Financial Sector Performance Research Articles

Will shared leadership engenders innovative work behaviors among salesmen toward improved performance?

Abstract Studies have shown that issue of shared leadership is directly related to leadership style adopted in the organization, which is germane and strategic to teamwork to effectuate high business performance across industries. The study looks at the relationship between the different leadership styles and innovative work behaviors (IWBs) that would ultimately lead to improved performance in financial sector among sales team. Thus, the study examines the operational frameworks of the different leadership styles and the effects on IWBs vis-à-vis sales team work in the financial industry. The case of financial industry stems from the fact that operations are currently changing from arm-chair marketing to aggressive selling strategy to improve customer base and financial inclusion in the economy. The study found out that leadership styles—transformational leadership, individual empowering leadership (IEL), team empowering leadership, and participative leadership (PL) are very strategic to sales teamwork, but IEL and PL are more strategic and performance-enhancing to behaviorIWB in financial sector sales teamwork.

Multidimensional financial development, exporter behavior and export diversification

Financial development shapes export sector performance because exporters need external finance and face credit constraints. Previous empirical research has relied largely on single-country studies. The Exporter Dynamics Database (EDD), which features firm-level exports from over 60 countries, reveals differences in the microstructure of the export sector across countries. In this paper, we first provide new evidence that these differences are related to cross-country variation in financial development and structure. Second, we combine the EDD and multidimensional data on financial development with a global database on export diversification. This study is the first to examine how macrolevel export diversification is determined by the microcharacteristics of the export sector. This approach is novel in the empirical literature on export diversification. According to our cross-country analysis, access to domestic financial services positively contributes to export diversification by increasing the number of small exporters, as financial services ease the credit constraints these exporters face.

The Exchange Rate Risk and Financial Sector Performance: Evidence from Nigeria

This article looked at the connection between exchange rate risk and financial sector performance in Nigeria using time series data from 2008Q1 to 20017Q4. The study employed Autoregressive Conditional Heteroskedasticity (ARCH), and Granger Causality tests as estimation techniques. Financial intermediation index was used as the dependent variable while risk from exchange rate, risk from consumer price index and risk from interest rate were used as the independent variables. The findings from the study showed that exchange rate risk (EXR) coefficient value was -0.276230 with p-value of 0.0000, implying that EXR was negative and significant to influence FII. The risk from financial intermediation index reveals a coefficient value of -5.213590 and the p-value of 0.000 implying that when financial intermediation index increases, volatility or risk reduces which means that financial intermediation index was not a risky variable which was significant during the study period. However, the study concluded that the shock from exchange rate moves at a negative and significant direction to financial intermediation index of the economy. It is also concluded that exchange rate and financial intermediation index does not have uni or bi-directional relationships between each other. It is recommended that the Government and the Apex Bank of Nigeria are encouraged to increase the stabilization measurement for exchange rate to cushion its risk and by so doing; this could improve financial sector performance.

Effect of Foreign Portfolio Investments on the Performance of Financial Sector in Nigeria

The effect of foreign portfolio investments on the performance of financial sector in Nigeria was investigated by means of the ex-post facto design. Data of foreign portfolio investments and contribution of financial sector to gross domestic product was obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank Development Indicators spanning 1981–2016. Data obtained was analysed using stationarity and unit root, co-integration, ordinary least square estimation, error correction model, and variance decomposition tests. Findings of the study showed that foreign portfolio investments significantly affect the performance of financial sector in Nigeria. On the basis of this, it was recommended the government should strengthen the financial sector, specifically the money and capital markets in order to enhance the flow of foreign portfolio investments into this sector in Nigeria. This is because foreign investors can invest on financial or liquid assets with the hope of a sound future return.

