Bank Financing Research Articles

The Role of Innovation Management and Business Strategy to Boost the Sustainable Performance of Islamic Bank in Indonesia

Purposes: In terms of asset share and market share, Islamic banks in Indonesia continue to perform worse than conventional banks. This contrasts with the majority Muslim population in Indonesia. Considering, this research is aimed at investigating the influence of innovation management and business strategy on the performance of Islamic banks in Indonesia. Theoritical Framework: This study employs a causal research approach. With a quantitative methodology and cross-sectional data collection, explanatory research was conducted. Exogenous variable in this research is innovation management and business strategy. The endogenous variabel in this reasearch is Sustainable Islamic Bank Performance. Design/Methodology/Approach: This study's unit of analysis is the Islamic banking service industry. The survey includes a sample of 197 Islamic banks., including Islamic Commercial Banks, Islamic Business Units, and Islamic People Financing Banks, according to data from the Financial Services Authority (OJK). The unit of observation or respondent is the management/top management of each of these banks. The number of samples taken was 75. The measurement scale employed an ordinal scale based on the Likert technique. For data analysis, the SEM (Structural Equation Modeling) technique was utilized. Result: Business strategy and innovation management have a significant impact on the sustainable performance of Islamic banks in Indonesia, according to the results of a test of hypotheses. Innovation management has a greater impact on the performance of Islamic banks than business strategy. Research, Practical and Social Implications: The managerial ramifications of this study's findings are that the management of Islamic banks must reconsider and reformulate their business strategies to be more in line with current conditions, as well as develop innovative management in line with the ever-changing technological trends. Originality/Value: The novelty of this study is that innovation and strategy in Islamic Banks are important aspects that empirically influence the sustainability performance of Islamic Banks. Aspects of innovation and strategy are important when managing Islamic Banks so that they can grow and obtain positive profits.

Value proposition design at training & consulting services company in sharia financial banking Lampung Province at CV. Acceleration Indonesia Juara

Purpose: The study aims to identify the causes of the existing business performance gap and design a Value Proposition Design for Training and Consulting Services Companies in the Sharia Financial Sector in Lampung Province at Cv. Akselerasi Indonesia Juara.
 Research methodology: The model of this research is exploration research, which is research that begins to observe phenomena and problems occur and to develop initial ideas about them which then move towards refining the research questions.
 Results: CV Akselerasi Indonesia Juara created a sustainable program to provide training services. Because BPRS likes the service, they don't like it when the service is only limited to the classroom. The ongoing program can be made by providing alumni forums, sharing forums, and even to the ongoing program.
 Limitation: The company, AKIRA, provides training and consulting services to various institutions and companies, including UKMs, and has three divisions: Public Training, In House Training, and CCC (Coaching, Consulting & Co-management).
 Contribution: The company has faced challenges in developing its business due to the COVID-19 pandemic, which disrupted the industry of training and consulting services.

Money Makes The World Go Hot – Climate Litigation Against Banks?

Abstract Many industrial projects with detrimental effects on the environment and the climate require borrowed capital; which brings the financing banks into the spotlight of climate activism. This is not entirely new, and soft law instruments such as the Equator Principles and the unep fi Principles for Responsible Banking have long recognised the financial industry’s responsibility for environmental protection and, more recently, climate protection. As activism is moving towards litigation, this article explores whether financing banks could be successfully sued to omit the financing of a detrimental project, or to pay for protection against climate risks where they have already done so.

Fintech Lending: Threat or Opportunity for Sharia Bank In Indonesia?

