scholarly journals Addressing endogeneity in the causal relationship between sustainability and financial performance

2019 ◽  
Vol 210 ◽  
pp. 56-71 ◽  
Author(s):  
Mehmet Ali Soytas ◽  
Meltem Denizel ◽  
Damla Durak Usar
Keyword(s):  
Financial Performance ◽  
Causal Relationship

scholarly journals Changes in Financial Performance of Traditional Intermediatries for Financial Innovation

2019 ◽  
Vol 8 (10) ◽  
pp. 3723-3728
Keyword(s):  
Financial Performance ◽  
Causal Relationship ◽  
Granger Causality ◽  
Performance Measures ◽  
Empirical Model ◽  
Negative Impact ◽  
Financial Innovation ◽  
Bank Performance ◽  
Loan Growth ◽  
The Impact

The purpose of this thesis is to examine the impact of digital bank deposit, asset and loan growth on selected traditional bank performance measures. In order to estimate whether a causal relationship between digital bank measures and traditional bank performance exists, Granger causality method is selected as the main empirical model. In addition, to determine the direction and strength of said relationship, OLS regressions are performed. Research results lead to the conclusion that digital bank deposit and loan growth have a causal relationship to traditional bank performance ratios. Deposit growth has a negative impact on traditional bank performance ratios and loan growth shows both positive and negative impact on different ratios. This research demonstrates some of the challenges that traditional banks are facing in the age of innovation.

scholarly journals The effect of Al-Bai’ and wadiah contracts on sharia compliance and the sharia banking system performance through the Maqashid Index in sharia banks in Indonesia

2019 ◽  
Vol 14 (4) ◽  
pp. 104-113
Author(s):  
Wahyuniati Hamid ◽  
Ubud Salim ◽  
Djumahir ◽  
Siti Aisjah
Keyword(s):  
Financial Performance ◽  
Empirical Evidence ◽  
Causal Relationship ◽  
Research Design ◽  
System Performance ◽  
Banking System ◽  
Partial Least Square ◽  
Least Square ◽  
Real Sector ◽  
Analysis Method

This study sought to test and find empirical evidence on the effect of Al-Bai’ and wadiah contracts on sharia compliance and the performance of sharia banking system through the Maqashid sharia index. The study employed the explanatory research design, aimed at explaining a causal relationship among variables using a quantitative approach. The Partial Least Square (PLS) model was used as the analysis method to answer the hypotheses of this study. The authors found out that increases and decreases in wadiah contracts did not influence the financial performance of sharia banks. Another finding also showed that Al-Bai’ and wadiah contracts and sharia compliance had a significant effect on the performance of public sharia banks. This result evidenced that the concept of an Islamic bank should be a mediator, which should neither allow profiting from the fund, nor should be used to invest in the real sector of various funding systems.

scholarly journals Model and Financial Performance: Panel Data in Causality and Cointegration Test

2018 ◽  
Vol 7 (3.27) ◽  
pp. 391
Author(s):  
Amir Indrabudiman
Keyword(s):  
Panel Data ◽  
Financial Performance ◽  
Causal Relationship ◽  
Financial Reporting ◽  
Banking Industry ◽  
Cointegration Test ◽  
Test Results ◽  
Performance Variables ◽  
The Status ◽  
Size Growth

This paper aims to analyze the interaction between financial performance variables and bankruptcy status of companies in the banking industry in Indonesia. This study used the test of causality and cointegration of panel data for variable bankruptcy status and variable of financial performance among others (variable of NPL, ROA, CAR, NIM, SIZE, GROWTH, LEVERAGE) at 43 banks listed on BEI during 2010-2016 financial reporting period. From the research conducted in the findings that between the status of bankruptcy and variable financial performance of banks in Indonesia are only a few variables that have a two-way relationship, this is seen in the test results of causality lags 1, using lags 5, 10 and 15 this causal relationship is getting smaller . However, cointegration has been confirmed by using lags 1-1 to 1-4 lags interval premises, there are 7 variables that in each cointegrated each other.

scholarly journals Dividend Payout, Retention Policy and Financial Performance in Commercial Banks: Any Causal Relationship?

2018 ◽  
Vol 63 (1) ◽  
pp. 37-62 ◽  
Author(s):  
Odunayo Magret Olarewaju ◽  
Stephen Oseko Migiro ◽  
Mabutho Sibanda
Keyword(s):  
Financial Performance ◽  
Error Correction ◽  
Causal Relationship ◽  
Commercial Banks ◽  
Banking Sector ◽  
Sub Saharan Africa ◽  
Model Estimate ◽  
Vector Error Correction ◽  
Vector Error ◽  
Sub Saharan

