Bank Financing Research Articles

Unveiling the impact of COVID-19 on Small Finance Banks in India: An in-depth econometric analysis

This study assesses the performance of Small Finance Banks in India, focusing on their efficiency in the post-COVID-19 period from 2019 to 2023. It explores the influence of bank-specific and macroeconomic factors on the efficiency of Small Finance Banks, with the aim of understanding their role in promoting financial inclusion. The research employs a two-stage Data Envelopment Analysis (DEA) framework to evaluate the efficiency of 10 selected Small Finance Banks. It incorporates both bank-specific variables (such as capital adequacy ratio, credit-deposit ratio, and liquidity ratio) and macroeconomic factors (GDP and inflation) in a Tobit regression model to analyze their influence on efficiency. The study reveals that the majority of Small Finance Banks remained resilient during the pandemic, consistently achieving high efficiency scores, except for a slight dip in 2020–2021 due to lockdown measures. Bank-specific factors indicate a converse association between capital adequacy ratio and efficiency, while liquidity ratio and credit-deposit ratio positively correlate with efficiency. Macro factors, including GDP and inflation, have minimal impact on Small Finance Banks efficiency. This study provides a comprehensive assessment of Small Finance Banks’ performance post-COVID-19, shedding light on the factors influencing their efficiency. It offers valuable insights for policymakers and Small Finance Banks to strengthen their role in advancing financial inclusion in India, contributing to a more inclusive and dynamic financial landscape. The findings suggest that Small Finance Banks should focus on expanding their influence in niche segments by increasing assets, deposits, and revenue streams while managing operating expenses and liquidity risks. Listing on the stock exchange and active policy support for research initiatives can enhance the Small Finance Banks ecosystem and drive financial inclusion.

ENGLISH FOR FINANCE STUDENTS - PART 2

In a world where financial landscapes are constantly evolving, understanding the intricacies of finance becomes not just an asset but a necessity. This book, encompassing a wide range of financial topics, is crafted to demystify the complex world of finance for learners, enthusiasts, and professionals alike. Each lesson in this book is designed as a standalone module, allowing readers to dive into topics at their own pace and according to their interests. Starting with the "Fundamentals of Financial Planning," we lay the groundwork for sound financial understanding. As we progress, topics like "Digital Banking and Online Finance" and "The Role of Technology in Modern Finance" explore the digital revolution reshaping the financial sector. We delve into specific markets with lessons on "Stock Market Indices," "Real Estate Investment Basics," and "Commodities Trading," offering insights into different investment avenues. The book also addresses critical issues such as "Financial Consumer Protection" and "Cybersecurity in Financial Transactions," emphasizing the importance of security in the digital age. Global financial mechanisms are unraveled in lessons like "Understanding the International Monetary Fund (IMF)" and "Global Trade Financing," providing a macroeconomic perspective essential for grasping international finance. The chapters on "The Rise of Cryptocurrencies" and "History of Ethereum" bring readers to the forefront of modern financial innovation, while "Understanding the OneCoin Scam and Scandal" and "Understanding Pyramid Schemes in Finance" serve as cautionary tales highlighting the importance of vigilance in investments. For entrepreneurs, "Financial Literacy for Entrepreneurs" and "Starting and Growing Your Business: Financial Strategies for Entrepreneurs" offer practical guidance on managing and growing a business effectively. We also explore economic systems and government policies in chapters like "Understanding the Communist Economic System" and "Understanding the Cuban Government and Economic System." As we approach the culmination of this journey, "Jobs That May Disappear Due to AI in the Future" and "Understanding the Possibility of a Global Financial Collapse" prompt readers to think about the future of finance and its challenges. This book is more than just a collection of financial lessons; it's a guide to navigating the ever-changing currents of the financial world. Whether you're a student, a professional, or simply curious about finance, these pages are designed to enlighten and empower you in your financial journey.

