Net Interest Margin Research Articles

The Significance of Corporate Governance: Insights from the Banking Industry in Kosovo

This research investigates the influence of corporate governance (CG) practices and specific financial indicators on the performance of Kosovo's banking sector from 2015 to 2022. The study uses secondary data from nine commercial banks and employs the Ordinary Least Squares (OLS) estimation method to assess their impact on Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The findings highlight the significant impact of these variables on the banking sector's performance, with varying degrees of influence depending on the performance metric. Notably, NIM emerges as the most effective metric for evaluating a bank's overall performance, emphasizing the importance of managing interest margins effectively in the Kosovo market. These results have broader implications for discussions on governance structures within financial institutions and policy formulation. In Kosovo's banking sector, corporate governance has become pivotal for operational success and sustainability. This research offers valuable insights for stakeholders and policymakers by analyzing CG practices and their effects on key financial performance metrics.The dataset spans from 2015 to 2022, ensuring a comprehensive assessment of trends and developments within the banking sector. By employing the OLS estimation method, this study sheds light on the intricate relationship between corporate governance practices, financial indicators, and the sector's overall performance. In summary, this research comprehensively explores the interplay between corporate governance practices, financial indicators, and Kosovo's banking sector performance. The identification of NIM as a key performance metric underscores the importance of effective interest margin management. These findings have far-reaching implications, prompting critical discussions on governance structures within Kosovo's financial institutions for policymakers and industry leaders.

THE SIGNIFICANT CONTRIBUTION OF BANGLADESHI COMMERCIAL BANKS LIQUIDITY POSITION, BANK SIZE, AND INTERNAL CAPITAL GENERATING ABILITY TO INCREASE PROFITABILITY

The banking system is the lifeblood of an economy. This study aims to inspect the extent of the impact of banks’ managerial issues in terms of liquidity position, bank size and internal capitalgenerating capacity on the profit-making ability of commercial banks in Bangladesh during the period of 2007 to 2018. To examine data, a static panel model is constructed by considering 57 commercial banks. Indicators of a bank’s profitability include return on assets, return on equity, and net interest margin. The Fixed Effect model and the Random Effect models are considered as the baseline estimations and the Ordinary Least Square estimation was performed to inspect the robustness of the data. The study suggests that the liquidity position and internal capital generation rate have a highly positive and significant impact on bank profitability. But bank size is significantly negatively correlated with banking profit. The rivalry, as assessed by the HerfindahlHirschman Index, has a strong beneficial impact on the profitability of banks, supporting the impact of industry-specific variables. Inflation and spread are two macroeconomic factors that have a detrimental but minor effect on bank profitability. The findings might increase management’s awareness of the banking sector in Bangladesh as well as provide a proposition to policymakers.

FACTORS AFFECTING PROFITABILITY ON BANKING COMPANIES LISTED ON THE IDX

This study aims to obtain empirical evidence about the effects of Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL), Net Interest Margin (NIM), Current Account Saving Account (CASA), and Operating Expenses to Operating Income (BOPO) on the profitability of banking companies listed on the Indonesia Stock Exchange (IDX) in 2017-2020. This research uses 27 banking companies selected using purposive sampling method. The research data will be processed using the EViews 9.0 program. The results of this research indicate that the NIM has a positive and significant effect on profitability, BOPO has a negative and significant effect on profitability, while CAR, NPL, and CASA have no significant effect on profitability.

The Determinant of Regional Development Bank’s Profitability in Indonesia

Regional Development Bank (RDB) is a Regional Owned Enterprise where the majority of ownership is owned by the provincial government and district or city governments within the province which have an important role in regional development and improving the economy of regional communities. The aim of this research is to analyze the factors that affect RDB profitability in Indonesia. The profitability of RDB in this research consists of net interest margin (NIM) and return on assets (ROA). Meanwhile, bank specific variables include bank size (SIZE), fee-based income (FEE), market power (LG), capital adequacy ratio (CAR), non-performing loans (NPL), management efficiency (BOPO), and loan to deposit ratio. (LDR). The data used consists of 24 regional development banks in Indonesia from 2018 to 2022. The results of panel data analysis with random effect model show that there are two bank-specific factors that have a significant affect NIM namely LDR and BOPO. This is in line with the factors that affect ROA, where LDR and BOPO have a significant affect ROA. LG, CAR, and NIM also contribute to the high ROA of RDB in Indonesia. These empirical results can provide an overview of the determinant factors that influence RDB profitability and how RDB management strategies are used to maintain profitability. Apart from that, the Financial Services Authority (OJK) is able to encourage the government to increase capital in RDB. As well as encouraging RDB to increase credit distribution thereby increasing interest charges. Keywords: Regional Development Banks, Profitability, Net interest Margin.

