International Banking Sector Research Articles

The Effects of Working Capital Management on Firms’ Efficiency: Case of Turkish and Zimbabwean Commercial Banks.

This research studies management of working capital and its impact on commercial bank efficiency in Zimbabwe and Turkey. The study examined the financial statements of 10 banks from each country between 2009 and 2022. The research evaluated performance of banks using return on asset (ROA) as well as return on equity (ROE) as efficiency indicators. Working capital was assessed through the current ratio, current ratio, and total cash ratio, while bank size and leverage were considered as control variables. Correlation analysis, estimation equations, and regression models were used to examine the data, which included pooled cross-sectional and time series data, using SPSS (version 20.0). The data demonstrated a favourable and substantial association between ROE and the current ratio, demonstrating that adequate management of working capital has a beneficial impact on the banks’ profitability. A negative correlation, in contrast, between current ratio and ROE was noted, implying a balance of profitability and liquidity. Furthermore, no statistically significant association was seen between cash payment ability, total cash ratio, and ROA. However, a significant negative correlation was identified between the current ratio and ROA. Comparing the two countries, Turkish banks demonstrate superior liquidity management, potentially attributed to their adherence to the Basel III reform guidelines. The study recommends that Zimbabwean banks adopt similar measures to enhance their competitiveness in the international banking sector. In conclusion, the research emphasises the significance of good management of working capital in maximising bank efficiency. The findings provide valuable insights for policymakers and practitioners in the banking industry, urging them to implement liquidity management strategies for sustained success.

Examine the level of environmental, social and governance disclosure in sustainability report – a study of the Indian banking sector

Purpose Sustainable development (SD) is widely acknowledged as the center around which all development efforts should revolve. Banking is a crucial component of SD, and the adoption of sustainable banking practices by various banking institutions is a powerful catalyst for its achievement. This paper aims to investigate the level of adoption of environmental, social and governance (ESG) indicators in India and the extent to which financial institutions use these strategies. In addition, the banks have been classified according to their sustainable banking performance and showing a relationship between ESG and sustainability. Design/methodology/approach An ESG framework has been developed for the Indian banking system that focuses on the behavior of banks. The evaluation of literature helps to identify the gaps in particular frameworks for analyzing sustainable banking practices in developing nations because of the variation in economic criteria between developed and developing countries. An attempt to construct a common framework for measuring the banking sector’s sustainable efforts has been done in the past. Specifically in India, where the social and environmental dimensions of sustainability are of equal importance to governance indicators, these studies fall short of providing relevant indicators. Multiple financial reports, nonfinancial reports, corporate social responsibility reports and business responsibility reports of this sector were analyzed using content analysis techniques against ESG indicators for sustainability attainment. Findings The result of this study shows that both the sectors are disclosing their environmental indicators more as compared to other dimensions. While the analysis says that private companies are going better than public companies in terms of disclosing their ESG indicators. As compared to the international banking sector, adoption of Global Reporting Initiatives standards, United Nations Environment Programme Financial Initiatives (UNEP FI), Green Credit Policy and Equator Principles (EP) is near to the ground in India. IDFC bank is the only entity that started implementing EP practices and Yes bank also is doing a wonderful implementation of the green policies and is the signatory to UNEP FI. Practical implications The current state of sustainable banking in India is reflected in the implementation of the proposed framework. To better integrate sustainability problems into banking, this study provides helpful information for banks and other stakeholders. In addition, this study corrects the lack of research in the Indian context on sustainable banking. Originality/value To the best of the authors’ knowledge by far, this is one of the prime studies to inspect the degree of ESG disclosure by the Indian banking sector in their sustainability report.

The Effect of Cryptocurrencies’ Growing on the Value Relevance and Financial Performance of the International Banking Sector

The Effect of Cryptocurrencies’ Growing on the Value Relevance and Financial Performance of the International Banking Sector

The Effect of Cryptocurrencies’ Growing on the Value Relevance and Financial Performance of the International Banking Sector

The Effect of Cryptocurrencies’ Growing on the Value Relevance and Financial Performance of the International Banking Sector

