Bank Market Performance Research Articles

Nurturing trust in Islamic banking within the metaverse for market success

Purpose This study aims to investigate the impact of trust in the metaverse on the Islamic banking sector, particularly in facilitating market success. Additionally, it seeks to explore the relationship between metaverse-driven brand image, product features, service quality and overall performance in the market. Design/methodology/approach Data were collected from 187 participants in Jordan, with the SmartPLS software used to test the hypotheses. Findings The findings reveal a significant impact of metaverse-enhanced brand image, product features and service quality on Islamic banking market performance. Furthermore, customer trust in the metaverse plays a significant role in shaping the relationship between product features, service quality and Islamic banking market performance. Originality/value The study’s practical implications still suggest the need for a more holistic metaverse-driven approach. Investing in service quality initiatives alone may not adequately build and sustain customer trust in the metaverse. Instead, transparent communication on ethical practices in the metaverse is required to reinforce trust and magnify the positive influence of superior service quality in the metaverse.

Influence of gender and age diversity of boards on financial and market performance of banks

This paper seeks to explore the impact of gender and age diversity within the board of directors, as well as the appointment of a female CEO, on the return of assets (ROA) and Tobin Q of banks on a global scale. The study is motivated by the growing interest in how the quality of human capital within boardrooms affects the performance of banks, as well as the conflicting results of previous research on this topic. To conduct the study, panel regressions with fixed effects were employed as the research method. The sample consisted of 470 banks, including 146 banks from emerging markets, and data was collected from 2013 to 2023. The findings revealed that gender diversity within the board had a significant and negative impact on banks’ Tobin’s Q. Additionally, there was no significant relationship found between gender diversity and banks’ ROA, as well as between age diversity and both banks’ ROA and Tobin’s Q. The appointment of a female CEO harmed banks’ Tobin Q in emerging markets, but no significant influence was found on ROA and Tobin Q in banks in the developed world. As a result, it appears that banks’ investors do not view gender diversity as separate from other human capital issues within the boardrooms and may not derive significant financial benefits from gender and age diversity. These findings can be valuable for strategic controlling in evaluating the impact of human capital on the boards and executive branches of financial institutions.

The Impact of Indonesian Financial Service Authority’s Relaxation Policy Towards Bank’s Financial Performances

This research examines the effect of the Indonesian Financial Service Authority's countercyclical regulation No.11/POJK.03/2020 regarding credit restructuring policy towards Indonesian banks' fundamental and market performance. The fundamental analysis uses some indicators: CAR, Gross NPLs, Net NPLs, credit impairment losses, LDR, primary statutory reserve requirements, LCR, NSFR, ROA, and ROE. While the market analysis is conducted using the measurement of Tobin's Q. Samples in this research are banks listed in the Indonesian Stock Exchange during 2018-2022. The results of this study show that the policy No.11/POJK.03/2020 has a positive impact on the Bank's credit quality (shown by a higher level of CAR, lower NPLs, and lower credit impairment losses), a positive impact on Bank's credit allocation (shown by lower LDR), has positive impacts on Bank's liquidity (shown by lower primary statutory reserve requirements, higher LCR, and higher NSFR), has positive impacts on Bank's profitability (shown by higher ROA and ROE), and has a positive impact on Bank's market performance (shown by higher Tobin's Q).

The impact of fintech and banks M&A on Acquirer's performance: A strategic win or loss?

Fintech startups symbolize a radical transformation in the financial industry that provides technology-based financial services. These newly formed business organizations use digital technologies such as computers, the internet, mobile, and data to innovate and facilitate, thus creating tough competition with formal incumbents such as banks. Banks are working on various strategies to deal with these new competitors, one of which is to buy them. So, this study focuses on mergers and acquisitions (M&As) between banks and fintech and the impact on the performance of the acquirers in the period 2010–2020. The paired-sample t-test and GMM analysis indicate a significant positive impact of fintech and bank M&As on the operating performance, liquidity, and financial leverage of banks but a negative impact on the market performance of banks in the long run. The study offers guidance for financial institutions, policy makers, and regulators in designing strategies toward new competitors in the market.