Analisis Faktor Faktor yang Mempengaruhi Non Performing Loan pada Bank Pemerintah Daerah di Indonesia

In this study, researchers observed non-performing loans for the 2019-2022 period at 23 local government banks in Indonesia. This study uses eight independent variables: return on equity, firm size, GDP, equity ratio, capital adequacy ratio, loan-to-deposit ratio, net interest margin, inflation, and the composite stock price index. Meanwhile, bad debts are the dependent variable used. The results of the study using multiple linear regression analysis show that non-performing loans are influenced by capital adequacy ratio, net interest margin, return on equity, and company size. Non-performing loans are not affected by loan to deposit ratio, inflation, GDP, or the composite stock price index.

Analysis of the Influence of Capital, Income and Liquidity on Banking Performance with Fintech as a Moderation

This research examines the effects of Capital, Interest Income, and Liquidity on Financial Performance of the Bank during period of 2012-2022, taking into consideration the moderating role that FinTech plays in the relationship. Capital, as assessed via CAR which is Capital Adequacy Ratio, exhibits conflicting impacts on banking performance. It has a significant negative influence on profitability (ROA) and asset quality (NPL), but it has a good impact on efficiency (BOPO). Capital effects on different things ROA, NPL, and BOPO, however, becomes statistically negligible when FinTech is used moderately. The ratio that represents net interest income, known as the net interest margin, contributes considerably to an increase in profitability (ROA), but at the expense of the asset quality and operational efficiency. If FinTech is managed properly, its influence on ROA will be reduced, while the consequences it has on NPL and BOPO will become less significant. The Return on Assets (ROA) and Efficiency (BOPO) are both favorably affected by Liquidity, as assessed by the Loan to Deposit Ratio (LDR), while Asset Quality (NPL) is not significantly impacted. However, because of the moderation brought about by FinTech, the effect of liquidity on ROA, NPL, and BOPO becomes statistically irrelevant. Among our suggestions is the adoption of digital services for the purpose of boosting liquidity, the reduction of unproductive branch offices, the formation of collaborative partnerships with FinTech companies, and the improvement of regulatory control. This study reveals important insights into the rapidly changing world of banking and FinTech, which may influence strategies for achieving sustainable development

The dark side of bank FinTech: Evidence from a transition economy

Using data from Chinese commercial banks from 2008 to 2018, this paper explores the effects of bank FinTech on stability (i.e., bank stability). We first construct and measure a bank Fintech index and then examine the relation between bank FinTech and stability. We argue that bank FinTech affects stability from two aspects: bright effects and dark effects. The results show that the dark effects prevail over bright effects, that is, bank FinTech decreases bank stability. Specifically, a one-standard-deviation increase in bank FinTech is associated with a 14.2 % reduction in bank stability. Our results also show that bank FinTech increases stability by improving risk control and increasing net interest margin (i.e., bright effects), whereas bank FinTech increases non-interest activities, and thus reduces stability (i.e., dark effects). Second, the negative impacts of bank Fintech on stability are weaker in state-owned banks. Third, as time progresses, the negative effects of bank Fintech become weaker. Finally, when we examine five subareas of bank FinTech, we find that artificial intelligence technology and big data technology increase bank stability, but internet technology reduces bank stability. Our main results pass a series of robustness tests and endogeneity issues.

Faktor-Faktor yang Mempengaruhi Kinerja Keuangan Perbankan: Studi pada Perbankan yang Terdaftar di BEI Tahun 2017-2019

Financial performance of banking is an indicator that measures the successful or unsuccessful of a bank in carrying out its business activities and indicates that management has managed resources effectively and efficiently. Financial performance is proxied by the entity's profit growth. This study verifies and analyzes the influence of Non-Performing Loans, Loan to Deposit Ratio, Return on Assets, Operating Expenses, Operating Income, Inflation, Net Interest Margin, and Intellectual Capital on Financial Performance of Banking. Type of this research is associative. Population of this research is all around banks where listed on the Indonesia Stock Exchange (BEI) for the 2017-2019 period. The sampling technique used was a census/sampling technique, total sample obtained was 41 banks. Hypothesis testing using multiple linear regression. The difference with previous research situated on the addition of the Net Interest Margin and Intellectual Capital variables. The Results of this research prove that NPL has a negative effect on financial performance. LDR, ROA, BOPO, Inflation, NIM, and IC have no effect on financial performance.

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.

