Bank Rate Research Articles

Federal Funds Rate Spillover Effect On Emerging Market Banking Liquidity And Capital – Evidence From Indonesia

This paper examines the spillover effect of the fed fund rate (FFR) on emerging banking liquidity and capital in emerging markets, especially in Indonesia, using the Structural Equation Model (SEM). Data were collected from the Indonesia Central Bank and Financial Services Authority. Our model reveals a significant indirect negative relationship between FFR, banking liquidity, and capital. This relationship was examined both directly and indirectly using the model. While the FFR influence was robust, the impact on liquidity and capital was translated through the local bank rates. It is found that rising interest rates would still result in tighter liquidity to some extent. FFR also impacts capital decisions because the rising interest rate might incentivize managers to borrow from a lower market environment. Thus, observing the indirect relationship, the impact of the FFR depends on the local central bank monetary policy transmission to mitigate the spillover effect resulting from developed economy monetary policy.

Central Bank Rate Pass-Through Effects on Kenya’s Lending Rate

Several African nations, including Kenya, Nigeria, and South Africa, have seen dramatic shifts in their monetary policy framework and financial environment during the last two decades. To manage and stabilize the economy, the Central Bank of Kenya (CBK) stopped intervening directly in lending low interest rates at financial institutions and instead turned to indirect and market-based measures to carry out monetary policy. Even though it was predictable that a changing financial environment would have a substantial impact on the efficacy of monetary policies, there has not been sufficient research done to determine how IRPT affects lending rates. The purpose of this article was to analyze the pass-through effects of the central bank rate on lending rates in Kenya. The study adopted a non-experimental research design. Data was collected from the CBK, the Kenya Bureau of National Statistics, and the Nairobi Stock Exchange between 2010 and 2021 quarterly data. The study's theoretical underpinning was the loanable funds theory and cost of capital. The cost-of-funds method is based on the conventional marginal cost pricing model for financial markets and helps explain how market prices are transmitted to consumers. The error correction model was used to measure the short-term effect of bank rate changes on Kenyan lending rates. The findings showed that Kenya has an incomplete IRPT which means that increases in the lending rate would be less than proportional whenever there is a change of a specific percentage in the CBR. According to the study, this may be one of the causes of some banks' foreign ownership, their independence from the central bank's liquidity, and their slow reaction times to signals from the central bank to modify lending rates. The study recommends that since commercial banks are a very important component in the transmission mechanisms, they should follow suit in the adjustment of the lending rates.

Forecasting Lending Interest Rates of Commercial Banks in Cameroon with Autoregressive Integrated Moving Average (ARIMA) Model.

Purpose: Lending Interest rate prediction is one of the most relevant aspects in the banking sector and a country’s economy. Lending is an important variable within this sector since economic and market conditions vary over time. Efficient methods are needed to describe the trends and characteristics of lending interest rate. The performance of different time series models for analysis of lending interest rates of commercial banks in Cameroon is provided to determine the feasibility of method for the generation of results in the wake of economic decisions.
 Methodology: Historical time series of lending interest rates in the banking sector in Cameroon were analysed for the period 1972 to 2023. The Box-Jenkins methodology was used to analyse the time Series data.
 Findings: It was revealed that 76.75% of the variation in Lending interest rates in Cameroon is accounted for by the lending interest rates for the past 52 years, the inflation rate for the past 52 years and the GDP for the last 52 years. Therefore, an increase in lending interest rates 52 years ago by one unit will increase lending interest rates today by 0.808 units. Similarly, an in increase in inflation by one unit will reduce lending interest rates by 0.002 units. In addition, an increase in GDP by one unit will reduce lending interest rates by 0.000001 unit. The ARIMAX (1,1,4) demonstrated to be more robust. Therefore, lending interest rates in Cameroon will reduce with time as from the year 2023 to 2027 and above. Investors are encouraged to borrow from the banks and invest within this time frame.
 Unique Contribution to Theory Practice and Policy: Long and varying lags of interest rates separate the effects of monetary policy from the economy and has caused a lot of unemployment in any society. The degree to which interest rates rise has pulled down the economy is alarming. This can be seen in businesses, economic projections, and spending. More businesses report that interest rates have reduced their capital and non-capital spending expectations compared to 2022. A further indication that the impact of higher interest rates has yet to be fully felt is evidence that keeping the existing policy course will limit the spending activity of more enterprises. Monetary policy has surpassed all other concerns for finance executives in the past quarter. Survey participants mentioned interest rates in their decision to cut spending. The study provides a unique way of comparing results of interest rates using a traditional time series model to a typical Interest rate model.BEAC should chose an accommodating monetary policy centred on decreasing the already high interest rate and injecting cash into CEMAC savings in response to the economic shock currently existing in Cameroon.