Data on the percentage of financing distribution to sharia banks in Indonesia in the last 5 years has experienced quite slow growth compared to the percentage of loan distribution by fintech lending which has experienced very significant growth, reaching 2,390.4% from 2018 to February 2023. The literature shows that there are two opposing views regarding the influence of fintech lending on banking. On the one hand, fintech plays an important role in increasing financial inclusion, while on the other hand fintech also has a major impact on the financial services industry. The aim of this research is to examine the influence of fintech lending on financing at Islamic banks in Indonesia and to analyze the impact of fintech lending on Islamic banks in Indonesia. This study uses a quantitative approach. The type of data used is secondary data taken from the official website of the Financial Services Authority (OJK) in the form of statistical data on sharia banks and fintech lending. The number of samples used was 60 financial report data obtained from sample selection through purposive sampling. The data analysis technique uses descriptive statistical analysis with a linear regression analysis model. The results of this research show that 88.9% of fintech lending has an influence on sharia bank financing in Indonesia. In the sense that fintech lending companies exist as complements or complements to sharia banks in providing financial loans to the public, therefore fintech lending can be an opportunity for collaboration for the sharia banking industry in Indonesia. This collaboration can be carried out using several patterns or models, including cooperation through cross-selling schemes, channeling, references, shadow investors, outsourcing platforms and fintech consortiums.

Role of International Organisation in Shaping the global governance

International organizations play a pivotal role in shaping global governance by fostering cooperation, facilitating diplomacy, and addressing transnational challenges. As influential actors, these organizations, such as the United Nations, World Bank, and International Monetary Fund, serve as platforms for dialogue, negotiation, and policy coordination among nations. They contribute to the development of norms, regulations, and standards, promoting stability and sustainable development on a global scale. Through collaborative efforts, international organizations help address complex issues like climate change, economic inequality, and health crises, thereby influencing the trajectory of global governance and fostering a more interconnected and cooperative world.

Fixed rate versus adjustable rate mortgages: Evidence from euro area banks

Why do residential mortgages carry a fixed or an adjustable interest rate? To answer this question we study unique data from 103 banks belonging to 73 different banking groups across twelve countries in the euro area. To explain the large cross-country and time variations observed, we distinguish between household conditions that determine the local demand for credit and the characteristics of banks that supply credit. As bank funding mostly occurs at the group level, we disentangle these two sets of factors by comparing the outcome observed for the same banking group across the different countries. Local household conditions dominate. In particular we find that the share of new loans with a fixed rate is larger when: (1) the historical volatility of inflation is lower, (2) the correlation between unemployment and the short-term interest rate is higher, (3) households’ financial literacy is lower, and (4) the use of local mortgages to back covered bonds and of mortgage-backed securities is more widespread.

Pengaruh Intellectual Capital Terhadap Kinerja Keuangan pada Bank Pembiayaan Rakyat Syariah (BPRS) di Indonesia dengan Model Value Added Intellectual Capital (VAIC) Periode 2016-2020

Competition in the Islamic banking industry is tight, so the competence of Islamic banking human resources must increase. This needs to be done to increase the lack of resources who have studied and received good education and training, but when they return due to unfavorable environmental factors, the results of education and research be wasted.
 This study aims to determine the effect of Intellectual Capital on Financial Performance in Islamic People's Financing Banks (BPRS) in Indonesia with the Value Added Intellectual Capital (VAIC) Model. There is research data using monthly time series data taken in the 2016-2020 period. Data analysis technique uses PLS (Partial Least Square) with processing using Warp-PLS 7.0 Software.
 The test results using the SEM-PLS approach show that Intellectual capital IB-VACA has a positive and significant effect on the financial performance of Indonesian Islamic banking. By obtaining a path coefficient value of 0.482 with a p value of P

Resilience and spillover effects on bank financing for the private sector development in sub-Saharan Africa

Resilience and spillover effects on bank financing for the private sector development in sub-Saharan Africa

