Romanian Banking System Research Articles

Perception of the stakeholders of the Romanian banking system on the adequacy of current accounting regulation

Perception of the stakeholders of the Romanian banking system on the adequacy of current accounting regulation

Management of Derivative Financial Products within the Banking Activity

Abstract Current developments in the national financial markets, as well as in the international market, mark a period of great changes. As the process of globalization intensifies, the economic environment is marked by increasing volatility and uncertainty. Financial institutions, as links in the financial intermediation process, play a crucial role in directing capital flows to the areas where they are most productively used. This is also the case of derivative financial products, stock exchange and over the counter, which become elements found in the reports of commercial banks. In this context, this article wanted to identify, on the one hand, the causes that determined commercial banks to focus on activities with financial derivative products, going beyond the traditional sphere of banking operations, and on the other hand to explore ways in which products derivatives can be used in banking. Within the article, complex methods were used, both at the statistical level, materialized through the econometric model exposed, and at the theoretical level, of observation and analysis. An entire point of discussion is intended to x-ray the main derivatives, how they can be used and integrated into banking. Another goal was to deepen, at least theoretically, the consequences of using derivative financial products in banking on systemic risk and monetary policy. Also, the paper aimed to highlight the current conditions and prospects for increasing the use of derivative products in the Romanian banking system.

Digitalization in Banking: Navigating the Effects of Automated Decision-Making on Customer Experience

Abstract This study explores the impact of automated decision-making processes on customer experience within the banking industry, set against the backdrop of digital transformation. The objectives are to provide insights into how automated decision processes shape the contemporary banking experience and influence customer perceptions, acknowledging both the positive and negative implications for the evolving nature of banking services in the digital era. The literature review examined the contributions of the cited authors, generating a summary of information categorized into three parts: a comprehensive overview of the banking landscape in the context of digital transformation, brief considerations regarding automated decision-making processes and several insights into customer experience. The research methodology employed a questionnaire, encompassing both close-ended inquires and an open feedback section. The study was conducted for the Romanian banking system and had a sample size of 102 respondents. The gathered data was subsequently correlated and analyzed to evaluate the alignment of customer perception with the opportunities and challenges identified in the specific literature. This paper also tries to widen its relevance by facilitating practical applications of the research findings. Thus, in the result section, key considerations were formulated, targeting a more precise definition of automated decision-making processes in the banking industry, aiming to optimize the experience for the utilizing customers. The conclusion indicates that both strengths and weaknesses of automated decision-making processes in banking industry are of relevance in the perception of customers, as the questionnaire’s responses align in form and extend with the theoretical concepts identified in the relevant literature.

Anti-Money Laundering in The Romanian Banking System

Because today, the laundering of money from illegal activities is performed mainly through the banking system, governments have developed Anti-Money Laundering (AML) compliance programs. Their implementation proves complicated and expensive, which is why many banks are sanctioned by the authorities with historic fines. In Romania, starting in 2019, the supervision process of financial banking institutions in the area of preventing and combating money laundering and terrorist financing has intensified, with the National Bank of Romania sanctioning some banks for their insufficient involvement and compliance in the direction of combating money laundering.

The Impact of Sustainable Policy on Financial Performance in the Romanian Banking System

The Impact of Sustainable Policy on Financial Performance in the Romanian Banking System

Does the Integrated Reporting Influence the Financial Performance Within the Banking System? Case Study on Romanian Banks

Abstract The banking sector, as compared to other sectors of activity, represents a level of credit risk or of credit quality, measured through the rate of unperforming loans. This paper has the purpose of analysing in what measure the integrated reporting (from the point of view of financial, environmental, and social dimensions) influences the financial performance of the banking entities in Romania. This study encompasses a sample composed of 19 presently active banking entities on the Romanian market which publish financial and non-financial reports, as part of the integrated reporting. To evaluate and determine the impact of each of the integrated reporting’s components on nonperforming loans, one referred to data analysis through multiple linear regression. The study’s results have demonstrated that the financial and environmental information influence the rate of nonperforming loans from the Romanian banking system. Regarding the social components of the integrated reports, these do not impact under any manner the banking system’s performance measured through nonperforming loans.

