scholarly journals Resilience of commercial banks of Bangladesh to the shocks caused by COVID-19 pandemic: an application of MCDM-based approaches

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ratan Ghosh ◽  
Farjana Nur Saima
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Stock Exchange ◽  
Multiple Criteria Decision Making ◽  
Capital Adequacy ◽  
Negative Effects ◽  
Content Type ◽  
Economic Event ◽  
Low Performance ◽  
Credit Portfolio

PurposeThe purpose of this study is to analyze and forecast the financial sustainability and resilience of commercial banks of Bangladesh in response to the negative effects of COVID-19 pandemic.Design/methodology/approachEighteen publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as a sample for this study. To measure the riskiness of banks' credit portfolio, nine industries of DSE have been considered to determine probable loss of revenue arising from the COVID-19 pandemic shock. Moreover, two commonly used multiple-criteria-decision-making (MCDM) tools namely TOPSIS method and HELLWIG method have been used for analyzing the data.FindingsBased on the performance scores under TOPSIS and HELLWIG method, banks are categorized into three groups (six banks each) namely top resilient, moderate resilient and low resilient. It is found that EBL and DBBL are the most resilient banks, and ONEBANK is the worst resilient bank in Bangladesh in managing the COVID-19 pandemic shock.Research limitations/implicationsThis study concludes that banks with low capital adequacy, low liquidity ratio, low performance and higher NPLs are more vulnerable to the shocks caused by the COVID-19 pandemic. The management of commercial banks should emphasize on maintaining higher capital base and reducing default loans.Originality/valueResilience of the Bangladeshi banking sector under any adverse economic event has been examined by only using stress testing approach. This study is empirical evidence where both TOPSIS and HELLWIG MCDM methods have been used to make the result conclusive.

The Fourth Industrial Revolution and private commercial banks: the good, bad and ugly

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asif Rahman ◽  
Md. Joynal Abedin
Keyword(s):  
Commercial Banks ◽  
Industrial Revolution ◽  
Banking Sector ◽  
Stock Exchange ◽  
Vital Role ◽  
Commercial Banking ◽  
Digital Products ◽  
Content Type ◽  
Traditional System ◽  
Fourth Industrial Revolution

Purpose This study aims to assess how new and emerging technologies can contribute to achieving the financial goals of the private commercial banking sector in Bangladesh. It considers the perception among the top management about the Fourth Industrial Revolution (4IR) and further measures the readiness of private commercial banks (PCBs) to become resilient. Design/methodology/approach This study attempts to measure the perception and readiness of the commercial banking sector because of the 4IR based on the stratified sampling method. The research is qualitative and selected PCBs listed in the Dhaka Stock Exchange. 4IR in the context of the banking sector in Bangladesh is a problem that has not been studied more clearly, intended to establish priorities, develop operational definitions and improve the final research design. Findings This research has identified a significant gap of study in the preparedness among the private commercial banking sector in Bangladesh to confront the 4IR while indicating the most significant risks and managerial insights. The findings show technologies will dramatically change the nature of work. Traditional system of banking from the branch will be shifting into banking from everywhere. Hence, digital products and services will foster value-driven business. The result of the study also states the readiness of the banking sector is in the preliminary stage and endorses some of the coping approaches. Research limitations/implications Different schools of thought regarding the role of the 4IR and its future consequences have been observed. The corporate sector in Bangladesh has an inclusive lack of understanding regarding the 4IR. Practical implications The insights may provide directions to banking financial institutions of Bangladesh to thrive during the 4IR. This study is intended to assist policymakers, decision-makers and employees of PCBs to increase awareness and preparedness for future challenges that may appear from the 4IR where the 41 competitive PCBs play vital role in turning the fast emerging Bangladesh economy. Originality/value The contribution of this paper associates with academics and bankers to increase understanding of coping in the context of the escalating use of emerging technology-driven banking services within the PCBs in Bangladesh by determining perception and testing different forms of readiness including a variety of important outcomes such as risks.

Swiss policy turn may dampen Polish consumption

2015 ◽  
Keyword(s):  
Central Europe ◽  
Banking Sector ◽  
Balance Sheet ◽  
Capital Adequacy ◽  
Financial Risks ◽  
Short Term ◽  
The Czech Republic ◽  
Content Type ◽  
Credit Portfolio ◽  
The Impact

Subject The impact on Central Europe of the reverse in Swiss monetary policy. Significance The Swiss National Bank's (SNB) decision in January to scrap its exchange-rate peg against the euro raised concerns about a mortgage repayment crisis and lending practices in Central Europe (CE). Banks across the region are well capitalised on the whole, and better placed to absorb the impact of financial risks arising from the decision than those of countries further south-east, where deleveraging has continued. Banks in the Czech Republic and Hungary are the least exposed to foreign exchange (FX) risk; those in Poland are the most exposed. Impacts Poland's capital-adequacy ratios and strong credit portfolio will offset balance-sheet risks, but profits may fall in the short term. Hungary's banking sector is under heavy strain as a result of the government's FX debt relief programme. However, the Funding for Growth Scheme, and high forint and FX reserves, provide a liquidity buffer. Czech banks are CE's most profitable and liquid and will not be affected owing to tiny exposure to Swiss franc denominated loans.