The Impact of Artificial Intelligence on Organizational Performance: Insights from VFD Micro Finance Bank (VBank), Lagos State Nigeria

The Impact of Artificial Intelligence on Organizational Performance: Insights from VFD Micro Finance Bank (VBank), Lagos State Nigeria

The Determinants of SME Credit Rationing in Morocco. Case of SMEs in the Casablanca Settat Region

In this article, we are concerned with a central element of the Moroccan economy, namely small and medium-sized enterprises (SMEs), which often find themselves in a situation where alternative sources of financing are not easily accessible, including bank financing. Indeed, Moroccan SMEs are closely dependent on banking institutions to obtain the financial support necessary for their projects. However, these businesses frequently face the phenomenon of credit rationing, necessitating improved access to credit. In this research work, we have contributed to the study of this phenomenon, focusing specifically on the Casablanca Settat region. Our research revolves around two essential objectives. Firstly, we aimed to evaluate the impact of credit rationing on SMEs in this region. Next, we focused on empirically identifying the determinants of this phenomenon. To achieve these objectives, we selected a target population of 218 SMEs from the Casablanca Settat region. Our initial statistical tests revealed that SMEs in the Casablanca-Settat region are facing both total credit rationing and partial credit rationing. Subsequently, the results obtained from multinomial logistic regression tests reveal that the SME's sector of activity, age, reputation, legal status, size, gender of its manager, age, education, nature of the relationship with the bank, and professional experience all play an important role in explaining this phenomenon.

Risk Management Practices in Sharia Commercial Banks in the Financing Sector

To help the Indonesian economy face increasingly complex risks and problems, Sharia Commercial Banks are very important. Threats and difficulties faced by Sharia Commercial Banks both internally and externally. Risk is the possibility of something happening that may have a positive or negative impact on achieving organizational goals. However, work accidents often occur which result in a Sharia Commercial Bank experiencing losses. Of course, recognizing existing risks can prevent work accidents. For this reason, it is necessary to establish a good system that is comprehensive, planned and structured. This research focuses on how to attract investors to provide financing to Sharia Commercial Banks under the auspices of the OJK. This research uses secondary data collection methods in the context of qualitative descriptive research. In the context of Sharia Commercial Bank financing which is under the supervision of the OJK, the findings of this research provide a comprehensive understanding of relevant and efficient risk management techniques. These findings also provide useful direction for other banks in managing financing funds and fostering investor confidence. Furthermore, solving financing problems is carried out with the 3R idea, namely: rescheduling, reconditioning, restructuring

A bibliometric study of financial innovation development trends

Object: The purpose of this article is to identify and analyse the most influential authors, publications, countries, journals on financial innovation and the key trends in their development of financial innovations using bibliometric method based on Web of Science Core Collection data using VOSviewer. Methods: This study used the quantitative and qualitative method. The PRISMA approach helped to sort out 942 articles on the financial innovation topic. The science mapping analysis as the citation analysis of documents, authors and countries, and co-occurrence analysis of all keywords was applied to show the main research trends in financial innovation field. Results: The most productive country is the USA. The most productive author is Oskooee, Mehdi Bahmani. The Journal of Banking Finance published the greater number of papers which is 29. The trends were specified using the clusters. So, business innovation, economic growth, fintech, corporate innovation and financial inclusion are popular trends in financial innovation development. Conclusions: Financial innovation influence our daily life through financial sector, specifically banking sector and fintech products and services. Popularity increases in the fintech products and services, eco and green innovation that affect the company’s performance and image. Developed countries have greater impact to promote this topic.

Influence of short-term funding methods in the systematic risk of Latin American companies

This research aims at identifying the impact of short-term funding methods of organizations (bank funding or commercial funding) on the systematic risk of Latin American companies. The proposal is based on the ideas provided by Hamada (1972) and Modigliani and Miller’s theory (1958, 1963), evidencing the relationship between the funding structure of companies and the systematic risk. Multiple linear regression econometric models were estimated. The systematic risk was measured by levered beta (β) and the respective disaggregation of unlevered beta (βD) and residual beta (βR). The sample under study belonged to Latin American companies from 2009 to 2022. The main findings evidence a negative relationship between short-term commercial and bank debt and unlevered beta from Latin American companies, resulting in higher intensity and significance for commercial debt. The study includes evidences that contribute to the finance literature by making clear that short-term funding methods impact on the systematic risk of organizations. From the practical contribution perspective, this research explains to market actors and investors that the funding structure determined by operational activities, through operational liabilities, must be considered in the asset pricing process.

Fiduciary Guarantee Registration Implementation Through Electronic (Online System) in Indonesia

The aim of this research is to analyze the implementation of electronic fiduciary registration in Indonesia and to analyze the factors that support and hinder the implementation of electronic fiduciary registration. The research methods taken in this study is a normative juridical approach supported by empirical data. Fiduciary as a guarantee institution is regulated in Law No. 42 of 1999 concerning Fiduciary Guarantees and followed up with Government Regulation Number 21 of 2015 concerning Procedures for Registration of Fiduciary Guarantees and Costs for Making Fiduciary Guarantee Deeds. Fiduciary registration cannot be separated from fiduciary collateral because fiduciary registration results in guaranteed legal certainty for creditors and interested parties. However, until now there are still many fiduciary guarantees that are not registered because many things have become obstacles in the registration process for fiduciary guarantees. To overcome the obstacles that occur in daily practice both those that occur in bank financing institutions and non-bank financing institutions (leasing) and notaries in registration of fiduciary guarantees, then the government made a new breakthrough by increasing the service of registration of fiduciary guarantees easily, quickly, and at low cost, namely by conducting electronic fiduciary registration services.

