Non-banking Sector Research Articles

PROVISION OF BANKING SERVICES IN THE CONTEXT OF THE SUSTAINABILITY OF THE BANKING SYSTEM: CURRENT TRENDS AND DEVELOPMENT DIRECTIONS

The article examines banking services in the context of the stability of the banking system: current trends and directions of development. The current stage of development of the global banking system operates under conditions of intensified competition and crisis phenomena in financial markets. One of the main factors in the successful development of the domestic banking system is the policy of constant innovations.Currently, innovation is a key factor in the stability, competitiveness and sustainable economic growth of domestic banks. The sustainable development of the national economy is accompanied by an increase in the volume of financial transactions and an increase in the importance of the domestic banking sector. The banking system, being one of the most important links of the market economy, affects the life of society in many ways. It not only provides a mechanism for interregional redistribution of monetary capital, but is also a key element of the settlement and payment mechanisms of the country's economic system. This fact determines the importance of the banking sector in the socio-economic development of the state.The current realities of the banking business contribute to the identification of the main catalysts of domestic banking innovation activity: globalization of world financial markets and markets of banking services; growing competition from the banking and non-banking sectors; the world financial crisis. The above-mentioned factors significantly affect the qualitative and quantitative composition of banking institutions and their services and lead to key changes in consumer behavior, thus leaving banks with the only opportunity to preserve and increase their competitive advantages through the introduction of innovations, the direction of which determines the strategy for the development of the banking sector on medium-term perspective. Based on the results of the research, it was established that the problems accumulated in the national banking system can be solved by applying the experience of Great Britain, and the main postulates should be adapted to the national banking system, which will contribute to the development of the domestic market of banking services and increase the stability of the national banking system.

Evaluating the responsiveness of Caribbean stock markets – The case of COVID-19

The Caribbean stock markets have been largely ignored by scholars, partly due to the conventional view of a weak and inefficient system, and low integration to the world financial system. This paper examines the major announcements related to COVID-19 as exogenous shocks and their impacts on stock market returns in the two most developed stock markets in the Caribbean region. Using the standard event methodology and a dynamic difference in differences model, we confirm a significant decline in stock returns in response to negative announcements of COVID-19-related news. Other positive news such as the announcements of re-opening of the economy and vaccine had a positive impact on stock returns. The Jamaica stock markets are likely to be weakly efficient and exhibit low responsiveness to major COVID-19-related events and news. Most sectors in the Caribbean economy experienced significant losses to stock returns resulting from these shocks. The banking, conglomerates, and property sectors continued to be subdued in the face of continued uncertainty and unpredictability of the overall impact of COVID-19. The energy and communication sectors seemed to be either the most resilient or most asymmetrically informed sectors as they are found not to be affected by COVID-19-related announcements. The manufacturing, property, and non-banking sectors are found to recover quickly from the shocks. Our analysis provides further insight in terms of portfolio investment strategies in the Caribbean region.

Non-banking sector development effect on economic growth. A nighttime light data approach

Non-banking sector development effect on economic growth. A nighttime light data approach

Digital loans and buy now pay later from LendTech versus bank loans in the era of ‘black swans’: Complementarity in the area of consumer financing

