Bank Stock Research Articles

Financial development, economic growth, and income inequality: a Toda-Yamamoto panel causality test

This paper examines the causality between financial development, economic growth, and income inequality using panel data for 23 European Union countries over the period 1987-2017. The empirical study employs a trivariate setting of Granger non-causality test of heterogeneous panels adopting the Toda and Yamamoto approach using several proxies of financial development capturing different dimensions of the banking system and stock markets. The findings suggest mixed evidence for the causality direction between financial development and economic growth and financial development and income inequality. In addition, the results support bidirectional causality between economic growth and inequality and one-way causality from inequality to growth. The policymakers can focus primarily on economic growth to raise the demand for financial services and encourage income distribution.

Dynamic Threshold Effect of Financial Development on the Country Risks–Subsidies–Firm Performance Nexus: Evidence from Chinese Renewable Energy Firms

ABSTRACT Using multifaceted financial development indicators and a dynamic panel threshold model, this study finds that different regimes of financial development have different effects on Chinese renewable energy firm performance through the interactive channel of country risks and subsidies. A high level of composite financial development strengthens the positive interaction effect between composite risk and subsidies on renewable energy firm performance, and a high level of banking sector development and stock market development, respectively, weakens and strengthens the negative interaction effect between composite risk and subsidies on renewable energy firm performance. Further, these threshold effects of financial development on renewable energy firm performance are also different when using economic, political, and financial risk indicators, and they also change with different ownership attributes. Thus, the Chinese government needs to improve the level of composite financial development and create a stable composite risk environment to achieve fully the potential of subsidies in promoting renewable energy firm performance.

Is the banking stock return affected by exchange, interest, and inflation rates?

For public investors, the return becomes the appeal for investors to purchase and sell the stocks in the capital market. Fundamentally, in their analysis, they must consider macroeconomic factors, i.e., foreign exchange, interest, and inflation rates. This study investigates and analyzes these factors as the determinant of stock return. The return intended is owned by the Indonesian capital market-listed banks selected as Kompas 100 Index constituents. Eight years are used as time observation, i.e., from 2015 to 2022. Based on this period, 11 banks exist as the samples. Then, this study utilizes the regression model to analyze the data associated with hypothesis testing. After examining the hypotheses, this study concludes a negative relationship between the exchange rate of IDR/USD on banking stock return: The more weakened the IDR/USD, the lower the stock return. Similarly, this negative sign also happens in the relationship between interest rate and stock return. Conversely, inflation positively affects this return.

Analisa Pengaruh Rasio Keuangan Terhadap Pertumbuhan Harga Saham Bank Buku IV Yang Terdaftar Di Bursa Efek Indonesia

Research on the effect of financial ratios on stock prices has been carried out on various research objects, but specifically examining the effect of financial ratios specifically on the growth of BUKU IV bank stock prices has never been done so that research is needed to reveal what the effect of financial ratios consisting of Net Profit Margin ( NPM), Return On Equity (ROE), Debt to Equity Ratio (DER) and Current Ratio (CR) to the growth of BUKU IV bank stock prices. The research sample was taken from banking companies in the BUKU IV category as many as 7 companies that have been listed on the Indonesia Stock Exchange for the period 2017 to 2019. The sampling method was purposive sampling using secondary data in the form of quarterly financial reports published through the Indonesia Stock Exchange website. The data were analyzed using the E-views econometrics program version 10. through the estimation stages of panel data regression model selection, normality test, heteroscedasticity test, multicollinearity test and then hypothesis testing. The results showed that partially Net Profit Margin (NPM) and Debt to Equity Ratio (DER) had a significant effect on stock price growth, while Return On Equity (ROE) and Current Ratio (CR) did not. significant effect on the growth of BUKU IV bank stock prices. However, simultaneously Net Profit Margin (NPM), Return On Equity (ROE), Debt to Equity Ratio (DER) and Current Ratio (CR) have no effect on the growth of BUKU IV bank stock prices, so there are other independent variables that are not included in the study which affect the growth of stock prices.

Ethics and Banking: Do Banks Divest Their Kind?

