Bank Group Research Articles

DRIVERS OF PROFIT CONVERGENCE IN EURO AREA BANKS

Since there are persistent concerns about the viability of euro area banks, we analyse their profit recovery in the post-crisis period, applying the concepts of β and σ convergence as well as the Phillips and Sul clustering algorithm. The results are consistent with ROE convergence, but to different levels across bank groups. The clustering analysis reveals the existence of banks with solid performance, but also a group of persistent underperformers. We find that non-interest income and operational efficiency emerge as crucial discriminating factors to explain the banks’ relative post-crisis ROE dynamics. Supervisors and bank managers are advised to monitor and reinforce bank business model viability.

Ứng dụng công nghệ trong quy trình cho vay của các ngân hàng thương mại Việt Nam

Adapting to the digital transformation trend, Vietnamese commercial banks in recent years have quickly caught up and implemented various software and applications to support the lending process. However, there are not many studies that focus on analyzing the detailed activities and the level of digitization in the lending process at Vietnamese commercial banks. Therefore, this article looks at the current situation of technology application at each stage of the lending process for three groups of commercial banks (large scale, medium sized, and small sized) and for two different customer groups (individuals and businesses). The research utilizes a survey method to collect data from employees currently working at commercial banks. The descriptive analysis results show that the level of technology application in improving the lending process is uneven across stages (primarily focusing on the document creation and decision making stage). Moreover, digital transformation in the lending process is implemented more rapidly in medium sized banks and primarily focuses on individual customers.

Optimizing Saudi Bank Stock Performance Through Response Surface Methodology Approach

One of the most effective methods for developing countries to increase their revenue is through the implementation of value-added tax (VAT). Nevertheless, market capitalization (MC) and trading volume (TV) are potent indicators of stock performance (SP). The objective of this paper is to determine the optimum VAT, TV, and MC on SP of Alinma Bank (ANB) and Samba Financial Group (SFG) company in Saudi Arabia, for the first time. The event study method was implemented to determine the abnormal return for each event within a specific timeframe of 15 days. Response Surface Methodology (RSM) was employed to optimize the results. On the 4th day prior to the 5% applied VAT, the model predicted an optimal result for ANB company with 2.98% abnormal return, with a 0% VAT, 37.70% TV, and a 3.16% MC. In contrast, the model anticipated an optimal outcome for the SFG company with 2.55% abnormal return at 5% VAT, 168.93% TV and 9.85% MC on the 4th day prior to the 15% VAT raise. Additionally, this research determined that there is a correlation between the variables, which VAT has a higher impact than MC and TV on SP.

Brazilian banks risk-taking and systemic risk

This study analyzes the marginal contribution of Brazilian banks to the systemic risk. The objective is to identify whether banks that share common characteristics similarly contribute to systemic financial shocks. First, the risk assumed by a sample of listed banks is measured from the accounting, market, and regulatory perspectives. Sample banks were segregated using an unsupervised clustering model. The results were compared with the methodology currently used by the Central Bank of Brazil to segment the banking institutions. Finally, we evaluate the banking groups’ marginal contribution to systemic financial risk using ΔCoVaR. These results suggest that institutions that share similar characteristics in relation to their risk profiles behave similarly during times of greater market stress. Notably, size, geographic diversification, and liquidity were common attributes among banks contributing significantly to systemic risk during financial crises. This study advances the field of banking finance by introducing an analytical framework that goes beyond the traditional focus on bank balance sheet size, aligning with international standards for evaluating the systemic importance of financial institutions.

Assessing the impact of COVID-19 management on the workload of human resources working in India’s National Tuberculosis Elimination Program

