Bank Rate Research Articles

EXAMINING INDONESIA'S ISLAMIC COMMERCIAL BANKS HEALTH STATUS USING THE RBBR METHOD

The scientific importance of Indonesia's Islamic banks' state is the focus of this study using a strategy based on the Risk-based Bank Rating technique. This quantitative descriptive research analyzes the health of Indonesia's Islamic commercial banks, namely Bank Syariah Indonesia and Bank Muamalat Indonesia, for the years 2019 to 2022, focusing on the degree of bank health as measured by the RBBR approach. The study's data analysis leads to the conclusion that Bank Syariah Indonesia's overall condition is represented by a Composite Rank 2 (PK-2) of 85% in 2019, meaning that it is deemed "Healthy" and capable of withstanding significant negative influences from changes in business conditions and other external factors. However Bank Muamalat Indonesia's overall composite rating (PK3), or "Healthy Enough," corresponds to the bank's evaluation of its health level from 2019 to 2022 using the Risk-based Bank Rating method, which includes indicators of Risk Profile, Good Corporate Governance, Earnings (Rentability), and Capital as a whole.

Does Monetary Policy Influence Non-performing Loans of Listed Commercial Banks in Kenya?

The Kenya banking sector plays a crucial role in Kenya’s economy despite the prevailing macroeconomic headwinds in the Country. The Banking Sector Industry Report of 2023 indicated that the banking sector contributed to 66% of gross domestic product as of December 2022. The high levels of non-performing loans remain a concern in the Kenya banking sector. The study sought to assess the influence of monetary policy on non-performing loans in the banking sector in Kenya. The target population is all listed commercial banks in Kenya. Using monthly secondary data from November 2019 to September 2023 obtained from the Central Bank of Kenya, the study utilized a multiple regression model to estimate the influence of monetary policy on the percentage growth of nonperforming loans of listed commercial banks in Kenya. Findings pointed out that Repo rates and Treasury bill rates do not influence non-performing loans of listed commercial banks in Kenya as measured by the gross non-performing loans ratio as exhibited by the P-values of 0.327866 and 0.577173 respectively, which is greater than 0.05. The results also implied that the central bank rate and interbank rates do influence non-performing loans of listed commercial banks in Kenya as measured by the gross non-performing loans ratio as illustrated by the P-values of 0.028844 and 0.00018 respectively, which is less than 0.05. According to the findings, the study recommends that policymakers should prioritize creating a strong financial ecosystem so that monetary policy can be utilized to regulate commercial bank interest rates. This will, in effect, serve to decrease the expansion of non-performing loans, reduce risk and entice competitors into the financial sector, enhance the capital base, increase lending to promote feasible projects, and, as a result, stimulate the country's growth.

Interest Rate Transmission on Indonesia’s Monetary Policy Analysis: Case of Banking Interest Rate

Indonesia's economic stability should be achieved by implementing monetary and fiscal policies, for instance, setting the interest rate by Bank Indonesia (BI) as policy rate of central bank, which should be followed by other banking institutions. Unfortunately, this interest rate regulation by BI had not been able to achieve the goal of restoring economic stability since it always had long time lag. This happened because the policy of increasing interest rates had not been followed up spontaneously by other banking institutions. In fact, time lag might cause disadvantages such as long-lasting high inflation, increased poverty, and severe economy vulnerability. This research was conducted to analyze the time lag of the transmission of Bank Indonesia's interest rate monetary policy and the response of banking institutions in Indonesia. The method used in this study was survival analysis. The results indicated that the time lag of monetary policy transmission using the interest rate in Indonesia needed to be improved to double adjustment speed to reach the optimal point. The response of banking institutions could be improved because there was still asymmetry response in all aspects including types of interest rates, allocations, and change direction. Meanwhile, from the aspect of ownership, both state-owned and private-owned banks had shown in line response of time lag performance.