A growing group of institutional investors use divestment strategically to deter misconducts that are harmful for the climate and society. Based on Kantian ethics, we propose that divestment represents investors’ universal and absolute moral commitment to socially responsible investing (SRI). Following categorical and hypothetical imperatives and reciprocity as a norm, we hypothesize how institutional investors’ commit to SRI through a divestment strategy against ethically reprehensible behaviour of banks, especially when these investors represent banks themselves. Using a hand-collected database of the revelation dates of enforcement actions on banks, we find evidence that banks are less likely to divest equity holding on banks with misconduct (fined banks) than their non-bank institutional investors peers. Banks that commit to invest responsibly by signing for the Principles for Responsible Investment (PRI) are not significantly more likely to divest on fined banks stocks than non-signatory banks. Moreover, divestment of fined banks whose own legitimacy to operate is in question is not significantly different from non-fined banks divestment. We find that European banks are more inclined to sell their holdings permanently on fined banks than their United States peers. Therefore, bank’s moral commitment to SRI via divestments is influenced more by cultural and reciprocity norms than their moral commitment to participate in the PRI.

Valuation Analysis of the Banking Industry based on DCF, P/E and EBITDA Valuation

Contemporarily, banks play a significant role in the global financial system, and by conducting valuation research on the Chinese banking sector. It is possible to determine whether the country's financial market is operating in a stable and efficient manner, whether Chinese banking stocks offer investment potential at this stage in the sector's life cycle, and other issues. This study examines the discounted future cash flow model, the P/E model, and the EBITDA valuation method on evaluation of the banking sector. The research findings lead to the conclusion that there is little chance of significant changes in the stock price of China's banking sector, that relevant stock risks for investors are minimal, and that stable dividends can be obtained annually. The industry is at a mature stage in its life cycle, therefore there are little opportunities for rapid, extensive growth. Overall, these results shed light on guiding further exploration of the valuation of China's banking industry and banking valuation methods.

Impacts of COVID-19 Pandemic on the Price Volatility of Listed Commercial Bank Stocks in Vietnam

This article aims to estimate the relationship between COVID-19 and the price volatility of listed commercial bank stocks in Vietnam during the two most severely affected years of the pandemic (2020–2021), and measuring the impacts of macroeconomic factors on those stocks’ returns and their price volatility (measured by standard deviation of returns) with previous studies’ results before the pandemic. Using the data from 16 listed commercial banks’ stock returns on Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) during the study period, we used OLS to find the effect, with important findings: (1) COVID-19 daily reported cases had a weak negative effect on Vietnam listed banks’ stock returns and hardly any relation with stock returns’ standard deviation. (2) GDP influenced commercial bank stock returns positively, while CPI, number of COVID-19 cases, and businesses closed had a negative effect. Also, listed commercial bank stock returns were insignificantly impacted by the interest rate. (3) Macroeconomic factors’ impact on the standard deviation of returns were weak, during the pandemic. GDPs and CPIs effect turned out to be insignificant while interest rate had a negative effect on the volatility rate, and was only significant in two out of the three models, implying potential negative impacts of COVID-19 on the macroeconomy. JELClassification: G21, F62, F65, G18, G28

RELEVANSI STABILITAS KEUANGAN BANK TERHADAP RISIKO INVESTASI DAN KEBIJAKAN DIVIDEN SEBAGAI VARIABEL MEDIASI

This study aims to test and analyze empirically the relevance of bank financial stability (STAB) to bank stock investment risk (RISK), with dividend policy (DIV) as a mediating variable; and bank company size (SIZE), status of state-owned enterprises (BUMN), and regionally-owned enterprises (BUMD) as control variables. The population in this study are national commercial banks consisting of private banks and BUMN/BUMD banks listed on the Indonesia Stock Exchange for the 2011-2020 period. Using a purposive sampling method, the number of bank companies sampled in this study was 16 bank companies with a total of 160 observations of financial report data (over a 10 year period). In this study, multiple linear regression analysis techniques and Ordinary Least Square models were used with data processing using eviews 9 software. The results of this study indicate that simultaneously STAB, DIV, and the control variables SIZE, BUMN, BUMD have a significant effect on RISK. Meanwhile, partially, STAB and SIZE have a negative effect on RISK in bank stocks. In addition, STAB has a positive effect on DIV, but DIV has no effect on RISK, so it can be concluded that dividend policy is proven not to mediate the effect of financial stability on investment risk in bank stocks.