Corporate Governance, Liquidity Risk, and Sustainable Growth Rate in the Nigerian Banking Industry

Purpose: The objective of this study was to investigate the impact of board independence, liquidity risk management, and other bank-specific factors on the sustainable growth rate of banks in a developing country. Theoretical framework: The study relied on two major theories: the Agency Theory, which explored the conflicts of interest between owners and managers, and the Resources-based View Theory (RBV), which examined how banks utilised unique resources to achieve competitive advantages and sustain growth. Design/methodology/approach: The study analysed panel data from twelve banks listed on the Nigerian Stock Exchange from 2008 to 2021. This study utilised the Feasible Generalised Least Squares (FGLS) regression technique, chosen for its effectiveness in addressing serial correlation and heteroskedasticity, to examine the effect of various factors on the sustainable growth rate. Findings: The study found that the sustainable growth rate (SGR) of banks was significantly affected by the interaction between corporate governance variables and factors such as liquidity risk, dividend payout ratio, bank size, asset quality, and operating margin. Additionally, board independence and bank performance may not be enough to ensure a bank’s resilience in volatile conditions. Research, Practical & Social implications: The study illuminated previously neglected factors that affect the sustainable growth rate of banks. Bank boards and policymakers can utilise these insights to enhance governance structures, risk management practices, and regulatory frameworks. This enhanced comprehension can contribute to a more stable financial system, improving public confidence and economic stability. Originality/value: This study addresses a notable research gap by examining the influence of board independence and bank-specific factors on the sustainable growth rate of banks. Prior research has predominantly focused on the non-financial services industry, leaving this area understudied.

Empirical Analysis on the Impact of Management Efficiency and Watch Loans on the Bankruptcy Rate of Community Banks in Tanzania: A Random Effect Model Approach

This paper analyses the impact of management efficiency and watch loans on the bankruptcy rate of community banks in Tanzania, for the period ranging from 2006 to 2021. In Tanzania, for the period starting from 2017 to 2019, seven community banks were closed by the Regulator while others were being merged to increase their operational efficiency and going concern. The failure of these banks raised a lot of concerns among banks’ stakeholders including private sector, the government and the general public. The study used archival reviews as one of the tools for secondary data collection in quantitative research where panel data were collected from community banks and the Bank of Tanzania publications. The employed sample size was 11 community banks, with a total of 176 observations. The panel data analysis has been conducted using statistical software (Stata) with the random effect model being used to generate regression results as one of the statistical models for panel data analysis. The research findings indicated significant negative correlations between the explanatory variables, namely, management efficiency and watch loan ratios with bankruptcy rates as computed using the Altman’s model approach specific for developing countries. This paper contributes to the contagion theory by arguing that not only bank runs that causes bank failure, but also there are other factors such as; management inefficiency and high level of watch loans as justified by the theory of market structure and asymmetric information theory. Further, for the purpose of diminishing bankruptcy rate of community banks, the study recommends adequate credit management policy in terms of proper credit appraisal systems and strong corporate governance policy, which reduce level of watch loans and operational costs.

Factors Affecting Return on Asset with The Moderation Role of Non-Performing Loans in National Private Banking

The aim of this research is to determine the influence of capital adequacy levels, liquidity levels, bank operational efficiency levels, inflation and interest rates on banks' ability to generate profits before tax with the moderating role of non-performing loans. The level of capital adequacy is proxied by the Capital Adequacy ratio (CAR), the level of liquidity is proxied by the Loan to Deposit Ratio (LDR), the level of operational efficiency is proxied by operational cost to operating income ratio (CI) and the level of the bank's ability to generate profits before tax is proxied by Return on Assets (ROA) while non-performing loans are proxied by Non-Performing Loans (NPL). The indicator for measuring the level of inflation is the Consumer Price Index (CPI) while the interest rate used in this research is the BI rate. The sample was selected using the purposive sampling method, 45 banks were selected as samples. The analysis technique in this research is partial least squares (PLS) for testing measurement and structural models. The results of this research are: 1) CAR has no effect on ROA, 2) LDR has no effect on ROA, 3) CI has a significant negative effect on ROA, 4) Inflation has no effect on ROA, 5) Bank Rate has a significant positive effect on ROA, 6) NPL does not strengthen the influence of CAR on ROA, 7) NPL does not strengthen the influence of CAR on ROA, 8) NPL does not strengthen the influence of CI on ROA, 9) NPL does not strengthen the influence of inflation on ROA, 10) NPL does not strengthen the influence of the BI rate on ROA.