Stressed assets, off-balance sheet business activities and performance of Indian banking sector: a DEA double bootstrap approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammad Shahid Zaman ◽  
Anup Kumar Bhandari
Keyword(s):  
Technical Efficiency ◽  
Commercial Banks ◽  
Banking Sector ◽  
Balance Sheet ◽  
Capital Adequacy ◽  
Bank Efficiency ◽  
Content Type ◽  
Bootstrap Approach ◽  
Double Bootstrap ◽  
Indian Banks

Purpose This paper examines the technical efficiency (TE) of Indian commercial banks during 1998–2015. Design/methodology/approach This study uses mathematical programming-based data envelopment analysis (DEA) methodology to measure technical efficiency of Indian banks. Further, Simar and Wilson (2007) double bootstrap procedure is applied to examine the determinants of efficiency of the Indian banks, by examining the effects of various bank specific and other contextual variables. Findings The results indicate substantial upward bias in the conventional efficiency estimates of the Indian commercial banks. Needless to note, such upward bias is consistent with the theoretical postulates. The bootstrapped regression results show that increasing capital adequacy ratio is positively associated with bank efficiency. The popular belief that non-performing assets have a dampening effect on performance of banks is validated. Among others, ownership category is observed to be an important determining factor of bank efficiency. Specifically, state-owned banks (SOBs) are relatively lagging behind the foreign banks. Moreover, larger banks are observed to have a significantly higher level of efficiency, therefore, recent official policy initiatives toward consolidation of SOBs are validated. Originality/value As this study uses Simar and Wilson (2007) bootstrap approach, it enables the authors to have an estimate of the extent of bias in the traditional DEA TE scores. It also helps us drawing consistent inferences by rectifying the problem of serial correlation in the conventional second stage regression in this regard.

Does capital adequacy ratio influence risk-taking behaviour of conventional and Islamic banks differently? Empirical evidence from dual banking system of Malaysia

2020 ◽  
Vol 11 (9) ◽  
pp. 1989-2015
Author(s):  
Rafik Harkati ◽  
Syed Musa Alhabshi ◽  
Salina Kassim
Keyword(s):  
Empirical Evidence ◽  
Risk Taking ◽  
Commercial Banks ◽  
Banking Sector ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Islamic Banks ◽  
Content Type ◽  
Capital Adequacy Ratio

Purpose The purpose of this study is to investigate the influence of capital adequacy ratio (CAR) prescribed in Basel III on the risk-taking behaviour of Islamic and conventional commercial banks in Malaysia. It also investigates the claim that the risk-taking behaviour of Islamic banks (IBs) and conventional banks (CBs) managers is identically influenced by CAR. Design/methodology/approach Secondary data for all CBs operating in the Malaysian banking sector are gathered from FitchConnect database for the 2011–2017 period. Both dynamic ordinary least squares and generalised method of moments techniques are used to estimate a panel data of 43 commercial banks, namely, 17 IBs and 26 CBs. Findings The findings of this study lend support to the favourable influence of CAR set in Basel III accord on risk-taking behaviour of both types of banks. CBs appeared to be remarkably better off in terms of capital buffers. Evidence is established on the identicality of the risk-taking behaviour of IBs and CBs managers under CAR influence. Practical implications Even though a high CAR is observed to hamper risk-taking of banks, the findings may serve as a signal to regulators to be mindful of the implications of holding a high CAR. Similarly, managers may capitalise on the findings in terms of strategising for efficient use of the considerable capital buffers. Shareholders are also concerned about managers’ use of the considerable capital buffers. Originality/value This study is among a few studies that endeavoured to provide empirical evidence on the claim that IBs mimic the conduct of CBs in light of the influence of CAR prescribed in Basel III on risk-taking behaviour, particularly banks operating within the same banking environment.

scholarly journals Condition of banks listed on the Warsaw Stock Exchange during the first 3 months of the pandemic in Poland

2020 ◽  
Vol 2/2020 (14) ◽  
pp. 5-20
Author(s):  
Zbigniew Korzeb ◽  
◽  
Paweł Niedziółka ◽  
Keyword(s):  
Banking Sector ◽  
Stock Exchange ◽  
Operational Efficiency ◽  
Capital Adequacy ◽  
Sharp Drop ◽  
Warsaw Stock Exchange ◽  
Additional Costs ◽  
Small Banks ◽  
The Cost ◽  
Credit Portfolio

