Performance In Terms Of Profitability Research Articles

Impact of Related Lending on Bank Health: Case Study in Indonesia Banking Industry

Related lending is a critical driver of banks’ health, particularly on its profitability and risks profile. As banks engage in related lending activities, they face challenges in managing profitability and assessing various risks, including systemic and credit risks. Nevertheless, the banking literature presents divided views on this: the information view and the looting view. The information view posits that related lending could enhance bank profitability and reduce risks through improved information symmetry between banks and borrowers. Conversely, the looting view theorizes that related lending may deteriorate banks’ performance, reducing profitability and increasing risks, primarily due to the misallocation of resources and the prioritization of personal interests by banks’ insiders. The challenges of related lending have been intensified by the global crisis of the COVID-19 pandemic. Empirical research indicate that banks tend to increase lending to related parties by up to 20% during economic difficulties, with more significant effects in emerging economy such as Indonesia. This trend is reflected in increasing related lending ratio and deteriorating financial indicators of publicly listed Indonesian banks, such as declining profitability ratios of return on assets (ROA) and net interest margin (NIM), as well as increasing risk ratios of higher non-performing loans (NPL) during the pandemic’s onset. Therefore, this study will investigate the impact of related lending on bank health of publicly listed Indonesian banks across two critical periods, before crisis (2013-2019) and during the crisis due to the pandemic (2020-2022). By employing a quantitative approach through regression analysis, this study will be able to assess the relationship between bank profitability and risk ratios with their corresponding variables. The aim is to provide empirical evidence on whether related lending enhance or impair bank performance in terms of profitability and risk, particularly under the economic strains brought by the pandemic.

Financial Performance and Stock Price: Evidence from Listed Manufacturing Companies in Sri Lanka

Despite several studies on the effect of financial performance in terms of profitability on stock price, existing literature provides contradictory conclusions regarding this association. Therefore, the main purpose of this study is to explore the effect of financial performance in terms of profitability on stock price, with special reference to the listed manufacturing companies in Sri Lanka from 2011 to 2021. Earnings per Share (EPS), Return on Equity (ROE), and Return on Assets (ROA) were used as proxies of profitability since the current study aims to investigate the aspect of profitability, while the average share price was used as a proxy of stock price. Moreover, the study used three firm-specific control variables, namely, Dividend per Share (DPS), Firm Size (FS), and Debt to Equity (DE). The data was collected from the published annual reports of 29 listed manufacturing companies out of 34 listed manufacturing companies. By employing fixed effect panel regression analysis, this study aims to examine whether there is an effect of financial performance in terms of profitability on stock price. Accordingly, the findings reveal a statistically significant positive effect on stock price in terms of ROA and EPS, despite ROE indicating a negative effect on stock price. Moreover, somewhat simultaneous and divergent results were indicated by the control variables. Accordingly, FS and DE demonstrated a positive association with stock prices. Contrary to this, DPS does not indicate any association with stock price. Moreover, the findings of the study provide insights to investors for encouraging investments and maximizing their investment income, to listed companies for making policy decisions connected with stock price and other investments, and to policymakers for formulating appropriate policies to promote stock investment while regulating credit policies and interest rates.

Impact of Some Selected Determinants on SMEs Performance: A Study on Jhenaidah District of Bangladesh

Small and Medium Enterprises (SMEs) play a critical role in any emerging economy. These sectors are now considered as the main engine of the economy in Bangladesh. The principal objective of this study is to identify, measure and compare the impact of some selected determinants on SMEs performance in Bangladesh. The study employed qualitative interviews with the owners/employees of SMEs dealing with i) Tailoring ii) Flower cultivation iii) Restaurant business iv) Auto rice mill business v) Jewelry vi) Nursery vii) Clinic business 8. Handicrafts business ix) Rice cultivation and x) Banana cultivation in Jhenaidah district of Bangladesh. This is a survey-based study and the data were collected from 101 respondents using a structured questionnaire. The data collected for the study have been processed using MS Excel 2007. This study examined six determinants such as entrepreneurial competency, marketing capability, financial resources, modern technology, product quality, and investment capacity to determine the SMEs’ performance in terms of profit. Seven hypotheses were developed to reach the objectives in the study. The collected primary data were analyzed by applying basic statistical tools. The results of the study revealed that the most significant determinants that affect the performance of SMEs in Bangladesh were entrepreneurial competency, financial resources and investment capacity respectively. Policymakers and owners of SMEs should take necessary steps in light of the findings of the study to improve the performance and ensure the sustainable growth of SMEs sectors in Bangladesh.