The Romanian Banking System - Evolution and Transition After the Crisis Generated by COVID 19 and the War in Ukraine

The Romanian Banking System - Evolution and Transition After the Crisis Generated by COVID 19 and the War in Ukraine

THE POTENTIAL IMPACT OF CEO CHARACTERISTICS AT THE ROMANIAN BANKS PERFORMANCE DURING THE COVID PANDEMIC

The main objective of this research is to identify to what extent the CEO characteristics have affected the financial performance of banks within the Romanian banking system during the COVID 19 pandemic. Regarding these characteristics, aspects such as age, gender diversity, education were included in the research, the financial performance of the banking system being measured through the ROA (return on assets) and ROE (return on assets) indicators respectively. In order to carry out this research, the authors used the SPSS software, the research methodology being predominantly quantitative, including descriptive methods, correlation analyses and regression models. The results of the research indicate that the financial performance of banks operating within the banking system in Romania, measured by the ROA and ROE indicators, is influenced by the education of the persons holding the position of CEO, the other variables not exercising a significant influence on the financial performance of banks at the level of the Romanian banking system

The CEO characteristics and Romanian banks performance

The main objective of this research is to identify to what extent the characteristics of the CEO (chief executive officer) influence the financial performance of banks within the Romanian banking system. The sample under investigation includes all 21 Romanian banks, and the analyzed period included the financial years related to the last 5 financial years (2018–2022). Regarding these characteristics, aspects such as age, gender diversity, education, nationality, and duality were included in the research, the financial performance of the banking system being measured through the ROA (return on assets) and ROE (return on equity) indicators, which are often used in the literature, including control variables such as the size of the bank, assessed by the total value of bank assets, the share of debts in total assets and the share of capital in total assets. Regarding the duality of the CEO, this is the practice of the same person holding both the position of chairman of the board of directors and that of executive manager. The authors tried to find the answer to the question: Is there a correlation between CEO characteristics and the financial performance of the banks, and if the answer is yes, to what extent are these correlations significant? To carry out this research, the authors used the SPSS software, the research methodology being predominantly quantitative, including descriptive methods, correlation analyses and regression models. The results of the research indicate that the financial performance of the banks operating within the banking system in Romania (measured by the ROA and ROE indicators) is influenced by the nationality and education of the persons holding the position of CEO but also by the size of the banks, appreciated by the value of their total banking assets.

MIFID II and EMIR impact on Romanian banking system performance

Abstract MIFID II/MiFIR represents comprehensive financial market reforms in trading and settlement of financial instruments. The greatest impact of the new regulatory framework in the banking sector relates to pricing, trading, and reporting of banking products and classification of financial institutions. The new role of the financial market infrastructure provides more protection for bank customers and significantly increases market transparency. Banks are required to show their customers the best execution price on the relevant trading venues, transaction costs and market behavior. The regulation will be aligned with other financial market regulations of over-the-counter markets and market abuse protection to avoid regulatory overlap - European Market Infrastructure Regulation (EMIR). The new regulatory framework requires the banking sector to fully comply with the rules governing the banking system of the European Union. Banks must incur significant costs in order to restructure internal processes, acquire new technological support, and forego additional profits in competitive and transparent markets. This study analyses the impact of MiFID II/MiFIR and EMIR implementation on local banks’ performance (credit institutions, Romanian legal persons). Using a unique dataset from banks that have been operating in Romania over the period 2004-2020, it is shown that the implementation of the new regulatory framework did not affect the net trading income ratio of the selected banks. Moreover, the average trading asset ratio in the post-financial crisis period increased in comparison with the average trading asset ratio in the pre-financial crisis period. Local banks that took advantage of the large economies of scale obtained due to branch banking did not reduce their investment banking activities and product offerings to customers in the period following the introduction of the regulatory framework. Most of the costs of implementing the new regulatory framework were borne only by the ultimate parents of the controlled Romanian subsidiaries. All subsidiary banks benefited equally from these economies of scale.

The Impact of Competition and Risk Exposure on Profitability of the Romanian Banking System During the COVID-19 Pandemic

In the context of the economic uncertainty generated at the national level and caused not only by the COVID-19 pandemic, for a healthy evolution of business relations in the competitive environment, for resilience and survival in this context of the pandemic and efforts to counteract possible financial losses, optimal risk management plays a key role in the banking system to avoid excessive exposure with a negative impact on financial performance. The present research aimed to provide an analysis of the potential relationship between the competition presented on the example of the Romanian banking market (before the onset of the COVID-19 pandemic and after its start), risk management in terms of risk-weighted assets (credit risk, market risk and operational risk), on one hand, and the profitability of the banking system measured by the ROA (return on assets) indicator, on the other. In order to test the formulated hypotheses, the authors used a predominantly quantitative research methodology based on a statistically deductive analysis with a series of testing objectives and potential cause-effect links. The results of this study indicate, before the onset of the COVID-19 pandemic, the existence of a significant intensity correlation between the banks’ exposure to the total risk (RWA) (risk-weighted assets) and the market share (as dependent variables) and the banking performance indicator (ROA) (as an independent variable) and, after the onset of the COVID 19 pandemic, banks’ exposure to the credit risk, together with the position on the banking market.