The Implications of the Russia-Ukraine Conflict on International Banking

This study analyzes the implications of the Russia-Ukraine conflict on the international banking industry. The study establishes that the economic sanctions imposed on Russia have gravely affected the international banking sector. Primarily, the study highlights that the US government implemented a sanction that prohibits the Central Bank of Russia from using the US dollar for payments. This move has rendered all the reserves by the Russian government and its citizens, which are kept in US dollars worthless and inaccessible, leading to huge losses for domestic and international banks. Moreover, this study outlines that banning Russian financial institutions from using SWIFT has limited the financial payments that are being completed in the global banking sector between Russian consumers and companies, and other merchants across the world. This study also establishes that the withdrawal of services by Visa, MasterCard, American Express, and Paypal from the Russian economy as a protest against Russia’s invasion of Ukraine has led to a decline in revenues for international banks. As a measure to mitigate the adverse implications of economic sanctions on sovereign states in the future, the study suggests the adoption of diverse global payment systems such as CIPS and SPFS, which can cushion the international banking industry against the potential adverse effects of being denied the right to use the world's dominant currencies and the SWIFT messaging system to make payments.

Глобальные системно значимые банки: все еще угроза для финансовой стабильности?

The global financial crisis of 2007–09, followed by sweeping overhaul of international banking regulation, urged financial regulators to apply a tailored supervisory regime to global systemically important banks (G-SIBs). This approach was caused by exacerbation of the G-SIBs’ systemic risks and their transmission during macro level instability. The size of G-SIBs, the extent of their market power, and the heterogeneity of their operating models resulted in their dual role in systemic stress: being a source of systemic risks for the macro level, G-SIBs are at the same time transmitters of crisis developments to the micro level, hence increasing their own exposure to risks. Under these circumstances, the objectives of the post-crisis recovery required a revision of regulatory priorities by shifting them from G-SIBs’ profitability to G-SIBs’ stress resilience through the application to them of more stringent capital adequacy standards and liquidity requirements, which ultimately contributed to G-SIBs’ insusceptibility to external shocks. At the same time, the G-SIBs’ role in exacerbation of systemic stress remains uncertain due to the unresolved issues of the G-SIBs’ systemic importance. Accordingly, the crisis and liquidity dilemmas remain unresolved. Given the high level of G-SIBs interconnectedness in the international financial area, their dysfunction can provoke a domino effect of insolvency and bankruptcies in the international banking sector. Based on 2011–21 statistics for all G-SIBs included in the annual lists of the Financial Stability Board (FSB), we found certain decline in G-SIBs’ systemic risks, which is attributable to further strengthening of their market discipline. This proves that international regulatory policy is on the right track. We also found that the stress resilience of G-SIBs, a product of the application of Basel III capital surcharge buffers and the total loss-absorbing capacity (TLAC) standard, significantly contributed to financial stability at a level sufficient not only for the integrity of G-SIBs’ performance during the COVID-19 pandemic, but also for minimization of the risk of collapse of the banking systems that prevented the transformation of the related shocks and instability into an economy-wide crisis. Nevertheless, the post-crisis regulatory reform failed to contain the systemic importance of G-SIBs, mostly due to the lack of supervisory tools and techniques in reduction of the negative effects of the G-SIBs’ international interconnectedness.

Panel Data Analysis to Identify the Factors Affecting Capital Adequacy Ratio of Deposit Banks

Capital adequacy ratio serves as a basic indicator linking current equities of banks to the amount of risk that they can undertake. Therefore, it is taken into consideration while evaluating banks and expected to be at a normal level. According to the Basel I criteria published by the Basel Committee in 1988 for the international banking sector, capital adequacy ratio as “Total Capital / Credit Risk” should be at least 8%. Basel I Criteria began to be implemented in Turkey in 1992. In this process, it was decided that capital adequacy ratio would be implemented as 8% starting from 1998 in Turkey. The purpose of this study is to identify the factors affecting the capital adequacy of state-owned, private and foreign deposit banks operating in Turkey between 2009-2019. The result obtained from the analysis has revealed that the established model is significant. The ratio of independent variables for explaining the dependent variable is 36%. The independent variable OME has a statistically significant and positive effect on the dependent variable at 1% significance level.