The Effects of Electronic Payment Systems on the Performance of the Financial Sector in Selected Islamic Countries

This study investigates the effect of electronic payment system on the performance of the financial sector in selected Islamic countries including Iran, Indonesia, Jordan, Kuwait, Malaysia, Egypt, Morocco, Oman, Saudi Arabia, Senegal, Turkey, and the United Arab Emirates. Reaching this purpose, the study uses annual panel data from 2011 until 2017. The results show that all electronic payment indicators including Mobile Bank, Internet Bank, Bank Card, POS machine and ATM positively and significantly affect the financial sector performance. It is also found that economic growth and population have a significant positive effect on financial sector performance. Inflation aKey Words: Electronic Payment Systems, Financial Sectornd interest rate negatively and sigThis study investigates the effect of electronic payment system on the performance of the financial sector in selected Islamic countries including Iran, Indonesia, Jordan, Kuwait, Malaysia, Egypt, Morocco, Oman, Saudi Arabia, Senegal, Turkey, and the United Arab Emirates. Reaching this purpose, the study uses annual panel data from 2011 until 2017. The results show that all electronic payment indicators including Mobile Bank, Internet Bank, Bank Card, POS machine and ATM positively and significantly affect the financial sector performance. It is also found that economic growth and population have a significant positive effect on financial sector performance. Inflation aKey Words: Electronic Payment Systems, Financial Sectornd interest rate negatively and significantly affect the financial sector performance.nificantly affect the financial sector performance.

Financial Sector Performance: Evidence in Twelve West African Countries

In most West African countries, the financial sectors are the least developed area. The absence of deep-efficient financial markets put major economic growth constraints. This study aimed to investigate the financial sector performance in twelve selected West African countries. To determine financial sector performance, a panel data semi-log model was employed. Data were collected from the World Bank Open data page from 2004-2013. The results revealed that both variables matched the hypothesis, indicating a positive impact in the financial sector. It indicated that the variables used in this study were major players of the financial sector in the selected countries. This study recommends that because financial stability, globally and within countries, generates jobs and improves productivity, more efforts should be made to ensure an effective and developed financial sector system. It is so because limited and inadequate access to credit will limit small and medium-sized enterprises' contributions to private sector development

Managing Foreign Financial Firms (MNB) and their Contributed in Financial Sector Performance

Managing Foreign Financial Firms (MNB) and their Contributed in Financial Sector Performance

Analysis Effect Quality of Accounting Information Systems to Support Company Performance

The purpose of this study is to explain the Accounting Application system quality qualitatively in facilitating the financial sector performance in a company. The method used in this study is semi-structured interviews with informants of the quality of the accounting information as budget accountants in a company. The results showed that a quality accounting application system is from the analysis existing accounting information systems quality such as security, accessibility, reliability use, data integration, and availability of correct and timely information that is able to support company performance. Companies must have these four elements in the accounting system they use. The result of this study is that the company has used a quality accounting information system because it has fulfilled all four elements and is able to support the employees’ performance in the company. The conclusion from this study is this company has been able improving the company’s performance quality ofr the employees by using good accounting information system.

The Effect of Investment Committee on the Financial Sector Performance of Saudi Financial Market in View of Vision 2030: A Panel Data Approach

The investment committee is primarily a decision-making entity that aims to implement investment decisions taken by the company. In the framework of the powers conferred upon it by the board, the importance of this committee is highlighted and as such, in the present study, the primary aim is to examine the effect of investment on Saudi financial sector, an examination that is the first of its kind. The investment variable was measured by investment committee characteristic including, size, independence, meeting, commitment and allowance for session attendance. The study data was gathered from the annual reports of the financial firms spanning from 2014 to 2017. Panel data was used to conduct the hypotheses testing concerning the relationship among the variables of the investment commitment and the performance of the financial firms. Based on the findings, investment committee size and investment committee independence positively and significantly related with the performance of the firms. This study has several contributions to literature, particularly concerning information about the importance of investment committee. In addition, this study is clarified our understanding concerning best practices of corporate governance structure existing in Saudi financial listed companies.