Does the Disclosure of Performance Indicators Impact Bank Profitability? Empirical Study for the Romanian Banking System

Does the Disclosure of Performance Indicators Impact Bank Profitability? Empirical Study for the Romanian Banking System

CHANGING THE PERSPECTIVES OF BANKING – COVID-19 PANDEMIC AND ITS EFFECTS ON THE ROMANIAN BANKING SECTOR

In the last decade, the banking system has seen increase and decrease, progress and stagnation, resilience and acceptance, in terms of digital. It is desired to automate a growing number of banking processes and adapt customers to the new digital phenomenon. But what actually happened before and during the COVID-19 pandemic? What was the behaviour of the customers? What about the banks? Looking both from the perspective of customers and banks, this research paper presents a comprehensive scrutiny of the impact that the pandemic had. Firstly, the article refers to the general background of Romania, by comparing the financial reports of the five most profitable banks in the national system and by analyzing the situation of cashless or closing local branches. Likewise, it is pursued the strategy embraced by the banks to deal with the global health crisis. Concerning the credit risk highly encountered in 2020, the paper analyzes how it has become more substantial due to the general circumstances, but also provides an overview of the situation in Romania. Furthermore, digitalization has spread to all areas, as lockdown has limited people’s movement, so their quotidian activities needed to be carried out from home. Consequently, banks have been forced to quickly come up with a solution. In this way, e-banking has entered into a new stage. 2020 marked an unforeseen progress, something that banks dreamed of before. Finally, the paper aims to a blunt attempt into what the pandemic has brought to the Romanian banking system, making certain assumptions for the years leading up.

CREDIT GROWTH DETERMINANTS IN ROMANIA

Through an empirical analysis, using a multiple linear regression model, the aim of this paper is to study the effects on credit growth of some of the macroeconomic factors as well as indicators of assets and liabilities of the Romanian banking system. Credit growth is determined by the dependent variable of bank credit to the private sector as percent of GDP. The results showed a direct statistically significant relationship between the dependent variable and factors such as ROE, bank lending-deposit interest rate spread, capital investment, and the indicators of bank assets as percent of GDP and the unemployment rate.

TOWARDS BETTER INVOLVEMENT IN GREEN BANKING PRACTICES: EVIDENCE FROM ROMANIA

The European Green Deal has re-ignited the imperative of green finance that is called to support the European Union transition to a greener economy. Green finance becomes even more opportune in the context of the economic recovery after the COVID-19 pandemic. The aim of the paper is to explore green banking practices in the Romanian banking system. The investigation reveals the efforts of banks to be environmentally friendly and to be involved in financing of some green projects, such as the energy efficient projects. Nevertheless, the green banking products are still in the emerging stage and banks in Romania should develop their role in the field, by diversifying the range of green products and services, improving the expertise to assess green projects or intensifying the marketing initiatives to promote green products. In order to encourage banks in Romania to provide green financing several incentives should be conceived; similar to banks, the borrowers seeking green projects should be rewarded. Some mandatory requirements for banks to be involved in green investments may promote green banking in Romania. An essential condition to achieve the development of green banking in Romania is to increase awareness towards environmentally friendly behaviour at all levels.

A Study Regarding the Correlations that Exist between Types of Cultures in Banking Organizations and the Country of Origin of the Majority Capital, the Gender of the Employees, their Age, Level of Experience and Seniority the Organization

The aim of this article is that of establishing the correlations that exist between the types of organizational cultures and the country of origin of the majority capital, the gender of the employees, their age, level of professional experience in the banking field and seniority in the organization of the respondents in banking organizations in Romania by using the ANOVA (the analysis of variation with one factor) test. 410 informants, out of which 260 operating personnel and 150 employees with leadership positions answered the questionnaire that was used in order to create the database needed for the analysis. Through the ANOVA analysis of the correlations that exist between the four types of organizational cultures (Task Type, Power Type, Role Type and Person Type) and of the aforementioned variables we can conclude that for both the operating personnel and for those with leadership positions the country of origin of the majority capital influences the organizational culture in the Romanian banking system, while the age and seniority in the organization do not influence the organizational culture. Furthermore, the professional experience in the banking system does not manifest itself as a variable with a significant impact on organizational cultures, with the exceptions of the banks in which the Role Type culture is predominant and in which the managers are aware of the importance of the experience accumulated in the field. In regards to the gender, this leaves its mark on the organizational cultures of the Task Type both in the case of operating personnel and in that of those in leadership positions.