BackgroundIn 1993, WHO declared tuberculosis (TB) as a global health emergency considering 10 million people are battling TB, of which 30% are undiagnosed annually. In 2020 the COVID-19 pandemic took an unprecedented toll on health systems in every country. Public health staff already engaged in TB control and numerous other departments were additionally tasked with managing COVID-19, stretching human resource (HR) capacity beyond its limits. As part of an assessment of HR involved in TB control in India, The World Bank Group and partners conducted an analysis of the impact of COVID-19 on TB human resources for health (HRH) workloads, with the objective of describing the extent to which TB-related activities could be fulfilled and hypothesizing on future HR requirements to meet those needs.MethodsThe study team conducted a Workload Indicators and Staffing Needs (WISN) analysis according to standard WHO methodology to classify the workloads of priority cadres directly or indirectly involved in TB control activities as over-, adequately or under-worked, in 18 districts across seven states in India. Data collection was done via telephone interviews, and questions were added regarding the proportion of time dedicated to COVID-19 related tasks. We carried out quantitative analysis to describe the time allocated to COVID-19 which otherwise would have been spent on TB activities. We also conducted key informant interviews (KII) with key TB program staff about HRH planning and task-shifting from TB to COVID-19.ResultsWorkload data were collected from 377 respondents working in or together with India’s Central TB Division (CTD). 73% of all respondents (n = 270) reported carrying out COVID-19 tasks. The average time spent on COVID-19 tasks was 4 h / day (n = 72 respondents). Multiple cadres highly instrumental in TB screening and diagnosis, in particular community outreach (ASHA) workers and CBNAAT/TrueNAAT laboratory technicians working at peripheral, block and district levels, were overworked, and spending more than 50% of their time on COVID-19 tasks, reducing time for TB case-finding. Qualitative interviews with laboratory technicians revealed that PCR machines previously used for TB testing were repurposed for COVID-19 testing.ConclusionsThe devastating impact of COVID-19 on HR capacity to conduct TB case-finding in India, as in other settings, cannot be overstated. Our findings provide clear evidence that NTEP human resources did not have time or essential material resources to carry out TB tasks during the COVID pandemic without doing substantial overtime and/or compromising on TB service delivery. To minimize disruptions to routine health services such as TB amidst future emerging infectious diseases, we would do well, during periods of relative calm and stability, to strategically map out how HRH lab staff, public health resources, such as India’s Health and Wellness Centers and public health cadre, and public-private sector collaboration can most optimally absorb shocks to the health system.

Multilateral financial flows and state–business relations in Morocco

ABSTRACT Political economy explanations of regime resilience often look at domestic support bases and patronage systems. Foreign aid to the state is seen as a direct form of propping up regimes. This article attempts to track the flow of foreign assistance to one part of the domestic support base of a regime, namely the economic elite, thereby making a connection between domestic explanations and foreign support explanations of regime resilience. The core argument of this article is that multilateral financial flows from Western dominated institutions may preserve regimes in the Middle East and North Africa. Multilateral flows from the World Bank Group, the European Investment Bank, and the European Bank for Reconstruction and Development went to regime insiders and thus potentially strengthened existing economic elites during the time in which the former Islamist opposition party led a coalition government. I draw on the linkage dimension of Levitsky and Way’s model to show the importance of specifying the nature and destination of multilateral financial ties with Morocco’s private sector. This contribution helps us link the international dimension to the domestic political economy. It thus potentially adds to our understanding of monarchical regime resilience post-Arab Spring by highlighting how multilateral financial institutions support an important part of the economic elite.

COVID-19 PANDEMIC; IMPACT ON NET INTEREST MARGIN OF INDONESIAN BANKING INDUSTRY

The study explores factors affecting Net Interest Margins (NIM) in Indonesia's Core Capital Bank Groups. Using data from Jan 2021 to Mar 2022 and the Error Correction Model, it finds negative short-term correlations between BOPO and LDR with NIM in KBMI 1 and positive long-term correlations with BI Rate. KBMI 2 exhibits negative short-term correlations between inflation and LDR with NIM. KBMI 3 shows negative short-term correlations with Covid-19, LDR, and BOPO with NIM. KBMI 4 experiences negative impacts from BOPO, Covid-19, and LDR on NIM in both short and long terms. The study emphasizes the importance of managing operational costs and credit distribution for NIM stability in the short term and highlights the significant influence of Bank Indonesia's benchmark interest rate policy on NIM in the long term, requiring careful adjustments to prevent excessive fluctuations.

A Fair Investment Environment: The Impact of the Shadow Economy, the Harshness of the Courts Against Corrupt Officials, Tax Pressure and Restrictions on Business