Inflation and financial sector development in Sub-Saharan African countries

PurposeThe purpose of this paper is to examine the link between inflation and the financial sector performance in Sub-Saharan African (SSA) countries.Design/methodology/approachThe study analyzes the relationship between inflation and the financial sector performance for selected 22 Sub-Saharan countries from 1980 to 2013. The study used panel data and the dynamic panel generalized method of moments econometric method. The study concentrates on the link between inflation and the development of the banking sector.FindingsThe findings suggest that inflation does not promote financial sector development in SSA region while trade openness has a positive impact on the selected financial development indicators. Other variables that enhance financial development in SSA include government expenditure and good governance.Practical implicationsThe main policy implication of the study is that in order for SSA countries to benefit from a deeper and more active financial sectors, the rates of inflation must be maintained low and be consistently under control. Also, for SSA region financial sectors to become deeper and more active it is crucial to develop stronger economic institutions including independent central banks and sound fiscal authorities.Originality/valueThe study differs from previous studies as it includes more (22) countries from SSA region while previous studies were either regional or country specific. The study also incorporates trade openness and the role of institutional quality in enhancing financial development. This differentiates the study from previous studies on the subject from the region.

The Impact of Financial Sector Development and Sophistication on Sustainable Economic Growth

The drivers of economic growth and development are among the most important issues explored by economic theory. Sustainability of economic development was previously linked by various economic schools of thought to natural resources (agriculture, land, minerals, metals etc.), labor force (including skills, productivity, and education), entrepreneurship or technology and innovation. Capital was later introduced by classical economic theory as the key element. Without significant capital accumulation, all other production factors remain idle. The value added of the production process is a result of the existence, the accessibility and the cost of capital. Therefore, the development and the sophistication of the financial sector has gradually become very important for any nation interested in sustainable growth. This paper investigates the impact of financial sector development, sophistication and performance on economic growth based on a panel regression methodology. We found statistically significant results that confirm the importance of this connection and that are very consistent with economic theory and previous relevant articles and studies.

The Role and Impact of Merger & Acquisition of Banking Sector in Pakistan

Authors: Kishwar Ali, School of Finance, Zhongnan University of Economics & Law, Wuhan, China Atta Ullah, School of management, Huazhong University of Science and Technology, Wuhan China Pages: 113-121 DOI: http://doi.org/10.21272/fmir.3(3).113-121.2019 Download: Views: Downloads: 40 54 Abstract The paper summarizes the arguments and counterarguments in the scientific discussion on determining the effects of mergers and acquisitions for banking institutions. The purpose of this article is to conduct an empirical study to identify the nature of the impact of mergers and acquisitions on Pakistan’s financial sector performance. The research in the article is carried out in the following logical sequence: a thorough literature review on the analysis of key aspects of mergers and acquisitions and their impact on the financial and economic performance of banks before and after their practical implementation; the historical basis of the experience of mergers and acquisitions caused by various economic factors, such as: GDP growth, interest rates on loans, monetary policy; financial analysis of bank profitability, solvency and liquidity indicators before and after the merger and acquisition was conducted. Five commercial banks of Pakistan that were involved in the merger and acquisition processes were selected as the subject of study. The study period is presented before and after the merger and includes two years before the acquisition report and two years after the acquisition announcement by analysis of financial ratios of liquidity, solvency and profitability. The results of empirical and theoretical research have shown that there is a positive relationship between merger and acquisition processes and liquidity ratios of banking institutions; and – the negative impact of such processes on banks’ profitability and solvency in the short term. The author states that the main limitation of the study is the unavailability of financial data until 2006 and the use of a small sample size and a low likelihood of data collection technique, which is limited by a certain type of people and lack of generalization. Keywords: merger, acquisition, bank, solvency risk, liquidity, profitability.