A STOCK PREDICTION SYSTEM USING TEKNIKAL INDICATORS WITH THE LSTM METHOD

The capital market industry in Indonesia is developing in a better direction so that the growth of new investors is also increasing. Until the end of February 2021, operational data from the Indonesian Stock Exchange (IDX) and data from the Indonesian Central Securities Depository (KSEI) recorded that the number of new capital market investors had increased by 16.35% or 634,350 investors, from the previous 3,880,753 investors. to 4,515,103 investors. The development of the capital market industry in Indonesia, which has increased investor interest in investing, is expected to mobilize public funds to support national economic development. Some companies that are familiar to the community are BCA, BNI, BRI and MANDIRI. This study attempts to forecast banking stock prices on the LQ45 index, using the Long Short-Term Memory (LSTM) method. LSTM is one of the Recurrent Neural Networks (RNN) which has good accuracy in predictions. The identified fields are Close, Open, RSI, MACD and MA. The evaluation method used in this prediction system is MAPE in the form of percent output.

Impact of Mortgage Repayments Withdrawal Threat on Banking Stocks: An Event Study in China

In July 2022, several media outlets reported news of Chinese homebuyers refusing to repay mortgages on unfinished buildings. It is uncertain whether this event would have had an impact on bank returns as, there is not an overwhelming amount of literature available. Therefore, we collected data from 43 A-share listed banks and the CSI 300 Index for 191 trading days. Based on the Theory of the Efficient Market Hypothesis, we used an Event Study Method to explore whether the returns of bank stocks were affected by this event. By calculating the Average Abnormal Returns and Cumulative Abnormal Returns of the samples, we found that although the withdrawal of mortgage repayments by homebuyers had a short-term significant negative impact on the returns of banks’ stocks, it was quickly absorbed by the market. We consider this may be related to the risk announcements issued by some banks. Additionally, we have provided recommendations for homebuyers, banks, and relevant institutions based on our findings.

A difference in COVID-19 impact on bank stocks between Japan and the US

A difference in COVID-19 impact on bank stocks between Japan and the US

Causality and volatility spillovers of banks' stock price returns on BSE Bankex returns

AbstractThis paper investigates the causal relationships and volatility spillovers between the BSE Bankex index and the stock prices of five major Indian banks (Axis Bank, HDFC Bank, ICICI Bank, Kotak Bank, and SBI). Daily data from January 2, 2018 to March 8, 2023 are used, and statistical techniques such as descriptive statistics, Unit Root test, Cointegration test, Ganger Causality test, OLS regression, and GARCH model are employed. The study finds bidirectional causal relationships between the bank stocks and BSE Bankex returns, suggesting that the movement of the bank stocks significantly affects the overall market returns and vice versa. The study also finds significant volatility spillovers between the bank stocks and BSE Bankex returns, implying that the shocks in the bank stocks affect the market returns and vice versa. The study's outcomes have practical implications for investors and policymakers. Investors can use the results to make informed investment decisions in the Indian stock market, while policymakers can use the findings to monitor the financial stability of the banking sector and design appropriate policy interventions to address any potential financial crises. Overall, the study's findings suggest that policymakers should proactively monitor and manage market risks to safeguard overall financial stability.