Creating a fair investment environment is crucial for economic growth and attracting domestic and foreign investors. The purpose of this study is to find out how the shadow economy, harshness of courts against corrupt officials, tax pressure, and restrictions on business affect the fair investment environment. Therefore, two economic-mathematical models are built using multiple least squares regression analysis, in which the outcome variables are: in model 1 ‒ control over corruption, which is a component of the Global Governance Index; in model 2 ‒ the European Business Association’s Investment Attractiveness Index. The composition of the factor attributes in both models is the same: Corruption Perceptions Index by Transparency International; level of shadow economy according to the Ministry of Economy of Ukraine; the number of criminal cases in courts under the article “Acceptance of an offer, promise or receipt of an undue benefit by an official” using open data from the Unified State Register of Court Decisions; total tax and fee rate, which reflects taxes and mandatory payments as a percentage of commercial profit, determined by the World Bank Group methodology; assessment of “Starting Business” by Doing Business, according to the methodology of the World Bank Group. The modeling is based on the example of Ukraine for 2012‒2022. Calculations based on Model 1 show that restrictions on business have the greatest impact on the corruption control indicator (a 10% reduction in restrictions leads to a 3-point reduction in the need to control corruption), the shadow economy and tax pressure have an average impact (a one-point increase in them will increase the level of corruption by 0.4 points). The harshness of the courts against corrupt officials has the least impact (most corruption cases in Ukraine do not reach the courts). Calculations based on Model 2 show that the complexity of starting a business exerts the greatest impact on investment attractiveness (if it decreases by 15%, investment attractiveness will increase by almost 1 unit). The average impact is exerted by the increase in the shadow economy (a 10% increase in the shadow economy leads to a rise in investment attractiveness by 0.4 units). The insignificant impact is exerted by the tax burden and judicial punishment of corrupt officials.

Governing Complexity in Complex Times: The HDP Nexus and the Role of the UN, the EU and the World Bank

ABSTRACT Based on the work conducted with a Nexus-centred network of scholars and practitioners (HDP LAB SYNEX4 Future), an overview is offered of the literature on regime complexity to analyse origins and evolution of the Triple Nexus multilateral approach to the governance of compound humanitarian-development-security crises. The identification of the main institutional features of the UN-orchestrated Nexus policy concept highlights its potential as an innovative attempt at global experimentalist governance. This analysis of the nexus-based approach of the United Nations (UN), the European Union (EU) and the World Bank Group (WBG) in three pilot countries – Cameroon, Myanmar and the Democratic Republic of Congo (DRC) – demonstrates that, while coordination has increased, the agency of local communities remains limited and major impediments hinder the inclusion of the peace dimension, an area where separate initiatives by non-Western regional organisations have also stalled. Progress will necessarily depend on the ability of Nexus actors to develop its bottom-up and participatory components, and to improve coordination within the group of like-minded donors who share a clear commitment to a human rights-based, inclusive and prosperous future.

Bank Competition, Loan Portfolio Concentration and Stock Price Crash Risk: The Role of Tone Ambiguity

AbstractWe examine the association between loan portfolio concentration, competition and stock price crash risk in the US banking industry. We find that during economic downturns, banks with poorly diversified loan portfolios that operate in competitive markets are more likely to crash. Importantly, we show that this link is channelled through aggressive earnings management and ambiguous annual reports. Therefore, managerial ambiguity can serve as an early warning signal of information obfuscation, which can eventually lead to stock price crashes. As a quasi‐natural experiment, we use the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018. This policy lowered the regulatory requirements and oversight for a specific group of large banks. The results of a difference‐in‐differences analysis support our baseline findings and add to the ongoing debate on the roots of the 2023 banking crisis. Therefore, our findings can be informative to market participants, regulators and policy makers.

Infant and child mortality in Afghanistan: A scoping review.

Since 1990, global child and infant mortality rates have typically stabilized or decreased due to improved healthcare, vaccination rollouts, and international funding. However, Afghanistan continues to face the highest child and infant mortality rates globally, with 43 deaths per 1000 live births. This study aims to examine the factors contributing to this high mortality rate and propose interventions to address the issue. A comprehensive literature search was conducted using databases such as Google Scholar and PubMed, focusing on articles published in English within the last 10 years (2013-2023). The search terms included "Child mortality," "Infant mortality," "SIDS," "COVID-19," and "Afghanistan." Original studies, systematic reviews, case studies, and reports meeting the inclusion criteria were selected for analysis. Additional sources from organizations such as UNICEF, the World Bank Group, WHO, and EMRO were also reviewed. The study findings reveal significant challenges contributing to Afghanistan's high infant and child mortality rates. These challenges include birth defects, preterm birth, malnutrition, sudden infant death syndrome (SIDS), traumatic injuries, fatal infections, infanticide, and abuse. The ongoing conflict, insecurity, and humanitarian crises further exacerbate the situation, leading to increased child casualties. Despite efforts by international agencies like UNICEF to provide vaccines and maternal education, the infant mortality rate remains high. In conclusion, Afghanistan's child and infant mortality rates are of significant concern, and it is imperative that action be taken to reduce the incidence of child and infant mortality rates.

