Bank Size Research Articles

Financial Inclusion Convergence in Low-Income and Lower-Middle-Income Countries

The study used interest rate, exchange rate and banks size as variables of study. The panel data of 22 Pakistan commercial banks about2009 to 2020, STATA Panel Ordinary Least Square (OLS) and general methods of moments (GMM) estimator is used, and results indicate that in Pakistani banks management efficiency is has high power over shareholder to make profits and involve in risk taking projects. Bank size increase highlights better performance but and a disadvantage to use funds in investments for future growth. Diversification in banks is not a helpful factor to bring change in risk portfolios during financial crises. The liquidity inverse relation causes less availability of resource to boost financial performance and default lending result in credit risk. High proportion of assets utilized for personnel expense raise risk-taking ratio for operation in Pakistan. Banks should avoid the adverse selection of risks with proper performance policy, as to safeguard from hostile economic situations.

Impact of Internal Factors on Banks Profitability In Pakistan

This paper investigated the internal factors that affecting profitability of banks in Pakistan. This study was used annual data of 19 banks of Pakistan from 2012 to 2016. Descriptive statistics and regression analysis are used to test the relationship between return on equity as dependent variable and independent variables. Capital adequacy, liquidity, bank size and expense management are used as independent variables and return on equity is used as dependent variable. The findings of this study showed that all the independent variables have a significant impact on profitability. Capital adequacy, bank size and expense management are variables which have positive and significant impact on the return on equity. Other variable liquidity has a negative but significant relationship with the return on equity. The results of the descriptive statistics show that liquidity and bank size have high mean values while the standard deviation has low values, but the other variables have low mean values.

An Analysis of the Determinants of Bank Stability in the Banking Industry of Nepal

Bank stability refers to the ability of a financial institution to maintain consistent and secure operations, even in the face of economic challenges or shocks. This research study examines the determinants of bank stability in the Nepalese banking industry. The study analyzed data from commercial banks over a wide time range from 2001 to 2023, utilizing the autoregressive distributed lag (ARDL) model technique. The study found that bank size, funding risk, liquidity risk, and GDP growth have a positive and significant impact on bank stability in Nepal. The study also found that credit risk has a negative impact on bank stability. This implies that higher levels of credit risk increase the likelihood of bank instability in Nepal. Banks must give utmost priority to effectively managing and controlling bank size, funding risk, liquidity risk, and fostering GDP growth in order to bolster bank stability and fortify the country's financial system. However, the study also found that credit risk has a negative impact on bank stability. This implies that higher levels of credit risk increase the likelihood of bank instability in Nepal. The implications of the research study for policymakers, regulators, and banks, emphasize the need for effective risk management practices, adequate capitalization, diversified funding sources, and a supportive economic environment to ensure a stable banking sector. The implications of this finding hold great importance for policymakers, as they highlight the crucial role of preserving current bank stability in order to attain even greater stability in the future.

EFFECTS OF EXCHANGE AND INTEREST RATES ON MANUFACTURING SECTOR PERFORMANCE IN NIGERIA: ARCH AND GARCH APPROACH

This study evaluates the effects of exchange, and interest rates on manufacturing sector performance in Nigeria. The data were sourced from the World Bank's World Development Indicators (WDI) and the Statistical Bulletin of the Central Bank of Nigeria (CBN) for the analysis. The unit root test was performed on the formulated model using the Augmented Dickey Fuller (ADF) method. The log of manufacturing sector contribution to GDP (MUFQ), exchange rate (LEXR), inflation rate (LIFR), and bank size (LBKS) were integrated at order zero I(0) while and the log of interest rate spread (LIRS). was stationary at order one I(1), as shown by the Augmented Dickey Fuller unit root test. In order to determine whether there is a long-run relationship between interest rate, exchange rate, and inflation, a bound test was conducted using the Auto-regressive Distributive Lag (ARDL) model. High volatility in exchange and interest rates have a positive effect on manufacturing sector performance, as shown by the results of the Auto-regressive Distributive Lag (ARDL) bound test, and the results from Arch and Garch corroborate these findings. Auto-regressive Distributive Lag (ARDL) results indicated a positive and statistically significant relationship between the exchange rate and the performance of the manufacturing sector over time at 0.05 level. However, bank size revealed a positive but insignificant relationship with manufacturing sector performance in the short-run, while the coefficient of interest rate spread and inflation rate were both negative and significantly influenced manufacturing sector performance in the current year period. The paper concludes that Nigeria's manufacturing sector is strongly correlated with the country's exchange and interest rates. The study recommended amongst others that as a result of too much dependence on oil, the federal government should peg the local currency rate and mandate the deposit money banks through the Central bank of Nigeria (CBN) to maintain a single digit interest rate. This would boost investors’ confidence on the Nigerian economy as well as the financial system while efforts should be taken to diversify the economy to ease the pressure from the local currency.