EPOCA LUI ALEXANDRU IOAN CUZA: DISCUȚII, PROPUNERI, PROIECTE, NEREUȘITE, ÎMPLINIRI ÎN DOMENIUL FINANCIAR-BANCAR NAȚIONAL

. First and foremost, we will depict the realities of “money trading” (money changing, pawnbroking, and quasi-modern lending) in the Romanian Principalities from the 18th century to mid-19th century, having as starting point a number of more ancient or recent bibliographical resources. The need for low interest rate loans to support lucrative business was increasingly present in the period between 1830 and1859. The financial market of the Romanian Principalities was becoming the focus of more and more Western European banks that were seeking to pursue business through their Ottoman branches. With the support of his close associates, Alexandru Ioan Cuza, the Ruler of the Romanian Principalities, also had in mind the modernisation of the Romanian banking system, as part of the reforms aimed at the development of the Romanian society as a whole. Discussions revolved around the establishment of a discount and circulation bank that would also have the right to issue currency and of a mortgage bank entitled to give out loans to the largest landowners in the country. Even though the 1864 establishment of the Savings and Consignments House had been successful in collecting private savings to be later used by the Government as budget resources for major national investment projects, the 1865 attempt at establishing Banque de Roumanie resulted in failure, due to opposition by the Romanian ruler’s political adversaries. The establishment of French and English banks in Romania was stopped and Romania failed to become a preferred market for Western European countries. Nevertheless, one should keep in mind that Alexandru Ioan Cuza, the Ruler of the Romanian Principalities, was a pioneer in this field as well, since his ideas were implemented and expanded upon after 1866.

Human Resources Practices in the Romanian Banking System: Rewards, Job Satisfaction, and Job Performance

Abstract This research aims to analyze the relationships established among rewards, job satisfaction and job performance in the Romanian banking system. In order to achieve this goal, a single-case study is used as a research strategy and a survey-based on a questionnaire is developed among the 60 employees the BCR-BpL branch from Bucharest, Sector 3. The relationships established among rewards, job satisfaction, and job performance are tested using Partial Least Square – Structural Equation Modelling. The results prove that: (i) rewards have a positive influence on job satisfaction; (ii) the relationship between job satisfaction and job performance is not statistically significant; and (iii) the relationship between rewards and job performance is not statistically significant. These findings have both theoretical and practical implications. On the one hand, they extend the theory from the human resources management field by analyzing the relationships established among rewards, job satisfaction, and job performance, within the Romanian banking system. On the other hand, they help managers understand the importance of using rewards as a strategic organizational tool, capable to increase employees’ satisfaction.

The corporate social responsibility in the Romanian banking system

In the 1970s, Milton Friedman has claimed that: “the only social responsibility of a company is the use of its resources together with the engagement in businesses that are meant to increase the profits, maintaining the rules of the game. This means to engage into an open and free competition, without any abuse or fraud.” And this is how, starting from the 70s, the “rules of the game” were known in business and the responsibility that triggers the community, a responsibility that the companies fully acknowledge and embrace. The corporate social responsibility (CSR) deals with strategies used by companies to develop their business in an ethical way, to respect the relation with the other members of the society. CSR can involve a range of partnerships with the local communities, investments with a real social impact of the corporations (education, art, and environmental protection), the development of the relations of the companies with the clients, employees and their families.

Emotional Intelligence, Occupational Stress and Job Performance in the Romanian Banking System: A Case Study Approach

Abstract The research aims to analyze the relationships developed among emotional intelligence, occupational stress and employee performance in the financial banking sector. In other words, it aims to: (i) analyze the specialized literature regarding the concepts of emotional intelligence, occupational stress and job performance; (ii) to measure employees’ emotional intelligence, occupational stress and work performance; and (v) to analyze the relationship established among the aforementioned variables (emotional intelligence, occupational stress, job performance). A quantitative approach is adopted and a case study strategy is employed due to the fact that the research focuses on investigating a phenomenon which is frequently encountered in the real context of today’s organizations. Thus, a single-case study analysis is used and a survey based on a questionnaire is developed among 55 employees from the administration department of ING Bank Romania (Bucharest). The hypotheses are tested using partial least square - structural equations modeling and the results prove that in the Romanian banking institutions: (i) there is a negative relationship between employees’ emotional intelligence and the occupational stress; and (ii) there is a positive relationship between emotional intelligence and job performance. These findings have both theoretical and practical implications. At the theoretical level, the present study extends the theory from the human resources management field by proposing a model for evaluating the relationships established among emotional intelligence, occupational stress and job performance in the Romanian banking financial system. At a practical level, it increases managers’ understanding regarding the factors that influence employees’ performance and it provides several strategic directions that could be taken into account for future improvement.