Research background: People who take non-banking loans are primarily perceived as excluded from accessing bank services. The growth of e-commerce and the increasing digitalisation of customer interactions with banks was particularly accelerated by the COVID-19 pandemic (the first ‘black swan’). These processes have also influenced the rapid growth of the LendTech (LT) sector within FinTech with its digital loans and buy-now-pay-later (BNPL) services. The war in Ukraine (the second ‘black swan’) has led to an energy crisis, increased inflation, interest rates and credit costs, and reduced credit accessibility. In this context, the following research questions are addressed: Are the LT and banking sectors complementary or substitutive in the area of consumer financing? Does complementarity apply to all customer segments and loan amounts? How does the extent of complementarity or substitutability of the LT sector depend on, and to what extent do changes in the regulatory and macroeconomic environment affect, the interaction between the banking and LT sectors? Purpose of the article: The aim of the article is to identify trends in the LT sector within FinTech in the context of assessing the scale and determinants of current and future complementarity of the non-bank sector and the banking sector in the area of consumer credit in time of black swans. An additional purpose of the article is to estimate revenues from the basic operating activities of companies from the on-line channel. Methods: The research process was multi-stage and the research procedure was structured. Due to the lack of a uniform source of data on LT products and services, the study used many data sources — data from the Credit Information Bureau, a primary nationwide survey on LT users a primary survey of people representing LT's managerial staff. The selection of LTs was carried out according to the concept of the monetary sampling unit. The Horvitz-Thompson estimator with Sen‐Yates‐Grundy variance form was used to estimate net operating income for LT from the online channel in 2021. Findings & value added: The LT companies surveyed state that black swans (the COVID-19 pandemic and the war in Ukraine) and the current macroeconomic situation have not significantly affected demand for non-banking loans. The reduction in the opportunities for the LT sector as a result of anti-usury regulations will only lead to a shift in consumer demand to the pawnshop sector and the shadow economy, which will be detrimental to consumers. Complementarity between LT and the banking sector is revealed especially in crisis situations, thus limiting the effects of market shock (limited supply of loans offered by banks). In periods of stabilisation, a rather clear division of preferences is noticeable – in the case of seniors and loans for higher amounts, banks dominate, while in the case of lower amounts and in younger age groups, non-bank institutions are more popular. The mechanism by which shrinking banking services are replaced by LT in short-term crises confirms the importance of LT in balancing the Consumer Finance market in the face of unstable periods. From a medium- and long-term perspective, it should be noted that inflation and rising interest rates will increase the scale of credit exclusion in commercial banks, shifting part of the demand to the non-bank sector. These phenomena have an international dimension. Similar observations were made already in 2012 by the CFPB in the USA and the British FTA, when analysing the consumer finance market immediately after the subprime crisis, emphasising the effects of limiting access to bank consumer loans and the resulting growth of the LT market (Gębski, 2013).

Using Data Mining Techniques for Fraud Detection in The Non-banking Sector

Using Data Mining Techniques for Fraud Detection in The Non-banking Sector

Penyuluhan Tata Kelola Keuangan Pada UMKM di Desa Tempos, Kabupaten Lombok Barat

Understanding the financial management and governance of micro, small, and medium enterprises is needed so that micro, small, and medium enterprises can develop and obtain information quickly and accurately for decision-making. Understanding the financial management of Micro, Small, and Medium Enterprises involves traders in Tempos Village, including traders of traditional Lombok snacks. This community service activity aims to improve understanding of the financial management of micro, small, and medium enterprises. Apart from that, if financial records are carried out well, they can produce the right information for decision-making and solve problems for business actors. With this outreach, it is hoped that the level of awareness of activity participants will become more motivated and will no longer be afraid of seeking capital in both the banking and non-banking sectors inherent in business actors. The method of counselling and knowledge about financial governance is carried out by training participants to make simple financial reports. By implementing this program, participants are expected to be able to apply and be able to make simple financial reports that can be used to apply capital to financial institutions.

MORTGAGE REAL ESTATE MARKET: LENDING TO HOUSEHOLDS BY COMMERCIAL BANKS OF UKRAINE DURING THE STATE OF MARTIAL

MORTGAGE REAL ESTATE MARKET: LENDING TO HOUSEHOLDS BY COMMERCIAL BANKS OF UKRAINE DURING THE STATE OF MARTIAL

ФУНКЦІОНУВАННЯ НЕБАНКІВСЬКИХ ФІНАНСОВИХ УСТАНОВ В УМОВАХ СУЧАСНИХ ВИКЛИКІВ

The stability and development of the country's financial sector is determined by the presence of a well-developed network of non-bank financial institutions. The latter include financial and insurance companies. The purpose of the article is to assess the activities of non-bank financial institutions, identify the advantages and disadvantages of their activities and develop proposals for improving their performance in the context of current challenges. The article analyses the current challenges facing the financial intermediary market, which require an immediate response. It presents the dynamics of the financial sector in Ukraine and analyses its changes since the beginning of the Russian aggression. It is found that the war has created additional risks for non-bank financial institutions, such as the risk of client insolvency, the risk of changes in legislation and regulation, the risk of falling asset prices, rising inflation and exchange rate depreciation. This may lead to increased losses and reduced financial stability of non-bank financial institutions, negatively affecting their liquidity and solvency. Proposals are made to improve the activities of non-bank financial institutions in the face of current challenges, in particular: the market of non-bank financial institutions should adhere to high standards of corporate governance and transparency, which will have a positive impact on the level of confidence in the market and give it an additional impetus for development; adhere to the Strategy for the Development of the Financial Sector of Ukraine until 2025, as the current military-political situation has made adjustments that need to be taken into account; the system of regulation and supervision of the non-bank sector should be improved. In market segments where there are no EU standards, national standards based on international experience will be introduced. It is noted that non-bank financial institutions should continue to actively develop their activities, improve and develop new products and services of interest to consumers. Non-bank financial institutions play a particularly important role for large companies which, due to the nature of their activities, have business contacts with many counterparties with which it is technically impossible to settle without the assistance of financial intermediaries.