الجامعة المستنصرية / كلية الادارة والاقتصاد

The recent technological developments and innovations that have taken place at the international level have led to a revolution in the world of information and communications, and this is one of the most important features of the modern era that affected society and individuals began to deal on its basis because it harnesses modern technologies to give individuals new options that reduce time and effort and reduce the cost, and thus what I produce This development affected various economic, legal, social and cultural sectors, and since the banking sector is one of the most important economic sectors, therefore,it was affected by this development and this appeared through the development of traditional payment methods and their conversion to electronic payment methods. The Iraqi banking sector has witnessed, after the year 2003, an openness to the outside world through the use of modern banking technologies in providing services to customers in order to keep abreast of developments and developments in the international banking sector. Thus, Iraqi banks have sought to develop their services through the use of information technologies and the application of electronic payment systems and means in order to diversify the banking services it provides and to create new services as well as to increase the spread of banking services in addition to increasing the efficiency and effectiveness of banking work and increasing its profits, Thus, the research section was divided into three sections, as the first topic dealt with the nature and types of electronic payment methods. As for the second topic, it touched on the main components of the project to develop and modernize the payment system in Iraq. In the third topic, the factors affecting the spread of electronic payment methods in Iraq were discussed.

Sovereign risk and asset market dynamics in the euro area

This paper studies the behavior of euro area asset market co-movements during the period 2010–2014, through the lens of a DSGE model. The economy is a two-country world consisting of a core and a periphery and featuring an international banking sector, international equity markets, home bias in sovereign bond holdings, and sovereign default. The periphery is buffeted by a sovereign risk shock, whose process is estimated from the data. The model accounts successfully for the divergence in core-periphery correlations between stock and sovereign bond returns. The simulation results indicate that the sovereign risk shock explains 50% of the increase in the sovereign spread and of the decrease in global investments, and 7% of the decrease in global output during the sovereign debt crisis.

Comparing the Influence of Green Credit on Commercial Bank Profitability in China and Abroad: Empirical Test Based on a Dynamic Panel System Using GMM

This study establishes a dynamic panel model for 12 Chinese-listed commercial banks and seven international commercial banks. More specifically, it examines the impact of green credit on the profitability of commercial banks and the differences between China and other countries while using the generalized method of moments. The research shows that the Equatorial Principles project-financing ratio of international banks positively affects bank profitability, while the ratio of green credit for Chinese commercial banks is inversely related to their profitability. Further, a comparative study of China and other countries highlights that the green credit business is at significantly different stages in China and the rest of the world. This study also finds that the profitability of China’s banking sector is positively affected by asset size, management expense ratio, cash ratio, and GDP growth rate, in addition to the common influencing factor of non-performing loan ratio, whereas asset size and capital adequacy ratio negatively affects the international banking sector. Drawing on these empirical conclusions, this study offers suggestions for the further development of green credit in Chinese commercial banks.

Correlation and spillover effects between the US and international banking sectors: New evidence and implications for risk management

This paper quantitatively examines return transmission and volatility spillovers between banking sector stocks in the US and eight other countries by applying our newly extended VAR-DCC-MEGARCH-M model with asymmetric spillovers and Student-t or skew-t errors. Our investigations clarify almost unidirectional stock return transmission from the US banking sector to all other eight international banking sectors. In addition, we also uncover bidirectional volatility spillovers between the US and other eight international banking sector stocks, which are all tied to the leverage effect. Moreover, using the dynamic conditional variances and covariances from our extended model, we derive the time-varying optimal hedge ratios and optimal portfolio weights. These analyses reveal that, except for such extraordinary periods as during financial crises, we can hedge the US banking sector stocks with other international banking sector stocks, and that well-balanced portfolios of the US and other banking sector stocks are optimal. Furthermore, additional analysis using gold, silver, and platinum futures reveals that we can hedge international banking sector stocks with precious metal futures highly effectively, and that well-balanced portfolios of banking stocks and precious metals are optimal. Based on the results from our analyses, this paper derives many significant interpretations and implications for financial and systemic risk management.

Are the Islamic Banks Really more Profitable than the Conventional Banks in a Financial Stable Period?

The international banking sector is dominated by the conventional banks but the global market share of the Islamic banks is increasing gradually. This study determines which model maximizes a bank’s profitability in several heterogeneous contexts and over a financial stable period (2010-2018). Most previous studies examined banking profitability in commercial conventional and Islamic banks providing a limited literature. We retained three categories for each type of banks (commercial, investment and universal) because of the predominance of these categories in the money market. Within the framework of this study, two samples were taken from two reference populations. Basic populations were composed of all active conventional and Islamic banks existing in the selected countries. The choice of the banks is limited to the countries whose banking structures incorporate simultaneously the two types of banks independently of the proportion of each system in each country banking market. We then reduced the size of each population focusing on qualitative and quantitative filtering criteria, so that each conventional bank had its Islamic equivalence in terms of capital and size in the same country. This restriction reduced the sample size to 63 large banks for each type. The two banks’ samples were selected from sixteen countries and were listed in different stock exchanges around the world. Consequently, the empirical results showed that the conventional banks were more profitable than the Islamic banks during the period of financial stability.