Exploring the Relationship Between Diversification, Risk Bank, Size Bank, and Liquidity; Evidence From Conventional Banking In Indonesia

Banking plays an important role in the economy both micro and macro. In addition, it is crucial for a country to have a strong and robust banking system. To realize a strong and robust banking banks need to maintain their efficiency. Therefore, it is necessary to identify the factors that affect efficiency, including asset diversification, risk, bank size and bank liquidity. The novelty of this research is that there is an asset diversification variable. Asset diversification can protect investors from recurring investment cycles and can save from asset failure. The sample of this research are conventional banks with a total of 10 banks that have the largest share of assets in Indonesia. In this study to identify the effect of asset diversification, bank risk, bank size, and bank liquidity on bank efficiency used multiple linear regression analysis methods were used. This study concludes that asset diversification actually reduces bank efficiency. The increased bank risk, the better efficiency. Then, the size of the bank and liquidity have no effect on efficiency. Therefore, banks need to review the diversification strategy, ensure that the risks associated with each asset and portfolio as a whole are well-identified and look for opportunities to automate repetitive processes and reduce overall operational costs. Through this research, we suggest, (i) Banks need to review the diversification strategy that has been implemented. There may be some areas or types of assets that do not fit the risk profile and objectives of the bank, (ii) Banks need to ensure that the risks associated with each asset and portfolio as a whole are well-identified, measured and managed, (iii) Banks need to look for opportunities to automate repetitive processes and reduce overall operational costs.

Determinants of Capital Structure in the Banking Sector: Lessons from the Western Balkans

The study examines the capital structure of the Western Balkan banking industry across the period 2015 - 2020. Forty-seven of the total Western Balkan-based commercial banks were included in the study. By constructing a balanced panel, this study uses pooled ordinary least squares, fixed and random effects regressions, to assess the relationship between bank book leverage as the dependent variable and the set of bank-specific explanatory variables that include profitability, leverage ratio, bank size, earnings volatility, collateral, growth opportunities, and liquidity. The study shows a significant positive relationship between profitability and book leverage for the period studied. In contrast, leverage ratio, earnings volatility, collateral, growth, and liquidity significantly negatively impact the book leverage of Western Balkan banks. An extensive and comparative study of banks operating in Western and Eastern Balkan countries is recommended. The findings have practical implications for bank executives. They will assist them in identifying the bank-specific factors that influence the capital structure and selecting values that promote optimal capital structure. The findings of this study can help regulators develop an effective prudential framework. This study opens up new avenues for further research in this area for academics, researchers, and analysts.

Efficiency Comparison between Conventional and Islamic Rural Banks in Sumatra during the COVID-19 Pandemic

This study aims to examine and compare the efficiency of conventional rural banks and Islamic rural banks in their roles as intermediary institutions during the COVID-19 pandemic in Sumatra, Indonesia. Furthermore, the efficiency determinants were further analysed to find some variables that affect rural banks’ efficiency. Non-Parametric approach, Data Envelopment Analysis (DEA), and Tobit Regression are employed in this study. The results show that Islamic rural banks have better efficiency performance compared to conventional rural banks, but that there is a fluctuating efficiency trend experienced by both types of rural banks during the observation period. In addition, the potential improvement result indicates that financing and operating revenue variables are the main causes of rural bank inefficiency. Furthermore, the Tobit Regression result finds that capital and bank size significantly improve the efficiency level, but that risk significantly reduces bank efficiency.