DAMPAK REGULASI FINANCIAL TECHNOLOGY (FINTECH) TERHADAP RENTABILITAS PADA PERUSAHAAN PEMBIAYAAN YANG TERDAFTAR DI OTORITAS JASA KEUANGAN

The Objective of this study is to analyze the impact of Financial Technology (FinTech) regulation toward rentability of Funding Companies listed by Financial Services Authority. The Financial Services Authority (OJK) issued regulations regarding regulations for information technology-based money lending and borrowing services as stated in OJK Regulation Number 77/PJOK.01/2016. The research conducted different tests to analyze differences in rentability ratios of financing companies before and after the FinTech regulations The rentability ratios analyzed included ROA, ROE, NIM and BOPO. The population of this research is financing companies registered by the Financial Services Authority (OJK) using a purposive sampling technique. This research use paired sample T-Test to test hypothesis. The results of this research show that there is no significant difference in the ratio of Return On Assets, Return On Equity, and Net Interest Margin in finance companies before and after financial technology regulations. However, in the ratio of Operating Expenses and Operating Income there are significant differences between before and after financial technology regulations

An Empirical Analysis of the Dynamics Influencing Bank Capital Structure in Africa

Financial institutions, particularly banks, have long grappled with the dilemma of structuring their capital optimally. This process, commonly referred to as capital structure decision-making, is of paramount importance, especially within the financial services sector, where strict regulations are imposed by reserve and central banks in alignment with global Basel guidelines. This study unveils the key factors that determine the capital structure choices of African banks, using panel data encompassing 45 listed banks across six nations that had embraced the Basel III Accord spanning the years 2010 to 2019. The study used the system-generalised moment methods (sys-GMM) estimator to fit the formulated panel data regression model. The study findings showed positive associations between ZSCORE, an indicator of bank financial stability, and net interest margin ratio (NIMR) with bank leverage (TCTE). In addition, the results revealed positive correlations between earnings volatility (EV), profitability (P), and risk (R) with bank leverage (TDCE). This suggests that profitable banks are inclined to favour debt financing, a phenomenon driven by their ability to comfortably service debt obligations with free cash flows. This study’s overarching conclusion underscores the dominant influence of the Liquidity Coverage Ratio (LCR) on African bank capital structures. Whether assessing traditional or Basel III-prescribed measures of bank leverage, LCR consistently emerged as the primary determinant. This finding is of significant relevance to bank executives and regulators, offering them essential insights for informed decision-making by considering striking a balance between equity and debt financing based on financial stability, profitability, and risk profiles.

THE EFFECT OF CAR, NIM, BOPO, AND LDR ON ROA IN BUMN BANKS IN THE PERIOD 2013-2022

This study aims to see the effect of CAR (Capital Adequacy Ratio), NIM (Net Interest Margin), BOPO (Operating et al.), and LDR (Loan to Deposit Ratio) on ROA (Return on Assets) in BUMN Banks in the period 2013 - 2022. The data source for this research is secondary through the websites of each company listed on the Indonesia Stock Exchange. The population used in this study The population in this study are state-owned banks listed on the Bursa Efek Indonesia (BEI). The sample in this study is the financial statements of state-owned banks, namely Reports on Calculation of CAR, NIM, BOPO, LDR, and ROA financial ratios for 2013-2022, a total of 40 samples. The analysis technique used is R Square analysis and Path Analysis. The results of the study show that NIM and LDR have a positive effect on ROA. CAR and BOPO hurt ROA, while CAR, NIM, BOPO, and LDR affect ROA in R Square.

Determinants of Banks' Net Interest Margins in Türkiye and Theoretical and Empirical Investigation of Its Effects on the Financial Structure of Commercial Banks.

Bankalar, fon birikiminin kaynak ihtiyacı olan kurum ve kişilere aktarılması yoluyla finansman sağlanması, ekonomik yapının, iç ve dış ticaretin ve finansal sistemin gelişmesi amacıyla faaliyet gösteren en önemli finansal kurumlardır. Bankaların finansal yönden sağlam, etkin ve verimli olması, ekonomik gelişme ve finansal istikrarın südürülmesi açısından önemlidir. Bu nedenle; bankaların “Net Faiz Marjı” (NFM), sektörde, finansal sağlamlığın, kârlılık performansının değerlendirilmesinde, kredi fiyatlamasında, banka faaliyetlerinin verimliliğinin ölçülmesinde, finansal aracılık maliyetinin anlaşılmasında önemli bir gösterge olarak kabul edildiğinden gerek banka yönetimleri ve gerekse bankacılık otoriteleri ile araştırmacıları tarafından bir analiz aracı olarak kullanılmaktadır. 
 