Abstract Dividend policy remains one of the top ten unresolved issues in corporate finance including in the banking sector. Hence, this study explores data from 250 commercial banks in 30 Sub-Saharan African countries to establish the causal relationship between the use of two major dividend policies in the sector and financial performance for the period 2006 to 2015. The empirical results of the vector error correction block exogeneity Wald test and Pairwise Granger causality test reveal that only retention policies Granger cause performance (ROA), even though both major policies posit a positive relationship with performance (ROA) in the Vector Error Correction Model estimate. Therefore, commercial banks in Sub Saharan Africa and also in the entire world should use their free cash flows wisely by exploring all available viable investment opportunities. By doing this, not only owners’ profit but wealth is fully maximised such that their survival, value creation, and future growth is fully justified.

scholarly journals Corporate governance structures in the context of cooperative banking

2019 ◽  
Vol 3 (1) ◽  
pp. 25-41 ◽  
Author(s):  
José Vaz Ferreira
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Organizational Performance ◽  
Causal Relationship ◽  
Management Team ◽  
Governance Structures ◽  
Governance Practices ◽  
Cooperative Banks ◽  
The Relationship ◽  
Cooperative Governance

This study aims to investigate the constraints of corporate governance structures, in the context of cooperative banking. That is, it will try to identify the factors that are the basis of the practice of corporate governance of cooperative banking, such as organizational performance, relationships of trust on the part of customers and the community in general, the image of the competition and to the regulator and the remuneration of the management team. In order to test the hypotheses, a questionnaire was carried out with the administration of the different cooperative banks, obtaining a sample of 58 banks, representing 67% of the total universe. The results point to the existence of a causal relationship between financial performance and corporate governance practices, specifically at the level of cooperative rights and at the level of relationship with clients, society and fiscal council activity. With the adoption of cooperative governance practices, the relationship between the return of cooperators and these practices has not been proven, the same happened with the relationship between the remuneration of managers and the adoption of these practices.

scholarly journals The Relationship between Credit Risk and Financial Performance: Evidence from Commercial Banks in Tanzania

2021 ◽  
Vol 4 (1) ◽  
pp. 22-33
Author(s):  
Ahmada Kaimu ◽  
Seif Muba
Keyword(s):  
Credit Risk ◽  
Financial Performance ◽  
Causal Relationship ◽  
Granger Causality ◽  
Commercial Banks ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Random Effects Models ◽  
Long Run ◽  
The Relationship

This research study purposed to determine the relationships between credit risks and the performance of commercial banks in Tanzania. Generally, the study aimed to establish the relationship between credit risk and financial performance in Tanzanian Banks. Specifically, to determine if the long-run relationship between credit risk and performance existed and investigated if credit risk and financial performance existed with a causal relationship in Tanzanian Banks. The research collected secondary data samples of 15 commercial banks in Tanzania from 2005-2019. This study adopted an explanatory approach to fulfil the above objectives. Both fixed and random effects models were engaged to determine the relationship. Hausman Test executed to determine the appropriate model. In the model, NPLR, LLPR, CAR, and BAS were used as the credit risk proxies, while return on asset (ROA) was used as the dependent variable. The findings reveal that the credit risk has both negative and positive relationships with the proxies used. The performance was inversely significant with NPLR and negatively insignificant with LLPR, while positively significant with CAR and positively insignificant with LBAS. The study concluded that the credit risk proxies, i.e., there was a significant relationship between NPLR and CAR with the commercial banks’ performance in Tanzania. Furthermore, the researchers concluded that the long-run relationship existed on the variables in the study, while granger causality existed in all variables except LLPR, i.e., Credit risk proxies except LLPR can granger cause the performance of commercial banks while the granger causality reveals no causal relationship among independent variables themselves. The study recommended that commercial banks in Tanzania should put more emphasis on handling credit risk and management of capital adequacy so as to have better financial performance.

scholarly journals Environmental responsibility and financial performance nexus in South Africa: panel Granger causality analysis

2017 ◽  
Vol 8 (3) ◽  
pp. 29-34 ◽  
Author(s):  
Thomas Adomah Worae ◽  
Collins C. Ngwakwe
Keyword(s):  
Financial Performance ◽  
Causal Relationship ◽  
Granger Causality ◽  
Market Value ◽  
Equity Returns ◽  
Environmental Responsibility ◽  
Causality Analysis ◽  
Cross Sectional ◽  
Granger Causality Analysis ◽  
Emissions Intensity

The authors examined environmental responsibility and financial performance nexus of Johannesburg Stock Exchange’s socially responsible investing manufacturing and mining firms during the period of 2008-2014. The study employs annual panel dataset of fourteen manufacturing and mining companies on the index, and Granger causality analysis using Gcause2 Baum’s version. The paper found unidirectional causal relationship between environmental responsibility, measured by emissions intensity and equity returns, and bidirectional causal relationship between emissions intensity and market value of equity deflated by sales at 1% significant levels. Impliedly, improvements in ‘energy efficient technologies’ to reduce fossil energy consumption (prevention activities) seem to exhibit value destroying tendencies, while improvements in ‘end-of-pipe’ activities seem to estimate a drive market value of equity deflated by sales and equity returns. The Pesaran CD and Breusch-Pagan LM tests confirmed existence of cross-sectional dependence amongst panel members. The authors tend to support institutional and stakeholder theories.

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