A method to evaluate the rank condition for CCE estimators

We develop a binary classifier to evaluate whether the rank condition (RC) is satisfied or not for the Common Correlated Effects (CCE) estimator. The RC postulates that the number of unobserved factors, m, is not larger than the rank of the unobserved matrix of average factor loadings, ϱ. When this condition fails, the CCE estimator is inconsistent, in general. Despite its importance, to date this rank condition could not be verified. The difficulty lies in the fact that factor loadings are unobserved, such that ϱ cannot be directly determined. The key insight in this article is that ϱ can be consistently estimated with existing techniques through the matrix of cross-sectional averages of the data. Similarly, m can be estimated consistently from the data using existing methods. Thus, a binary classifier, constructed by comparing estimates of m and ϱ, correctly determines whether the RC is satisfied or not as . We illustrate the practical relevance of testing the RC by studying the effect of the Dodd-Frank Act on bank profitability. The RC classifier reveals that the rank condition fails for a subperiod of the sample, in which case the estimated effect of bank size on profitability appears to be biased upwards.

The Effect of Online Banking on Ethiopia's Commercial Banks' Bottom Lines

Purpose: Examining how electronic banking affects the bottom lines of Ethiopia's commercial banks was the primary motivation for this research. The study's overarching goal is to analyse the effect on commercial banking in Ethiopia of a number of variables including ATM usage, debit card acceptance at points of sale, mobile and internet banking, bank size, and management effectiveness.
 Methodology: Over the course of 2018–2022, this study focused on nine commercial banks as its primary unit of analysis. These nine commercial banks were chosen with care since they provided complete data and information during the study period. In our investigation, we used a special type of data called panel data. Separate electronic banking services such as ATMs, mobile banking, point of sale (POS), debit cards (DC), and internet banking (IB), as well as bank size and managerial efficiency, serve as supplementary controls in this investigation. Both descriptive and inferential statistics were used to help the study reach its goal. Mean, variance, and standard deviation are some of the central tendency measures that have been used in the study's descriptive analysis. Static panel data models were used for the econometric analysis in this work. These included the pooled ordinary least squares (POLS), fixed effect, and random effect models.
 Results: Commercial banks' performance, as measured by return on asset (ROA), is negatively impacted by the logarithm of mobile banking and management efficiency, according to the fixed effect model. ROA is positively and significantly impacted by bank size and the logarithmic prevalence of internet banking. For this reason, commercial banks could benefit from revaluating certain of their electronic banking offerings, especially mobile banking.

Exploring the Influence of Corporate and Shariah Governance on the Profitability of Banks and their Islamic Windows: A Comprehensive Study of Pakistan

The main purpose of our study is to take a look at how it impacts corporate governance and shariah governance on the profitability of conventional banks of Pakistan and their Islamic windows, one more objective of this study is to investigate whether there is any significant difference in the profitability of conventional banks after opening of Islamic windows. Our research study's theoretical basis draws from corporate governance theories, agency theory, resource dependence theory, and Islamic finance principles. By examining the relationships between these independent variables and the dependent variables (ROA and ROE) our study aims to provide insights into the factors influencing the financial performance of Shariah-compliant banks. Our study is based on 10 conventional banks which also provide Islamic windows. For our analysis in the current study, we will use annual data that covers the period from 2013 to 2022. To achieve these objectives we are using a linear regression model and paired sample t-test. Our findings conclude that bank age and board size have a significant positive impact on corporate governance in contrast, board diversity has a significant but negative impact on the ROA of conventional banks on the other hand bank size and board independence do not have any impact on ROA and if we talk about ROE board size and board independence had a helpful important impact on ROE while bank size bank age and board diversity doesn't have any significant impact on ROE of conventional banks of Pakistan. In the case of Shariah governance, only the Shariah board has a significant positive effect on ROA and ROE ratio on the other hand remuneration and charities don’t have any effect on the Islamic windows of conventional banks. We further discover no substantial variation in the ROA & ROE of Pakistani conventional banks following the establishment of Islamic windows. The findings of this study suggest that the government of Pakistan should focus on promoting good corporate governance practices in banks, especially regarding board size, bank age, board diversity, and shariah board because these factors increase the profitability of conventional banks.