Assessing the Influence of Energy Consumption and Islamic Financial Development on Indonesia’s Economy with Dynamic ARDL Simulations Approach

The purpose of this study is to evaluate the contribution of energy consumption and Islamic financial development to economic growth in the case of Indonesia. The macroeconomy variable namely gross fixed capital formation also involved in the model as control variables considering its significant contribution to economic growth continuously. The monthly data of economic growth, as dependent variable, represented by industrial price indicator. As independent variables, the data of energy consumption denoted by the amount of primary energy consumption while the data of financial development reflected by Islamic Banking financing consists of the amount of mudharabah and musyarakah financing. Moreover, the variable gross capital formation is chosen as the control variables with consideration that the variable constantly has significance contribution to economic growth and cannot be ignored. An interpolation technique performed for variable with annual range and to equalize all data to be monthly. The method of ARDL and ECM chosen as the suitable method to reach the objectives. The result concludes that energy consumption and Islamic financial development has positive contribution to Indonesia’s economic growth. The cointegration exist which means there is a long-run relationship between the variables. Energy consumption and the growth of Islamic finance, as illustrated by musyarakah financing, have a long-term impact on Indonesia's economic growth. The error correction mechanism also found which reflects that there is a mechanism of adjustment when shock happen. This paper presents the latest empirical evidence of the contribution of energy consumption and Islamic financial development to economic growth in the case of Indonesia. The variable of Islamic financial development is breakdown become mudharabah and musyarakah to get deeper analysis. In addition, the involving of capital formation as control variables never been done by previous studies. To the best author’s knowledge, the study that discuss this issue is limited especially in the case of Indonesia which use disaggregate Islamic financial development as well as involving capital formation as the control variables for the case study of Indonesia.

THE EFFECT OF INFLATION AND UNEMPLOYMENT ON NPF IN ISLAMIC COMMERCIAL BANKS IN INDONESIA

This research seeks to examine the influence of inflation and the number of unemployed people on the problematic financing (NPF) of sharia commercial banks. The monthly time period from 2012 to 2023 was used as secondary data in this study. The quantitative method of this study used the time series VAR method which was then transformed into VECM. The data used comes from secondary sources, namely Sharia Banking Statistics from the OJK which includes Problematic Financing data; Bank Indonesia reports accessed via its official website which includes inflation data; and information from the official website of the Central Statistics Agency (BPS) which provides open unemployment rate (TPT) data. Inflation and unemployment are the two main factors that influence Sharia Commercial Bank Non-Performing Financing in this analysis. Study findings indicate that non-performing financing of sharia commercial banks in the long and short term is positively influenced by unemployment and inflation. The conclusion is that there is a significant positive influence between inflation on NPF, the higher the inflation value, the higher the NPF value in Sharia Commercial Banks. Likewise, unemployment has a significant influence on NPF, so the higher the unemployment rate, the higher the NPF level.

Bank Funding Risk, Reference Rates, and Credit Supply

ABSTRACTCorporate credit lines are drawn more heavily when funding markets are stressed. This elevates expected bank funding costs. We show that credit supply is dampened by the associated debt‐overhang cost to bank shareholders. Until 2022, this impact was reduced by linking the interest paid on lines to a credit‐sensitive reference rate like the London interbank offered rate (LIBOR). We show that transition to risk‐free reference rates may exacerbate this friction. The adverse impact on credit supply is offset if drawdowns are expected to be deposited at the same bank, which happened at some of the largest banks during the global financial crisis and COVID recession.

State-Owned Banks Financial Performance: Non-Performing Loans, Liquidity, Interest Rates, And Profitability

This study aims to analyze the effect of bad debt, liquidity, interest rates, and profitability on the financial performance of Indonesian state-owned banks. The data used are secondary data from published financial reports on the Indonesian Stock Exchange in 2021-2023. The method used is quantitative descriptive. The population of the study was all state-owned banks, namely six issuers. The sampling technique used saturated samples so that the number of samples was the same as the population. The banks used as samples were Bank Rakyat Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Tabungan Negara, Bank Syariah Indonesia, and Bank Raya Indonesia. The data analysis technique used multiple linear regression with the help of the SPSS program. The study showed that bad debt and profitability negatively affect financial performance. Meanwhile, interest rates and liquidity did not affect financial performance. Theoretically, this study can complement existing theories and be a reference for further research. Practically, this study can be used as a reference for banks in improving their financial performance.