A multi-period discrete event simulation model for comparing synchronous and asynchronous facility reopening in global supply chains affected by disruption

Lean global supply chains have exhibited considerable improvements in inventory levels, lead times, and service levels in recent decades. Still, global disruptions such as pandemics have exposed the hidden vulnerabilities of these supply chains. This study extends the previous literature by using a multi-period discrete event simulation model to compare synchronous and asynchronous reopening times of different supply chain echelons with varying demand and production capacities. The results of simulation experiments show that for a very low demand upon reopening, asynchronous reopening gives higher supply chain profit and service level than synchronous reopening. In addition, the experiments also indicate that when the demand and capacity are low, the supply chain performance in terms of profit and service level is better if the reopening time is closer to the demand recovery phase. This study provides insight to supply chain managers to formulate reopening strategies for their facilities when faced with a global disruption.

Firm-Specific Factors and Performance of Commercial Banks in Kenya

The purpose of this research was to determine the effect of credit risk and income diversification on commercial bank performance in Kenya. Impaired loans and total loans were used to measure credit risk. Net interest income and net non-interest income were used to measure income diversification. The study's population consisted of thirty-nine Kenyan commercial banks. The study, which spanned eight years from 2013 to 2020, relied on secondary data from audited annual financial statements. The collected data was analyzed using descriptive statistics and multiple regression analysis. Based on the findings, credit risk has a significant impact on bank performance. An increase in credit risk tends to lower the bank's financial performance in terms of profitability. The study further examined the impact of income diversification on bank performance. According to the regression results, income diversification had a significant impact on bank performance. The analysis concludes that banks and monetary authorities should devise strategies to ensure that asset quality is appropriately maintained and that non-performing loans are regulated and kept to a minimum to improve their performance. Further, given that over-diversification can affect bank performance by increasing the volatility of returns and default risk, there should be a balance between interest income and non-interest revenue as a source of income.

Digital Transformation—Top Priority in Difficult Times: The Case Study of Romanian Micro-Enterprises and SMEs

Ever since the pandemic context accelerated technology adoption, the digital transformation of enterprises has become part of consumers’ daily lexicon. The highly demanded necessity of companies to integrate digital solutions and provide services and goods in virtual spaces provokes both managers and academia to identify new perspectives. In this context, can digital transformation through marketing represent an option in difficult times? The authors aimed to reveal an answer to this question by researching the attitudes of 837 entrepreneurs involved in digital marketing activity before and during the pandemic, following their behaviour in the post-pandemic context. With quantitative and qualitative methods, unexpected results were unveiled. Financial losses or low performance in terms of profit or turnover do not negatively influence the attitude of the subjects towards digital marketing adoption. Moreover, the most unexpected result was the evolution of turnover from 2020 compared to 2019 as a determining factor for entrepreneurs’ perceptions of their level of digital knowledge. However, the results are discussed in the context of digital transformation through the method of providing services and goods in the virtual space with digital techniques, enriching the literature with the Romanian micro, small and medium-sized enterprises evidence.

Influence of Successors’ Socio-demographic Characteristics on Performance of Family-Owned Small and Medium Enterprises in Tanzania

This study examined the influence of successors’ socio-demographic characteristics on the performance of family-owned Small and Medium Enterprises. Probability sampling technique was employed to obtain sample of 219 successors. The hierarchical regression model and independent samples t-test were employed to test the study hypotheses. The findings of this study indicate that successors’ socio-demographic characteristics, that is, education and business experience have influence on performance of family-owned Small and Medium Enterprises and there is no statistical difference in performance in terms of profit between male and female successors. It was concluded that for performance of family-owned SMEs successor’s sex should not be a factor for consideration in selecting a successor in family-owned SMEs. For good performance of family business, successors’ socio-demographic characteristics mainly education and business experience should be given priority in succession plan. The paper recommends that, to reduce the reported high failure rate, family business founders should strengthen their successors’ socio-demographic characteristics, mainly education and business experience instead of building on sex as the only criteria for successors’ selection.