СУЧАСНІ АСПЕКТИ ДІЯЛЬНОСТІ НЕБАНКІВСЬКОГО ФІНАНСОВОГО СЕКТОРУ

The national economy is in dire need of long-term investments. The economic stability of the state in modern conditions depends on the effective operation of banking institutions and the non-banking financial sector, and in this matter such institutions as: non-state pension funds, insurance companies, leasing institutions, etc., could provide significant assistance. In the wartime period, their role is most obvious, since the level of such macroeconomic indicators as: real GDP growth, unemployment rate, inflation rate, balance of payments depends on the development of non-bank financial intermediaries. An important feature for the formation of funds of the non-banking sector is the fact that the funds are formed, firstly, on contractual terms, and secondly, on the terms of the sale of securities. The purpose of the article is to study the activities of institutions of the non-banking financial sector, analyze their impact on the investment of industrial enterprises, and develop proposals for intensifying their participation in investment processes. The theoretical and methodological basis of the research is the work of domestic and foreign scientists in the field of determining the peculiarities of the functioning of enterprises of the non-banking financial sector. The information base consists of scientific, economic and reference literature, works of leading domestic and foreign scientists, methodical materials, information portals, Ukrainian periodicals. A set of methods and approaches were used: system analysis, theoretical generalization, methods of analysis and synthesis. In the article, the author states the importance of researching the theoretical and methodological foundations of the functioning of non-banking financial institutions. An analysis of the legislative framework regulating the activities of enterprises of the non-banking sector has been carried out, characteristic features inherent in each of the individual types of these institutions have been highlighted. The structure and dynamics of investments in the economy of Ukraine over the past ten years have been studied. The dynamics of the number and economic activity of enterprises of the non-banking financial sector have been analyzed. The scientific novelty consists in deepening the essence and researching the dynamics of increasing the investment potential of the non-banking financial sector, which, in contrast to existing research, emphasizes the special relevance of the development of this sector of the economy of Ukraine during the martial law and post-war reconstruction, and also takes into account the international

Dividend Policy of Russian Companies: Cancel Culture Effect

The paper is dedicated to the dividend policy of Russian companies under the sanctions pressure applied by the USA and the EU, which especially intensified in 2022 as a result of the changed global geopolitical environment. Cancel culture was used against Russia, complicating the financial, investment and operating activity of domestic companies. In the paper weanalyze a sample of 73 Russian listed companies from non-banking sectors and 317 observations for 2017–2022. We consider the impact of sanctions against companies, boards of directors and CEOs on the company dividend policy. We used a logistic regression as a model to determine the probability of influence of changes in the studied variables on the decision concerning dividend payment. The sample is divided into two parts: 2017–2020 and 2021, and it illustrates companies’ behavior when the political environment in the world was stable and when the situation was aggravated. The research showed that sanctions against boards of directors and direct limitations of company’s operations had a negative influence on the probability of dividend payments while sanctions against CEO in the period of aggravation of political risks produced a positive effect. The cancel culture effect, i.e., the refusal of the USA and EU to cooperate with Russia and sanctions imposed on it, produced a significant negative effect on dividend payout by Russian companies.

Domestic Debt and Price Stability in Nigeria

The impact of domestic debt on price stability in Nigeria from 2008 to 2023 is being analyzed in the research. The study employed an ex post-facto research design. Data from the Central Bank of Nigeria's statistical bulletin 2023 and Debt Management Office reports 2023 were used, specifically quarterly time series data. The dependent variable of price stability was inflation rate, while the independent variables were banking sector debt and non-banking sector debt. The Johansen cointegration test estimation was used based on the unit root test result which shows that domestic debt had no cointegration with inflation rate in Nigeria. Based on regression analysis, it was found that the banking sector debt had a positive significant effect on inflation rate in Nigeria, while non-banking sector debt had a negative significant effect on inflation rate in Nigeria. Therefore, the study recommended that banking sector debt should be properly channeled to productive financing of working capital in the agricultural sector for seedlings and fertilizers that will enhance price stability by reducing food inflation. Government should give more priority to domestic debt through non-banking sector debts such as the Sukuk loans which are tied to capital projects like roads, rails, and many other infrastructural developments.