Joint Pricing-Production Decisions for a Capital-Constrained Supplier in a Marketplace Platform

We analyze a supply chain consisting of a capital-constrained supplier and a platform functioning as a marketplace, where the supplier sells products to consumers via the platform, which charges a commission fee for each item sold. Operating in a market characterized by price-sensitive stochastic demand, the supplier must make simultaneous decisions regarding pricing and production quantity before a selling period. The supplier has three financing options for production: bank financing, platform-guaranteed bank financing, and direct platform financing. Using a Stackelberg game approach, we model these interactions and derive key managerial insights. Our findings reveal that financing choices and commission fees significantly impact the supplier’s pricing and production decisions, as well as the platform’s financing preferences. Generally, while the platform favors direct financing, the supplier prefers guaranteed financing under certain conditions.

Are Indonesia SMEs Interested in Switching Funding to Sharia P2P Lending? A Push-Pull-Mooring Framework

This study examines the switching behavior to peer-to-peer (P2P) lending platforms to determine the factors that encourage SMEs to use Sharia P2P lending platforms to obtain loans. This study focuses on the factors that contribute to the intention to switch SME funding from conventional banking to Sharia P2P lending in Indonesia. Using questionnaires and purposive sampling, we collected data from a total of 367 SMEs in Indonesia that use Sharia P2P lending and then applied PLS-SEM for data analysis. The results showed that the pull effect significantly influenced the intention of SME owners to switch to Sharia P2P lending and was negatively moderated by switching costs. In contrast, the push effect did not significantly influence the intention to switch to Sharia P2P lending. In addition, switching costs directly influenced the intention of SME owners to switch from conventional banking funding to Sharia P2P lending.

Entrepreneurial Firms and Bank Financing: Do Business Angels Play a Role?

ABSTRACTThis paper investigates the contribution provided by business angels' (BAs) post‐investment intervention to the interaction between young entrepreneurial firms and bank lending decisions within the entrepreneurial finance ecosystem. The analysis relies on a data set comprising 114 Italian BA‐backed firms over the 2010–2018 period, alongside 498 matched firms. We find evidence that BAs' support makes it easier for entrepreneurial firms to raise follow‐on bank financing. Additionally, we document the positive effects of both BAs' entrepreneurial experience and soft monitoring. These effects can be attributed to BAs' value‐added contributions and their role in mitigating information asymmetries perceived by debt providers.

Determinants of online cash waqf behavioural intentions for micro enterprises financing: the case of Indonesian Muslim youth

Purpose This study aims to determine the intention of online cash waqf donations among Indonesian Muslim youth for micro enterprises (MEs) financing. Therefore, the contribution of Muslim youth in supporting MEs can be accelerated to solve some interrelated social and economic issues. Design/methodology/approach This study integrates the theory of planned behaviour (TPB) and the technology acceptance model (TAM) partially relevant to research characteristics. A questionnaire survey is used as a data collection approach to acquire responses from 180 Indonesian Muslim youth. The data obtained are analysed using smart partial least squares-structural equation modelling to answer the research hypothesis and obtain conclusions. Findings Religiosity, awareness and perceived behavioural control are significant factors determining the intention to donate online cash waqf for MEs financing. Religiosity plays an important role in building attitudes and perceived awareness of Muslim youth’s behaviour and intention to donate online cash waqf for MEs financing. Research limitations/implications The analysed factors could be used as guidelines for better planning and implementing digital-based cash waqf marketing strategies for Nazir (waqf institutions). Regulators (Government and National Waqf Board) must provide better regulations for digital waqf platforms and policies for cash waqf financing for MEs. Researchers could investigate the other theory and cash waqf financing model in low-risk MEs’ empowerment. This study will also broaden cash waqf literacy for MEs financing. Originality/value To the best of the authors’ knowledge, no previous study addressed the intention of Muslim youth in Indonesia towards online cash waqf to empower MEs. This study develops models by combining TPB and TAM with additional constructs to determine the intention to donate online cash waqf for MEs financing that have been experiencing difficulties accessing banking financing.

