Profitability Risk Research Articles

Analysis of The Efficiency Allocative of The Tabela Rice Farming System in Tondowolio Village, Tanggetada Sub-District, Kolaka

This research aims to determine the efficiency of the use of factors (seeds, fertilizers, pesticides, the number of workers) allocatively in the wetland rice farming system in the Tondowolio Village, Tanggetada District, Kolaka Regency; This is to determine the risk of lowland rice farming with a table system in Tondowolio Village, Tanggetada District, Kolaka Regency. This research was conducted in Tondowolio Village, Tanggetada Subdistrict, Kolaka Regency, using an analysis of allocative efficiency and farm risk. Results: The seeds with an NPMx / Px value of 499.9 1 so that the use of seeds in the research area was not efficient, the allocative efficiency of fertilizers with an NPMx / Px value was 6.18 1 so that the use of fertilizers in the research area was not efficient, the allocative efficiency of pesticides with a value NPMx / Px of 1357.56 1 so that the use of seeds in the research area is not efficient, the allocative efficiency of HOK (labor) with an NPMx / Px value of -237.75 1 so that the use of seeds in the research area is inefficient. Farm risk analysis obtained a production risk value of 0.41, a price risk of 0.008 and a risk of profit of 0.41. The value of production risk, price risk, and profit risk is directly proportional to the risk faced by farmers, the greater the coefficient of variation obtained, the greater the risk that must be borne by farmers, and vice versa.

Profitability prospects, risk aversion and time preferences of soybean producers in the region of Santarém, Brazilian Amazon: perspectives for an ecological transition

AbstractReducing adverse environmental consequences of modern industrial agriculture requires an ecological transition of agricultural practices. An important determinant of adoption of new agricultural practices by producers is the perceived profitability of these practices. The profitability of ecological agricultural practices tends to rely on improved crop prices and reduced input use. Transition to such practices often entails increased profit volatility (risk) and long-term returns (temporal profile). Ideal candidates for transition would therefore be aware of the output price and input costs dimensions of their profitability, as well as willing to assume some risks and show patience to value long-term returns. We assessed the potential for such a transition along these three dimensions (profitability, risk aversion and time preferences) in a group of soybean producers in the agricultural frontier of the Brazilian Amazon. Primary data were collected using a questionnaire and economic tests in the region of Santarém (State of Pará, Brazil). We found that, while these producers have a low-risk aversion that could favor the adoption of new ecological practices, their focus on increasing yields to enhance profits and their high discount rates considerably reduces their propensity to adopt these practices.

A decision-making model for a retailer considering a new short-term contract and flexible demands

Electricity retailers encounter several uncertainties in a pool-based electricity market, such as uncertainties in demand and market price. This paper presents a new stochastic model for an electricity retailer with flexible demands to facilitate its energy procurement. The retailer, in addition to participating in the wholesale market, can exchange with a wind producer through a contract under the new short-term trading mechanism. In order to facilitate energy and financial exchanges, to estimate the spot market price, and to send contract information to system operator, the short-term trading operator is introduced. Following the day-ahead market clearing, the wind producer and the retailer submit their decisions on the contract to the introduced operator. The operator allocates possible energy transactions based on the surpluses or shortages of the parties. The uncertainty associated with market prices, demand, and the exchangeable power within short-term trading mechanism are considered by sets of scenarios. Also, profit risk is considered by conditional value at risk. The resulting stochastic linear formulation is applied to two case studies to show the effectiveness of the proposed model. Results indicate that the proposed mechanism increases the profit of the retailer during the short-term operation.

Milk Income over Feed Cost Margin, Margin Protection Program, and Farm Finances for a Sample of Wisconsin Dairies in 2000–2017

AbstractThe relationship between farm‐level milk income over feed cost (IOFC) margin and national margin, profit risk, and terminal stress risk are investigated using data on Wisconsin dairy farms over the period 2000–2017. Results show that farm‐specific IOFC margins were not highly correlated with the national margin, higher farm IOFC margin increased profit level and volatility but decreased downside risk, and farm terminal stress appears unaffected by either the margin or the related payments. These findings suggest that, for sample farms, a policy that targets IOFC margin might reduce downside risk of net farm income.

