Performance Of Banking Sector Research Articles

The Relationship Between Economic Development, Banking Sector Performance and Financial Globalization: Evidence from OECD Countries

The aim of this study is to examine the relationship between the economic development of the 11 OECD countries selected in the period 1990-2018, banking sector performance and financial globalization by integrating investments and trade openness as explanatory variables. The cointegration between variables is investigated by Pedroni, Kao and Westerlund tests and the long-term coefficients are determined by Driscoll-Kraay standard errors forecasters. Finally, the causality relationship between variables is tested in the Dumitrescu-Hurlin panel bootstrap approach. Empirical findings indicate the existence of cointegration between variables. The banking sector performance, financial globalization and investments have a statistically significant positive effect on economic development, while the trade openness has a meaninglessly positive effect. They also indicate a two-way causality between the economic development and banking sector performance and investments, and a one-way causality running from trade openness to economic development. Therefore, the findings make political recommendations for both policymakers and future studies.

Impact of board gender diversity on performance of public sector vis-à-vis private sector banks in India

Impact of board gender diversity on performance of public sector <i>vis-à-vis</i> private sector banks in India

An MCDA composite index of bank stability using CAMELS ratios and shannon entropy

AbstractThis study uses the multi-criteria decision-analysis (MCDA) approach to construct a composite performance index (CPI) directly from the CAMELS financial ratios. The CPI has several promising characteristics, such as (i) being an absolute measure of performance that allows for adding or removing data without affecting the existing scores; (ii) employing CAMELS ratios directly in its calculation without the need for normalization or imputation of positive values; (iii) employing the dynamic weighting system of data envelopment analysis (DEA); (iv) providing more robust insights on the Vietnamese banking system under the Shannon entropy approach; and (v) can be an alternative measure of bank stability, compared to the CAMELS ratings and z-scores. Based on a rich dataset of 45 Vietnamese banks spanning from 2002 to 2020, our findings suggest that the proposed CPI could offer an overall view consistent with other approaches for measuring banking sector performance and stability and identifying specific strengths and weaknesses of banks.

Measuring Impact of CAMELS Model on Financial Performance of Indian Commercial Banks

The purpose of this study is to examine the effects of CAMELS components on the financial performance of Indian commercial banks. To fulfill the objectives of the study,secondary data were collectedfor the fiscal year 2016 to 2021 from four public sector and four private sector banks based on their market capitalization. To analyse the data two econometric models are constructed using return on assets (ROA) and return on equity (ROE) as proxies for commercial banks’ financial performance as dependent variables and six CAMELS’s key indicators (capital adequacy, asset quality, management efficiency, earning quality, liquidity, and sensitivity to market risk)as independent variables. To determine the extent to which the independent variables have an effect on the dependent variable, panel ordinal least square regression with their assumption has been used. The findings of the study revealed that the financial performance of Indian banking sector as evaluated by ROA and ROE is statistically and significantly affected by capital adequacy, liquidity and sensitivity to market risk, whereas asset quality, managerial efficiency and earning quality is found to have insignificant impact on the financial performance of Indian commercial banks. In order to perform better, it is suggested that the commercial banks should focus more on the variables that have a substantial impact on their financial performance. Keywords: Random effect, ROA, ROE, liquidity, sensitivity to market risk, CAMELS.