 Bu çalışmada; Türk bankacılık sisteminde faaliyet gösteren ve aktif büyüklüğü en yüksek 15 ticari bankanın üçer aylık dönemler halinde sağlanan ve 2003Q1-2022Q2 dönemini kapsayan verileri kullanılarak panel veri analizi yöntemiyle “NFM”nın belirleyicileri ve ticari bankaların finansal yapısına etkisi incelenmiştir. Oluşturulan modelde; kredi riski, likidite riski, sermaye yapısı, özkaynak yapısı, piyasa gücü, kârlılığı, faiz gelirleri, faiz giderleri oranı, toplam varlıklar vb bağımsız içsel değişkenler; faiz oranları, döviz kurları, enflasyon, ekonomik büyüme makro ekonomik değişkenler olarak alınmıştır. 
 
 Yapılan analiz sonucunda; NFM ile özkaynak kârlılığı, kredi oranı, sermaye yeterliliği, faiz gelirleri oranı, faiz dışı gelirler oranı, TL mevduat faizleri ve döviz kurları arasında anlamlılık düzeyinde ve pozitif yönlü bir ilişki belirlenmiştir. Diğer yandan, toplam varlıklar, kredi riski, finansal varlık oranı, TL kredi faizi, enflasyon ve ekonomik büyüme değişkenlerinin NFM’nı istatiksel olarak anlamlılık düzeyinde ve negatif yönlü etkilemekte olduğu tespit edilmiştir. Ayrıca, piyasa gücü, mevduat oranı, likidite riski ve özkaynak yapısı değişkenlerinin NFM üzerindeki etkisinin istatistiksel olarak anlamlılık seviyesinde olmadığı sonucuna ulaşılmıştır.

Impact of Covid-19 on Financial Ratio Banking Sector

The purpose of this research is to provide information on whether the COVID-19 pandemic had an impact on banking in Indonesia, especially for banks listed on the Indonesia Stock Exchange. The impact on banking was measured by using financial performance ratios, namely nonperforming loan (NPL), operating expenses to operating income (BOPO), net interest margin (NIM), and liquidity coverage ratio (LCR). Researchers used comparative data on financial statements, namely in 2019 and 2020. The tool used by researchers to process research data was SPSS 24. Researchers used different test methods to determine the impact of the Covid-19 pandemic on the financial performance of the banking sector. The results showed that the Covid-19 pandemic had affected the financial performance of the banking sector.
 Keywords: financial performance, Covid-19, banking sector

Do sustainability or environmental, social and governance (ESG) practices influence emerging Asia banks performance during COVID-19 pandemic?

As the COVID-19 crisis unfolds, the banking industry has once again come under scrutiny, particularly due to the recent collapses of notable financial institutions in the United States and Switzerland. This warrants an urgent reassessment of regulations, financial governance, and risk management practices. This research aims to investigate the relationship between Environmental, Social, and Governance (ESG) practices and bank performance within emerging Asian economies. Its urgency is underpinned by these recent financial disruptions and the need for resilient banking systems geared for sustainability. By exploring bank-specific performance indicators like the Net Interest Margin (NIM) and Capital Adequacy Ratio (CAR), this study offers an approach differentiated from traditional profitability measures, namely Return on Assets (ROA), Return on Equity (ROE), and Tobin's Q. This paper's quantitative approach includes multivariate regression analysis of unbalanced panel data from all publicly listed banks in these economies between 2018 and 2022. This research not only provides reflections on these institutions' performance during a global crisis but also illustrates the imperative for ESG assimilation in bank strategy and operations as a safeguard against future uncertainties.

Assessment of the Profitability Indicators of Armenian Commercial Banks and the Forecast of Possible Scenarios to Increase Profitability

Purpose: The main purpose of the study is the comparative analysis of total capital, total assets, net profit, return on assets (ROA), return on equity (ROE) and net interest margin (NIM) of 17 commercial banks operating in Armenia for several years are presented, the advantages and disadvantages of the banks with high and low results in the above-noted indicators have been briefly commented on.
 
 Theoretical framework: Currently, the banking system of Armenia is the most developed one in comparison with other sectors of the economy, as the processes of attracting deposits, providing loans and fulfilling the standards set for commercial banks are regulated in line with the world experience. The object of study is operational environment of the banks.
 
 Design/methodology/approach: The profitability indicators are considered to be the most basic tool for assessing the efficiency of operations carried out by commercial banks. Methodological tools of the study methods were interest income, interest expense and average annual return on profitable assets, which were analyzed separately.
 