Analisis Kesehatan Keuangan Bank Syariah Mandiri Ditinjau dari Faktor Permodalan (CAR), Pembiayaan (FDR), Profitabilitas (ROA & ROE) Serta Risiko Kredit (NPF)

The aims of the research is to find out the financial soundness of Bank Syariah Mandiri (BSM) seen from the capital factor (CAR), financing (FDR), profitability (ROA & ROE), and credit risk (NPF). This research uses quantitative descriptive methods. The data used are the 2014-2018 financial statements. The results of this study indicate that BSM in terms of capital using the CAR ratio shows an average CAR ratio of 14.75%. This means that BSM in terms of capital is ranked very well. This means that BSM's ability to generate profits is ranked quite well. Bank Syariah Mandiri in terms of financing using the FDR ratio shows an average FDR ratio of 79.81%. This means that BSM's ability to repay short-term loans and meet agreed financing is at a healthy rating. Bank Syariah Mandiri in terms of profitability using the ROA and ROE ratio shows an average ROA of 0.53% and ROE of 6%. Bank Syariah Mandiri in terms of credit risk using the NPF ratio shows an average NPF ratio of 3.18%. This means that there is very little credit provided by Bank Syariah Mandiri and the bank is viewed from the aspect of credit risk, including in a good rating. From the results of these research, indicate that the the soundness level of Bank Syariah Mandiri (BSM) is in a good level of soundness.

Bank Board Network and Financial Stability in Emerging Markets

This study analyzes the relation between board network and financial stability of banks in India. We find that a larger board network is related to improvements in financial stability given by asset quality, insolvency risk, and volatility of profits. Further, the board network is more critical for the private sector banks in India. Our findings support the integrated resource dependence view of the board where well-connected boards are better able to monitor the management and provide strategic advice necessary to reduce risk. Unlike for non-financial firms, restricting the number of directorial positions for bank directors may not have any desirable effect on bank outcomes.

Constructing a banking fragility index for Islamic banks: definition impact on the predictive power of an early warning system

ABSTRACT This study aims to construct a banking sector fragility index for Islamic banks that gives substantial predictive power results. We develop various banking sector fragility indices using different combinations of proxies for credit, liquidity and market risk factors. Apart from the existing literature, we add profitability risk factor into fragility indices. Our results show that the predictive power of an Early Warning System (EWS) is highly sensitive to the proxies and combinations of the risk factors and, profitability risk has a positive impact on the predictive power results for Islamic banks.

EXPORT INTENSITY AND LEVERAGE: AN EMPIRICAL ANALYSIS OF SPANISH SMES

The aim of this study was to contribute to the literature debate on financial behavior and corporate capital structure by focusing on two aspects. First of all, we analyzed how the intensity of exports and therefore the percentage weight of foreign sales compared to total sales affect the leverage of companies. Secondly, we have analyzed which are the most significant factors influencing the financial behavior of SMEs. The financial information for the analysis were collected from the Sabi database of Bureau Van Dijk (BVD). To select the companies to be included in the sample, we followed a methodology capable of ensuring that the sample of export oriented and non-export oriented companies was adequately represented. The overall sample size was 2000 companies. The analysis showed that export intensity has a negative and significant impact on leverage, suggesting that as exports increase, leverage decreases. In addition, profitability and business risk are negatively related to leverage, while the tangibility of the assets and growth correlates positively with leverage.

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 Effect of the Arab Spring on the Performance of Islamic and Conventional Banks in Egypt: Which Model Performs Better Amidst Crisis?

This empirical study analyzes financial institutions and performance in times of external crisis and whether a difference in performance between Islamic (IBs) and conventional (CBs) bank models exists. Egypt surrounding the Arab Spring (2009-2013) is taken as a case study, comparing 6 CBs and 3 IBs. Financial ratio analysis is the main method employed, allowing performance to be measured by efficiency, capital adequacy, profitability, solvency, liquidity, and credit risk performance. Due to small sample size, the nonparametric Mann-Whitney U test and effect size analysis assess the significance of the ratio analysis results. Results show CBs have superior performance in all indicators other than Cost-Income and NIM. Efficiency performance for both models were equally volatile or alternately stable with progression through the crisis, while IBs increased capital adequacy and solvency during the crisis. IBs profitability was significantly negatively impacted by the crisis, other than related to NIM, while CBs increased profitability rates. IBs liquidity worsened, then improved midway through the crisis while CBs stabilized liquidity rates throughout. IBs improved credit risk midway through the crisis while CBs declined. Nonparametric results hold observed differences are insignificant and have weak effect size for all but the TENL ratio.

