Bank Policy Research Articles

Exploring bankers' perspectives on Green Banking in commercial banks of the Kathmandu Valley

The perception of bankers on green banking practices in commercial banks in the Kathmandu Valley can provide valuable insights into the current state of sustainable practices. To effectively implement sustainable practices, banks must develop policies and strategies, provide training and education, and promote green products and services. However, developing nations face challenges such as lack of infrastructure and resources. In order to investigate the perception of Green Banking in developing country like Nepal, we chose banking professionals working in the Kathmandu Valley, the capital city of Nepal. Structured questionnaires were used to collect data and PLS-SEM was used to analyze bankers' perception on Green Banking in commercial banks of the Kathmandu Valley. A sample of 403 individuals was gathered using the KOBO toolbox from the Kathmandu Valley. Purposive sampling technique is used as a sampling technique of non-probability sampling. This study tested five hypotheses on the relationship between banking policy, daily operations, investment, and green banking practices in commercial banks in the Kathmandu Valley. Hypotheses H2, H3 and H4 are supported. The study identifies a lack of awareness among bankers in the Kathmandu Valley about green banking practices, highlighting the need for better education and training. Despite challenges such as trust issues and limited technology knowledge, green banking offers significant potential for enhancing business operations, customer loyalty, and environmental responsibility.

Bank Specific Factors on the Financial Performance of Commercial Banks in Nepal

Purpose-This study examines the bank-specific factors and financial performance of commercial banks in Nepal. The study period of Nepalese banks’ performance during a period ranging from 2013 to 2023. Design/methodology/approach- Descriptive research design has been used in analyzing the performance of commercial banks. Banks' performance is measured in terms of ROA, ROE, and NIM. Profitability has been taken as the proxy of performance of banks in this study. Based on the findings of the study. Findings- Nepali commercial banks are performing moderately. They are not able to increase their performance level significantly. Their performance measured in terms of profitability is not very satisfactory. However, observing the significant decrease in level of non-performing assets, it is concluded that the internal management, credit policy, and business management aspects of the Nepalese commercial banks have been improving. On the other hand, Nepalese commercial banks are well-capitalized and do not have solvency problems. Because of maintaining an adequate capital adequacy ratio, they have the capacity to absorb unexpected losses and safeguard the depositors, investors and creditors. Original/Value- Few studies have addressed the interplay of microfinance on poverty alleviation in Nepali context.

PENGARUH GREEN BANKING TERHADAP PROFITABILITASBANK BUMN DI INDONESIA PERIODE 2019-2023

The implementation of green banking is one of several factors that can have an impact on banking profitability. In addition to being a form of responsibility and participation of banks in protecting the environment, in fact the implementation of green banking has a fairly large influence on profitability. This study aims to understand the impact of green banking policies and daily operations on the profitability of state-owned banks in Indonesia in 2019-2023. Green banking policies are measured by 16 indicators set by Shaumya & Arulrajah (2016) and daily green banking operations are measured through the frequency of transactions via mobile banking, both of which are independent variables. Meanwhile, the dependent variable is profitability which is measured by the Return on Assets (ROA) ratio. To understand the influence between variables using panel data regression analysis. The results reveal that; 1) partially the impact of green banking policies on the profitability of state-owned banks is positive and insignificant; 2) partially the impact of daily green banking operations on the profitability of state-owned banks is positive and insignificant; 3) simultaneously the impact of green banking policies and daily operations on the profitability of state-owned banks is positive and significant

Doing good in times of need: Green finance policy and strategic corporate social responsibility

This study investigates the effect of a green finance policy on the corporate social responsibility (CSR) activities of firms in heavily polluting industries. Based on the 2017 policy of the People's Bank of China (PBC), which incorporates green finance into its macroprudential assessment system, we employ the difference-in-differences method to show that firms in heavily polluting industries have significantly improved their CSR performance after the implementation of the PBC's green finance policy. In response to the negative effect of the PBC's policy on their financial position, affected firms strategically engage in CSR activities in the hope that appearing socially responsible will help them recover from their adverse position. Furthermore, firms in heavily polluting industries that enhance their CSR performance after the PBC's policy have benefited from reduced bank credit transaction costs and have obtained more bank loans. The improvement in CSR performance is mainly concentrated in firms that are non-state-owned, small in size, highly dependent on external financing, and receiving more media attention. Overall, this study reveals a social consequence of the PBC's green finance policy on the CSR performance.