Empirical Analysis of Commercial Banks' Loans in Cambodia: Panel Data Models

The aim of this research is to employ three distinct panel models, specifically Pooled OLS, Fixed Effect, and Random Effect models, in order to investigate the impact of the five components of banks' risk rating, referred to as CAMEL, on the loan growth rate of commercial banks. The measurement of these components included the equity to asset ratio for capital adequacy (C), the non-performing loan to loan ratio for asset quality (A), the operating expense to asset ratio for management capability (M), the return on asset for earning quality (E), and the liquid asset to asset ratio for liquidity (L). Furthermore, each model took into account two macroeconomic indicators, specifically the real GDP growth and the growth rate of money supply measured by broad money (M2), as control variables. Over a span of 12 years, from 2011 to 2022, a total of 22 commercial banks were carefully chosen. The results of the Fixed Effect test suggest that the FE model is more suitable when compared to the Pooled OLS model. However, the Hausman test indicates that the RE model is more appropriate than the FE model. The findings of this study revealed that the quality of assets played a highly significant role in determining the rate of loan growth. The slope coefficient in all three models was found to be statistically significant at a 5% level. Additionally, the management capability and earning quality were also found to have a statistically significant impact on the loan growth rate. Furthermore, the growth rate of real GDP was found to statistically influence the loan growth rate, whereas the impact of broad money on the loan growth rate was found to be statistically insignificant.

Interest rate derivatives in lending to construction companies in the Russian market

Subject. This article examines interest rate derivatives as a way to hedge the risks of construction companies in a period of high uncertainty in financial markets. Objectives. The article aims to build an approach to estimating the price of interest rate derivatives, taking into account the specifics of lending to construction companies in the Russian Federation. Methods. For the study, we used the Black model and a regression analysis. Results. The article presents the first version of the author-developed model for estimating cap options on the key interest rate of the Central Bank of the Russian Federation when lending to construction companies. Conclusions. It is necessary to make an amendment to the traditional model for estimating premiums for the cap option on the key interest rate of the Central Bank of the Russian Federation when lending to construction companies, taking into account the specifics of pricing such loans.

NINE DEFAULTS OF ARGENTINA: NATIONAL TRAGEDY OR POLITICAL GAME?

The article examines the history of nine defaults - both technical and sovereign - that occurred in Argentina between 1827 and 2023. The reasons for the emergence of crisis situations in which a country declares the impossibility of paying off debts on financial obligations, and the consequences associated with this event: economic, political and social upheavals in society, are examined. This work also explains the economic situation in Argentina in 2023, in which the national economy is literally in a fever, inflation for the year reaches 142 %, the national currency is collapsing, the dollar costs 339 pesos, the key rate of the Central Bank of Argentina has risen to 133 %, enterprises are in debt to their employees, and 140 out of 146 million people live below the poverty line. A series of changing presidents, whose coming to power does not improve the economic situation, but only takes them away from the problems for a short time. The work also examines the motives that encourage creditors to provide financial injections to the country that may soon enter a state of a new, tenth default.

Monetary policy, macroprudential policy, and bank risk-taking behaviour in the Indonesian banking industry

ABSTRACT There is a growing consensus on the translation of monetary policy actions into changes in credit demand on account of changes in interest rates. The study investigates monetary policy, macroprudential policy, bank-specific and macroeconomic determinants of bank risk-taking from 2010–2022 in Indonesia. The study aims to address a gap in the literature because most previous studies have focused on advanced markets. First, three POLS and fixed effect models are estimated. However, the Durbin Wu-Hausman test indicated endogeneity issues with the estimated models. The second stage uses a system GMM estimation to investigate the impact of central bank rates and macroprudential policy on bank risk-taking. Dynamic-GMM estimations find that, partially the central bank rate and macroprudential policy have a positive impact on bank Z-Score. Furthermore, when central bank rate and macroprudential policy are included in a model, we still find a positive impact of both policies on bank Z-Score.

The Norm of Rate Fixing of Islamic Banks Based on Conventional Bank Rates: Evidence from Indonesia

Interest rate fixing is a monetary tool used to control the money supply and hence inflation by the central bank. However, it cannot be applied to Islamic banks due to the prohibition of interest in Islam. This paper examines whether the central bank may implement rate fixing for Islamic banks, given that interest is forbidden, and the fixing of prices by the government is also generally prohibited, according to Hadith and the consensus of Islamic jurists. A documentation study was conducted to comprehend the viewpoints of classical and contemporary Islamic jurists and the National Shariah Board−Indonesian Ulama Council's fatwa. The analysis used Islamic law methodology (uşūl fiqh), which included combining the opinions of classical and contemporary Islamic jurists through the al-jam’u and the legal maxim approach, "al-‘ādah muhakkamah" approach to the custom practiced by Islamic banks, and the maqāşid approach. The research findings illustrate that Islamic banks have been using rates to calculate profits as the National Shariah Board−Indonesian Ulama Council accepts the notion of the time value of money, provided it is not utilized in loan transactions. This condition could enable the central bank to set the rates for Islamic banks, which is an effective tool for controlling the money supply and achieving economic stability, thus contributing to the realization of community welfare (maslahah 'ammah).