Management of Corporate Distressed Debt: From Terminology to Statistics

The aim of the paper is to systematize definitive approaches of “problem (distressed) debt” and related terms in order to create a conceptual apparatus useful from the point of view of management entities, as well as to statistically study the dynamics and sectoral structure of problem debt based on the banking sector performance indicators in Russia and other countries in 2009–2023. As a result of the analysis of international and Russian documents in the field of banking regulation, two types of problem debt typologies have been identified: classifications of credit risk of the supervisory authority and recommendations of internal credit risk. Two approaches to the definition of “problem (distressed) debt” have been identified: a regulatory (accounting) approach based on the requirements of regulatory authorities and reporting standards; an identification approach that includes a list of various signs of problems. As a result of the synthesis of approaches, the article proposes the author’s understanding of the terms “overdue debt (credit)”, “problem (distressed) debt” and “problem asset”, taking into account the subject composition of debt managers, represented not only by banks, but also by trade creditors. As part of the preparation of the statistical review for 15 years, a constant excess of the share of “bad” loans (with no probability of repayment and complete depreciation of debt) over “problematic” ones was revealed, which confirms the low effectiveness of the banks’ preventive work to prevent borrowers from becoming problematic (troubled). The authors analyzed the dynamics of the ratio of non-performing loans (NPL) to the total volume of loans issued in 28 countries of the world, revealed a relatively high proportion of the indicator in Russia in recent years. An assessment of the sectoral debt structure of Russian companies showed the dominant position of the manufacturing industry, whereas in the structure of overdue debts, the main companies are from the real estate, wholesale and retail trade sectors. The work of credit institutions to manage problem debts is an important issue of ensuring the economic security of the state and should include monitoring the condition of borrowers based on a strategic map and a comprehensive analysis model, using the methodology of managing transformational projects for the financial recovery of troubled companies.

Moonlighting and Organizational Performance in the Nigerian Banking Sector

This study examined the effect of moonlighting on organizational performance in the Nigerian banking sector. It adopted a survey design that allowed the researcher to collect only cross-sectional data from the respondents. The questionnaire was administered to the staff of five (5) different banks in Lagos and Ogun states to seek their opinions. The responses were analyzed using regression analysis. The results revealed that, most of the respondents had heard and experienced moonlighting at various points of their career in the banking sector and that moonlighting negatively impacts firm performance in terms of employees’ productivity, profitability, and dividend payment. The study recommends the need for policies to be put in place. Terms of policies must be incorporated in the employment contract for employees to know the consequences of breaching the contract. Finally, disciplinary action should be taken on the affected staff to serve as deterrent to others.

Impact of ESG Score on Stock Performance in Banking and IT Sector

The awareness regarding Environmental, Social and Governance (ESG) has grown a lot in the recent past years. The paper mainly aims at investigating whether there is an existing relationship between the disclosure by the companies from the industry of Banking and Information Technology based upon Environmental, social and governance framework and the stock performance of the companies of the same industry. The study took variable as the ESG Score and annual share price of the top 5 companies each of Banking and Information Technology present in the NSE ESG INDEX between the FY2014 to FY 2023. The study has used correlation and ANNOVA to analyse the impact that ESG score has upon the share prices of the target companies. We have attained observation through our studies that the relationship that exists between the SDG score of 8 companies out of the 10 companies selected as a sample is significantly positive. This study mainly aims to determines the relationship amongst ESG disclosures and stock prices and if the relationship is positive, negative or neutral. Keyword - ESG disclosure, ESG index, ESG Score, Stock Price, Firm performances

English Assessing Banking Sector Performance: A Comparative Camel Study between Public and Private Banks

Purpose: To assess and determine the top-performing Indian public and private banks while examining any discernible disparities in their financial performance. Methodology: 12 public and 20 private banks were evaluated for financial performance from 2019 to 2023, using composite ranking and independent sample t-tests. Findings: All banks met the mandatory minimum requirement of a 9% Capital Adequacy Ratio, as revealed by the study results. The Bandhan Bank was the best performer in “Capital Adequacy” and “Earning Ability”, HDFC in “Asset Quality” and “Management Quality”, and Bank of India and IDBI Bank in “Liquidity Adequacy” parameters. Kotak Mahindra Bank secured the top position in the overall ranking, followed by IndusInd Bank and HDFC Bank. Punjab &amp; Sind Bank, Bank of Maharashtra, and UCO Bank occupied the bottom positions. Nevertheless, most of these banks lied in a similar rank region over the last five years except Bandhan Bank, RBL Bank, and DCB Bank, who had achieved substantial success. The test results indicated a significant difference in rank performance between public and private banks in the CAMEL model, except for ratios involving liquid assets to total deposits and total assets. Lastly, looking at the trend, the study found that private banks dominated the banking industry and grew faster than public banks. Moreover, public banks were not efficiently managing advances and assets, resulting in higher NPA. Practical implication: The result of this study will be significant to regulators, government, investors, customers, and management in making decisions based on market risk.