Bank Lending and Policy Interactions—A Comprehensive Assessment for the G20 Countries

ABSTRACTThis study examines the joint impact from supervisory requirements, monetary policies and rescue packages on the supply of bank loans. Evidence is obtained from conceptual considerations and the empirical investigation of G20 banks over the period 1995–2021. To prepare the analysis of interactions, we first address modelling concepts and consistently identify the effects on bank lending that come from each of the regulatory approaches in isolation. Second, we empirically assess the effects that result from the parallel application of policy actions. Short‐term liquidity ratios in combination with further variables mostly associate with positive interaction effects. In contrast, the joint assessment of long‐term liquidity ratios as well as leverage ratios with other policy actions usually provides negative effects. Overall, the results suggest that unconventional monetary policy and rescue actions can stimulate bank lending only after the institutions have restored their own stability. Interactions of policy actions matter, and both regulatory authorities and bank management should consider them.

What drives green banking operations in Bangladesh? Findings from PLS-SEM and BSEM

PurposeEnvironmental threats are becoming severe in developing and undeveloped countries. It urges to know how green banking operations can foster sustainable development in these regions. This study aims to provide empirical evidence of the determinants of green banking operations in Bangladesh.Design/methodology/approachBased on the socially responsible investing (SRI) theory, this study examined the hypothesized relationships using a partial least square structural equation modeling (PLS-SEM) approach. The Bayesian SEM (BSEM) through a Markov Chain Monte Carlo (MCMC) approach was also used to validate the study's first-order model.FindingsThe findings show that sustainable innovativeness, green investment and green banking policy substantially and positively change green banking operations. Notably, green investment is the most influential predictor of green banking operations, driving banks to establish sustainable economic systems within the country.Practical implicationsThe findings offer valuable guidance for scholars, financial institutions, policymakers and bank managers to develop and implement effective strategies for green banking operations. These strategies may significantly contribute to achieving the sustainable development goals (SDGs) in Bangladesh.Originality/valueThis study is ground-breaking in associating sustainable innovativeness and green banking operations from a developing country. It enriches our understanding of green banking, aligning with existing literature. Additionally, PLS-SEM and BSEM provide strong validation of the proposed theoretical model.

Taxes under stress: bank stress tests and corporate tax planning

PurposeThis paper aims to examine how bank stress tests affect bank tax planning.Design/methodology/approachThe study uses US bank stress test bank size thresholds and a regression discontinuity design to investigate the effect of the Dodd-Frank Act and the instituted bank stress tests on bank tax planning. We use different measures of tax planning, including bank-specific measures and measures of tax avoidance, tax aggressiveness, and effective tax planning from recent literature. Our regression discontinuity and difference-in-differences regression analyses include bank and year fixed-effects and lagged bank characteristics to control for potential endogeneity.FindingsThis study finds that stress tests have the unintended consequences of intensifying tax planning and increasing tax avoidance. Stress-test banks increase tax avoidance by accelerating charge-offs, net interest, and non-interest expenses. However, this increase in tax planning is not optimally maximized, leading to lower effective tax planning compared to non-stress-test banks. Banks with a substantial increase in tax avoidance under the Dodd–Frank Act tend to increase their risk, investing in high-risk-weight assets and lending in riskier loan categories. These findings are consistent with tax minimization conditions under added regulatory attention and policy uncertainty.Originality/valueLiterature on bank tax planning is limited. Most tax avoidance literature excludes financial institutions such as bank holding companies mainly due to differences in business practices and regulatory frameworks. This study is the first to investigate tax planning behavior among US banks. The current study thus extends the research field by examining the effect of bank transparency regulations, such as bank stress tests, on bank tax planning activities. Our findings have a direct bank policy implication. They show that stress testing has the unintended consequences of increasing tax planning activities and consequently increasing risk-taking on banks with high tax avoidance, which goes against the goals of stress testing regulations.

FACTORS INFLUENCING CONTINUATION INTENTION OF MOBILE BANKING USAGE: EXTENDING EXPECTANCY CONFIRMATION MODEL (ECM) AND ARTIFICIAL INTELLIGENCE (AI) WITH SECURITY AS MODERATION

This study aims to identify factors that influence continuance intention to use mobile banking by extending the Expectancy Confirmation Model (ECM) and integrating Artificial Intelligence (AI) and security as moderating variables. Data were collected from mobile banking users in Southwest Papua and analyzed using a Structural Equation Model (SEM) with the Partial Least Squares (PLS) approach. The results showed that confirmation, perceived usefulness, customer experience, and satisfaction significantly influenced continuance intention to use mobile banking. In addition, artificial intelligence that is considered intelligent and anthropomorphic also increases perceived usefulness and confirmation of expectations. The security aspect was found to moderate the relationship between perceived usefulness and satisfaction, thereby increasing user satisfaction. These findings provide important insights for mobile banking developers and policy makers to increase the adoption of digital banking services.