An Analysis of Demand for Microfinance in Sri Lanka

Necessity of microfinance services is upraising with the increased complexity of rural life style. Economic pattern of rural communities and the performance of informal financial sector are two cornerstones of the modern microfinance services. It is expected that the demand for microfinance will be increased as the complexity of rural life thrived. Yet, a downward trend is noted in the demand for microfinance by the rural community of Sri Lanka with the introduction of social benefit programmes particularly, the “Samurdhi” Programme. Thus, the motive of this study was to empirically evaluate the factors affecting the demand for microfinance. In particular, it was based on the clients of Samurdhi Prajamula Banking Societies (SPBSs) in Diganwewa Division, Puttalam District of Sri Lanka. The study was quantitative and used the survey research method. The sample was randomly drawn from Samurdhi beneficiaries who are currently the members of SPBSs. The data were gathered by administering a close-ended questionnaire while univariate and bivariate analysis analysed them. The results indicated that the general literacy & income of potential borrowers and also receipt of social benefit by the potential borrowers are significantly predicting the intention to obtain microfinance. Additionally, demand for loan securities, service features and interest charged for the microfinancing facilities are affecting the demand for microfinance. Among the factors related to borrower, literacy level and income of them found positively and significantly affecting the microfinance demand. Yet, a negative influence was noted with respect to receipt of social benefits on the demand for microfinance. All the factors, except service features of the credit facility, negatively affecting the demand for microfinance.

Impact of Macroeconomic Factors on Banking Profitabilty

This study comparatively focuses on the impact of macroeconomic determinants and the internal indicators on bank performance. It comparatively evaluates the differential effects of macroeconomic variables and bank specific variables. Thus, considering five-five banks from each system, a comparative performance investigation between conventional & Islamic banks is the aim of this paper. To determine the short-run and long-run impact of these factors, co-integration & general to specific approach are adopted. This study also considers bank specific and macroeconomic variables in two separate models (Return on Assets and Return on Equity). Our objective is to find whether or not Islamic banks are performing well in the country as compared to their conventional counterparts. The results indicate that in the long run, Gross Domestic Product, and inflation, is positively related to performance, while Interest rate has no effect on the performance of banking sector in Pakistan. Similarly, bank size, capital adequacy, expenses, interest income and non-interest income are the bank related factors that significantly influence the performance of financial sector.

Effect of Knowledge Management Practices on the Performance of Nepalese Financial Institutions

Knowledge Management (KM) is considered as a recent phenomenon prevailing in the management circle. Despite its growing concern, there are relatively few literatures showing clear linkage between knowledge management and organizational performance (OP) in financial sector. The main objective of this study is to measure the effect of knowledge management practices on the performance of financial institutions in Nepal. In this study, samples of 385 respondents were selected randomly from four different types of financial institutions of Kathmandu, Nepal. The statistical analysis was done to draw the conclusion. The results clearly showed that components of KM process (KM obtaining, KM organizing & KM applying) are positively correlated with the organizational performance measured in terms of Financial and Market Results, Organizational Effectiveness, Employee Satisfaction and Customer Satisfaction. Finally, this paper concludes that performance of any financial institution is significantly affected by various KM processes and practices adopted by these organizations.

CORPORATE FINANCIAL DISCLOSURE IN NIGERIAN DEPOSIT MONEY BANKS

The study examined the impact of corporate financial disclosure on the performance of Nigerian Deposit Money banks. It evaluated the extent to which Nigerian Deposit Money banks complied with the financial disclosure requirements as given by the monetary authorities. Primary data collected through questionnaire were used for the study. Out of 120 copies of questionnaire served on respondents, 100 copies were recovered and used for the analysis of the study. The analytical tools used for the study are the t-test and the Analysis of variance (ANOVA). From the hypotheses tested, the results show that corporate financial disclosure has a significant influence on the banks’ stability and performance in the Nigerian financial sector. Therefore, the study concludes that the corporate disclosure of financial reporting practices by banks in general will enable them to work towards improving and managing their non-performing loans effectively and efficiently for stability and hence better performance. It was therefore recommended among others that efforts should be geared towards improved corporate financial disclosure among money Deposit Money banks in Nigeria and mandatory compliance with the code of corporate governance and effective legal framework which specifies the rights and obligations of banks, it’s directors and shareholders.

Is natural resource abundance a stimulus for financial development in the USA?