THE IMPACT OF SFAS166/167 ON BANK LIQUIDITY AND LENDING

This study examines whether, and to what extent, SFAS166/167 changed the role of securitization in bank liquidity and lending activities. We compare the sensitivity of on-balance sheet loan growth to the loan portfolio liquidity index proposed by Loutskina [( 2011 ) The role of securitization in bank liquidity and funding management, Journal of Financial Economics 100, 663–684] between affected banks and control banks. We find that SFAS166/167 is significantly associated with a reduction in the use of securitization to enhance on-balance sheet liquidity, consistent with the view that consolidation on balance sheets may render the securitization of loans too costly to be considered an effective source of liquidity. In addition, we find that affected banks with the highest increase in liabilities from consolidating Qualified Special Purpose Entities (QSPEs) experienced a significant decrease in lending activities relative to the control banks. This is likely because consolidating former QSPEs may adversely affect the ability and willingness of banks to engage in securitization and issue new loans. Taken together, our results suggest that SFAS166/167, requiring the consolidation of former QSPEs, led to a decline in the role of securitization as a liquidity management tool in banks and to a significant decline in lending.

Does Financial Literacy Influence Houswife Intention To Use The Islamic Financing? With Trust As A Moderating Variable

Research Aims: This study aims to analyze the effect financial literacy on the houswife intention to use islamic financing with trust as a moderating variable. Methodology: This study involved 358 housewife respondent in 32 Indonesian provinces. The model used was based on the theory of reasoned action development with the partial least squares structural equation modeling as the data processing tool. Research Findings : Housewives' financial literacy influences mothers' intentions to use Islamic bank financing products. Originality: Although numerous studies have concentrated on financial literacy and the use of sharia financing, the behaviour of houswife and the high number of housewife loans to informal institutions concern academics and practitioners. This research can highlight the importance of financial literacy for housewives can avoid applying for loans to informal institutions, so sharia financing can be a suitable alternative. Research limitation and implication: The study discovered that financial literacy with variabel ability, attitude and knowledge affect the intention of houswife to use the Islamic financing. Meanwhile, the trust variable failed to moderate the housewife's ability to use Islamic financing. The trust variable was not successful in moderating the attitude and knowledge of the housewife to use Islamic financing. Meanwhile the trust variable significantly moderates the attitude towards the financing variable with a significance

Platform financing vs. bank financing: Strategic choice of financing mode under seller competition

Third-party sellers on online platforms primarily rely on banks to meet their financing requirements and are often constrained by the lack of sufficient working capital. Online platforms such as Amazon and Alibaba have ushered new dynamics in the e-commerce financing landscape by offering working capital loans to these sellers, thereby directly competing with banks and influencing market competition. This paper analytically studies how the competition between third-party sellers on platforms affects the strategic financing choices of sellers, namely, platform financing (P) vs. bank financing (B). We examine how the financing choice influences sellers’ pricing decisions in the competitive product market. Based on the sellers’ financing choices, four lending modes are possible: BB, PP, BP, and PB. Our analyses provide critical insights on the optimal financing choices and uncover the interplay of pricing, product substitution, referral fees, and production costs. We show that any seller deviating from PP to a hybrid mode (BP/PB) leads to a higher platform interest rate and a lower seller profit. We find that the competing sellers choose a hybrid lending mode when the unit production cost is low. However, the platform always prefers PP, leading to an all-win outcome in the supply chain when the production cost is high. Furthermore, for products with low referral fees and high substitution effect, BP/PB emerges as the equilibrium mode, while for products with low referral fees and low substitution effect, PP is the equilibrium outcome. Interestingly, we find that both sellers may choose bank financing when their working capital levels are high.

Collateral policy of the central bank and corporate financing costs: Evidence from China

This paper proposes a model of collateral policy to study the impact of the expansion of collateral scope by central banks on corporate financing costs. Based on the theoretical model and a quasi-natural experiment in China, this paper empirically tests the effect of the expansion of the collateral scope for Medium-Term Lending Facility (MLF) by the People's Bank of China on corporate financing costs. We find that this loosening of collateral policy in China can significantly reduce the credit spreads for enterprises by 45 bps and the loan financing costs for micro and small enterprises by 71 bps, respectively. After a series of robust tests, the impact of the loose collateral policy on corporate financing costs remains significant statistically and economically.