ROLE OF FINANCIAL INSTRUMENTS IN ENSURING LIQUIDITY AND STABILITY OF THE CURRENCY MARKET OF UKRAINE IN THE CONDITIONS OF MILITARY CONFLICT

In the conditions of military actions, liquidity of the currency market is of critical importance for the financial stability and security of the state, which stipulates significant relevance of the issue of instruments of liquidity provision. The research aims to identify the influence of the instruments of the National Bank of Ukraine (NBU) on the liquidity of the currency market of Ukraine within the context of long-term military conflict.The methods of regression analysis, correlation analysis, and analysis of variance were used in the study to determine the leading factors that influence the liquidity of the currency market in Ukraine in the conditions of military conflict.The study of the liquidity of the currency market through the prism of linear regression reveals the relation between the core economic indicators and the level of liquidity of the currency market during the military conflict. The model with a coefficient of determination 0,774 was found to effectively describe 77,4% of liquidity variability, underlining the significant influence of such factors as central bank policies and macroeconomic conditions. Significant coefficients for central bank interventions (1,7867), regulatory measures (59,8199), volume of international aid (-1,5684) and inflation (-99,9780) indicate their influence on the liquidity of the currency market in the conditions of military conflict. The influence of regulatory measures with a correlation of 0,59 is especially important.The article emphasises the necessity for minimising dependence on external financing and inflation control through monetary measures to ensure price stability. Further study perspectives involve consideration of the influence of digital currency of central banks on the liquidity of the currency market.

Loan loss provisions of European banks – Does macroprudential tightening matter?

In this paper, we study the relation between macroprudential policy and loan loss provisioning policy of European banks between 1996 and 2019. We analyse both the level of loan loss provisions (LLP) and their use in income smoothing by banks. Overall, we demonstrate that macroprudential tightening actions are associated with changes in LLP policy. Banks decrease their LLP when macroprudential policies are tightened and this result is particularly strong under Basel III. In parallel, we find that macroprudential tightening exacerbates income smoothing in the pre-Basel III period and diminishes it under Basel III. Links between LLP policy and macroprudential policy strongly depend on the category of tools that are being tightened. In particular, instruments relating to provisioning standards are associated with increased LLP, while lower LLP are observed when a tightening occurs in tools connected with taxes on financial institutions and activities.

Asymmetric impact of climate change on banking system stability in selected sub-Saharan economies

This study is an empirical examination of the asymmetric impact of climate change on banking system stability in selected sub-Saharan economies. The study leverages a quantitative research approach through a panel non-linear ARDL framework and data from 29 selected economies, which spans 1996-2017. Findings from the study reveal that in the long term, partial sums of temperature have an insignificant relationship with banking system stability. Further, partial sums of precipitation are negatively related to banking system stability in the long term. The finding indicates that both positive and negative precipitation do harm banking system stability in the selected sub-Saharan economies. Moreover, we find that partial sums of greenhouse gas emissions had an insignificant relationship with banking system stability. In addition, we conclude that greenhouse gases (positive and negative) do not impair banking system stability in selected sub-Saharan economies in the long term. We surmise from the findings that both positive and negative climate change indexes are harmful to banking system stability. On the short-term asymmetric impact, we discover that partial sums of temperature, precipitation, and climate change index do not harm banking system stability. However, negative greenhouse gas emissions are pernicious to the banking system’s stability in the short term. Conversely, positive greenhouse gas levels were statistically insignificant. The study recommends that central banks and monetary authorities in Sub-Saharan Africa design green banking policies to push the climate change agenda in the banking sector.

Green Banking and Performance of Commercial Banks in Kenya: An Empirical Model Approach

Green banking involves financing practices by commercial banks, which are environmentally compliant and sustainable. Empirical studies reveal that financial institutions have adopted green banking policies in Kenya, Africa, and other developing countries worldwide. However, the adoption of green financing policies is still shallow compared to their industrialized counterparts. Therefore, the main aim of this study is to establish the relationship between green banking and the performance of commercial banks in Kenya. The specific objective of this study is to determine the relationship between electronic transaction volumes and profit before tax of commercial banks in Kenya using quantitative research paradigm and longitudinal time series research design. The study is anchored on the CAMEL model, CAMPARI framework and 5Cs lending model. Results of the study reveal that electronic transaction volumes significantly influence profit before tax of commercial banks in Kenya ((β =.64, p =0.000<0.05). Therefore, it is concluded that green banking influences the performance of commercial banks in Kenya. This study is essential to scholars, regulators and commercial bank managers.