Effect of advertising spending on operating and market performance of banks: empirical evidence from Bangladesh

PurposeThe purpose of the paper is to empirically explore the economic effect of advertising spending on the performance of banks on a sample consisting of all banks listed on the Dhaka Stock Exchange over the period spanning from 2011 to 2019.Design/methodology/approachA dynamic panel data autoregressive approach of two-step system generalized method of moments (2-SGMM) estimation technique has been adopted in this study to analyze the contemporary and carryover effect of advertising on the financial performance of banks.FindingsThe findings indicate that advertising expenditure boosts banks' accounting returns but not their market value. Furthermore, advertising has a negative carryover effect on the financial performance of banks and is statistically significant for operating profit and return on equity. This finding demonstrates that the economic benefits of advertising expenditure lapse entirely within the current period and ought to be treated as an expense since it does not bring any future return for the banks in Bangladesh. In addition, this paper also offers no critical contrast between the impact of advertising spending on the performance of both conventional and Islamic banks operating in Bangladesh.Originality/valueTo the best of the authors' knowledge, no study so far has looked into the effect of advertising on the profitability and the market value of the banks operating in Bangladesh, and this is the first study that explores this relationship.

Corporate governance structure and bank performance: evidence from an emerging economy

PurposeThe purpose of the paper is to explore the association between corporate governance mechanisms and the performance of listed banks in Bangladesh.Design/methodology/approachDynamic panel data of two-step System Generalized Method of Moments (SGMM) estimators are used to analyze the influence of corporate governance characteristics on the performance of banks operating in Bangladesh over a period of eleven years from 2008 to 2018.FindingsBy employing the two-step SGMM, the authors find statistical evidence to conclude that board size has a positive impact on banks' accounting performance. However, it does not influence the market performance of banks operating in Bangladesh. The authors’ results also suggest that outside independent directors, managerial ownership and females' participation on the board are not linked with the performance of the listed banks in Bangladesh. It signifies that the mere presence of outside directors and female directors in the board does not guarantee the enhancement of banks' performance and the minimization of agency conflict between shareholders and management. The persistent characteristic of bank performance is one of the crucial findings of this paper.Research limitations/implicationsThis research has some limitations as the study's findings may not be generalized to other countries or industries because the current study considered only the small sample size based on the availability of the data and focused only on the banks listed in the DSE. Moreover, this study may not represent the whole financial industry because it includes all listed and non-listed banks and non-bank financial institutions. Hence, the findings may not be applicable to the other industries operating in different business ecosystems.Practical implicationsThe findings of this analysis have some managerial implications. This study provides managers empirical evidence regarding the influence of corporate governance elements on banks' performance, and they can now identify the factors that should emphasize enhancing the bank performance. The findings demonstrate that policymakers, regulatory bodies and bank management should pay more attention to the banks' overall corporate governance structures, especially in the case of appointing independent and female directors to challenge the executive power and to prevent the repetition of financial irregularities and loan scams in the banking industry of Bangladesh. Furthermore, the regulatory authorities should ensure the banks follow the corporate governance guidelines precisely for building a resilient banking industry to attain sustainable development goals in the long run.Originality/valueThis paper is the first empirical in-depth analysis applying the most recent data that examines the effect of bank governance elements on the performance of all the banks listed in the Dhaka Stock Exchange to the best of our knowledge.

Role of Remuneration and Board Characteristics for Bank Performance. A Study Based on Conventional and Islamic Banking Comparison

The standing study tried to analyze the role of board remuneration and board characteristics on the comparative performance of commercial and Islamic banking in Pakistan for the duration of 2006 to 2017. The data was collected in panel form for five leading conventional banks and five Islamic banks. Panel estimation techniques like fixed, random and pooled Ordinary least square were applied after conforming Hausman specification test and LM test. Using ROE and ROA, found that Director’s Remuneration is positively and significantly affecting banking performance while Account holder’s investment is positively and significantly affecting bank’s performance for conventional banks only and Social contribution is significantly and positively affecting Islamic banking performance in Pakistan. Using Tobin’s Q as a proxy of market performance indicates remuneration is negatively affecting conventional banking performance while Islamic banking market performance is negatively and significantly affected by board’s composition and positively and significantly affected by social contribution. The policymakers should enhance the remuneration of their directors so as to boost their bank’s performance. Moreover, the management of conventional banks should also consider the account holder’s investment to enhance the accounting performance of their banks. The policymaker in Islamic banks can increase their performance (accounting as well as market) by enhancing the social contribution like Zakat. The discoveries of this comparative study are restricted to the banking sector of Pakistan.

