Saudi Bank Research Articles

Assessing the Impact of COVID-19 on the Saudi Bank’s Performance: A Panel Analysis

The primary objective of this study is to assess the performance of Saudi banks over a specified period, which is from 2015 to 2021. The chosen methodology for this analysis is panel data regression. Panel data combines cross-sectional and time-series data, making it suitable for examining trends and relationships over time among different entities (in this case, banks). The study uses annual financial data for the 10 selected banks over the seven-year period, from 2015 to 2021. The study finds a marginally negative association between COVID-19 and the performance indicators ROA and ROE. This suggests that the COVID-19 pandemic had a slightly adverse impact on the profitability and equity returns of the Saudi banks included in the analysis. The study employs a dummy variable, likely called "COVID," to account for the impact of the COVID-19 pandemic. The results indicate that there is a statistically significant but weakly negative association between return on equity (ROE) and credit risk (CR). The study finds that credit risk and liquidity risk are both insignificant when analyzing return on assets (ROA). These findings provide valuable insights into how external factors like a pandemic and internal factors like credit risk can affect the financial performance of banks. The study's results offer regulatory authorities in Saudi Arabia a valuable resource for making informed decisions regarding the financial performance and stability of the banking sector during a crisis. By incorporating these findings into their policies and oversight activities, regulatory bodies can contribute to a healthier and more robust banking system that benefits both the financial institutions and the broader economy.

The Mediating Role of Employee Performance in the Relationship Between Organizational Identification, Organizational Commitment, and Corporate Reputation Among Saudi Bank Employees

The Mediating Role of Employee Performance in the Relationship Between Organizational Identification, Organizational Commitment, and Corporate Reputation Among Saudi Bank Employees

Evaluating Developer Responses to App Reviews: The Case of Mobile Banking Apps in Saudi Arabia and the United States

Application stores (app stores) enable developers to interact with users by responding to their reviews. Many developers continuously monitor user reviews and seek to respond to them effectively and efficiently to boost user satisfaction, which in the end increases the app’s rating. Thus, it is essential to study developer responses and how to improve them. This research was aimed at evaluating developer responses to user reviews in both the Apple App Store and Google Play Store in the banking domain. Ten Saudi and ten United States (U.S.) bank apps were selected from each store as the sample. Quantitative and qualitative approaches were employed to code and categorize developer responses for each app using content analysis. The study found that developers’ responses can be divided into three types of interaction: interactive response, semi-interactive response, and no response. A main finding is that responses by U.S. bank app developers outperformed those by Saudi bank app developers in terms of the number and quality of responses. This research provides valuable recommendations for users, developers, and app stores to enhance user–developer interaction.

Islamic banks as a main driver of Islamic financial industry activity: Al-Rajhi Saudi Bank model

This research paper aims to show the role of Islamic banks in revitalizing the Islamic financialindustry with reference to the experience of the Al-Rajhi Saudi Bank, which is considered a successfulexperience in this field, especially since Saudi Arabia occupies the leadership in the field of Islamic finance in recent times, in addition to extracting the need of Islamic financial institutions To the work of Islamic banks as the main pillar of this industry, by providing a variety of financial products with the aim of supporting the work of these institutions, as Islamic banks seek to mobilize the financial resources deposited with them to activate long-term investment, and to get rid of excess liquidity, if it exists; In addition to managing risks if they occur.this research paper has reached to That Islamic banks due to the advantages they have, are able tostrengthen the relationship between the various institutions of the Islamic financial industry within theframework of functional integration among them, which allows to expand the activity of this industry and increase its competitiveness with its traditional counterpart

Examining the mediating effect of multi-channel integration quality in the relationship with service quality, customer satisfaction and customer loyalty in the Saudi banking sector