Bringing a justice lens to ocean access

Maritime spaces have transformed rapidly the last decades. Open waters and beaches have become restricted and sometimes privatized enclosures. Different forms of extractivism have led to biodiversity loss and in particular to declining fish populations. Additionally, large-scale coastal and marine infrastructure projects, such as deepening and widening of shipping channels, have destroyed important habitats. These profound socio-ecological transformations have had an impact on geographies of resource access and control and consequently on the ability of actors to access, use and benefit from coastal and marine space. Moreover, changes in the lending policies of local banks have posed additional and severe challenges for fishers’ ability to fish. Such processes effect in particular the livelihoods of coastal and small-scale fisher communities and consequently increase existing inequalities and injustices. We suggest to bring the literature on ocean justice and access and property into dialogue and develop a heuristic for analysing inequalities and justice claims. Based on qualitative case studies focussing on the Sicily (Italy), the Elbe estuary (Germany) and the Lofoten (Norway), we show that investigating access relations facilitates the identification of unequal societal relationships with nature. Our cases illustrate that power relations in which privatization processes and access relations are embedded, determine whether injustices can be translated into justice claims and how successful these claims are. Moreover, unequal socio-ecological relations are also influenced by what we call translocal justice. Translocal justice is often lost in processes of commodification, privatization and in the rescaling of political authority and power, as local ties and confidential relationships vanish.

Embodiment of Economic Democracy Aspects in National Banking Law

This research discusses the embodiment of aspects of economic democracy in Indonesian national banking law. Economic democracy is defined as a system in which the distribution of wealth and economic opportunity is done fairly and equitably. This research evaluates the extent to which the principles of economic democracy, such as fair access to banking services, financial inclusion, and consumer protection, are implemented in national banking regulations and policies. The method used in this research is qualitative analysis with a normative juridical approach, which involves the study of legal documents and related regulations. The results show that although there are some efforts to integrate the principles of economic democracy in national banking law, there are still gaps in its practical implementation. Recommendations are given to strengthen regulations and policies to be more aligned with the objectives of economic democracy, so that economic benefits can be felt by all levels of society.

Nexus between green credit efficiency and strategic, business and management digital transformation–based on 114 commercial banks in China

With the expansion of green finance and the digital economy, the discussion on the evolution of green credit business and the digitalization of commercial banks have grown in prominence. However, limited research has been done on how different degrees of digital transformation in commercial banks—the main issuers—affect the way of green credit efficiency. To fill this gap, based on data from 114 Chinese commercial banks between 2010 and 2021, this paper explores the impact of digitalization on the green credit efficiency through the integration of several methodologies. The paper indicates that enhancing the digitalization, business digitization, and management digitization of commercial banks can greatly enhance the effectiveness of green credit businesses, but the impact of strategic digitization is not significant. Further analysis reveals that digitization facilitates the expansion of overall bank assets, thereby bolstering the green credit business. It also investigates the characteristics of commercial banks and the geographical distribution of their headquarters, indicating a diminished promotional impact for urban and rural banks, as well as banks in the central areas. Finally, this study contends that commercial banks ought to leverage digital resources extensively to facilitate digital transformation and bolster the advancement of green credit operations. It is also recommended that the government should implement preferential policies for regions and banks exhibiting slower developmental progress.

Defence sector and military cooperation between Turkey and the Central Asian Republics: limitations and prospects amidst intensified regional and global rivalry

ABSTRACT Recent Turkey-Central Asian Republic integration attempts are notable. Regular visits, Turkic World summits, economic steps to build a cooperative development bank, defense procurement, and regional policy collaboration have driven this trend. China's Bridge and Road Initiative, NATO's exit from Afghanistan, the Taliban's ascent, and the Russian elite's use of the “Russkiy Mir” after the Russo-Ukrainian War make the “Turkic world” geopolitically vital. Global and regional power struggles will make the region's natural resources and strategic location more important in coming decades. Turkey-Central Asia defense cooperation may also shape the region. This study aims to determine if Turkey-region defense cooperation improves Turkic integration. The states utilize regional military ties and diverse tools for regional and global objectives. The probe will begin with “Turkic integration” and recent Turkish defense industry achievements, then regional defense ties. Finally, a comparative analysis will reveal regional integration constraints and potential, focusing on defense cooperation.