FINANCIAL INNOVATION, RISK MANAGEMENT, AND BANK PERFORMANCE

Several researches conducted from the angle of corporate governance reveals that the majority of the work that examines the direct association between financial innovation and bank performance has displayed mixed results and has ignored the indirect relationship between these two variables through the risk management of incurred by the bank. In this context, the purpose of this study is to investigate whether or not there is a mediating effect of risk management on the relationship between financial innovation and bank performance. Data collected from annual activity reports of banks listed on the Tunis Stock Exchange is analyzed, and used to validate the theoretical and empirical contributions of our article. The empirical study uses the Panel data extracted from 10 banks, over the period ranging from 2009 to 2017, and the Baron and Kenny (1986) mediation approach has been estimated, using specifications of random effects. Our empirical analysis substantiates that financial innovation has a positive direct effect on stock market performance, and a non-significative impact on financial profitability. Additionally, our results show that improving the stock market performance of banks by financial innovation depends on the mediator role of the operational risk management. To remain improving performance, Tunisian banks must pay more attention on special training of bank managers whose function relate to the choice of financial innovations and manage the associated risks.

Sustainability reporting and bank's performance: comparison between developed and developing countries

Focusing on the differences between sustainability in developed and developing countries, this study examines the relationship between sustainability reporting and bank's performance in developed and developing countries. This study examines equal selected sample from developed and developing countries for eight years (2009-2016). The sample contained 232 banks to yield 1,856 bank-year observations. The findings deduced from the empirical results on one hand demonstrated that ESG positively affect the bank's market performance in developed countries which supporting the value creation theory. However, the ESG negatively affect the bank's financial performance which explains the cost capital reduction theory. On the other hand, the findings of developing countries showed that ESG positively affect the bank's financial performance in developing countries. However, it has insignificant effect on the market performance.

What Drives Stock Market Performance of Banks / Universal Banks? A Critical Examination of Literature

Universal banks combine commercial loan services and public deposit functions with investment, and other services such as home and auto financing, mutual funds, pension and insurance to name a few. The importance of universal banks have been recognized in emerging economies, and its growth spur economic growth and development of many countries in the world. Most universal banks are listed in stock exchanges, and as financial intermediaries, not only these banks expand their already wide portfolios but they allow more global investors into the fold, almost like a foreign direct investor, the difference only is, the investor don’t have to leave the home country. Since these banks are considered to be among the key players in stock markets, and this study seeks to understand what factors drive their performance in stock exchange so that global investors be aided in making investment decisions on universal banks.

Impacts of Zakat Avoidance on the Market Performance of Banks in Saudi Arabia

Impacts of Zakat Avoidance on the Market Performance of Banks in Saudi Arabia

EFFECT OF FINANCIAL PERFORMANCE AGAINST MARKET PERFORMANCE IN BANKING

This study aims to examine the effect of the financial performance of the banking market performance. This study used a sample of banking companies listed in Indonesia Stock Exchange 2011-2013. Financial Kineja measured using CAMEL (Capital, Asset Quality, Management, Earnings and Liquidity). market-based financial performance is measured by stock returns, variable we used in this study are the independent variables which covers CAR, DER, ROA, LDR. Data research using panel data and methods of data analysis using simple linear regression. influence the financial performance against the performance of the market is not particularly a significant impact on the performance of banks.

Do Board Characteristics Impact the Market Performance of Indian Banks?

This paper explores the role of board characteristics of Indian banks on their market performance. We conducted panel data analysis on a sample of 29 Indian banks that form part of the National Stock Exchange (NSE) 500 index (covering a period of 8 years from 2009-2016). While ten board characteristics were considered as independent variables, Tobin’s Q was considered as the dependent variable (Tobin’s Q was assumed to be a proxy for market performance of banks). Findings suggest that only three out of ten board characteristics (average number of boards served, CEO duality and number of meetings conducted) positively affect market performance of Indian banks. Our sample included 29 Indian banks covering a period of 8 years. Also, other corporate governance mechanisms, such as characteristics of audit committee, stakeholder relations committee, nomination and remuneration committee and risk management committee were not considered for the study. Hence caution must be taken in generalizing the results of the study.

The Credit Quality and the Market- Based Performance of Banks: A Comparative Study

The Credit Quality and the Market- Based Performance of Banks: A Comparative Study Dr. Salah Ahmed ORABY Abstract This research aims at measuring the relationship between the credit quality measured by both non-performing loans % (NPL) and provisions for loan losses%(PLL) as independent variables and the market performance of banks measured by share prices.The sample study includes 11 Saudi listed banks in Saudi stock exchange and 15 banks listed in Jordanian stock from 2011 to 2016. This study used regression analysis and correlation analysis to analyze the quarterly data to test research hypotheses.Results of the Saudi case indicated that neither NPL% nor PLL has a statistically significant relationship with share prices and that can be interpret that investor in Saudi Arabia ignore both NPL and PLL when pricing shares of banks. On the other hand, results of the Jordanian case indicated that only PLLhave a statistically positive impact on share prices of banks.so it can be said that investors in Jordanian capital market look at part of provisions for PLL as a source of potential profit in future because they believe that PLL contain discretionary component used to manage earnings and used as signalingtool to shareholderson future expected cash flows. Also results indicated that both NPL and PLL are alternative measures should not be used together in the same model as predictors and PLL is better than NPL because PLL reflects both specific and general risk. Full Text: PDF DOI: 10.15640/ijat.v6n1a6

Views on Turkey's impending ESCO market: Is it promising?