Corporate Profitability and Shareholder Meeting Participation in Italian Listed Companies

This paper intends to investigate the relationship between the attendance of annual general meetings (AGMs) and company performance in terms of profitability. In particular, it is intended to highlight some elements that can be interpreted as constituting attendance at the shareholder meetings, for example, the number of shareholders present at the shareholder meeting, the share of authorized capital attending the shareholder meeting, and the duration of the shareholder meeting. Following this analysis, attention is devoted to the relationship between corporate performance and shareholder meeting participation (one of the possible governance mechanisms available to monitor the activity carried out by company management). We analyse the AGMs convened for the adoption of financial statements. Empirically, the study uses the minutes of the meetings of a sample of Italian listed companies held in 2017 and 2018 on the occasion of the adoption of financial statements for the 2016 and 2017 fiscal periods, respectively. The main results show a positive relationship between the share of authorized capital attending annual shareholder meetings and the level of corporate profitability of Italian listed companies.

Education Level of The Board of Directors and Financial Performance of Go Public Banks at The Indonesia Stock Exchange

Having experience, knowledge, and expertise in banking is important for the board of directors to properly manage its activities, which is indicated by their financial performance. This study investigates the effect of the formal education level of the board of directors on financial performance in terms of profitability. The sample used in this study was 31 banking companies, especially conventional commercial banks listed on the Indonesia Stock Exchange in 2009-2018, with 244 observations. This study uses multiple linear regression analysis with the Ordinary Least Square (OLS) approach. In this study, the dependent variables used are Return On Assets (ROA) and Net Interest Margin (NIM). The independent variables used are the level of education of the board of directors divided into Master and Ph.D. This study indicates that the board of directors with the highest educational level of Masters and Ph.D has a significant positive effect on ROA. Meanwhile, the board of directors with the and education level of Masters has a significant negative effect, and the board of directors with the highest education level of Ph.D has a significant positive effect on NIM.

General Bank's Profitability Analysis on The Impact of Going Public Process

Various reasons underlying the company's owner to Go Public processes such as increasing the company's capital, diversifying shares, overcoming lending constraints. Whatever the underlying reasons, Go Public decisions always have an impact on the company's finances and operations. There is a possibility for companies to not be able to manage funds from the Go Public process, causing a surplus of equity and an impact on decreasing company performance. This research was conducted to determine the impact of Going Public on company performance in terms of profitability. This study uses a purposive sampling technique to produce 3 sample banks that conduct an IPO in the period 2009- 2012 with the BOOK Bank category 2. Post-Go Public company performance is analyzed in terms of profitability using the financial ratios of Net Profit Margin ( NPM) and Gross Profit Margin (GPM). Hypothesis testing in the form of a paired t test was conducted on Net Profit Margin (NPM) and Gross Profit Margin (GPM) for the period of 4 years before and after going Public. The results of this study are expected to find out whether the process of Going Public has an impact on company profitability. In addition, the company's ability to perform cost efficiency can be measured through the use of the ratio of Net Profit Margin (NPM) and Gross Profit Margin (GPM).

Analisis Kinerja Keuangan Bank Aceh Setelah Konversi Periode 2016-2018 Berdasarkan Peraturan Otoritas Jasa Keuangan Nomor 8/POJK.03/2014

<p>This research aims to find out how Bank Aceh's financial performance after conversion in terms of earnings and capital. The type of research used is quantitative descriptive research. The data collection method used is the documentation method based on the data in the form of quarterly financial statements for the 2016-2018 period published. The method of data analysis in this study is by using the RGEC method (Risk Profile, Good Corporate Governance, Earning and Capital). The results of the study show that Bank Aceh's financial performance in terms of profitability ranks 2, with the definition that profitability is adequate, profit exceeds the target and supports the growth of bank capital. Bank Aceh's decision to convert to sharia as a whole was a very appropriate decision because it was able to show good performance, besides that it also supported the Aceh Government in carrying out its programs to enforce Islamic law. Bank Aceh's financial performance in terms of capital also ranks 2, with the definition that banks have adequate capital quality and adequacy relative to their risk profile, which is accompanied by strong capital management in accordance with the characteristics, scale of business and the complexity of the bank's business.</p>

Board diversity and performance in a masculine, aged and glocal supply chain: new empirical evidence