Faktor-Faktor Yang Mempengaruhi Dividend Payout Ratio Pada Perusahaan Perbankan Di BEI

The dividend policy considers whether a company's earnings will be reinvested or distributed. This policy significantly impacts stakeholders' interests. For investors, the dividend policy is crucial because it affects the level of return on investment. This study aims to explain and analyze whether the bank size, return on assets (ROA), debt-to-equity ratio (DER), loan-to-debt ratio (LDR), and net interest margin (NIM) have a significant impact on the dividend payout ratio (DPR). The sample for this research consists of 10 banking companies listed on the Indonesia Stock Exchange from 2018 to 2022, encompassing 50 observations. The sample was tested through descriptive statistical analysis, model selection tests, and panel data regression analysis. The research findings indicate that Bank Size has a positive and significant impact on the DPR, ROA has a negative and significant impact on the DPR, while DER, LDR, and NIM do not significantly influence DPR.

IMPACT OF CREDIT RISK AND BANK-SPECIFIC FACTORS ON THE FINANCIAL PERFORMANCE OF LICENSED BANKS IN SRI LANKA

The objective of the study is to examine the impact of credit risk and bank-specific factors on the financial performance of licensed banks in Sri Lanka during the period of seven years (2015 - 2021). In the empirical investigation, return on assets and return on equity are used to measure financial performance while non-performing loans and capital adequacy are proxies for credit risk. Cost efficiency, average lending, loan-to-deposit ratio, and bank size are considered bank-specific factors. Seventeen licensed commercial banks and five licensed specialized banks are taken as samples of this study, and data is collected from annual reports of licensed banks in Sri Lanka during the period from 2015 to 2021. Panel data regression analysis is employed to examine the hypotheses. Results of the study revealed that non-performing loans have a negative impact on banks’ financial performance in terms of return on assets of licensed banks whereas average lending has a positive impact on banks’ financial performance in terms of return on assets. Other variables such as capital adequacy, cost efficiency, loan-to-deposit ratio, and bank size have not shown any significant impact on the financial performance of licensed banks. The output of the study may be useful to the bank lending unit’s decision-makers, investors, and economic policymakers of the country. The Banks should seek mechanisms to improve their risk management capacity efficiency and quality lending to remain competitive in the market.

Income diversification and bank performance: an evidence from emerging economy of Pakistan

Purpose The income structure of banks has undergone a notable change in recent decades; therefore, non-interest-based activities have gained much attention. This paper aims to examine the impact of income diversification on bank performance in Pakistan.Design/methodology/approach A balanced panel data set of 20 Pakistani commercial banks is used from 2007 to 2020. The random effect model is employed to test the relationship between income diversification and financial performance.Findings The empirical results indicate a significant positive impact of income diversification of banks on risk-adjusted returns on assets and equity. Moreover, while banks' risk-adjusted profit performance improves with the increase in bank size, equity ratio and loan ratio, it deteriorates with high credit risk and technology. However, geographical diversification does not explain financial performance in all the risk-adjusted return on equity models. Among the macroeconomic factors, the interest rate influences bank risk-adjusted returns positively, whereas gross domestic product and inflation rate have a negative effect on banks' financial performance.Originality/value To the best of the author's knowledge, this study is the first to empirically investigate the relationships between income diversification and the risk-adjusted profits of Pakistani-listed commercial banks. This study has implications for regulators and policymakers of commercial banks.