Market orientation of Islamic banks in the UAE: an empirical examination

Market orientation of Islamic banks is an area of optimal managerial relevance that has not been subjected to a rigorous examination in the literature. Because market orientation addresses how organisations adapt or should adapt to their environment to stay competitive, Islamic banks cannot afford to neglect market-oriented strategies to improve performance. Therefore, this paper makes a modest attempt to examine market orientation of Islamic banks operating in the robust international banking sector of the UAE. This kind of research exercise is anchored in an extensive review of the market orientation literature, pooling together previously disparate strands of knowledge. Empirical evidence is presented and managerial implications are also discussed.

Análisis de las memorias de sostenibilidad de la banca internacional

La imagen del sector bancario ha quedado dañada con la última crisis financiera sufrida a nivel global, siendo patente la desconfianza generada hacia las entidades financieras por parte de los diferentes stakeholders. La responsabilidad social corporativa, y particularmente la divulgación del desempeño socialmente responsable, es una herramienta al servicio de la recuperación de la imagen y confianza en el sector. Este trabajo tiene como objetivo analizar la divulgación de información sobre responsabilidad social corporativa (RSC) en el sector bancario internacional mediante el análisis de contenido de las memorias de sostenibilidad y la estimación de un índice de responsabilidad global. El estudio concluye que la información divulgada es heterogénea, siendo la dimensión económica la más divulgada, seguida del enfoque de gestión, para situarse como las dimensiones con menor presencia en las memorias de sostenibilidad, la ambiental y social.

Merdžeri i akvizicije u bankarskom sektoru - slučaj Republike Srbije

The basic trend of the banking sector before the onset of the global financial crisis in 2008 was characterized by deregulation of financial markets. Following the onset of the crisis, regulatory bodies have been striving to increase regulation of the financial sector. The global crisis has led to great many mergers and acquisitions in the banking sector. Accordingly, this paper points to the significance of the banking sector's stability in the conditions of globalization, following the global financial crisis, when a major wave of mergers and acquisitions of the international banking sector has been produced. The research refers to qualitative and quantitative study of mergers and acquisitions in the international banking sector, and the specifics of these transactions in national economies of the countries in transition (the case of the Republic of Serbia). In the introductory part of the paper, theoretical consi­derations of the mergers and acquisitions are stated. Specifics follow of the mergers and acquisitions in the countries in transition, compared to those in developed countries. Through disclosure and analysis of quantitative data of mergers and acquisitions in the international banking sector in USA and Europe, this paper then identifies specificities of these transactions in different continents. In the second part of the paper, analysis follows of the mergers and acquisitions in the banking sector in the Republic of Serbia. A certain methodology is employed involving collection and processing of the latest data, i.e. quantitative data offered by the relevant international institutions, as well as their comparative analysis. In its concluding segments, on the basis of the previous analyzes and research results the paper identifies factors of emergence of the mergers and acquisitions, future trends in such, offering certain guidelines hopefully leading to harmonization of the banking sectors of the countries in transition and of highly developed countries, as well as in international banking on the global level.

Network analysis of interbank cross-border flows at country level (2006 - 2015)

In today’s globalized world, economic activities are performed beyond the physical boundaries of countries. It can be seen as increasing activities such as trade of goods, financial flows and trade of intermediate goods. Network analysis, that has been used to analyze formations of complex systems recently, is frequently used to investigate these global economic relations. In this context, international trade networks, financial networks and global production networks (input-output networks) are some of the fields that are analyzed in an interdisciplinary way. In this study, it is aimed to analyze interbank cross-border flows at country-level by applying network analysis. Thus, we expect to investigate the systemic importance and vulnerabilities of countries in international banking sector by applying HITs algorithm from 2006 to 2015. HITs algorithm has an advantage since it takes second order adjacencies of countries into consideration. As a consequence of the analysis, it will be possible to see the effects of global and Eurozone crises on systemic importance and vulnerabilities of countries.

The Value Relevance Variation of Capital Stocks and Earnings Quality: Potential of Banking Analogy.