Purpose This study aims to contribute to the debate on the relationship between board diversity and performance, a hot topic for scholars and shareholders. A number of studies have found contrasting impacts of board diversity on firm performance and this paper adds new and original evidence in the context of the automotive supply chain focusing on gender, age and nationality diversity. Design/methodology/approach The authors propose a triple stage empirical analysis. First, the authors use linear models according to different performance indexes for investigating diversity (gender, age and nationality) within the board of directors and executives. Second, the authors investigate the issue of diversity in different contexts such as position in the supply chain, nationality of the owner and family/corporate ownership. Finally, the authors use non-linear models to find a better combination of diversity in terms of gender and nationality for retrieving some managerial implications. Findings First, the authors demonstrate a robust positive effect of women in board representation on firm performance in terms of profitability and firm risk. In the case of, age and nationality the results are more equivocal in particular for the former. Second, the authors depict board diversity in different contexts as follows: positioning in the supply chain, type and nationality of the final owner. Again, gender heterogeneity is more adequate in the complex firm as Tier 1 suppliers, corporate and foreign company. Originality/value The authors focused the analysis on a specific industry, shedding light on the main specificities linked to operating in certain phases of the supply chain, a substantial novelty in this field. The empirical evidence is based on a very large data set containing quantitative and qualitative information on a representative sample of 1,538 firms operating in the Italian automotive supply chain, one of the most relevant in Europe.

Did China’s bank ownership reform improve credit allocation?

This paper studies the impact of ownership reform on the credit allocation of China’s three largest state-owned banks (SOBs) in 2004. Using firm data for 2000–2007, we show that listed companies with higher amounts of debt experience a larger decline in credit access in cities that are more exposed to these SOBs after bank reform, indicating that a bank ownership change pushes loan officers to give much more importance to credit risks in the lending process. We extend our study to the universe of unlisted manufacturing companies and find that bank ownership reform also reduces bank lending to state-owned enterprises (SOEs) and low productivity firms in addition to more indebted firms. The negative effect of the reduced SOB lending on firm performance in terms of profitability and investment is only prominent in SOEs and firms with low productivity.

The impact of cash flows on the financial performance of companies - An analytical study on the Saudi telecommunications sector -: أثر التدفقات النقدية على الأداء المالي للشركات - دراسة تحليلية على قطاع الاتصالات السعودي -

This study aimed to identify the Net Cash Flows, from operational, investment and financing activities, impact on financial performance in terms of profitability through return on assets and return on property rights in the Saudi telecommunications sector. The study sample included (3) companies within Saudi telecommunications companies, and covered a 10-year period of time, from 2009 to 2018. The financial and statistical analysis is used to examine the study's hypotheses and questions, through the reports of the companies listed in the Capital Market and published on the Tadawul site as well as private companies' websites. To test the validity of the hypotheses and to get to the relevant statistical significances, the multiple regression coefficients and the SPSS program were used. The study found a statistically significant impact of Net Cash Flows of the Net Cash Flows of operational activities, Net Cash Flows of investment activities, and Net Cash Flows of finance activities, at the level of (= 0.05), on financial performance (return on asset index - return on property rights index). The researcher suggested a set of recommendations, the most important of which is the need to pay attention to the cash flows list since its provide financial information free of misinformation as it is real data and depend on the monetary base, and carrying out the study of cash flows in its three divisions (operational, financing and investment) on other economic sectors to illustrate the relationship between cash flows and the financial performance of companies.

What a firm produces matters: Processes of diversification, coherence and performances of Indian manufacturing firms

Economic growth and development of a country involves the accumulation of knowledge and dynamic capabilities. Past research has begun to investigate capability accumulation and macro-economic development of countries and sectors, and the role of new products in these processes. In this work, we focus on the firm-level process of capability accumulation and diversification in a developing country, namely, India. First, we explore the drivers of firm diversification strategies, and the effects of diversification upon firm performance in terms of profitability and sales growth. Second, we look at the idiosyncratic characteristics of different products, trying to identify the synergies of a product line with respect to the overall product basket of the firm – i.e. the “coherence” of its diversification patterns. We observe that the future performance of firms crucially depends on the interactions between the products they produce.

ANALYSIS OF THE INVESTMENT ACTIVITY IN SOUTH AND CENTRAL EASTERN EUROPE. A COMPARATIVE ANALYSIS OF THE CORPORATE GROWTH MODEL

With the opening up of the South and Central Eastern European markets in the early 1990s, foreign firms grabbed the opportunity to exploit their ownership advantages and expand abroad. Within this context, the primary aim of this study is to test the impact of ownership and location advantages in determining the internalisation decisions by foreign investors. The theoretical part will present a framework for explaining the strategic aspects of the internationalisation process, by integrating the resource based theoretical approach, which examines inter- alia ownership resource requirements, and the transaction costs approach, which involves examining variables relating to internalisation control and resources costs. The framework is then applied to the empirical examination of various aspects of the internationalisation process of foreign companies in the region. These break down into three main areas: the internationalisation decision itself; the entry mode strategies; and the implications for performance in terms of profitability.

