothesis is rejected. Therefore, there exists positive relationship between capital adequacy and bank performance at 5% significant level, which is in line with theory.

Corporate Governance and Performance of Banking Sector in Pakistan

This paper investigates the impact of corporate governance variables on the financial performance of banking sector in Pakistan. For this purpose, the data of financial performance and corporate governance variables of thirty banks are used for the period of 2001-2009.The panel regression analysis is applied to determine this effect, firstly for the whole banking sector, and secondly for different types of banks. These types are categorized on the basis of their ownership and banking practices. The results show that there is a significant impact of corporate governance variables on the performance of overall banking sector in Pakistan. But there is no significant impact of corporate governance practices on the performance of foreign banks

A research on the problems and financial performance of banking sector in Northern Cyprus after global financial crisis

The Global financial crisis has been considered as different from the other crises ever lived in 20 year of time because of its effects on the Globe. In this context, it is crucial to predict to what extent the crisis, which started in financial markets, will affect the economies of the developing countries as well as the developed countries. Unfortunately, it is not possible for the banking sector to avoid all the effects of this and similar international crises. In this study, the effects of the Global financial crisis on the banking sector in Northern Cyprus were aimed to be examined. The financial information of Turkish Cypriot banking sector covers the period 2003 to 2009 and the ratios used to carry out the analysis are profitability, equity, liquidity and the quality of assets. As conclusive remarks, the impact of crisis had been very limited on the Turkish Cypriot banking sector with low degree of its external integration except turkey and structural reforms taken in both Turkey and Northern Cyprus. However, Turkish Cypriot banking sector have serious problems among which Judicial extension of the bankruptcy process related to non-performing loans”, “Lack of direct access to international markets due to Cyprus problem”, “Economic instability” are the main ones. Furthermore, global financial crisis affected Turkish Cypriot banking groups at remarkably different levels. Such that, branch banks exhibited better performance in almost all respects compared to other groups. Unfortunately, the performance of public banks requiring structural and administrative measures fell behind other banks groups. Key words: Global financial crisis, Northern Cyprus, banking sector, ratio analysis.

THE INFLUENCE OF IMPLEMENTING CORPORATE GOVERNANCE PRINCIPLES TOWARDS CORPORATE FINANCIAL PERFORMANCE IN BANKING SECTOR

History has recorded that banking scandals have never ceased to happen. It implies that the urgency for banking sector to manage banks prudently by implementing good governance practice. The good government practice is designed to improve bank performance, protect stakeholder interest, and increase adherence to prescribed regulations, legislations and also generally accepted ethical values. The implementation of good corporate governance in long period of time has an impact on bank performance because good corporate governance principles are the foundation of banking organizing process. This research aims to test the impact of corporate governance principle implementation on financial performance of banking sector. The secondary data were obtained from Indonesian Capital Market Directory (ICMD) and Annual Report from the Faculty Data Centre. The result shows that the implementation of corporate governance has positive impact on financial performance of banking sector as measured by Return on Equity (ROE). This suggests that in the future, the banking sector should proceed to implement corporate governance principle especially on disclosing some aspects such as environment, quality, and standardization.