Banks regulations manage to enhance understanding of key supervisory issues, and improve the quality of banking supervision worldwide. Financial crisis over the past decades had built challenges to the banks and regulators, where they need to optimally manage the risks of credit, market and operations. The earnings quality of the banks are considered a significant variable to follow and analyze to present how far this earnings quality is changing as to be improved, and to protect banks against any risk management failure and loss. This paper examines the association between the banks’ earnings quality and the value relevance variation of banks capital stocks at a time period for a purposive sample of number of international banks, in order to show what is expected in the future for the banks regulations and earnings quality, based on what is currently analyzed in the banking industry. Measuring earnings quality for the purpose of analysis in this paper requires the measure of the changes in earnings quality variables, as an indication for the association between banks' earnings quality and the value relevance variation of capital stocks in the banking sector. This paper answers a main question of: Is the international banking sector currently efficient enough to warrant high earnings quality, and consequently affects the value relevance variation of capital stocks in banks? This is significantly helpful to measure the proper improvements in the economies and the anticipations for the future protection for the banks financial position and operations and their markets. For the current stage of this paper, regression analysis is optimal to apply for the analysis and interpretations by building a model that is proper to examining the value relevance variation of capital stocks in relation to earnings quality. I find that the change in non-interest income, and the change in the weight assigned to operational risk are positively associated with the value relevance variation of capital stocks in banks, and the estimation of fair value for liabilities is negatively associated with the value relevance variation of capital stock at a significance level of 0.10, this represent the significance of the three variables to be considered in banks for future sustainability and profitability, whereas the statistical inference shows for this regression model a high explanatory power to predict this significant association. This paper has a major limitation in respect to the size of the sample of banks used in the regression model, but has an optimistic vision about what the analysis will represent for the current and the future stages of banking analogy in this regard for the purpose of sustaining future protection in the banking sectors and the future economies for future generations. Thus, future research can find a useful trend to generalize the findings by expanding more empirical methodologies.

Religiosity and Bank Asset Securitization

The global financial turmoil of 2007-2008 underlines the importance of understanding asset securitization, a process that allows banks to shed credit risk, fund their credit growth, and arbitrage capital requirements. Examining this ethically questionable activity has become crucial given its perceived long-term social impact. This paper examines the factors that motivate banks’ decisions to enter into asset securitization. In particular, we examine the influence of both organizational and geographic religiosity as important ethical parameters of economic choices on banks’ decisions to securitize their assets. We employ propensity scores using a unique database on asset securitization of banks in 22 countries during the period of 2003-2012. We find that both types of religiosity indicators are significantly associated with banks’ decisions to securitize. Banks located in countries with high religious importance scores show a lower likelihood to securitize. We also find that religiously adhered banks are likely to embark on a constrained model of securitization, which involves a high level of monitoring. In addition, our analysis suggests that religiously adhered banks are less likely to engage in asset securitization to reduce credit risk by shifting it to new investors. This conclusion is supported by their lower credit risk in the years before securitization. Alternatively, our results suggest that these banks embark on asset securitization to improve their financial and regulatory performance. Our study emphasizes the importance of considering religiosity as an important institutional factor and a monitoring mechanism in future global banking studies. Findings in this study are of importance to researchers, to local and international regulators, and to different stakeholders in the international banking sector.

Global Financial Crisis: Exploring the Special Role of U.S. Banks and Regulations

Financial markets have suffered the greatest dislocation following the truly seismic significance of the global financial crisis. Regulators argue that the banking sector played a particularly special role in triggering the causes of the subprime debacle, thereby leading to the occurrence of the global financial crisis. Banks previously functioned as only a financial intermediary, but certain developments in the international banking sector like deregulation, technological progress, consolidation and competition, securitisation and financial innovation, resulted in banks being involved in subprime lending activities and hence, a reason behind the financial turmoil. The aim of this paper is to scrutinise the special role of banks in the global financial crisis and to stress on the need for increased regulation and their implications on the banking sector. The current study will thus contribute to the examination of the salient features of the global financial crisis and provide regulatory suggestions for the banking sector and the government as a whole.

Religiosity and risk-taking in international banking

We examine the relationship between religiosity and risk-taking in the international banking sector. Previous research indicates that individuals who are more religious have greater risk aversion. Additionally, prior literature documents a positive relation between religiosity and both financial accounting transparency and timely recognition of bad news. Given timely recognition of future loan losses, religiosity could constrain excessive risk-taking through enhanced internal and external monitoring. We hypothesize and find that banks located in more religious countries exhibit lower levels of risk in their decision-making. We also demonstrate that banks in more religious countries were less likely to encounter financial difficulty or fail during the 2007–2009 financial crisis.