Too-Big-to-Fail Banking in Europe: An Enduring Challenge

ABSTRACT Is banking in the European Union still too-big-to-fail (TBTF)? We address this question by providing a critical overview of post-crisis banking regulation and examining whether financial markets continue to expect European governments to bailout TBTF banks. To the latter end we use a novel set of primary data, gathered from fieldwork in Europe, analyse credit ratings of TBTF banks, and compare them with the ratings of other European banks. Our results suggest that the expectation of government support for European banks is still present. Most notably, TBTF banks command a long-term credit rating about three notches higher than what would be the case in the absence of the expectation of government support. Other European banks enjoy significant rating uplifts too, albeit smaller in size.

The dominant risks in the interest rate channel: evidence from the urban housing market in Taiwan

ABSTRACT The main purpose of this paper is to investigate the city-level data on mortgage rates of banks which may hide significant information about the monetary transmission mechanism. This study, by regional housing loans and risks data, investigates the behaviour of banks after a monetary policy tightening. By using the structural vector autoregressive model with the counterfactual impulse response function and the spatial regression model, our results show that monetary tightening causes mortgage rates to rise. This response is mainly driven by price and credit risks. Consequently, these housing activities have a significant effect on mortgage rates, by amplifying the shock from the tightening monetary policy. The latter result provides evidence that financial intermediation and regional housing risks play an important role in the interest rate channel.

Efficient pathway for men fertility preservation in testicular cancer or lymphoma: a cross-sectional study of national 2018 data

BackgroundIn 15–49 years-old men, the main cancers are testicular cancer (TC) and lymphomas (L): freezing of ejaculated sperm is primarily used for male fertility preservation (FP) before cancer treatment.Our objective was to analyze the French FP rate in 15–49 years-old men diagnosed with TC or L in 2018.We designed a national descriptive cross-sectional study of sperm banking rate in men with a diagnosis of TC, Hodgkin L (HL) or non-Hodgkin L (NHL).From the French National Cancer Institute (INCa) 2018 data, we extracted the estimated incidence of TC and L in metropolitan France. From the 2018 activity report of CECOS network (Centers for Study and Banking of Eggs and Sperm), we extracted the number of men with TC or L who banked ejaculated sperm. We estimated the proportion of 15–49 years-old men diagnosed with TC or L who banked sperm.ResultsAmong 15–49 years-old men, INCa estimated 38,048 new cancer diagnoses in metropolitan France in 2018: 2,630 TC and 3,913 L (943 HL and 2,970 NHL). The CECOS network provided data from 26/27 metropolitan centers (96% response rate): 1,079 sperm banking for men with TC, 375 for HL and 211 for NHL.We estimated that the 2018 sperm banking rate in France was 41% for TC, 40% for HL, and 7% for NHL.ConclusionsTo our knowledge, our paper is the first cross-sectional study with multicenter and national data analyzing FP rate in cancer men: it suggests an efficient pathway for men to FP before cancer treatment, compared to previously published studies. Although sperm banking rate in 15–49 years-old men could definitely be improved, further studies should evaluate the information given to patients before gonadotoxic treatments, the factors associated with the absence of sperm banking and whether this lack of referral induces a loss of chance for these men.

Empirical analysis on the impact of market share and capital adequacy ratio on the bankruptcy rate of community banks in Tanzania: an application of Altman’s Z-Score model

This paper examines the impact of market share and capital adequacy on the bankruptcy rate of community banks in Tanzania, for the period spanned for 16 years from 2006 to 2021. For instance, recently in Tanzania, seven community banks were closed by the Regulator while others were being merged to increase their going concern and operational efficiency. This study has employed a quantitative approach based on secondary data collected from the Bank of Tanzania as a Regulator and some of them were gathered from community banks. The sample size is 11 community banks, with a total of 176 observations. The panel data analysis has been conducted using statistical software, namely, STATA version 17 with the random effect model being used to generate regression results ready for interpretation. The research findings depicted significant positive correlations between bankruptcy rates as computed using Altman’s Z-score model and the independent variables, namely, market share and capital adequacy ratio. In that regard, the study recommends adequate capital levels and market share to reduce the bankruptcy rates of community banks in Tanzania.