Turkey's Energy Efficiency Law (EEL) came into force in May 2007. The EEL will transform energy policies implemented in the government and private sectors. The law and upcoming regulations will offer opportunities for the impending Energy Service Company (ESCO) market in Turkey. In this work, we briefly review the ESCO literature and its financing mechanisms in the world, and present our views with regard to the funding and related risks that are likely to be associated with the forthcoming Turkish ESCO market. These views are backed up with Turkish credit and banking market performance and the lessons learned from implementation of some EU-related projects involving the banking sector and small-and-medium-sized firms. We conclude that in order to create a promising competitive ESCO market, Turkey's policy must be to sustain its average 5% growth rate achieved lately for the coming decade, finish the structural reforms which will invite necessary capital inflows to ensure an economic stability and financing.

Internet banking market performance: Turkey versus the UK

PurposeThe purpose of this paper is to compare and evaluate the internet banking services of Turkey and the UK.Design/methodology/approachThe paper is based on an exploratory research for a sample of nine banks from each country, a web survey is conducted to collect data for each internet bank using an analytical framework based on a three dimensional model.FindingsIt is found that Turkish banks offer a wider range of services from their internet branches compared to British banks, despite the fact that the UK has a more favourable environment for internet banking in terms of the level of sophistication of its banking sector and technological infrastructure. Furthermore, a key difference is observed in the approaches of banks towards the issue of “security”.Research limitations/implicationsThe findings of this paper are reached by the use of a simplified model that only focuses on the transaction side of internet banking. Therefore, further research could encompass other aspects from the provider's perspective of the internet banking environment within a refined model.Practical implicationsThe paper suggests that there is a fundamental difference in the banks' approaches to dealing with security problems and insights can be gained from cross‐country peer group analysis. Furthermore, the study assists researchers and practitioners to evaluate and build upon their e‐business provision.Originality/valueThe paper is the first of its kind, that the authors are aware of, to conduct a cross‐country analysis of internet banking services.

Bank Growth Choices and Changes in Market Performance

Changes in bank market performance are compared for banks that choose not to grow, to branch, bank acquire, product expand, or some combination. Using the change in market value-to-book value ratios, banks that include acquiring other banks as part of their growth strategy have significant positive changes in performance. Positive performance by bank acquirers is in contrast to many studies, but prior research has not reviewed other growth activities in a single model, nor used market-based measures to review performance over longer time periods following bank expansion.

Successive retention of funds, loan profitability and marketing implications in banking

This paper analyzes potential effects of successive retention of funds, induced by portions of funds granted as loans being successively redeposited via a chain of market transactions in the same bank, on loan profitability. It identifies sets of market conditions and loan terms under which the magnitude of the fund retention phenomenon could be significant, derives formulae to measure its magnitude, and suggests loan marketing strategies potentially capable of exploiting successive retention of funds to improve loan profitability. The potential role of the loan-induced retention process as an additional explanatory factor in the relationship between market structure and market performance in banking is also discussed.

Improving Bank Market Performance

The primary assertion of this paper is that banks need to redirect and balance the focus of their business strategy from that of an internal (efficiency oriented) to an external (effectiveness oriented) marketing research program in order to achieve full profit potential. The return on assets (ROA) of banks has only fluctuated from 0.93% in 1992 to 1.24% in 1997. As one alternative to the flat ROA, the industry has engaged in a merger mania and invested in internal, transaction-oriented information systems in order to reduce costs and increase the current net income (efficiency driven). However, this business strategy results in short-run profits to the exclusion of opportunities that may result in long-run profits. It is obvious from this flat ROA that banks have not been effective. Therefore, in order to avoid the danger of banks becoming atrophied, the organizational effectiveness component must be brought into the overall architecture of the bank's information system rather than the simple current emphasis on processing efficiency. This change in business strategy requires a fundamental paradigm shift in the manner in which banking executives view their industry. The business strategy must change from the narrow "provider of financial service" orientation to the broader "fulfiller of financial needs" orientation. A marketing information research system facilitating such a major shift in orientation is presented.