Loan Eligibility Prediction Using Machine Learning

Technology has made many improvements, and the banking industry is no exception. Submission of loan applications by people are so many every day, making it more difficult for bank to approve loan. To choose an applicant for loan approval, Banks must consider other bank policies also. Based on a few factors, the bank must choose the proposal that has the best probability of getting granted. It would be time-consuming and unsafe to individually check each applicant before recommending them for loan approval. Based on the prior performance of the person to whom the loan amount was previously accredited, we utilize a machine learning technique in this study to forecast the person who is trustworthy for a loan. This will check the whether the applicant is eligible for the loan or not based upon the any previous loan or running loans whether the applicant is paying back the loan within the deadline or not and it will check many other factors to shortlist the applicant is genuinely eligible for loan or not.

EFFICIENCY OF MONETARY POLICY IMPLEMENTATION AS A BASIS FOR CENTRAL BANK STABILISATION POLICY UNDER MARTIAL LAW (UKRAINIAN AND ISRAELI PRACTICES)

The purpose of the paper is to summarise and present the anti-crisis practices of a central bank during martial law in the country, based on the experience of the National Bank of Ukraine and the Bank of Israel. The research methodology is based on an analysis of reports, guidelines, statistical data, scientific articles, legislation bases, and other relevant materials. One of the methodological aspects of this study is a comparison of the knowledge acquired about the regulations implemented by the two central banks after the introduction of martial law in the countries. The objective is to identify potential lessons learned for the banking regulations of Ukraine and the State of Israel. The results of the study show that the practical implementation of stabilisation measures by central banks is crucial for achieving financial stability of the state both during and after wartime, as well as the ability to predict possible deepening of crises and minimise their consequences. The tools and methods used by these central banks differ. In particular, the NBU's main monetary policy instrument was foreign exchange interventions, while the BoI actively used the key policy rate. The proper formation of international currency reserves and the possibility of using them during a war-related crisis is critical for both countries. This fact confirms that crisis management has different types of scenarios. Each anti-crisis scenario is unique. This paper highlights the practical need for interaction between monetary and macroprudential policies of the central bank in wartime. It demonstrates various combinations of methods and instruments of the central bank's monetary policy. This study also shows the interdependence of the economies of these two countries. Practical implementation. This analysis provides insight into the anti-crisis activities of central banks during unpredictable periods in a country's life, namely, during martial law. At the present stage, banking systems do not often face the challenges of war. Therefore, studying each case is important for improving theoretical knowledge and deepening practical research. Value / Originality. The author of the study collected the experience and practices of stabilisation activities of the central banks of Ukraine and Israel during the war.

Basel Implementation in Banking in Indonesia

This study’s goal is to determine the application of Basel in banking in Indonesia. Bank Indonesia in issuing banking regulations refers to the Bank for International Settlement (BIS) policies related to liquidity, especially as a reference to protect Indonesian banks from crises caused by insufficient liquidity needs in the Bank. policies from the BIS will be accommodated first by the Islamic Financial Service Board (IFSB). IFSB is used as a reference for regulators to make banking policies. One of the IFSB committees, namely the Basel committee in the field of banking supervision, has issued provisions that are a reference for international banking, namely Basel 1, Basel II and Basel III. This study collects data using a descriptive qualitative methodology and secondary data obtained from literature studies. The results of the research show that banks in Indonesia have implemented regulations according to the Basel III international standard OJK has adopted Basel recommendations and has implemented Basel 1, 2 and 3 although there are some shortcomings but the application of risk management is more effective and efficient. The application of the continuation of Basel III is adjusted to the conditions of national banking proportionally.

PENGARUH VARIABEL MAKROEKONOMI TERHADAP DANA PIHAK KETIGA PADA BANK KONVENSIONAL DI INDONESIA

This study aims to determine the effect of macroeconomic variables on the collection of third party funds at conventional banks in Indonesia. The data used is monthly time series data from January 2017 to December 2022. The method used in this study is the Vector Autoregression (VAR)/Vector Error Correction Model (VECM) method. However, in choosing between the two methods, stationarity test must be done first. The variables used include inflation, BI rate, crude oil price, and gold price. The results of the study show that the inflation variable has a positive influence, while the BI rate, crude oil price, and gold price variables have a negative influence on third party funds of conventional banks in Indonesia. This research is expected to be applied to banking policy makers with the aim of being insightful to be able to adjust policies when there is instability in macroeconomic variables and for economic policy regulators in determining policies that can stabilize the banking system. In addition, it is used as knowledge for customers to make better decisions regarding investment portfolios with the aim of identifying risks based on macroeconomic conditions.