PurposeSince banks do not sell tangible products, they rely heavily on customer interactions and retention, which requires service quality, customer satisfaction and customer loyalty. Banks must innovate and develop new services and expand customer engagement efforts beyond stores, kiosks, direct mail and websites to include social media, mobile applications and location-based services in order to meet their customers’ growing demands. A multi-channel strategy that integrates the offline and online presences of banks can increase quality, customer satisfaction and loyalty. This paper aimed to use a service quality scale to: (1) examine the association between service quality and customer satisfaction; (2) examine the association between customer satisfaction and customer loyalty; (3) examine the indirect association between service quality and customer loyalty through customer satisfaction; and (4) examine the mediation effect of multi-channel integration quality in the relationships between service quality, customer satisfaction and customer loyalty.Design/methodology/approachThe data was obtained from banks in Saudi Arabia. The analysis was based on an online survey of 265 Saudi bank customers. The multi-channel integration quality model and Statistical Package for the Social Sciences (SPSS) were used to test the proposed hypothesis and conduct the analysis.FindingsThe results found that there was a statistically significant link between service quality and customer satisfaction in the Saudi banking industry. Service quality did not directly affect customer loyalty. When multi-channel integration quality was moderate to high, service quality affected customer loyalty through customer satisfaction. For service quality and customer loyalty in the Saudi banking sector to be achieved, customers must be satisfied, but also the bank’s brand must manage the quality of integration channels provided to them with care, and thus branding plays a key role in achieving customer loyalty in the Saudi banking sector.Originality/valueThe academic community has provided little evidence to support how the relationships between constructs such as service quality, customer satisfaction, customer loyalty and multi-channel integration quality apply to the Saudi banking sector. A conceptual framework was proposed to show how these constructs affect the Saudi banking sector. An empirical study was conducted to see how the framework held up in banking settings. The conceptual framework serves to advance the fields of business and management and banking and their respected literature, as well as advance the understanding of multi-channel integration in boosting customer satisfaction and loyalty through high service quality in the Saudi banking sector.

Interest rate, foreign exchange and stock performance in a dual banking industry: evidence from Saudi Arabia

PurposeThis study aims to extend the literature by extensively investigating the impact of foreign exchange and interest rate changes on the returns and volatility of bank stocks in Saudi Arabia, which is the largest dual banking industry.Design/methodology/approachThis study employs the generalized autoregressive conditional heteroscedasticity (GARCH) model on stock returns of four fully Islamic Saudi banks and eight conventional Saudi banks.FindingsThe results showed that the foreign exchange rate return has a positive impact on Saudi conventional bank returns, while it has an adverse impact on Saudi Islamic bank returns. Moreover, a higher interest rate return has a positive impact on Saudi bank stock returns implying that the assets side is more sensitive to changes in interest rates than the liability side. Finally, higher foreign exchange and interest rates volatility increases the volatility of Saudi bank returns, where the former has the largest significant impact. Therefore, Saudi regulators should pay more attention to the risk management of their banks because this could threaten the stability of their financial system.Originality/valueTo the best knowledge of the author, this is the first study that tries to extensively analyze the joint impact of foreign exchange and interest rates on bank stock returns and volatility in Saudi Arabia by applying the GARCH model. The study uses a long data set from 2010 to 2019 that includes all Saudi banks and employs four measures of interest rates to increase the robustness of the results.

Impact of Non-Performing Loans on Saudi Bank Profitability

Non-performing loans (NPLs) have become increasingly worrying to the Saudi banking sector. Sanctioned loans have a repayment schedule, including principal and interest amounts. Excessive defaults on loans leads to a liquidity crisis throughout the banking sector, and can even cause bank failure. As a result, banks have to cover non-performing loans and maintain reserves under the instructions of the Saudi Arabia Central Bank, which severely affects profitability. This study analyzes the comparative position of non-performing loans in the Saudi banking sector over the period 2009-2017 to determine causes and impacts on bank profitability, using data from annual reports. The study variables are profitability (ROA and ROE) as the dependent variable, and non-performing loans ratio (NPLR) as the independent variable. The data was analyzed by correlation, regression, and analysis of variance (ANOVA) using SPSS. The empirical results represent that NBLR has a negative influence on the dependent variable.

The impact of audit committee characteristics on Saudi bank performance

This paper examines the impact of audit committee characteristics on the performance of Saudi listed banks. Data are collected from the annual reports of Saudi listed banks from 2010 to 2018. To test hypotheses, this study applies the random effects model as the main method of analysis, while the ordinary least square (OLS), the feasible generalized least squares (FGLS), and the panel-corrected standard errors (PCSE) methods are used for robustness check and additional analysis. The empirical results indicate a significant positive effect of audit committee independence on all measures of bank performance (ROA, ROE, Tobin’s Q). The empirical results of this study also provide important implications for regulatory bodies and market participants in Saudi Arabia and developing countries to understand the actual role of different attributes of the audit committees on firm performance.