The role of corporate social responsibility as a moderating factor in influencing bank performance in Indonesia

An important factor in increasing public trust in banks is to show bank performance, so it is necessary to know the factors that influence bank performance. Therefore, it is important to attract the attention of bank management. This study aims to determine the factors influencing bank performance by using social responsibility as a moderating variable. This study involved 20 banks in Indonesia and used a quantitative approach. Secondary data sources were used for data collection and analyzed using a regression equation model. The results show that non-performing loans and bank size have no effect on bank performance. Meanwhile, loan-to-deposit ratio and corporate social responsibility have a positive effect at the 1% significance level. The results of testing the moderation effect obtained t-statistic values of –0.365 and –4.269. These results show that social responsibility has a negative effect, does not moderate the relationship between non-performing loans and bank performance, but has a negative effect, moderating the relationship between the loan-to-deposit ratio and bank performance. These findings have policy implications for bank performance through the implementation of corporate social responsibility policies. AcknowledgmentsThe authors would like to thank the DPPMP of Stikubank University for supporting the funding of this research. Thanks also to the NGEJUS - FEB Unisbank team who helped provide the facilities needed for this study.

Factors that Influence Banking Performance in Indonesia

This research aims to examine the influence of ESG Score, NPL, Bank Size, Bank Capital, Liquidity Risk, Bank Liquidity, revenue growth, Bank Leverage, Economic Growth, Inflation, Diversification, Labor Productivity, and ESG Score Moderating on Bank performance, which is shown with the achievement of Return on Assets. The research sample used in this research is banks listed on the Indonesia Stock Exchange for the period 2018 to 2022. Data was taken from time series data which contains data from 2018 to 2022 for the independent variable and bank performance as the dependent variable. The research methodology used is Ordinary Least Squares using Eviews 12 software. The findings and contributions in this research are that ESG Score, Non-Performing Loans, Bank Leverage, Economic Growth, and Inflation influence bank performance. Meanwhile, Bank Size, Bank Capital, Liquidity Risk, Bank Liquidity, and revenue growth do not have a significant effect on changes in bank performance. Bank Leverage, Economic Growth, and Inflation have a positive and significant effect on changes in bank performance, while ESG Score and Non-Performing Loans have a negative and significant effect on changes in bank performance. Banks can take advantage of Bank Leverage, Economic Growth, and Inflation opportunities to improve their performance so that investors are interested in buying bank shares. Low and controlled Non-Performing Loans will increase banking profits, thereby improving the bank's performance. It is hoped that the results of this research can provide input for banks and investors to consider ESG Score, Non-Performing Loans, Bank Leverage, Economic Growth, and Inflation in managing their business and in making investment decisions.

A CONCEPTUAL PAPER ON KEY FACTORS INFLUENCING FINANCING OR LOAN GROWTH IN MALAYSIAN ISLAMIC BANKS AND CONVENTIONAL BANKS

This conceptual paper aims to develop a comprehensive framework on the key factors influencing the financing growth in Islamic banks and loan growth in conventional banks in Malaysia. This is due to the crucial role of financing or loan growth in contributing significantly to bank income and fostering the expansion of a country's economic growth. Additionally, there exists a research gap on financing or loan growth, particularly Islamic banks financing growth in Malaysia. Study on the key factors influencing financing or loan growth is also being notably limited in developing countries compared to their developed counterparts, reflecting differences in the developmental stages of banking systems. Thus, Malaysian banking system has been chosen for the study. The study proposes the use of panel data analysis, utilising data from 16 Islamic banks and 26 conventional banks in Malaysia spanning from 2007 to 2020 (14 years). The internal factors to be investigated in this study include Impaired Financing or Non-Performing Loan, Bank Size, Liquidity, Capital, and Deposit Growth, while Inflation, GDP, Dummy Government Policy, and Overnight Policy Rate will be examined as external factors. The findings from this future research are expected to give valuable insight for bankers and regulators, enabling informed actions aimed at enhancing financing or loan growth. This may involve refining credit management practices and ensuring operational enhancements, particularly within Islamic banks, for future improvements.