Factors influencing financial performance in marine small-scale fisheries value chain in Kenya

Factors influencing financial performance in marine small-scale fisheries are numerous but are scantily documented and tested, more so from the Structure-Conduct-Performance perspective. The present study empirically tested influence of structure in context value of equipment, on actors’ conduct in context of price collusion, choice of products, access to market information and power to determine prices, and how these and other factors influenced performance in terms of profitability. Data was collected through field interviews targeting 403 actors (fishers, middlemen and small-scale processors) at five sites along the Kenyan coast. Binomial, multinomial, ordinary least squares regressions and regressions with instrumental variables were used in data analysis. Findings revealed that structure did not significantly influence actors conduct, while both structure and conduct influenced performance only on a few variables and actors. Instead other non-Structure-Conduct-Performance variables influenced performance across all actor groups. Increasing sales, improved profitability, while increasing variable and fixed costs decreased profitability. Results of the study provide important insights on actor behaviour that are useful for policy and value chain development interventions.

The Effect of Supply Chain Management on the Competitiveness of the Telecommunications Industry in Zimbabwe

The purpose of this study was to analyse the impact of supply chain management (SCM) on the competitiveness of the telecommunications industry in Zimbabwe. Key objectives of the study were to figure out the extent to which SCM contributes to organisational competitive advantage in the telecommunications industry in Zimbabwe, to determine the level of bargaining power when making local and off shore purchases, the extent of risk exposure due to global transactions and finally, to ascertain the strategies used on supplier ratings. Interviews and questionnaires were used as the main instruments for data collection. Questionnaires were distributed to 50 respondents with 36 responding, representing a 72 percent response rate. Data were analysed using SPSS and the resulted presented in graphs and tables. Interviews were carried out using a structured interview guide for uniformity of questions being asked. Three interviews were carried out with procurement managers from all the organisations represented namely, Econet, TelOne and NetOne. The results showed that SCM is a strong contributor to organisational competitiveness. If organisations in the telecommunications sector prudently apply SCM policies, strategies and practices, the performance in terms of profitability realised and competitive advantage will increase. Recommendations are that quality of products; better supplier management and competitive pricing may be realised if firms can adopt SCM principles and practices.

Evaluating the Risk Exposure and Challenges of Credit Providers in Microfinance in Ghana (A Case Study: Accra Metropolis, Ghana)

In view of the clear deficiencies in the cited researchers’ findings, there is the need to conduct new research to assess risk exposure of credit providers in micro financing in Ghana using Accra Metropolis, Ghana as a case study. The principal approach used for this analysis was a questionnaire-based survey. 120 workers and managements of Microfinance institutions responded to questionnaires made up of 9 questions. The analysis of the responses from the survey conducted was done using descriptive statistics. The results from the study shows that there is significant relationship between bank performance in terms of profitability and credit risk management in terms of loan servicing performance. The results verify the hypothesis that better credit risk management results in better bank performance. Accra Metropolis, Ghana is a city with challenges in the likes of the springing up of new micro finance and micro finance facilities. The study found that the microfinance institutions surveyed are aware of the types of risk inherent in their business line and use risk management approaches in different ways to reduce losses and increase profitability. Therefore, a more comprehensive assessment of risk exposure of credit providers in micro finance within the Accra Metropolis, which when not done will lead to a further fall in their performance standards as financial service providers. Keywords: Risk Exposure, Credit Providers. Microfinance in Ghana DOI: 10.7176/RJFA/11-16-03 Publication date: August 31 st 2020

The Impact of Fee Income Share on EU Banks' Performance and Its Implications for Drivers of Banks' Business Model Changes

This paper contributes to the current literature dealing with drivers of bank business model changes. We analyse the relationship between fee and commission income share and banks' performance in terms of profitability, risk and risk-adjusted profitability in the European Union. We applied the System Generalized Method of Moments to a unique data set of 329 EU banks in the period 2005-2014, which resulted in three key findings. First, we did not find any diversification benefits by increasing the fee income share. Therefore, we can conclude that the increase in fee income share observed in recent years in EU banks was driven mainly by external factors, such as increased competition, rather than by internal reasons. Second, higher reliance on equity financing and better quality of provided loans enhance banks' performance. Third, bank business strategies and macroeconomic factors are crucial determinants of banks' performance.