Sharia External Financing Alternatives for Business Expansion Study Case: PT. XYZ

This study investigates sharia compliance external sources of financing for SME’s business expansion. The object of this study is PT. XYZ that operates in the security service business entity of outsourcing industry. In the last five years until 2022 XYZ has declined in number of clients growth. Fortunately, in 2023 XYZ received an offer to supply 500 security personnel that will increase its sales growth to 134%. This growth is a lot higher than the internal and sustainable growth rate of the company, and hence it needs external financing of IDR 5.2 Billion to support the business expansion. The data collected in this research is through primary and secondary data from a semi-structured interview, five years of financial reports and desk research method. This study examines three alternatives of external Sharia financing namely Islamic Bank financing, Sukuk Issuance and Stock Issuance. XYZ needs to choose one alternative that makes the financial performance of the company healthy and also provides the most worthy risk-return to the equity holders. According to the financial ratios, DCF company valuation and risk-return analysis, this study finds that Sukuk is the best alternative external source of financing for XYZ because it makes the financial performance of the company healthy and also provides a desirable returns for the shareholders with lower risks. XYZ and others SMEs could use this alternative source of external financing to support business expansion. Sukuk can be issued through a funding campaign within a specified period in an authorized and credible Islamic Securities Crowdfunding (I-SCF) platforms.

Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan

PurposeThe impact of Islamic finance on economic growth is an ongoing debate. The purpose of this study is to empirically evaluate how the development of Islamic finance affects the long- and short-run economic growth of Pakistan.Design/methodology/approachThe institutional variables, Islamic banking development (IBD), Islamic bond market development (IBM) and Islamic stock market development (ISM), are considered as measures of Islamic financial development, and real gross domestic product (GDP) is taken as measurement proxy of economic growth. The quarter time series data from Q1:2006 to Q4:2021 is analyzed through Autoregressive distributed lag model, Bounds test, ECM and Pairwise granger causality test.FindingsThe findings of this study indicate that in the long run, there is a significant and positive correlation between IBD and ISM with the real GDP, though ISM negatively cointegrated with real GDP in the short run. In contrast, IBM and real GDP did not find cointegrated in the long run, though the relationship is significant but negative in the short run.Practical implicationsThe findings highlight Islamic financial development in Pakistan can contribute to the country's economic development, and this can be achieved by improving the infrastructure, increasing skilled professionals, creating a favorable legal environment and ensuring financial sector stability. Investors can diversify their investments and mitigate risk by adding Islamic financial instruments to their portfolios.Originality/valueThis pioneering study simultaneously measures the cause and effect relationship between Islamic financial development indicators (Islamic banking, Islamic bond and Islamic stock) and economic growth in Pakistan.

Impact of Leverage Ratio Relief Announcement and Expiry on Bank Stock Prices

The onset of the Covid-19 pandemic in early 2020 drastically increased uncertainty throughout the economy. This led to turmoil in various financial markets, evidenced by the Dow Jones Industrial Average in March 2020 posting its largest single-day drop since the 2008 global financial crisis.

Analysis of SOE Banking Stock Investment as Knowledge for Millenial Generation

The purpose of this study is to analyze the status of state-owned banks in Indonesia and find out which state-owned bank shares are suitable for investment by the younger generation. In addition, it aims to increase knowledge and information about investment and become one of the considerations for the younger generation in choosing a place to invest in state-owned banks. The research method used is descriptive-quantitative, using secondary data as the main material for statistical analysis. The results showed that all state-owned banks were in good condition, the lowest share price was Bank BTN, the highest share price was Bank Mandiri, and the highest profits were Bank Mandiri and Bank BNI. The bank that pays the highest dividend is Bank BRI. The younger generation who are risk averse, want to try investing, and have small capital, are suitable for investing in Bank BTN. If you dare and want big profits, it's better to invest in Bank Mandiri or Bank BNI. But if you want to focus and get big dividends, Bank BRI is the right choice. It cannot be denied that if you want to get big profits, you must be willing to take big risks (High-Risk High Return).
 Keywords: Investments, stocks, dividends, banks, the millennial generation.

Heterogeneity of the MENA region's bank stock returns: Does country risk matter?

This study examined the impact of country-risk factors on bank stock returns in the Middle East and North Africa (MENA) region countries. It also investigated whether Islamic banks differed from conventional banks and whether oil rent significantly moderated the risk-returns nexus. Using data from 137 banks from 2011 to 2019 and the 2S-GMM method showed that returns reacted positively to low risk. Islamic banks scored higher returns than conventional banks except with financial risk and democratic accountability, and the risk-returns nexus depended on oil. The results suggested that MENA countries should further enhance political stability and economic resilience and upgrade socioeconomic conditions.