Water Supply Delivery Failures—A Scenario-Based Approach to Assess Economic Losses and Risk Reduction Options

Access to a reliable water supply is central for a well-functioning society. However, water supply systems are subject to a wide range of threats which may affect their ability to provide water to society. This paper presents a novel risk assessment approach that enables thorough analyses of economic losses and associated uncertainties under a range of water supply disruption scenarios. The purpose is to avoid sub-optimization when prioritizing between risk reduction measures, by integrating the full range of possible outcomes from low to high probability events. By combining risk analysis with cost-benefit analysis, additional information is provided on measures for leveraging investments in managing and reducing the risks. This enables the identification of the most economically profitable risk reduction alternatives and enables decision makers to build strategic capacity for operating in difficult and uncertain futures. The presented approach is exemplified on the island of Gotland, one of the most water scarce areas of Sweden.

Uniwersytet podczas informacyjnego tsunami

Luciano Floridi and Nick Srnicek claims that with a decline in manufacturing profitability, capitalism has turned to data as one way to maintain economic growth in the face of a slow production sector. In the twenty-first century data have become central to firms and their relations with workers and customers (Floridi, 2013; Srnicek 2017). The platform has emerged as a new model, capable of extracting and controlling immense amounts of data, and with this shift we have seen the rise of monopolistic firms. We are told that today we are living in an age of massive transformation. Platforms, big data, additive manufacturing, advanced robotics, machine learning, and the internet of things – create our current living environment. In the presented text I am going to ask what is the place of the university in such a new digital constellation? What are universities for in the time of platform capitalism? My main line of reasoning follows to idea of “entrepreneurial state”. An innovative university is understood as an analogue of an “entrepreneurial state”. Mariana Mazzucato has convincingly demonstrated that developments like railways, the internet, computing, supersonic flight, space travel, satellites, pharmaceuticals, voice-recognition software, nanotechnology, touchscreensand clean energy have all been nurtured and guided by states, not corporations. During the golden postwar era of research and development, two-thirds of research and development was publicly funded. High-risk inventions and new technologies are too risky for private capitalists to invest in (Mazzucato, 2014; Srnicek, Williams, 2015). Socializing of the risk and privatization of profits – this is the main climate of “non-innovative capitalism”.

Specific investment, supplier vulnerability and profit risks

AbstractWe investigate, theoretically and empirically, the impact of relationship‐specific investment on suppliers’ profitability and profit risks. In addition to the familiar holdup problem, we explore another facet of specific investment that has received little attention in the literature, namely suppliers’ vulnerability to customer risks. In a theoretical model, we demonstrate that the supplier vulnerability problem implies a negative relationship between the degree of specificity and the expected profit of a supplier, and a positive relationship between the degree of specificity and volatility of the supplier's profit. Using panel data on over 5,000 US firms from 1990 to 2010, our empirical analysis shows the prevalence of the supplier vulnerability problem.

Emerging market currency risk exposure: evidence from South Africa

PurposeThe purpose of this paper is to examine the level of foreign exchange exposure of listed nonfinancial firms in South Africa. The study spans the period January 2002 and November 2015. Foreign exchange risk exposure is estimated in relation to the exchange rate of the South African Rand relative to the US$, the Euro, the British Pound and the trade-weighted exchange rate index.Design/methodology/approachThe study is based on the augmented-market model of Jorion (1990). The Jorion (1990) is a capital asset pricing model-inspired framework which models share returns as a function of the return on the market index and changes in the exchange rate factor. The market risk factor is meant to discount the effect of macroeconomic factors on share returns, thus isolating the foreign exchange risk factor. In addition, the study further added the size, value, momentum, investment and profitability risk factors in line with the Fama–French three-factor model, Carhart four-factor model and the Fama–French five-factor model to account for the fact that equity capital markets in countries such as South Africa are known to be partially segmented.FindingsForeign exchange risk exposure levels were estimated at more than 40% for all the proxy currencies on the basis of the standard augmented market model. However, after controlling for idiosyncratic factors, through the application of the Fama–French three-factor model, the Carhart four-factor model and the Fama–French five-factor model, exposure levels were found to range between 6.5 and 12%.Research limitations/implicationsThese results indicate the importance of controlling for the effects of idiosyncratic facto0rs in the estimation of foreign exchange risk exposure in the context of emerging markets of Sub-Saharan Africa (SSA).Originality/valueThis is the first study to apply the Fama–French three-factor model, Carhart four-factor model and the Fama–French five-factor model in the estimation of foreign exchange exposure of nonfinancial firms in the context of a SSA country. These results indicate the importance of controlling for the effects of idiosyncratic factors in the estimation of foreign exchange risk exposure in the context of emerging markets.