Service Innovation Performance in Sierra Leone's Banking Sector: An Empirical Analysis

This study investigates the innovation efficiency of Sierra Leone's banking sector, utilizing Data Envelopment Analysis (DEA) across 14 commercial banks representing 70% of the sector's total assets from 2017 to 2022. By analyzing existing financial and operational data, the study assesses performance variations and identifies disparities in innovation efficiency among these institutions. Findings indicate significant discrepancies in innovation efficiency levels, highlighting the critical role of strategic investment in technology and innovation for enhancing competitiveness and growth. This research contributes theoretically and practically to the literature on service innovation in banking in developing countries. It provides empirical evidence of the efficacy of DEA models in performance evaluation, offering benchmarks and strategic insights that could inform future policy and operational strategies. The study underscores the need for Sierra Leone banks to continually invest in innovative capabilities to maintain and enhance their competitive edge in a dynamic financial environment.

The Influence of the Banking Sector on Economic Growth and Commodity Prices: A Panel Data Analysis of Spain, France, and Romania

This study aims to investigate the impact of the banking sector on economic growth and commodity prices. Through panel data analysis, the research explores the relationship between the banking sector and economic growth in Spain, France, and Romania from 2000 to 2020. The findings reveal a positive correlation between the strength of the banking sector and economic growth across these nations, underscoring its pivotal role in fostering economic expansion and subsequently improving commodity prices. Additionally, this study evaluates various regulatory measures crucial ensuring the banking sector’s sustainability and preventing financial crises, including credit risk management, lending policies, liquidity constraints, and international financing and investment strategies. By analyzing the interplay between regulatory measures and banking sector performance, incorporating variables such as non-performing loans, household debt, liquid liabilities, government consumption expenditure, foreign investments, and trade openness, this research provides policymakers with valuable insights to formulate effective strategies for promoting economic stability and ensuring the sustainability and growth of the banking sector.

Navigating fintech innovation: Performance, trust, and risk factors in UAE's banking sector

This study was conducted to identify the determinants of fintech adoption in UAE financial service firms, specifically in the banking sector. Towards this direction, the study identified a set of factors such as performance expectancy, effort expectancy, facilitating conditions, perceived trust, and perceived risk as the factors affecting fintech innovation adoption. The data for this study was primary in nature; the sample used consisted of 330 managers from UAE financial services firms. Factor analysis and regression analysis were performed to arrive at the study results, which confirmed that fintech adoption has a significant positive impact on performance expectancy, effort expectancy, and perceived trust, but it has a significant negative impact on perceived risk. The results of the study recommend training employees and engaging customers for better adoption of fintech technology.

A Study on Risk and Return Analysis and Data Envelopment Analysis of Public and Private Sectors Banks: A Five -Year Study (2018-2022)

Risk and returns are like two faces of the same coin, if an investor wants to gain higher returns, he must also accept the fact that this would also increase the amount of risk involved. Most of the times, individual decision process is influenced by risk and return analysis. The study is focused on analysing the performance of those nationalized banks listed in the NSE with respect to return, risk and beta for the period 1st January 2017 to 31st December 2017. The term risk is a situation in which the possibility of the consequence can be predicted, but uncertainty is the situation where the possibility cannot be predicted. Risk and uncertainty are part and parcel of investment The possibility of risk is a loss for the investors. The methodology adopted includes analysis of the performance of banking sector considering Bank Nifty Index as benchmark. Risk and return of banking stocks as well as Data Envelopment analysis method is used for analysing the efficiency of banks. The entire study is based on secondary data collected from the NSE. The data collected was based on the monthly prices of the bank stocks listed in Bank Nifty. The reason for selecting monthly prices is to measure the shortterm variations in the banking stocks due to various other internal and external factors. The findings of the study revealed that if the investors are ready to take high risk for more returns, the investors are suggested to invest in stocks like Bank of India and Punjab National Bank in which risk and return are high. The investors who prefer low risk and return are suggested to invest in Axis Bank stock.