Integrating Behavioral Economics In-sights in Development Programs: The Case of the World Bank Group Model

The study aims to discuss the concept of behavioral economics, identify its connections with Islamic economics, and explore mechanisms for employing behavioral economics insights in development efforts. It presents a proposed framework for integrating behavioral economics perspectives into the operations of the Islamic Development Bank Group. To achieve the study's objectives, a descriptive-analytical approach was employed, examining various international experiences in integrating behavioral economics into development programs, with a focus on the experience of the Behavioral Economics Unit at the World Bank Group. The study's results confirm the importance of leveraging behavioral economics insights and their practicality in development efforts. They contribute effectively to understanding human behavior, motivating desired behaviors and choices, enhancing the efficiency of development policies, and maximizing their impact. The study recommends that the Islamic Development Bank Group enhance its developmental policies by establishing a Behavioral Economics Department within the Economic Empowerment Program.

ORTHODOX-INNOVATIVE EXPOSITION OF FINANCIAL MECHANISMS OF THE POST-WAR RECONSTRUCTION OF THE ECONOMY OF UKRAINE

The article is devoted to the study of modern financial mechanisms, which in the medium term can be effectively applied to rebuild the economy of Ukraine after the end of the war. The authors emphasize that the orthodox-innovative exposition of financial mechanisms represents a flexible and adaptive approach capable of effectively responding to current challenges, threats and needs of the country in the process of its reconstruction.The main focus of the article is on the study of such aspects as: outlines of the main challenges faced by the Ukrainian economy in the conditions of the war period, including the destruction of infrastructure, loss of production capacity and a decrease in the standard of living of the population; disclosure of traditional financial approaches, such as international loans and grants, that can be applied to the reconstruction of the economy; identification of modern innovative financial instruments, including “green” bonds, blockchain, crowdfunding and other financial instruments in order to provide additional sources of financing and increase trust on the part of international partners and donors; determining the role of international financial organizations, institutions and donors in the process of reconstruction of our state. An analysis of the assessment of the damage caused in Ukraine by the russian federation was carried out, which is based on the reports of the project “russia will pay” KSE Institute with the support of international partners and organizations and the report on the updated joint assessment of damages and needs that arose as a result of the invasion of the russian federation in Ukraine (Rapid Damage and Needs Assessment, RDNA3, developed by the Government together with the World Bank Group, the UN and the European Commission. The authors carried out a SWOT analysis, which made it possible to assess the strengths and weaknesses, opportunities and threats (risks) associated with the integration of orthodox and innovative financial mechanisms in the recovery process economy of Ukraine after the war. The article focuses on the Matrix of reforms – a huge plan of changes that systematizes and integrates reforms, includes officially approved recommendations and conditions under macro-financial support programs, in particular: “structural beacons” of the IMF, Plan of Ukraine under the Ukraine Facility program, documents of the European Commission, conditions of the World Bank (Development Policy Loan, DPL). Also, within the framework of the study, an analysis of the consensus forecast of the Ministry of Economy of Ukraine “Ukraine: Scenarios of Restorative Growth” was carried out to provide and assess risks for 2024–2027.

Sustainable Finance and Economical Profitability in Africa

African continent is facing a considerable demonstration of financial institutions and especially bank group which are dominating the banking environment. In the absence of developed financial markets, these bank organisations are at the centre of the economic activity. They are even the main financing source for companies, States, households and represent about 80% of African continent assets. This situation is encouraged by the organisational structure of those banks (subsidiary companies, representative offices, affiliated banks and branches) which permit a better representatively at the level of the continent. This research analyses the influence of sustainable finance principles on the economical profitability of 42 banking groups implanted in African continent between 2010 and 2020. Thus, data used are extracted from annual reports and were analysed through a time cross-sectional regression corrected for any latent heteroscedasticity and serial autocorrelation. At the end, the findings of this research are plural. firstly, green credits and transparency have a non-considerable impact on economical profitability. secondly, employee shareholding and gender diversity have a negative influence on economical profitability. thirdly, corporate environmental responsibility is negatively and highly correlated to bank economic profitability. Finally, philanthropy positively and highly affects economical profitability. One can therefore conclude that the profitability of sustainable finance is mitigated in Africa.