Tingkat Bagi Hasil Mudharabah Bank Umum Syariah: Analisis Kinerja Keuangan

This study aims to examine the signaling theory by analyzing the effect of financial performance such as profitability, financing risk, liquidity, operational efficiency and capital adequacy on the profit sharing rate of Islamic Commercial Banks (BUS) mudharaba deposits. The method used in this research is a quantitative descriptive method with panel data regression analysis techniques. Data collection techniques were carried out through documentation and literature study methods. The population in this study were 14 Islamic Commercial Banks. The method used for sampling in this research is purposive sampling with predetermined criteria, with a total sample of 11 Islamic Commercial Banks for four years (2017-2020), with a total of 176 observational data. The results showed that simultaneously the level of profitability, the level of financing risk, the level of liquidity, the level of operational efficiency and the level of capital adequacy had a significant effect on the rate of profit sharing for mudharaba deposits. Partially, the level of profitability and the level of operational efficiency have a positive and significant effect on the rate of profit sharing for mudharaba deposits. The level of liquidity has a negative and significant effect on the rate of profit sharing for mudharaba deposits. The level of financing risk and the level of capital adequacy have no effect on the rate of profit sharing for mudharaba deposits.

Central bank digital currencies and financial stability in a modern monetary system

The aim of this study is to disentangle the effects of introducing an interest-bearing central bank digital currency (CBDC) for financial stability using a Diamond and Dybvig (1983) model in which (i) both CBDC and private bank deposits can be used in exchange and (ii) liquidity is created endogenously. Agents have direct access to a CBDC, which is a claim on the central bank. They use both sight deposits and CBDC to buy goods and commercial banks borrow reserves to cover liquidity needs. The introduction of an interest-bearing CBDC has direct implications for the sight deposit rate and the loan rate of banks. Besides, if the central bank aims to have a positive net worth and the absence of bank runs, a high demand for a CBDC is a necessary condition to achieve both objectives. If this is not the case, financial stability will be endangered.

Driver Drowsiness detection based on monitoring of eye bank rate

Driver Drowsiness detection based on monitoring of eye bank rate

SOME CHALLENGES TO FINANCIAL STABILITY DURING THE ECONOMIC DOWNTURN

Financial stability issues, arising during the COVID-19 pandemic and the ongoing conflict in Ukraine, have affected the problems of financial market instability: interest rates of commercial banks started to rise, inflation increased, affecting consumer solvency issues, the need for bank financing and investment opportunities decreased, part of the staff was lost, labour supply decreased, productivity declined due to emerging economic stabilisation problems. Financial stability cannot be achieved without effective operation of the financial system, which is explored in this article, based on the evaluation models of financial stability. These models illustrate the integral relationship between the impact of individual factors and the effects on the interest rates of commercial institutions, the impact of interest rates on household financing, and the assessment of the interaction between interest rates and inflation. The assessment of financial stability takes into account the performance, liquidity, solvency, and evaluation of adverse conditions of banks as financial institutions.

Speed of adjustment and optimal leverage: evidencethe from South Asian family firms

ABSTRACT This study examines how family firms adjust their leverage towards optimal leverage. We use the dynamic system generalized method of moments (GMM) for analysis. The findings reveal that South Asian family firms adjust about 24% towards target leverage using market leverage and about 28% while using book leverage. The findings further suggest that growth opportunities, GDP growth rate, distance, lending rate, term spread, and short-term interest rate increase the speed of adjustment towards the target leverage. On the contrary, profitability and differential between the T-bills rate and the bank rate decrease the speed of adjustment.

The Effect of Risk-Based Bank Rating on Profit Growth of Sharia National Pension Saving Bank

The Effect of Risk-Based Bank Rating on Profit Growth of Sharia National Pension Saving Bank

Competition and risk taking in local bank markets: Evidence from the business loans segment

This paper studies empirically the relationship between competition and risk taking in banking markets. We exploit an unique dataset providing information about all bank loans to Norwegian firms over several years. Rather than relying on observed market shares, we use the distance between bank branches and firms to measure the competitiveness of local markets. The cross-sectional and longitudinal variation in competition in local markets are used to identify the relationship between competition and risk taking, which we measure by the non-performing loans and loss provision rates of the individual banks. We find that more competition leads to more risk taking. We also examine the effects of bank competition on the availability of loans. More competition leads to lower interest rates and higher loan volumes, but also makes it more difficult for small and newly established firms to obtain a loan.

ANALISIS RASIO KEUANGAN METODE RBBR DALAM MENGUKUR TINGKAT KESEHATAN BANK PADA BANK UMUM SYARIAH (BUS) PERIODE 2013-2020

This research has a purpose that is: 1. To analyze tha bank’s health level with the financial ratio of the Risk Based Bank Rating (RBBR) method at the BUS period 2013-2020, 2. To determine the difference in the bank’s health level with the financial ratio of Risk Based Bank Rating (RBBR) method at the BUS period 2013-2020. This research uses comparative analysis methods. The classic assumptions used in this research are the normality tes, homogeneous test, while the difference test used the kruskal wallis test. The result of the analysis with the RBBR method indicate that BUS from 2013-2020 has a condition of the bank’s health level in a composite rating of 3 with a value of 64% which means healthy enough, while based on the calculation of different test, seven banks that are used as samples in this study there is a difference from the ratio of NPF, ROA,BOPO and CAR because they have a significant difference of < 0,05 while for the FDR ratio there is no difference from the seven banks because the significant value is > 0,05.