The Impact of Inflation Rate and Interest Rate on Islamic and Conventional Banking in Afghanistan

Since the first bank was established in 1933, Afghanistan's banking sector has seen a number of variations but hasn't been able to grow to its full potential because of the civil war. The implementation of dual banks in Afghanistan is investigated in this study in relation to the effects of inflation and interest rates. This research took data from World Bank Data (WBD) over a period of nineteen years. For the banking sector, inflation, which is the general rise in prices of goods and services over time, presents considerable difficulties. The objectives of this research are to analyze the effect of inflation and interest rates on conventional and Islamic banks in Afghanistan, identify potential differences between these two banking models, and provide insights for policymakers and practitioners. A mixed-methods approach is used in the research to analyze quantitative data and qualitatively examine the unique difficulties that banks in Afghanistan's economic atmosphere encounter. The findings contribute to the understanding of the relationship between interest rate, inflation rate, and the performance of both banking systems in Afghanistan. The paper concludes with recommendations for policymakers and banking institutions to enhance the stability and growth of the banking sector in Afghanistan. Interest is described as "a prefixed rate for use or borrowing of money" from an Islamic perspective. This "prefixed rate," known in Islamic economics as "riba," has been described as "something undesirable." Furthermore, by using the time series regression data technique on the annual data from 2003 to 2021, this research examines the effect of CPI inflation rate and interest rate of Banking in Afghanistan.

Prediksi Financial Distress Bank Syariah di Indonesia dengan Analisis Risk-Based Bank Rating

This study aims to analyze the effect of Risk-Based Bank Rating (RBBR) conducted by Bank Indonesia in predicting financial distress at islamic commercial banks in Indonesia during the Covid-19 Pandemic crisis. So that both exposures originating from internal and external factors can be analyzed for their influence on the resilience of the financial conditions of islamic commercial banks during the Covid-19 Pandemic crisis. This research is a type of quantitative research with data analysis method used, namely panel data regression analysis.
 This study show the results that Risk-Based Bank Rating (RBBR) which reflect risk exposure to internal and external factors simultaneously influence predicting financial distress in islamic commercial banks in Indonesia during the Covid-19 Pandemic crisis. Besides, individually, variables of Non Performing Financing (NPF), Return on Assets (ROA), RGEC Risk Value, have no effect on financial distress. Meanwhile, if individual testing is carried out on the variables Financing to Deposit Ratio (FDR), Operating Expenses to Operating Income (BOPO), and Capital Adequacy Ratio (CAR) they have an effect on predicting financial distress in islamic commercial banks in Indonesia during the Covid-19 Pandemic crisis.

Determinants of Lending Interest Rate of Nepalese Commercial Banks

This research analyzes the determinants of lending interest rates of commercial banks in Nepal. The lending interest is the main source of income for any financial institution. Secondary data has been collected from the annual reports of seven commercial banks for the study. Using convenience sampling techniques only seven banks are taken as samples out of 21 commercial banks in Nepal. 35 observations of the study are analyzed and interpreted using correlation and simple regression analysis. The study is based on the dependent variable lending interest rate and independent variables: liquidity ratio, deposit interest rate, return on assets, default risk, gross domestic production, and inflation. This study found a statistically positive and significant effect of deposit interest rate, return on assets, and inflation on the lending interest rate of commercial banks in Nepal.

Analisis Tingkat Kesehatan Bank Dengan Metode Risk Based Bank Rating (RBBR) Pada PT. BPR Supra Artapersada KC. Cibadak

The assessment rating of bank hlth is expected to evalute the prformance of the banking industry. Because bank healtiness represent good financial condition and good management. Risk-based Bank Rating (RBBR) method is used Bank Indonesia as a standard to appraise the rating of the bank health. This study to find out the sundeness level of bank in terms of the aspects of Risk profille, Good Corporate Govermance (GCG), Earnings, and Capital. This was an deskriptif analysis, with the object study is BPR Supra Artapersada Kc. Cibadak, PT. the data were collected through documentation and date analysis techniquen was an analysis of the soundness of bank using the Risk-Bases Bank Rating approach with an assesment converage including Non Ferforming loand, Loan to Deposit Rating, Good Corporate Governmence, Return on Assets, Operational costs on operating income, and Capital Adequacy Ratio factors. The resulth howed the condition of BPR Supra Artapersada Kc. Cibadak, PT. at “healthy criteria” with Non performing Loand of 1,8%, Loan to Deposit Rating of 85%, Maximum credit limit of 0,083%, Return on Assets of 0,034%, Operational costs on operating income of 0,070%, and Capital Adequacy Ratio of 41%..