Money laundering, media and European banks

PurposeThis paper aims to assess, from an empirical perspective, the research question if public media reports which relate concrete banks to concrete allegations of money laundering have an adverse impact on banks stock prices and what are the drivers of such impact?Design/methodology/approachThe paper makes use of event study methodology and uses the constant mean and the market model. The event window is calibrated towards a five-day window, and the estimation window has a length of 90 days, in line with best academic practices. Drivers are identified by correlation analysis. and the market model uses ordinary least squares regression.FindingsThe application of event study methodologies yields the results that stock prices of affected banks generate, at the date of the news appearance, statistically significant negative abnormal returns under both the market model and the constant mean model. As negative abnormal returns have been mainly found at the date of the event itself, the findings confirm that the impacts of money laundering may be severe but short natured. In addition, the paper finds that the identified negative abnormal returns may be driven by the banks’ size in terms of total assets, by the bank’s profitability in terms of return on assets and by the bank’s sustainability risk.Practical implicationsThe findings have implications in terms of banking and supervisory practices. In specific, the findings help to argue that banking consolidation is needed to lower the impacts of AML cases, as stock prices of larger banks show less sensitivity. In addition, the findings could be used to determine financial sanctions against banks violating AML regulation. Finally, the findings imply that AML news can have severe and fast-moving financial stability considerations and are, therefore, important in crisis situations.Originality/valueAs there appears to be no substantial research that applies event study methodology to the money laundering context, the combination of research question and methodology has an innovative character. In addition, there is no clear literature on media and money laundering.

Factors affecting customers’ satisfaction on mobile banking service quality at Asia Commercial Joint Stock Bank

This study examined the factors affecting customer satisfaction on the quality of mobile banking services at commercial banks like the Asia Commercial Joint Stock Bank (ACB). The model of A.P. Parasuraman, V.A. Zeithaml, L.L. Berry in 1988 [1] was applied as the theoretical background for this study. Measurement scale was validated with Cronbach’s alpha, exploratory factor analysis (EFA). The results show that tangibles, reliability, and competency affect customers’ satisfaction with mobile banking service quality. Some managerial implications were grasped: (i) it is necessary to update many utility functions to serve customers’ need; (ii) it would be helpful to optimize the customer service process for quickness and accuracy; (iii) banking staff need to be equipped with more knowledge and skills to create a sense of trust while dealing with customers; (iv) Clear, complete, and simple information on transaction terms are required to commit that the information is the most accurate and true to give customers a feeling of peace of mind when doing transactions; and (v)Appropriate compensation policies are essential to create employee satisfaction so that employees can work effectively and productively.

Pengaruh Pertumbuhan Ekonomi, Kapitalisasi Pasar, Suku Bunga Bank Indonesia, Inflasi, Dan Volatilitas Harga Saham Sebagai Variable Moderating Terhadap Kinerja Pasar Saham Perbankan Syariah Di Indonesia

ABSTRACT This research purpose to explore and analyze the effect of growth, market capitalization, Bank Indonesia interest rates, and inflation on the stock market performance of Indonesian Islamic banks, moderated by stock price volatility. The method of data collection in this study is the method of documentation. The population of this study is all Islamic banks registered in Indonesia. The samples for this study are islamic banking financial statements and annual reports from the 14 largest Islamic commercial banks in Indonesia. This research approach uses moderate regression analysis analyzed with SPSS. As a result, economic growth has a significant positive effect on stock market performance, market capitalization has a significant positive effect on stock market performance, interest rates have a significant negative effect on stock market performance, Inflation has proven to have a significant negative effect on stock market performance, meanwhile, Stock Price Volatility is able to moderate Economic Growth, Market Capitalization, Interest Rates, Inflation against The Performance of the Indonesian Islamic Banking Stock Market. Keywords: Economic Growth, Market Capitalization, Bank Indonesia Interest Rates, Inflation, Stock Price Volatility, Stock Market Performance