Bank diversification and performance: Empirical evidence from Japan

AbstractThis article examines the relationship between bank diversification and performance in the Japanese banking sector. We use panel data from 141 banks over the period 2000–2022 to investigate whether banks can improve profitability and reduce risk through diversification strategies. Our evidence shows that diversification can improve bank profitability at the cost of a decline in net interest margins, suggesting banks are using the interest business as a loss leader to promote other business lines. We find that asset diversification has a risk‐reducing effect, which supports the portfolio hypothesis. Some evidence also implies that there is a more complex nonlinear relationship. This can be partly attributed to bank type, as the diversification effects vary across different types of banks. Furthermore, the decomposition of non‐interest income reveals that fees and commissions negatively influence return on assets while simultaneously reducing bank risk.

Board gender diversity and bank performance in Jordan

Board diversity is crucial for corporate governance and improves corporate outcomes by aligning management with stakeholders’ interests. Compared to advanced environments, Jordan’s decent sociocultural backdrop exhibits a higher level of gender bias. This study investigates the influence of board gender diversity (BGD) on Jordanian banking sector performance, an under-explored area. This quantitative paper employs Ordinary Least Squares (OLS), random, and fixed-effect approaches to analyze 182 bank-year observations for balanced longitudinal data analysis. These approaches correctly establish the BGD-Tobin’s Q nexus during 2010–2022. The coefficient of determination was 70.57%. The model confirms a positive correlation between BGD and market-based performance indicators. Findings support agency and resource dependency hypotheses, showing BGD’s role in decision-making. Hence, a one-unit increase in BGD causes a 37.2-cent increase in Tobin’s Q measure. Moreover, a one-unit change in board independence, board meetings, size, women’s representation in top management, and capital adequacy ratio, assuming all other factors remain constant, results in Tobin-Q changes of 2.57 cents, 32.8 cents, 5.78 cents, 51.2 cents, 30.55 cents, and 22.86 cents, respectively, and the same direction. The results show how BGD enhances bank performance and contributes to relevant theories. The results are vigorous in a variety of identification and estimation methodologies.

The Influence of Digital Banking Services on Financial Performance: A Focus on Customer Experience

This study highlights the critical role that customer experience plays in illuminating the complex relationship between digital banking services and the private banking sector's financial performance. This study investigates the mediating relationship between customer experiences in digital banking and financial performance. An online survey questionnaire is based on a convenience sample technique; cross-sectional data is employed in this study to conclude the findings. Three hundred sixty-one functional responses were extracted, and the structural equation model (SEM) was used to analyze the data to provide the final results. This research study may provide policymakers and banking sector planners in Pakistan with a fresh perspective on how to provide particular thought and create an environment that can be helpful for the achievement of profitable financial benefits. The impact of digital banking services and customer experience on the financial performance of the private banking sector of Hyderabad, Sindh, Pakistan. This research will explore how digital banking services ensure easy information delivery, minimize fraud, and provide marketable products to provide the best services to customers and enhance financial performance. With this practice, practitioners and policymakers can make such policies that can ultimately enhance the financial performance of the private banking sector.

Financial Inclusion Policies and Performance of Nigerian Listed Deposit Money Banks

The development of modern technology for financial transactions poses exciting enquiries to both the finance sector operators and policy formulators with regard to appropriateness of previous institutional measures and availability of devices that will guarantee efficiency, effectiveness and financial stability of fiscal policies. This study evaluates the impact of financial inclusion strategies on the performance of Nigeria’s banking industry. To get the intended outcome, this study employs an ex-post facto research strategy to investigate the relationship between financial inclusion and the economic performance of the Nigerian banking industry. The data utilised in this study is sourced from various secondary sources from 2009 to 2019. The study included descriptive statistics and the Ordinary Least Square method of Regression analysis. The findings of the study suggest that the adoption of Point of Sale (PoS) terminals significantly influences the overall efficiency and effectiveness of the banking industry in Nigeria. Additionally, it revealed that financial transactions conducted through Automated Teller Machines (ATMs) have a substantial impact on the Return on Equity (ROE) of the banking industry in Nigeria. On the other hand, it was determined that Mobile Money Transfer did not demonstrate a significant impact on the performance of the Nigerian banking sector. The report so suggests, among other recommendations, that the Central Bank of Nigeria should conduct a downward revision of electronic payment transaction rates in order to foster greater financial inclusion.