 Findings: The relevance of this scientific problem decision is that the negative consequences the COVID-19 pandemic within the business environment of the Armenian banking system have been studied.
 
 Research, Practical & Social implications: In the context of new economic relations, the banking system holds an important part in ensuring the economic growth and economic development of any country, including the Republic of Armenia. Possible ways to increase the profitability of the Armenian banking system were suggested in this study, the existing challenges of the banking system were identified.
 
 Originality/value: Based on the results of the research of the profitability indicators of the RA banking system and the conclusions drawn, several ways of increasing the profitability of banks were proposed.

Pengaruh Net Interest Margin, Loan to Deposit Ratio, dan Non-Performing Loan Terhadap Return On Asset (Studi pada Perbankan yang Listing di BEI)

A healthy bank or not can be measured from the level of profit. If the bank has a profit every year, the bank is still able to maintain its viability. Bank profits can be measured from the Return on assets. This study aims to determine the effect of Net interest margin, Loan to deposit ratio and Non-performing loan on Return on assets in banking companies listed on the IDX in 2019-2021. The sample technique used in this study uses purposive sampling and the number of samples is 54 banking companies listed on the IDX in 2019-2021. The data analysis technique used is the classical assumption test (autocorrelation test), multiple linear regression test, and hypothesis testing. The results of this study indicate that the net interest margin has an effect on return on assets. Loan to deposit ratio has no effect on return on assets. Non-performing loans have no effect on return on assets.

Ảnh hưởng của giá dầu đến Z-score của các ngân hàng thương mại tại Việt Nam: Phương pháp Bayes

By the Bayesian method, the arcticle found the negative effect of oil prices on Z-score, a proxy of bank stability. The research dataset included 28 commercial banks from 2011 to 2021. The posterior probabilities support a negative impact of oil prices on the Z-score, with approximately 97%. The empirical results did not find any obvious effect of bank size. Capital adequacy ratio, liquidity ratio, and expense-toincome ratio have a positive effect on Z-score with the probability of over 91%, 96%, and 87%, respectively. Besides, the net interest margin and ratio of non-interest income witnessed negative influence with a probability of over 82% and 97% respectively. Those provided useful statistical evidence on the impact of oil prices as well as internal factors on the stability of banking operations.

Do Bank Funding Diversity and Bank Lending Affect Net Interest Margins? Evidence From Asia Markets Before and During the Covid-19 Pandemic

This paper investigates how bank funding diversity and lending affect bank performance, especially during the Covid-19 pandemic. We employ the Generalized Method of Moments to analyze unbalanced panels of commercial banks in China, Taiwan, and Vietnam. The empirical results show that a percentage increase in bank funding diversity and bank lending in the sample negatively affects profitability. In contrast, the results are mixed in each country due to different market microstructures. While holding diversified funding strengthens bank profitability during the pandemic, increasing lending activities dampers the bank’s performance. Finally, this research has important implications for bank managers and regulators to develop sustainable banking performance in emerging markets, especially during pandemics.

Analisis Perbandingan Kinerja Keuangan Bank Umum Konvensional Dengan Bank Umum Syariah di Indonesia Menggunakan Metode RGEC Periode 2018-2022

This research aims to determine the differences in financial performance between Conventional Commercial Banks and Sharia Commercial Banks for the 2018-2022 period using the RGEC method which consists of Risk profile, Good corporate governance, Earnings and Capital. Risk Profile is proxied using the Non Performing Loans (NPL) ratio and Loan to Deposit Ratio (LDR) for BUK and Non Performing Financing (NPF) and Financial to Deposit Ratio (FDR) for BUS, GCG is proxied using the GCG self assessment composite value, Earnings are proxied using Return On Assets (ROA), Return On Equity (ROE), Net Interest Margin (NIM) for BUK and Net Operating Margin (NOM) for BUS and BOPO, and Capital is proxied using the Capital Adequacy Ratio (CAR). The sample used in this research consisted of 10 Conventional Commercial Banks and 7 Sharia Commercial Banks. Samples were taken using a purposive sampling method based on predetermined criteria. The data analysis techniques used in this research are descriptive statistics, normality test, and Independent Sample t-Test. The results of the research show that there are significant differences between Conventional Commercial Banks and Sharia Commercial Banks in the financial performance ratios of NPL/NPF, ROA, ROE, NIM and BOPO. Meanwhile, in terms of LDR/FDR, GCG and CAR financial performance ratios, there are no significant differences between Conventional Commercial Banks and Sharia Commercial Banks.