This paper investigates the stimulating role of natural resource abundance in financial development for the case of the USA over the period of 1960–2016. We included education, economic growth and capitalization as additional determinants of financial development in finance demand function. Thus, we applied traditional and recent unit root tests, accommodating unknown structural breaks in the series for examining the unit root properties of the variables. To examine cointegration between the variables, we apply the Bayer-Hanck cointegration approach. The robustness of cointegration relationship is tested by applying the bounds testing approach to cointegration. The empirical results show the presence of cointegration between financial development and its determinants. In the long run, we observe that natural resource abundance contributes to financial development. Education has a positive impact on financial development. A positive relationship exists between economic growth and financial development. Capitalization is inversely linked with financial development. The causality analysis reveals a feedback effect between natural resource abundance and financial development i.e. natural resource abundance causes financial development; in turn, financial development Granger causes natural resource abundance. This empirical evidence provides new insights for policy makers to use natural resource abundance as an economic tool to improve the performance of financial sector by considering the role of economic growth and education.

Turkey: In the Midst of Crisis, Between Liberal Utopia and Keynesian Regulation

As Turkey’s growth numbers signalled negative news about the near future, possible economic remedies to solve an upcoming economic slowdown have been discussed. In this article by looking at the financial and banking sector performance of the country during 2001 local and 2008 global crisis, I tried to compare two mainstream strands of theory, i.e. liberal and Keynesian approaches to the economic crisis. It seems like the country has experienced a neo-liberal, unregulated financial episode until 2001 crisis, while in post-2001 period we have witnessed more regulatory and Keynesian financial remedies which were successful to save the country from more harmful effects of the Great Recession. Those Keynesian style regulations were mainly inspired from the effects of changes within the governing style of international financial institutions. But in the final section of the analysis, through pointing out the potential triggers for another economic crisis, this article argues that though Keynesian solutions are more logical and helpful in alleviating the symptoms of crisis, they could not make Turkey crisis-free. High current account deficits, persistent inflation, adamant unemployment and insufficient domestic production in the face of rising imports, all of these can be classified as the symptoms of the still crisis prone economic structure in the country. Then, other, more radical alternatives should be on the agenda for a better future.

Intellectual capital and its impact on firm performance of the Turkish financial sector before and after financial crisis

The main purpose of this study is to investigate the relationship between intellectual capital and financial performance of financial companies listed in Borsa Istanbul, using data of 44 listed companies over 2004-2015. Value Added Intellectual Coefficient (VAIC) method is used as a measure of intellectual capital (IC). An OLS regression is utilized to examine the impact of intellectual capital; Human capital efficiency (HCE), Structural capital efficiency (SCE), and Capital employed efficiency (CEE) on market performance, financial performance, and productivity performance. The findings show that HCE has a positive significant relation with ROA after the crisis and with ROE before and after the crisis. SCE show a positive significant relation with PE and ROE after the crisis and a negative significant association with MB after the crisis. Regarding to CEE, the results show that it has only a positive significant impact on MB after the crisis and a negative significant influence on ATO after the crisis. Generally, VAIC has a negative significant relationship with ATO before the crisis and has a positive association with ROA after the crisis, in addition to a positive significant influence of ROE before and after crisis.

The Role of Stock Market Development on Economic Growth in OPEC Countries: Does Oil Price Movement Matter? Fresh Evidence from Nigeria

This study investigates the relationship link crude oil price and stock market development and economic growth in one of the OPEC countries with emphasis on Nigeria over the period 1981 to 2014, using the latest methodology autoregressive distributed lag approach (ARDL) to cointegration analysis. Three indicator of stock market development are constructed using principal component analysis. The revels the dominant role of rule oil price as one of the engine for economic growth in Nigeria. Using inflation and trade openness as a moderator on economic activities in Nigeria, this study found that stock market is insignificant in driving economic growth in Nigeria indicating poor financial sector performance. In general, the results highlight the dominant role crude oil price and posits the weakness of the stock market in stimulating economic growth through resource mobilization and allocation in Nigeria. Therefore for government to achieve sustainable economic development and maximize stock market performance, policy maker in oil exporting countries should monitor the movement of crude oil prices.