Global financial cycle: Impact on Ukraine

Global financial fluctuations that arise in the financial centres – the US and the EU through international channels of monetary transmission affect the financial markets of peripheral countries, including Ukraine, where the assessment and consideration of such an impact is an important element of monetary policy. Therefore, the purpose of the article was to assess the impact of cyclical fluctuations of the global financial situation on the financial sector of Ukraine’s economy. As a result of correlation analysis, a direct relationship between leverage indicators in Ukraine and the Chicago Board Options Exchange Volatility Index and Euro Stoxx Volatility Index has been revealed. At the same time, the direct relationship between these indices and the growth of domestic credit in Ukraine contradicts the concept of the global financial cycle and may indicate the presence of more important factors of domestic credit. Correlation analysis of the volatility index of the Chicago Board Options Exchange and capital flows in Ukraine showed that in the years of increased global uncertainty and volatility, the volume of capital flows decreased, especially for portfolio debt instruments. Analysis of the cyclical components of the global and domestic credit cycle in Ukraine obtained with the Godric-Prescott filter indicates a higher level of volatility in domestic lending. The obtained value of the concordance coefficient did not make it possible to draw an unequivocal conclusion about the counter- or procyclical nature of domestic credit fluctuations relative to the global volume of loans in the non-banking sector. It has been found that the global financial cycle was not a significant factor in domestic credit in Ukraine in the studied period. The practical significance of the results lies in the fact that the National Bank of Ukraine will be able to implement a monetary policy independent of the global financial fluctuations and limit the outflow of capital during the period of growing uncertainty in the international financial markets

Conventional monetary interventions through the credit channel and the rise of non-bank institutions

The amount of credit assets held by non-bank institutions has increased substantially in recent decades, to the point where it exceeded the amount held by depository institutions in the United States before the Global Financial Crisis. Our research aims to gain evidence on whether the credit channel of monetary policy, i.e. the transmission of monetary interventions through bank lending, has been altered by the enlargement of the non-bank sector. The analysis is based on the period before the Global Financial Crisis in order to apply a theory-consistent identification of conventional monetary interventions within a large Bayesian vector auto-regression. The results indicate an uncertain transmission when the non-bank sector is larger, casting doubt on the grip of monetary interventions in an evolving scenario.

Role of Knowledge Sharing and Employee Engagement Towards Innovative Performance with Learning Orientation as Moderating Variable

In this study, the authors will analyze the performance of innovation through knowledge sharing, and employee work involvement moderated by learning orientation variables. The purpose of this study is to determine the extent to which innovation performance can be obtained through knowledge sharing, work involvement, and moderation of learning orientation that develops in the process of holding state-owned companies in the banking sector. One of them is the existence of an interesting holding process between PT Bank Rakyat Indonesia, Tbk. (Bank BRI), PT Permodalan Nasional Madani (PNM), and PT Pegadaian, where PT Pegadaian can be considered a non-banking sector service. Thus, knowledge sharing and employee involvement, in this case, will be analyzed using learning orientation as a moderating variable. This type of research is explanatory research with a cross-sectional design and data collection using primary data in the form of data collection questionnaires distributed to employees of Bank BRI. The sample of this research is 213 respondents and will be analyzed using SEM-PLS 3.0. The results of this study indicate that knowledge sharing has a significant effect on innovation performance, employee involvement has a significant effect on innovation performance, and the results of learning orientation are able to significantly moderate knowledge sharing on innovation performance. However, learning orientation cannot moderate and is not significant between employee engagement and innovation performance.

PROBLEMS AND PROSPECTS OF FUNCTIONING OF CREDIT UNIONS IN UKRAINE

The article examines the theoretical and practical principles of the functioning of credit unions in Ukraine at the current stage. Scientific and methodical approaches to defining the economic category «credit cooperation» have been analyzed. It was determined that in Ukraine the credit cooperation functions in the form of credit unions. The definition of a credit union as a non-profit organization founded by individuals, trade unions, and their associations on a cooperative basis with the aim of meeting the needs of its members in mutual lending and providing financial services at the expense of the combined monetary contributions of the members of the credit union is generalized. The impact of the credit cooperatives on the development of economic entities at the level of social well-being of the population and the national economy as a whole has been studied. It was established that credit unions belong to high-risk financial institutions, since they operate with citizens’ funds, they occupy a special place among the majority of financial intermediaries operating in the financial services market of Ukraine. It has been proven that the difference of credit unions and at the same time their advantage among the other financial and credit institutions lies in the ability to accumulate cheap monetary resources, use them to develop business needs and increase consumer demand. The influence of the military-political crisis on the work of the non-banking sector of the economy, in particular, on credit cooperation, is determined. The financial indicators of credit unions in Ukraine were analyzed and it was stated that these indicators have been deteriorating since 2018. A retrospective assessment of subjective and objective factors affecting the functioning of credit unions was carried out, and problems and prospects for their development were outlined. A number of problems are listed, the solution of which will allow credit unions in Ukraine to return to an effective direction. It was determined that the introduction of a system of control over the activities of credit unions, the introduction of strict regulations and requirements regarding the adequacy of own capital will contribute to the development of this segment of the financial services market. A method of solving the problems of the operation of credit unions is proposed, which lies in the plane of professional organizations through the centralization of some functions in order to make them cheaper, the creation of accumulative funds for development and education.