Data transparency and GDP growth forecast errors

This paper examines the role of data transparency in explaining gross domestic product (GDP) growth forecast errors - the difference between forecasted and realized growth. On average, a one standard deviation increase in the log of a country’s Statistical Capacity Index, a measure of data capacity and transparency, is associated with a decline in absolute forecast errors by 0.44 and 0.49 percentage points for World Bank and International Monetary Fund (IMF) forecasts, respectively. The role of the overall data ecosystem, not just elements related to growth forecasting, is important for forecast accuracy. The study also establishes that forecast errors are large, the Middle East and North Africa region has the largest forecast errors among the world regions, and World Bank forecasts are more accurate and less optimistic than those from the IMF and the private sector.

Juridical Basis of Murabahah Bil Wakalah Contracts at Islamic Banks

The wakalah agreement that appears in financing schemes in Islamic banks becomes a series with the murabahah agreement. This series of contracts then appears in financing in the form of a murabahah bil wakalah contract. The specific purpose of this research is to find out and analyze the juridical basis of the murabahah bil wakalah contract in positive law and Islamic Law in Indonesia. This research is categorized as legal research with a normative juridical method. The normative juridical approach used is the statute approach. The data collection method in this research uses cross methods, namely literature study, observation and interviews, according to the types and sources of data needed. Until now, there are no rules governing murabahah bil wakalah as a unit in Islamic bank financing products, both rules in positive law and Islamic law in Fatwa DSN MUI. Therefore, the juridical basis for murabahah bil wakalah financing comes from the juridical basis for each murabahah contract and wakalah contract, whether from the Law, Regulations of the Financial Services Authority of the Republic of Indonesia, or other laws and regulations, as well as Fatwa DSN MUI.

Analisis Pembiayaan Ijarah Perbankan Syariah

At present there are many Islamic banks that have been established and developed in Indonesia, all Islamic banks compete with each other in making their products, as well as providing the best service to the community (customers) Many products have been operated by Islamic banks, among others: ijarah financing this product is shown to serve the community (customers). And one of the Islamic banking financing products opened to serve and facilitate the many Indonesian people who use ijarah financing. The problem formulation in this study is How is the ijaroh financing mechanism at KOSPPI, How is the suitability of ijaroh financing at KOSPPI with Islamic economic law? The data analysis method used in this research is descriptive qualitative method. In this study there are two things that will be analyzed, namely the Ijarah financing procedure and sharia accounting standards. Data collection used in this research is literature study, namely by reading or taking information from scientific journals, books and also utilizing the internet as a source of information. From the discussion above, the following conclusions can be drawn: that Islamic banking financing products based on lease contracts consist of pure leases and leases that end with the transfer of ownership rights or known as ijarah muntahiya bit tamlik. Ijarah vomia bit tamlik (IMBT) is basically a combination of leasing and buying and selling.

Investor behavior around targeted liquidity announcements

We exploit announcements related to targeted longer-term financing operations (TLTROs) as exogenous shocks in investor perceptions to test recent theories on bank funding liquidity (Ahnert et al., 2019; Liu, 2015). We find that banks with high derivative holdings and more exposed to sovereign credit risk respond better to the announcements, consistent with the view that lower funding costs benefit banks with higher asset encumbrance and located in more vulnerable Eurozone countries. The TLTRO announcements also elicit reductions in short positions on bank stocks relative to stocks of non-financial corporations without impairing their market liquidity. Robustness tests rule out that our results are driven by confounding events and anticipation effects. Placebo tests confirm that the TLTRO announcements are driving the estimated price reactions and changes in short positions.

Research on Internet Finance and SME Financing Model and Risk

The Internet finance industry is expanding quickly, and at the same time, it is closely linked to the growth of small and medium-sized businesses. This study discusses the history of Internet finance, the present state of the sector, its financing model, its role in financing small and medium-sized businesses, and further analysis of the risks associated with its financing model. At the same time, this paper also puts forward management suggestions for small and medium-sized enterprises, as well as ways and means to improve risk management. This paper analyzes the previous literature and data, and it can be concluded that Internet finance is a new form of financial business that makes full use of Internet technology to carry out profound changes in financial business. It refers to the emerging financial model that realizes financing, payment, and information intermediaries by means of Internet technology and mobile communication technology, which is different from the indirect financing of commercial banks and the direct financing of the capital market.