Investigating Performances of Commercial Banks in the UK by Using Grey Relation Analysis

This study employs Grey Relational Analysis to assess the financial performance of commercial banks in the UK banking system. The main aim of the study is to identify influential indicators that have an impact on the banks’ performance. Identifying influential indicators helps banks determine strategies, capitalize on strengths, address weaknesses, and assure stakeholders of their resilience and profitability in dynamic markets. Using data from 2020 to 2022, five categories—profitability, interest ratio, liquidity and funds, asset quality, and capital adequacy—were analysed. This period was chosen to reveal the impact of Covid-19 on the performance of banks in the UK. Barclays plc consistently emerges as a top performer, showcasing robust financial management. Nationwide Building Society maintains stable performance with strengths in asset quality and funding. Lloyds Banking Group demonstrates stability with good profitability and capital adequacy. Santander UK plc exhibits fluctuating performance. NatWest Group plc shows moderate fluctuations, while HSBC Holding plc and Standard Chartered plc face specific challenges. According to the results of this study, Grey Relational Analysis (GRA) is a useful tool that aids strategic decision-making and risk management. It benefits the banking sector by supporting profitability, stability, and performance. Effective interest rate management is a significant factor in maintaining stability during market fluctuations. High asset quality strengthens bank performance, while efficient liquidity management is crucial for the sustained success of banks.

The impact of cyber enforcement actions on stock returns

This paper investigates the impact of cyber enforcement actions on stock returns for a sample of US financial listed entities, by taking into account traditional banks versus either fintech banks or fintech/non-fintech shadow banks. We provide evidence of a less favorable market reaction for the last group relative to the group of traditional banks, consistently with the view that traditional banks are less technology-oriented and therefore they should be less subject to cyber enforcement actions than fintech and shadow banks.

Does gender equality matter? Gender responsive corporate procurement efforts of inter-governmental organizations

Public sector organizations, particularly intergovernmental organizations (IGOs), are expected to integrate gender-responsive practices into their operations to promote gender mainstreaming and diversity. Such initiatives can also be incorporated into these IGOs' corporate procurement endeavors since they have more control over their corporate spending, and it can directly affect the socioeconomic development of the stakeholders involved. In the following research, the gender-responsive procurement (GRP) practices of four major development-focused IGOs - the European Bank for Reconstruction and Development (EBRD), UN Women, the Asian Development Bank (ADB), and the World Bank Group (WBG)—are assessed. Utilizing in-depth key-informant interviews and interpretive document analysis, case studies are developed to log the goals, efforts, policies, etc. of the selected IGOs towards gender-responsive corporate procurement. Lastly, this study also demonstrates a summary of various actionable tools and approaches utilized by these organizations, thereby expanding the research area on GRP to encompass the efforts of IGOs.

Assessment of households’ food consumption strategies during the COVID-19 pandemic in Ilorin-South LGA, Kwara State, Nigeria [Commentary

Introduction The effects of the COVID-19 pandemic on the agro-food sector included significant effects on existing household food dynamics and tested the resilience of the food system as a whole. The pandemic also negatively affected livelihoods as it resulted in the loss of jobs and, thus, economic hardship (Aday & Aday, 2020). This was especially true in the developing world, where the numbers of vulnerable households were high (World Bank Group, 2022). The study on which this commen­tary is based was conducted in 2022 and focused on assessing the food consumption strategies adopted by households in Ilorin-South Local Government Area, Kwara State, Nigeria, during the COVID-19 pandemic in 2020. . . .

The impact of relationship marketing on achieving customer value, an analytical study on a group of private Iraqi banks

The impact of relationship marketing on achieving customer value, an analytical study on a group of private Iraqi banks

Banking competition in Indonesia: does Fintech lending matters?

PurposeThis paper aims to examine how the rise of financial technology (Fintech) lending affects bank competition. Moreover, this study also identifies the structure of Indonesian commercial banking sector and the different behaviour of competition among bank groups (based on their size, type and ownership) and the joint impact of COVID-19 due to the rise of Fintech lending.Design/methodology/approachUsing an unbalanced panel data set of 118 commercial banks in Indonesia over the period 2018–2022, both static panel and 2SLS/IV data analysis were used and found that random effect model is the best model.FindingsThe results show that the Indonesian commercial banking sector can be considered as monopolistic competition. Moreover, using the Lerner index reveals that the entry of the Fintech lenders increases bank competition. Furthermore, there were different responses to the impact of Fintech lending on bank competition among state-owned banks, private banks, regional development banks and foreign banks. Greater efficiency and stability lead to greater market power. In the meantime, higher level of asset growth, capitalisation and cost-to-income ratio increase the competition. Lastly, higher bank credit growth and lower inflation boost overall bank competitiveness.Practical implicationsThis study highlights some policy recommendations for commercial banks to be aware of the coming of Fintech lenders because they have started to increase the market competition. The government should create a more collaborative ecosystem between banks and Fintech lending to anticipate unhealthy competition.Originality/valueThis study will contribute to the literature by expanding the determinants of bank competition by considering the rise of Fintech lending in the market.