Legal Analysis of Bank Compliance in Implementing the Principle of Prudence in Credit with Trade Receivables Fiduciary Guarantee

prudential principle is a fundamental pillar in maintaining the stability and security of bank finances, especially in the distribution of credit with fiduciary guarantees for trade receivables. Credit secured by trade receivables has special characteristics that require a more in-depth risk evaluation, given the intangible nature of receivables and dependence on the ability of third parties to pay. This study discusses how the prudential principle is applied by banks in the process of creditworthiness analysis, assessing the quality of trade receivables as collateral, and managing related risks, including liquidity, default, and legal risks. In addition, this study highlights the importance of fiduciary registration and complete legal documentation to protect banks from potential legal disputes and ensure effective collateral execution in the event of default. By implementing strict prudential principles and comprehensive risk management, banks can minimize the risks associated with the distribution of credit guaranteed by fiduciary on trade receivables, thereby maintaining their financial and operational stability.

The effect of digital transformation on the performance of the banking sector in Kazakhstan

This paper examines the impact of banking digitization on the development of the banking industry, particularly on banking performance. This study aims to identify critical factors for the development of financial banks and factors for the development of banking digitization in the banking sector of Kazakhstan. Based on this purpose, the core of banking digitization and its definition will be examined. The study conducted a comprehensive analysis that provided quantitative and qualitative characteristics of the development of digital technology and its impact on the development of the banking industry. The problems set out in this paper are solved using quantitative and financial analysis methods. The point index method was used during the study. Data from Halyk Bank’s annual reports from 2019 to 2023 were used to assess digitalization's penetration into the banking industry. A panel approach is also used, allowing for data analysis for individual banks. Our research concludes that bank digitalization clearly impacts bank performance, focusing on the number of digital banking users, digital banking transactions, and IT investment growth on bank performance (such as return on equity, RoAE). The research findings provide implications for the practice of digital transformation of banks, especially in terms of digital investment and performance improvement. This study lays a foundation for future research on the impact of digital transformation on bank performance and provides a reference for investment decisions in the Kazakhstan banking industry.

Analysis of Bank Financial Health During and After the COVID-19 Pandemic Using the Camel Method (Study at PT. Bank Rakyat Indonesia (Persero), tbk 2020-2023)

Analysis of Bank Financial Health During and After the COVID-19 Pandemic Using the CAMEL Method (Study at PT. Bank Rakyat Indonesia (Persero), Tbk). This study aims to determine whether PT. Bank Rakyat Indonesia (Persero), Tbk experiences differences in financial health as measured by CAMEL (Capital, Assets, Earnings and Liquidity) between during and after the COVID-19 pandemic. The method used in this analysis is the Descriptive Method with a Quantitative Approach. The data used are the Financial Reports of PT. Bank Rakyat Indonesia (Persero), Tbk for the period 2020 - 2023. and the data analysis technique uses the CAMEL Method. The results of the study show that CAMEL PT. Bank Rakyat Indonesia (Persero), Tbk During and After the COVID-19 Pandemic is declared healthy. Average CAR BRI During COVID-19 23.60% and CAR BRI After COVID-19 23.60%, Average KAP During COVID-19 1.76% and After COVID-19 1.96%, Average NPM During COVID-19 72.45% and After COVID-19 78.64%, Average ROA During COVID-19 2.82% and After COVID-19 3.93% and Average LDR During COVID-19 82.76% and After COVID-19 84.73%. Bank BRI was able to face the economic crisis during COVID-19 and was consistently able to maintain its financial performance well.

Analisis Pengelolaan Dana Non-Halal Bank Syariah Indonesia

Islamic banks are financial institutions that operate according to sharia, the existence of non-halal funds in Islamic banks is something that is still not widely known by the public which then creates misperceptions that Islamic banks accept non-halal funds as being considered the same as conventional banks. This research aims to provide literacy to readers that the management of funds from non-halal activities received at Indonesian Sharia Banks is not the same as conventional banks by carrying out a descriptive qualitative approach, namely conducting interviews with sources regarding non-halal funds at Islamic Banks. From the results of the analysis that has been carried out by the author, Bank Syariah Indonesia receives non-halal funds from activities carried out with fellow partners such as bonds or contract defects due to the customer's negligence in maintaining the trust that has been given by Bank Syariah Indonesia. The non-halal funds obtained are then separated from operational income funds because this income is not allowed to be considered as income in accordance with the DSN MUI fatwa. Funds which are then not considered as Bank Syariah Indonesia income funds will be channeled back to the community for public purposes such as public facilities referring to the enacted laws and Islamic law.