Causality of Bank Financial Performance, Green Bond, CSR, Green Financing Portfolio and CO2 Emissions in Transportation: Evidence from Indonesia

This study aims to identify the causality between bank financial performance measured by Return on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), and Operating Expenses to Operating Income (BOPO) with Green Financing Portfolio and CO2 emissions in the transportation sector. This study uses descriptive quantitative research methods and content analysis of the Sustainability Report of Bank Mandiri, Indonesia for the period 2016 to 2022. In this study, we collected data from Bank Mandiri's financial statements which included information on ROA, ROE, NIM, and BOPO. In addition, we also collected CO2 emission data available from 2016 to 2022. The research sample is Bank Mandiri as one of the state-owned banks in Indonesia. We used purposive sampling technique to select samples that meet the inclusion criteria. The collected data was then analyzed using statistical methods to test the relationship between the variables involved, namely the bank's financial performance (ROA, ROE, NIM, and BOPO), Green Financing Portfolio, and CO2 emissions in the transportation sector. We use content analysis to illustrate the results of Bank Mandiri's financial statements in graphical form. The results of the analysis show that the increase in Green Bond that started in 2016 has a significant impact on the increase in fund allocation for Green Financing Portfolio. This indicates a positive causality between Green Bond and Green Financing Portfolio. In this context, the causality between Green Financing Portfolio and CO2 emissions can be explained through the influence of investment in green technology and sustainable practices. With significant funds allocated through the Green Financing Portfolio, companies and institutions can implement projects that aim to reduce CO2 emissions in the transportation sector. This means that the use of Green Bond as a sustainable funding source has the potential to reduce the negative impact of transportation on the environment.

Determinants of Access to Bank Financing in SMEs in Mexico

Several empirical studies indicate that the lack of financing is one of the main barriers that affects the economic growth of small and medium enterprises (SMEs). The main objective of this investigation was to determine to what extent the economic sector, the enterprise size, the characteristics inherent to the enterprise, the legal status, the variables linked to the performance of the enterprise, and the attributes of the owner influence the access to the bank financing of SMEs in Mexico. Using a discrete-response probit regression model, the impact of enterprise characteristics on the probability of obtaining a bank loan was determined. The data collected are from the Enterprise Surveys of Mexico, carried out by the World Bank. The sample of 1480 enterprises is representative by enterprise size, by economic sector, and by region. The research has a quantitative approach with a correlational scope, and a nonexperimental and transectional design. One of the main results highlights that the determinants with the greatest influence on access to bank financing are: the age, the small size, foreign participation, and the manufacturing sector. These results are consistent with other empirical studies, as well as with the pecking-order theory and the financial life-cycle theory.

The magnifying role of the banking sector during depressions

Is there a magnifying role of the banking sector during depressions? How can a financial perturbation, possibly small-sized, create large impacts on output and enduring recessions? What is the role played by the massive stock of due claims brought about by a financial crisis? We address these questions by putting forth a general equilibrium model endowed with a banking system in which due claims – henceforth named due loans – and occasionally binding credit restrictions coexist and their effects reinforce each other. Under “bad” financially-driven perturbations due loans hike and the concomitant opportunity, holding, regulatory, and impairment costs trigger sizable increases in external finance premia and promote credit restrictiveness. Firms’ net worth collapses as they are called in to finance banks’ problems, and their ability to invest and accumulate capital becomes compromised. The amplification effect can be very large: the full-fledged banking model may only require a perturbation of one-tenth the size of a plain vanilla version to deliver the same output drop at the trough. Effects are non-linear, since credit restrictions remain slack on the boundary of the steady state, and asymmetric, since these restrictions play no role whatsoever under “good shocks.”