Constructing an index for participation finance

In the aftermath of the 2008 global crisis, excessive financialization in the economic system, along with extreme shortening of the holding times of assets, led to a disconnection between the real economy and financial markets. In the post-crisis period, participation finance, which is expected to re-establish the eroded link between the real and financial economy, has attracted more attention. Countries are in an increasing competition at an international scale to benefit from relevant demand; however, the quantification process should be scrutinized in order to realize the potential of the sector and to create a benchmark for global market actors. Consequently, developing alternative approaches for comparing countries in the field is crucial. Evaluation of countries in the context of participation finance at a global scale is an emerging field in the literature. The approach in this study is to develop a new tool based on transparency and objectivity in participation finance and to provide benefits in the process of determining the participation finance rankings. Moreover, this study acts as an anchor for understanding global participation finance. In the study, country data are compiled from organizations that produce and share data on participation finance and countries are listed with a criteria importance through intercriteria correlation (CRITIC)-based technique for order preference by similarity to an ideal solution (TOPSIS) method. Using the CRITIC method, the theme of regulation and governance has the highest weight in participation finance, followed by banking and nonbanking sectors, education and research, and perception and awareness. Based on the weighted criteria, TOPSIS is used to produce rankings. The top three countries in the ranking are Malaysia, Indonesia, and Saudi Arabia. According to the weighting results applied to the variables, countries are recommended to take the following actions: establish institutions that will ensure compliance with the relevant legal framework, develop a legally based monitoring system, create areas for Islamic fintech research and development and related legislation.

Social security, psychological threat, and corporate performance: An analysis of financial performance after enactment of a social security scheme in Nepal

The main objective of this study was to analyze the impact of the contribution-based social security scheme on corporate performance after the enactment of the new policy in 2018. Panel data from 2015 to 2021 with observations of 266 companies, including 38 corporations from the banking and non-banking sectors, was used to analyze the impact of the new policy on corporate performance. This impact, as well as the role of psychological fear, was examined using the difference-in-differences analysis method. The findings of the analysis revealed an adverse impact on corporate performance in the banking sector compared to the non-banking sector. The study also showed that the banking sector's psychological fear was greater than that of the non-banking sector after the implementation of the policy. The conclusions of this study are helpful in understanding the corporations’ performance gap before and after the policy, as well as in making a strategic plan to overcome the psychological fear of the employees. This study suggests that the social security fund should use a mass media orientation program to explain the benefits and scope of the new policy.

Stress among the Employees of Banking and Non-Banking Sectors

Stress among the Employees of Banking and Non-Banking Sectors

Stress among the Employees of Banking and Non-Banking Sectors

Stress among the Employees of Banking and Non-Banking Sectors

Savremene finansijske tehnologije i tradicionalno bankarstvo

Contemporary financial technologies (FinTech) have revolutionized the world of finance, improved the operations of traditional financial institutions and created a new environment in which banks are no longer the only providers of financial services. Today, competition in the banking sector includes banks' competition with new FinTech companies and digital decentralized financial (DeFI) sectors. In the future, the financial sector will generate new technological innovations, trust in traditional (TradFi) and decentralized financial (DeFi) sectors, as well as a new attitude of monetary authorities towards DeFi systems which currently function outside their control. In contrast to banks, the FinTech non-banking sector quickly adapts to new business requirements by offering more functional and cheaper digital solutions. Although DeFi sectors may threaten financial stability and the application of monetary regulation, their development cannot be stopped. Financial regulation is being extended to digital innovations but its implementation in native DeFi systems is almost impossible, unlike centralized (CeFi) platforms whose segments are much easier to regulate. The regulation of DeFi is additionally aggravated by the international nature of the transfer of financial resources through these networks. The best solution may be provided by an internationally harmonized approach to the regulation of the DeFi sector, which is not easy to reach at all. There has been a shift in that direction since 2008. The regulation of banking and financial markets is slowly losing its exclusively national character and increasingly adopting the solutions based on regional and global financial consensuses, which are still not comprehensive. A hard-to-reach consensus is also necessary between monetary authorities at the global level and the creators of decentralized financial sectors.