The Reality of the Audit Expectations Gap in Saudi Banks: The Mediating Effect on the Relationship between Loan Decisions Performance and Individual Factors

This research work investigated the impact of individual factors such as the knowledge and experience of Saudi bank employees on the Audit Expectation Gap (AEG) and inquires if the gap can mediate the relationship between individual criteria and loan decision performance.

The influence of Internet banking services quality on e-customers’ satisfaction of Saudi banks: comparison study before and during COVID-19

PurposeThe main purpose of this study is to compare e-customer satisfaction in Saudi banks before and during coronavirus disease 2019 (COVID-19) pandemic by assessing the e-service quality dimension before and during the pandemic.Design/methodology/approachTo examine e-customer satisfaction among Saudi bank e-customers, data were collected using convenience sampling methods utilizing two questionnaires before and during COVID-19, distributed to Saudi bank e-customers. The sample size of collecting data of 588 bank e-customers was analyzed through a well-known statistical technique, multiple regression and paired sample t-test, using Statistical Product and Service Solutions (SPSS) software and Excel.FindingsIt is found that efficiency is the major determinant of e-customers’ satisfaction with banks in Saudi Arabia. The Saudi context is different from other countries. There are differences between the impact of Internet banking e-service quality on e-customer service before and during the COVID-19.Practical implicationsThis research has a crucial inference for the managerial level practically. This study has important implications for the banks to satisfy their e-customers by increasing customer service level and enhancing the interaction in the site to solve the e-customers problem immediately by creating an effective support team to encourage the effect of responsiveness. In particular, website managers should review their website framework and create an easily organized site for e-customers.Originality/valueThe research improves past studies' methodology by testing the impacts between the constructs before and during COVID-19. This research is a significant addition to the current literature collection.

Attitude Towards Adopting Cloud Computing in the Saudi Banking Sector

Cloud computing plays a significant role in business organisations by offering many benefits and opportunities. However, the adoption of cloud computing involves some trepidation. The adoption of cloud computing in developing countries is still in the early phase. The bank sector in Saudi Arabia aims to benefit from opportunities offered by the cloud computing technology; however, some banks continue to hesitate in the implementation of this technology. Therefore, this study aims to investigate factors that influence the attitude of the Saudi Arabian bank sector towards adopting cloud computing. A model that incorporates factors derived from the literature is developed in this study to determine whether specific factors positively or negatively affect the attitude of the Saudi bank sector towards adopting cloud computing. A quantitative method is used and data are collected from decision makers and IT staff members in the Saudi bank sector. Results showed that factors of security and privacy exert a significant negative effect whilst factors of benefits and competition pressure demonstrate a significant positive effect on the Saudi bank sector attitude towards adopting cloud computing. Thus, cloud computing providers must focus more on negative influential factors to reduce the apprehension of the bank sector in adopting the cloud computing technology. In addition, the bank sector must also consider factors that can drive the adoption of cloud computing as well as opportunities and losses if this technology is rejected.

The Moderating Role of Ownership Concentration on the Relationship between Board Composition and Saudi Bank Performance

The main purpose of this study is to investigate the potential effect of ownership concentration on the relationship between board composition and bank performance. The study employs a sample of Saudi banks listed on Saudi stock exchange (TADAUWL) over the period from 2011 to 2018. To test the study hypotheses and control for endogeneity issues, the Ordinary Least Square (OLS) and the Two-Stage Least Squares (2SLS) techniques are used. The empirical results reveal a significant negative moderating effect of ownership concentration on the association between board composition and bank performance, which confirms the study argument and supports hypotheses. The results indicate that board composition in terms of independent board members, executive board members, and non-executive board members in banks with higher ownership concentration have a weaker positive influence on bank performance. For control variables, the results are almost consistent with theoretical perspectives and previous empirical evidence. The results of this study have important implications for regulatory authorities, companies, and market participants in Saudi Arabia and countries with high concentrated ownership to understand how ownership concentration could affect corporate governance and firm performance and to identify appropriate actions to protect board composition from the influence of ownership concentration.