Implications of the Association Between Forest Cover and the Central Bank Rate of Return on Sustainable Forest Management in Kenya

Implications of the Association Between Forest Cover and the Central Bank Rate of Return on Sustainable Forest Management in Kenya

Reactions of Stock Prices to Changes in Exchange Rate and Monetary Policy Rate of Central Banking System: Symmetry or Asymmetry

This study examines the reactions of stock prices to variations in the monetary policy rate of the central banks and exchange rate shock, which is if the responses are similar or differ in a comparative analysis between developed and emerging stock markets. Data were obtained on daily stock market prices, exchange rates, and variations in policy rate. The panel non-linear autoregressive distributed lag (NARDL) estimation method was utilized for this study. The NARDL showed the existence of a significant asymmetric long-run link between stock market price, exchange rate, and variation in monetary policy rate variables. For developing countries, the long-run results show that a percentage rise in the currency rate stimulated a 0.596% increase in the price of stock while it resulted in a 0.574% drop in the prices of stock. The same results were obtained for the short-run analysis. Also, the results show that a positive shock to the policy rate led to a 0.26% drop in the price of stock in the long term while it induced a 0.35% rise in the prices of stock. These estimates are similar to those obtained for developed economies. By and large, the findings imply that variations in the currency and monetary policy rate of the central banks have significant implications for stock market prices. There is a need for central monetary authorities to base effective regulations of exchange and monetary policy rates on market mechanisms while stock market investors are advised to frequently study the behavior of the two variables when dealing with the stock market.

Consumer Intention in Using Mobile Banking Services: Using Extended TAM Model

Nepalese banks are using modern technologies to prompt their services and enlarging customer satisfaction. Realizing this fact, this study aims to identify different factors impacting on behavioral intention to use mobile banking. Extended Technology Acceptance Model was used to extract constructs and validate the findings. This study is based on descriptive analytical research design. A survey of 200 banking customers was done in Kawasoti Municipality, Nepal. Structured questionnaire was used to collect primary data and collected data was analyzed using IBM SPSS 20 version. It was found that perceived ease of use, perceived usefulness, trust and facilitating condition statistically affect behavioral intention to use mobile banking. The result of this study facilitates mobile banking providers for advancing different strategies that help for expanding the usage rate of mobile banking by current users and converting non users in to users.

Access to Pediatric Neurology training and services worldwide: A survey by the International Child Neurology Association.

Pediatric neurology is the medical subspecialty responsible for diagnosing and managing diseases and disorders of the nervous system in childhood and adolescence. In many, but not all, regions of the world the discipline of pediatric neurology is recognized as a specialty or subspecialty of either Neurology or Pediatrics. Significant knowledge and competencies in this area are necessary to be effective in clinical practice. The need for this is driven by the high burden of disease from neurological conditions in children and the impact on their families.As the first part of a multi-staged project under the auspices of the International Child Neurology Association, in collaboration with key stakeholders, a survey was undertaken to establish which countries have practicing child neurologists. For those countries that have child neurologists, the survey established the number of practitioners, and which countries have access to in-country child neurology training.Responses were obtained from 177 countries. Worldwide there is a median of 0.07 and mean of 0.39 child neurologists per 100 000 population. The greatest deficits in child neurology specialists and access to training were evident in countries which fell under the world bank rating of low income country status (range of 0 to 0.008 child neurologists per 100 000 population). Seventy-three percent of low income countries lack access to child neurologists: the majority are in the African and South-East Asia Regions. For the population of 1.37 billion in the continent of Africa there were 324 child neurologists, equating to median 0.01 per 100 000 population in comparison to a median of 0.59 child neurologists per 100 000 across high income countries. Ninety-four countries had capacity to support in-country pediatric neurology training.Worldwide there are inadequate numbers of child neurologists and great need for increased training capacity.

Cost of credit, mortgage demand and house prices

This paper studies the relationship between mortgage rates and house prices. We exploit a subsidized mortgage program that reduced the mortgage rates of state-owned banks in Turkey during the summer of 2020 as an exogenous shock to provide causal estimates of a decrease in the cost of credit on mortgage demand and house prices. The effects are estimated using a detailed dataset on all house sales with mortgages. We find that a 1 percentage point decrease in annual mortgage rates led to an increase in individual mortgage loans by 3.3% and an increase in house prices by 1.6%.

SLOVAK AND CZECH HOUSING MARKET ANALYSIS

SLOVAK AND CZECH HOUSING MARKET ANALYSIS