Active and Reactive Power loss Minimization Along with Voltage profile Improvement for Distribution Reconfiguration

Optimal distribution network reconfiguration (DNR), distributed generations location and sizing (DGs-LS), tap changer adjustment (TCA), and capacitors bank location and sizing (CAs-SL) are different methodologies used to reduce loss and enhance the voltage profile of distribution systems. DNR is the process of changing the network topography by changing both sectionalized and tie switch states. The optimal location looks to find the optimal setting of the DG and CA within the distribution network. Optimal size seeks to find the optimal output generation of both DG and CA. The TCA looks to find the optimal position for TC. These methods are challenging optimization problems and resort to meta-heuristic techniques to find a globally optimal solution. This paper presents a new methodology with which to simultaneously solve the problem of DNR, DGs-LS, TCA, and CAs-SL in distribution networks. This work aims to minimize active and reactive power losses, including voltage profile improvement using a multi-objective decision approach. The firefly algorithm (FA) and analytic hierarchy process (AHP) are used to optimize the fitness function and determine the function weight factors through the use of MATLAB software. Several scenarios were considered on the IEEE 69-bus network. In terms of active power and reactive losses, reductions in the test system of 96.16% and 92.7%, respectively, were achieved, evidencing the positive impact of the proposed methodology on distribution networks.

Sustainability reporting and audit committee attributes: Evidence from banks in Indonesia

This paper examined the effects of audit committee attributes on the sustainability reporting (SR) of commercial banks in Indonesia. This study conducted a cross-sectional and time-series analysis using a sample of 74 commercial banks from 2015 to 2019. This study investigated the audit committee attributes, including financial expertise, size, independence, and meeting frequency. The model under study was underpinned by the theory of legitimacy, stakeholders, and agency. The results showed that the financial expertise of audit committee had an inverse relationship with SR disclosure. Meanwhile, there was a positive relationship between committee independence, bank size, bank age, and type of auditor with SR disclosure. These findings imply that the banks should further focus on the audit committee’s attributes as an effective measure to produce quality SR disclosure. In addition, non-financial expertise, especially in the field of sustainability, is a skill that the audit committee needs to have.

Economic policy uncertainty and bank stability: Size, capital, and liquidity matter

We examine the impact of economic policy uncertainty on bank stability post-2007–2008 global financial crisis and how bank size, capital, and liquidity mitigate this relationship. We use 176,477 quarterly observations for US commercial banks over the period from 2011Q1 to 2020Q3 and find consistent and robust evidence that bank stability decreases as the level of economic policy uncertainty increases. We show that bank size, capital, and liquidity matter, i.e., the negative impact of policy uncertainty on bank stability is stronger for larger banks and weaker for highly capitalized banks as well as for more liquid banks. Our channel analysis shows that the increase in the level and volatility of lending and deposit rates, and the decrease in risk-adjusted capitalization and risk-adjusted profitability might to some extent explain the decrease in bank stability in times of higher economic policy uncertainty. Additional analysis reveals that higher market power mitigates the negative impact of EPU on bank stability. Our findings support the Basel II and III regulatory reforms aimed at tightening the capital levels with stricter rules for the larger banks and the implementation of the newly introduced liquidity rules.

Pengaruh Macroeconomi dan Bank Specific terhadap Non- Performing Loans pada Bank KBMI 3 yang Terdaftar di Bursa Efek Indonesia

This research aims to examine the influence of internal banking factors as measured by the inflation rate, growth rate of gross domestic product, interest rate, bank size, return on assets, equity to assets, and credit growth on non-performing loans in the 13 conventional banks referred to in Bank Group According to Core Capital 3 listed on the Indonesia Stock Exchange (BEI) for 7 years (2015-2021). The data in this research are quantitative data obtained from the annual reports of banks included in the Bank Group based on Core Capital (KBMI) 3 in Indonesia which are available on the official website of the Indonesia Stock Exchange (www.idx.co.id), and the official website owned by each bank for 7 years (2021-2015).