The Role of Accounting in the Reduction of Money Laundering Operations - Current Practice: An Empirical Study in the Kingdom of Saudi Arabia: دور المحاسبة في الحد من عمليات غسل الأموال ــ الممارسة الحالية: دراسة ميدانية في المملكة العربية السعودية

This study aims to shed lights on the extent of adherence by Saudi banks to Anti- Money Laundering standards and procedures, and by identifying the extent to which bank employees are aware of red- flag activities and suspicious indicators of money laundering. Furthermore, the study aims to identify the level of effectiveness of accounting procedures and internal controls in regard to preventing and deterring money laundering. This study employs the extrapolation approach. A questionnaire was distributed to bank employees working in Saudi banks. A total of (48) questionnaires were distributed, (36) questionnaires were suitable for analysis. A number of findings have been reached. The most important findings include: first, the significance of adherence by banks to the policies and procedures issued by the Saudi Arabian Monetary Authority. Second, the significance of awareness by Saudi bank employees of the money laundering activities and the procedures to combat them. Third, the direct or indirect contribution of accounting procedures in preventing and combating money laundering through the use of modern accounting systems, financial reports & statements, letters of credit, and accounting books. Fourth, bank employees exhibit high levels of awareness of the money laundering activities and methods of detecting and preventing them. Finally, it has been found that banks implement a number of accounting procedures, and develop internal controls that assist in combating money laundering activities.

Predicting Return Donor and Analyzing Blood Donation Time Series using Data Mining Techniques

Since blood centers in most countries typically rely on volunteer donors to meet the hospitals' needs, donor retention is critical for blood banks. Identifying regular donors is critical for the advance planning of blood banks to guarantee a stable blood supply. In this research, donors' data was collected from a Saudi blood bank from 2017 to 2018. Machine learning algorithms such as logistic regression (LG), random forest (RF) and support vector classifier (SVC) were applied to develop and evaluate models for classifying blood donors as return and non-return donors. The natural imbalance of the donors' distribution required extra attention and considerations to produce classifiers with good performance. Thus, over-SMOTE sampling was tested. Experiments of different classifiers showed very similar performance results. In addition to the donors return classification, a time series analysis on the donors dataset was also considered to find any seasonal variations that could be captured and delivered to blood banks for better planning and decision making. After aggregating the donation count by month, results showed that the number of donations each year was stable except for two discovered drops in June and September, which for the two observed years coincided with two religious periods: Fasting and Performing Hajj.

Consumer use of mobile banking (M-Banking) in Saudi Arabia: Towards an integrated model

Mobile banking is one of the most promising technologies that has emerged in recent years and could prove to have considerable value to both banks and customers. Thus, this study recognises the need to test the main factors that could predict the use of mobile banking as well as how using such a system could contribute to both customer satisfaction and customer loyalty. The conceptual model of this study combines two models (i.e. UTAUT2 and the D&M IS Success Model). A questionnaire survey was conducted to collect the required data from convenience sampling of Saudi bank customers. The main factors – performance expectancy, price value, facilitating conditions, hedonic motivation, habit, system quality and service quality – were found to have a significant impact on actual use behaviour. This study was cross-sectional, therefore future studies should implement longitudinal studies in order to re-collect the findings. Further, this study adopted convenience sampling of Saudi M-Banking users. This may adversely impact the issue of generalisability to the whole population. The gap in the M-Banking literature in Saudi Arabia would be bridged by proposing a comprehensive conceptual model that scrupulously clarifies the use of M-Banking from the perspective of Saudi users. Furthermore, this study would consider the adoption of numeric data in order to inferentially analyse them using SEM. This in turn would assist in generalising the findings to the whole Saudi population.

Bank’s financial stability and risk management

PurposeThis study aims to examine the effect of Saudi bank’s financial stability on risk management.Design/methodology/approachDifferent ordinary least square models have been used to study the significant effect of banks’ financial stability indicators on different types of risks in Saudi banks. Financial statements were collected of all Saudi banks (12 banks) from 2011 to 2014 from TADAWL website.FindingsThe results indicate a negative and significant effect of capital adequacy ratio on credit risk. Also, there is a significant and positive effect of leverage ratio on credit risk. Moreover, the results indicate negative and significant effect of provisions, leverage, ratio of loans to deposits and bank size on liquidity risk. Finally, results indicate a positive and significant effect of capital adequacy, provisions, leverage and asset utilization ratio on operational risk and indicate a negative and significant effect of loan-to-deposits ratio on operational risk. A robustness check was used to confirm the results. No differences between small and large Saudi banks was found. All banks are committed to apply Basel accord and Saudi Arabian Monetary Agency (SAMA) regulations. But there is a significant difference in applying SAMA toolkits regulations between 2011 and 2014. The 2014 results reflect very high degree of financial stability in Saudi banks when compared with that of 2011, also greater ability to mitigate risk exposure using different types of macroprudential toolkits stated by SAMA.Research limitations/implicationsThe study is limited to Saudi Banks from 2011 to 2014.Originality/valueThis is the first paper to use the macroprudential toolkits, suggested by SAMA as financial stability measurements, to examine their effect on different types of risks in Saudi banks. SAMA suggested this group of toolkits to comply with Basel III new regulations and to minimize the degree of risk exposure of Saudi banks.