Economic uncertainty, public debt and non-performing loans in the Eurozone: Three systemic crises

Recent systemic crises, from the Global Financial Crisis to Covid19 pandemic, have put geoeconomic uncertainty to the forefront of financial services decision-making and planning. Yet, to-date, research connecting economic policy uncertainty to banking sector risks and performance metrics is lacking. This paper examines the relationship between the Economic Policy Uncertainty Index on the non-performing loans across 19 Eurozone member states, using panel data for 194 banks during the 2001–2021 period. As the crises covered were endogenous to the banking sector regulatory and operational environments, we introduce a novel control for the interaction between crises severity and duration, and banking sector strategic and operating environment. This control is proxied by public debt changes which reflect fiscal measures deployed to ameliorate effects of the crises. We find that rising EPU during the crises is associated with higher NPLs and government debt. We also document how this relationship is changing over time and across different crises.

An assessment of banking sector performance in Indonesia

Purpose: This study examines the effect of dividend pay-out ratio (DPR), total assets, and asset growth on banking company performance, measured by return on assets (ROA) and net profit margin (NPM). Research methodology: Using purposive sampling, we obtained 67 banking companies as samples, comprising 33 unlisted firms and 34 listed firms on the IDX. This study observed a 9-year period from 2011 to 2019; thus, the total sample comprises 603 firm-year observations. Linear regression analysis was used to analyze the data. Results: The results show that DPR and total assets, namely ROA and NPM, have a significant effect on the performance of banking companies. Asset growth had a significant effect on NPM. However, asset growth has no significant effect on ROA. Limitations: We acknowledge that we solely used a banking corporation in Indonesia. Nevertheless, to demonstrate the bigger picture of the study findings in terms of banking performance, further studies should employ banking corporations in all emerging countries. Contribution: The results enrich the theoretical knowledge about these factors in financial performance, particularly in the Indonesian banking industry. Practical Implications: Corporation management might consider this finding when making decisions regarding dividend ratios, asset size, and asset growth. Further, management needs to pay attention to these factors when planning business strategies and making decisions to achieve higher financial performance. Novelty: To the best of our knowledge, this is the first study to examine the relationship between DPR, total assets, and asset growth to performance that employs samples of the banking industry from listed and unlisted companies on the IDX.

Enhancing Banking Sector Performance: Assessing IT Capabilities with COBIT 2019 Framework Analysis

The growth of Information Technology within companies has been following its advancements. However, the unattained objectives stem from inefficient transitional systems within the company, leading to inaccurate data and project delays, consequently hindering the fulfilment of corporate expectations. This study aims to offer developmental recommendations through the assessment of IT governance capabilities. The measured capabilities reveal that objectives within processes BAI03, BAI05, and APO03 are stagnant at level 2. The findings from these processes highlight areas for improvement that can be rectified by the company. The proposed enhancements align with recommendations focusing on transitional system development and monitoring to enhance data transition efficiency, thus establishing a monitoring system to mitigate errors resulting from inefficient data transitions.

The CSR perspective: Interplay of technological innovation, ethical leadership and government regulations for sustainable financial performance.

The financial performance of Chinese public and private sector banks is changing over time. There is no stability in the financial performance of Chinese banks which hurts businesses and the market. The purpose of current research was to determine the influence of corporate social responsibility (CSR) on driving the sustainable financial performance of Chinese banks. From methodological perspective, data was collected from 329 banking sector employees from China to partial least square-structural equation model (PLS-SEM) is employed for data analysis. The research used SPSS 24 and Smart PLS 4 as statistical analysis tools. This research confirmed that achieving sustainability in financial performance for Chinese banks can be achieved with CSR influenced by technological innovation, ethical leadership, and government regulations. This research has statistically confirmed that transformational leadership leading to CSR with technological innovation, ethical leadership, and government regulations can make significant improvements in financial performance. The framework developed by current research is a novel contribution to the literature. The findings of this research improve the literature on the banking sector and advanced performance. Furthermore, this research has highlighted significant ways that can help the banking sector employees to improve their financial performance with sustainability.