PENGARUH TINGKAT KESEHATAN BANK TERHADAP PERTUMBUHAN LABA

The profit growth can be used as a measure of achievement of a bank in the assessment of bank performance. This can be achieved if the level of health of banks consisting Capital Adequacy Ratio, Assets Quality, Net Interest Margin, Return on Assets, Loan to Deposit Ratio and Interest Risk Ratio in accordance with the standards set by the government. For this study aims to assess how the influence of the bank to profit growth, particularly private banks non-foreign national 2013-2014 period amounting to 23 banks. By using hypothesis testing found that the Return On Asset and Loan to Deposit Ratio positive effect on the growth rate of bank profits, while the Capital Adequacy Ratio, kualiatas Assets, Net Profit Margin and Risk Ratio interst does not affect the bank's profit growth.Keywords: Health, Income Growth, Bank

Bank sensitivity to international regulatory reform: The case of Korea

ABSTRACT This study examines the reaction of Korean banks’ procyclical behaviour to the adoption of the Basel III accord, which imposes a global capital framework on banks, and the sensitivity of Korean banks’ reactions depending on their capital structures prior to the adoption of the accord. Employing the random-effects panel data approach, we find that the procyclicality of banks, in terms of the capital adequacy ratio, profitability, and insolvency risk, is mitigated after the adoption of the accord. This change is only evident for banks with low capital adequacy ratios before the regulatory reform. Our findings suggest that the Basel III accord effectively mitigates bank procyclicality and that banks’ sensitivity to the reform becomes greater when their capital adequacy ratios are lower. The policy implications of the adoption in emerging and transitional economies are discussed, given the heterogeneous reaction of Korean banks to the international regulatory reform.

Procurement of New Products: Data-Driven Newsvendor with Profit Risk

We study a risk-averse newsvendor problem where demand distribution is unknown. The focal product is new, and only the historical demand information of related products is available. The newsvendor aims to maximize its expected profit subject to a profit risk constraint. We develop a model with a value-at-risk constraint and propose a data-driven approximation to the theoretical risk-averse newsvendor model. Specifically, based on the covariate information, we use machine learning methods to weight the similarity between the new product and the previous ones. The sample-dependent weights are then embedded to approximate the expected profit and the profit risk constraint. Afterward, we show that the data-driven risk-averse newsvendor solution entails a closed-form quantile structure and can be efficiently computed. Finally, we prove that this data-driven solution is asymptotically optimal. Experiments based on real data and synthetic data demonstrate the effectiveness of our approach. We find that under data-driven decision making, contrary to that in the theoretical risk-averse newsvendor model, the average realized profit may benefit from a stronger risk aversion. It further reveals that under data-driven decision making, even a risk-neutral newsvendor can benefit from incorporating a risk constraint, which plays a regularizing role in mitigating issues of data-driven decision making such as sampling error and model misspecification. The above effects however diminish as the size of the training data set increases, as the asymptotic optimality result implies.

Liquidity, profitability, tax rate and bankruptcy risk in Colombian SMEs

This article looks for statistical evidence for the correlation between liquidity, profitability, tax rates and bankruptcy risk for the period 2011 - 2016 between Small and Medium Enterprises in Bogota (Colombia). To do so, the authors conducted a quantitative, longitudinal research for which the Altman Z’’ Score index was used. Data from 2,084 enterprises belonging to 19 industries was collected. The relations between the variables were analyzed by the Pearson correlation coefficient. A significant positive correlation between the risk of failure and low levels of liquidity was evidenced in several industries. The results for the relation between the risk of bankruptcy and profitability were not conclusive, neither significant. Not enough statistical evidence that related rates of return or tax rates to risk of failure was found.

후순위채권 발행이 은행의 수익성과 부실위험에 미치는 영향

후순위채권 발행이 은행의 수익성과 부실위험에 미치는 영향

Pengaruh Struktur Kepemilikan Institusional, Profitabilitas, Dan Resiko Perusahaan Terhadap Kinerja Intellectual Capital

This study aims to determine the effect of institusional ownwership structure, profitability, and company risk. the population in this study were all banking company registered at BEI from 2015-2018. The sample in this study is a total sampling technique, where the entri population is sampled. With a total sample 168 sample using a purposive sampling method. The results of empirical studies show that institutional ownership structure, risk do not affect IC has a positive effect on IC and profitability has a positive effect on IC. Recommendations for further research are expected to conduct research in different business fields such as manufacturing sector companies, real estate companies etc. Adding variables not examined in this study. With company size variables, leverge and other ownership structures.