The Impact of Mergers and Acquisitions on Financial Performance of Banks in the Kingdom of Bahrain during 2004-15

Following the 2007 global financial crisis, more than 15 M&A transactions took place among financial institutions in the kingdom of Bahrain. This paper evaluates the impact of M&As on the financial performance of four such deals between banks in Bahrain. Data was collected from financial statements of the banks and the Bankscope database during 2004–2015. 15 accounting ratios were applied to CAMEL Rating Model approach. Financial modelling with Excel has been applied to test for the significance of changes in the financial performance of the banks three years before and three years after mergers. No significant difference in the financial performance of the local banks between pre and post M&As in the kingdom of Bahrain was observed. No significant difference in the financial performance of the acquirer bank or the target bank was observed except Bahraini Saudi Bank (target bank) which showed significant improvement in the financial performance after the merger with acquirer bank namely Al Salaam Bank. No significant change in the overall CAMEL ratios was observed for all banks involved in the M&As in Bahrain during 2004-15. The study provides an empirical analysis of the M&As before and after the mergers which can serve as a basis for further evaluation of future strategy of the banking sector in the kingdom of Bahrain.

An analysis of Saudi Banks’ Disclosures inCompliance with BASEL III Norms: A Case study of Saudi Bank Fransi

An analysis of Saudi Banks’ Disclosures inCompliance with BASEL III Norms: A Case study of Saudi Bank Fransi

The mediating role of transformational leadership style on relationship between personality type and turnover intention in Saudi Arabian banking context

The purpose of this paper is to study the mediation effect of leadership style on the relationship between employees’ personality types and turnover intention in the banks of Saudi Arabia. Data were collected using online questionnaires from 343 branch employees from two Saudi commercial banks operating in Riyadh City in Saudi Arabia. The obtained data was analyzed using structural equation modeling (AMOS) to test the hypotheses. It was found that high conscientiousness has an influence on decreasing turnover intention. Moreover, bank employees with high conscientiousness are less likely to perceive their leaders as transformational or transactional ones. Regarding to openness to experience, Saudi bank employees are less likely to perceive their leaders as passive or avoidant styles of leadership. The results of the study demonstrated that Saudi Arabian employees who score high in Neuroticism are more likely to perceive their banks leaders as either transformational or transactional ones. This research contributes to organizational behavior and leadership theory; it is considered as one of the first empirical studies within the Saudi context to investigate the mediating role of perceptions between leadership styles between personality traits and employees’ turnover intentions. It is also one of the first studies to examine the relationship between personality traits, leadership styles, and turnover intention in banking contexts. The findings have several important implications. For instance, this study documents both the direct and mediation effects of perceived leadership styles on employees’ personality and their turnover intentions which will be helpful for the development of new studies on human resource management and cross-cultural management.

The Mediating Role of Customer Satisfaction among SERVQ and Loyalty in the Banking Sector

This study aims to measure the effectiveness of service quality in Islamic banks compared to conventional banks with the objective of improving the performance of those banks, taking into consideration the customer's point of view in this regard, and hoping to offer an effective contribution to creating an Islamic alternative to conventional banks. The researchers have adopted in their perception of this study on the KSA’s market as a sample for the analysis of the status of Islamic banks in terms of the services provided to customers. Thus, the research is based on investigation and we used a sample of 1050 clients from Saudi Bank sector. Therefore, the analysis of our sample used exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) presented a multitude of structural relations path that gave rise to different results. In case of CB, the results shown that exist a direct effect between customer satisfaction, empathy, assurance and tangibles. The loyalty has an indirect effect within empathy, assurance, tangibles and a direct effect within customer satisfaction variable. However, in case of IB, the results indicated that exist a direct effect between customer satisfaction, responsiveness and reliability. The loyalty has an indirect effect within responsiveness, reliability, and direct effect within customer satisfaction. The role of customer satisfaction as a mediator between service quality and loyalty is major in both cases. Findings revealed that each type of banks presented its specificity in service quality.