The impact of technological innovation for emission reduction on decision-making for intertemporal carbon trading

Trading carbon emissions is a common strategy for reducing emissions around the world. But its flawless and methodical parameter adjustments and coping strategies nonetheless lack a theoretical grounding when faced with the prospect of uncertainty. To analyze how the enterprise emission path might be made compatible with the social emission path by policy adjustment, this study illustrates the impact of the uncertainty of technical innovation for emission reduction on the decision to engage in intertemporal carbon trading. The findings demonstrate that the decision to engage in intertemporal carbon trading is significantly impacted by the uncertainty of technological innovation for emission reduction. Enterprise productivity is directly correlated with technological innovation for emission reduction. When a policy instrument is used for adjustment, the probability of technological innovation for emission reduction is inversely related to the intertemporal trading banking rate and the price of carbon tax per unit product, whereas it is proportional to the intertemporal trading borrowing rate. This is taking the goal of maximizing social welfare as the constraint. The results serve as a guide for creating more logical parameters for intertemporal carbon trading legislation.

The Effect of Operational Strategy on Organizational Performance of Commercial Banks in Meru County, Kenya

Achieving optimal organizational performance is a concern for businesses, and it largely hinges on how well they adapt to the dynamic business landscape. Currently, this landscape is marked by significant turbulence in organizational performance, particularly posing challenges for managers in the banking sector. Furthermore, there has been a noticeable decline in the growth rate of most commercial banks in Meru City County, Kenya, leading to diminishing profit margins. Consequently, the implementation of functional level strategies has become crucial for banks aiming to achieve objectives such as customer retention, profit growth, increased sales, operational efficiency, and expanded market share. This research study primarily aimed to investigate how operational strategy impact the organizational performance of commercial banks in Meru County, Kenya. To conduct this research, a theoretical framework, resource-based view was used. The study utilized a descriptive research design, and a census approach was employed, targeting 19 branch managers, 19 operational managers, 19 marketing managers, 19 chief accounting officers, and 19 human resource managers in Meru County. A total of 95 respondents were selected for the sample, and data were collected using questionnaires with close-ended questions. Content validity was established through consultations and discussions with experts, academicians, and the supervisor. Reliability was assessed using the Cronbach Alpha method, and data analysis was conducted through the utilization of both descriptive and inferential statistical techniques, facilitated by the Statistical Package for Social Sciences software. The presentation of data took the form of frequency distribution tables and graphical charts. The consensus among respondents was that operational strategies exerted an influence on the organizational performance of commercial banks. Based on these findings, the study recommends enhancing operational strategies as they have a positive impact on the organizational performance of commercial banks in Meru County, Kenya.

Income inequality as long-term conditioning factor of monetary transmission to bank rates

Income inequality as long-term conditioning factor of monetary transmission to bank rates

Feasibility Study of Purse Seine Business Units In Tanete Riattang Timur Sub-District Bone District

In general, coastal communities in Tanete Riattang Timur Subdistrict in fulfilling their daily needs work in the marine and fisheries sector. The most widely used fishing gear is the Purse Seine and has constraints both in terms of finance, technology and business competition, the purse seine fishing community still maintains patterns of the economic system in fishing activities as a reference material in living their daily lives so that the purse fishing business The seine needs to be calculated for its financial feasibility to determine its sustainability in the future. In general, this study aims to determine the level of income from production activities and the level of business feasibility of purse seine fishermen to be developed in Tanete Riattang Timur District. This research was conducted from April to May 2021. In this study, the method used is descriptive quantitative with data analysis using income analysis = TR – TC and Business Feasibility Analysis with the formula Net B/C ratio = NVP(+)/NVP( -). The purse seine business unit has a Net B/C value greater than 1 (3.90 > 1) which is obtained from the Nvp (+) value divided by the Nvp (-) value, the purse seine business unit has an Npv value of 4,034,338,574 and the interest rate of return bank (IRR) of 86%. this means that the purse seine fishing business is feasible to carry out and continue.