The aim of the paper is to assess the condition of commercial banks listed on the Warsaw Stock Exchange after the first three months of the COVID-19 pandemic in Poland. The consolidated results for Q1 and Q2 2020 were used focusing on selected evaluation areas such as: capital adequacy, profitability, liquidity, credit portfolio quality as well as operational efficiency. The authors concluded that as a result of the credit crunch and the retention of previously earned profits, almost every medium (except for mBank SA) and every large bank experienced an increase in capital adequacy ratios. Moreover, the profitability of the banking sector eroded in each group of banks, with the rule that ROE is higher in the group of medium and large banks compared to the small ones. With the exception of Idea Bank SA all banks during the pandemic experienced an improvement in liquidity ratios. There was reported an increase in the cost of risk, with the greatest augmentation in small banks. It is maintained that the larger the bank the lower cost of risk. In almost every institution, the risk is mitigated by an increase in the degree of coverage by provisions for impaired receivables. In small banks there was noticed a deterioration in operational efficiency. In medium and large banks, despite a sharp drop in profits and additional costs associated with the pandemic, the process of efficiency improvement was reinforced.

scholarly journals Evaluating factors of profitability for Indian banking sector: a panel regression

2018 ◽  
Vol 3 (2) ◽  
pp. 236-254
Author(s):  
Rohit Bansal ◽  
Arun Singh ◽  
Sushil Kumar ◽  
Rajni Gupta
Keyword(s):  
Fixed Effects ◽  
Banking Sector ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
The Other ◽  
Data Set ◽  
Content Type ◽  
Independent Variables ◽  
Private Banks ◽  
Public Banks

Purpose The purpose of this paper is to quantify several measures to examine the determinants of profitability for the listed Indian banks. The authors include both public sector (PSUs) and private sector’s banks in the study. The authors have taken all the banks that are registered on the Bombay stock exchange (BSE) in the sample. This paper also intends to identify the association between the net profit margin (PM) and return on assets (ROA) with the several other independent variables of the Indian banking sector including private banks and public banks over the past six years starting from April 1, 2012 to March 31, 2017. Therefore, a sample of 39 listed banking companies and total 195 balanced observations are selected for the analysis purpose. Design/methodology/approach The authors have used profitability as a dependent variable represented by net PM, ROA and several financial ratios as independent variables. Financial statement and income statement of all listed banks were obtained from BSE and particular company’s website. Panel data regression has been analyzed with both the descriptive research techniques, i.e., fixed effects and random effects. The authors also verified both panel techniques with Hausman’s specification test, which is a widely used procedure for selecting a panel effect. The authors applied PP – Fisher χ2, PP – Choi Z-statistics and Hadri to testing whether the data set is free from unit root problem and data set is a stationary series. Findings Results imply that interest expended interest earned (IEIE) and credit deposit ratio (CRDR) reduced the profitability of private banks in India. IEIE, CRDR and quick ratio (QR) reduced the profitability of public banks in India, while cash deposit ratio (CDR) and Advances to Loan Funds (ALF) increased the effectiveness of public banks. Under the total banks IEIE, CRDR reduced the profitability, on the other side, CDR, ALF and Total Debt to Owners Fund (TDOF) increased the profitability of total banks in India. Under the dependency of ROA, CRDR and TDOF reduced the return of private banks in India, while CDR, ALF and QR enhanced the profitability of private banks. Originality/value No variables found significant under public banks while taking ROA as a dependent variable. Under the overall banking data, CRDR reduced the profitability. On the other side, capital adequacy ratio and ALF increased the profitability of total banks in India. The findings of this study will support policy creators, financial executives and investors in constructing investment decisions.

scholarly journals The effect of the efficiency of monetary policy educational tools on the financial soundness of banks A pilot study in the Iraq Stock Exchange (2007-2017)

2021 ◽  
Vol 10 (2) ◽  
pp. 54-75
Author(s):  
Nasreen Mohamed AL-hakim ◽  
Akram S. Yousif
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Policy Tools ◽  
Integration Test ◽  
Financial Soundness ◽  
The Impact

The aim of the research is to identify the impact of the quantitative tools of monetary policy on the financial soundness of banks, and the research was based on a set of hypotheses, to determine the nature of the effect between independent and dependent variables, and for the purpose of testing research hypotheses, a number of financial ratios according to CAMEL indicators were used to analyze the historical data of banks, the research sample and the component From (7) banks for the period (2007-2017), the quantitative tools of monetary policy were used from the impact published in the Central Bank of Iraq, and a number of statistical methods were used, including time series testing, joint integration test and multiple regression test according to programs.EVIES10 has been reached through the research to a number of conclusions, the most important of which is that the CAMEL classification system is one of the effective supervisory methods for assessing the financial soundness of banks and determining the duration of the strength and durability of their financial positions and the extent of their ability to adapt to any variables related to their activities, as it ensures that the banks are moving in the direction. Correct or reverse, and the weakness of the monetary policy tools applied by the Central Bank of Iraq due to the limited Iraqi market for securities as it is still incomplete conditions as a secondary market that contributes to expanding the circulation of securities, which constitutes a burden on the use of quantitative tools of the Central Bank of Iraq, especially open market operations,As well as the weakness of the legal reserve ratio in the impact on the ability of commercial banks to grant credit, because commercial banks in Iraq enjoy high liquidity due to the high rate of inflation significantly. The research also presented a set of proposals, the most important of which is the activation of the monetary policy tools of the Central Bank of Iraq, which is currently being used to modernize, develop and increase the efficiency of the stock market in Iraq to keep pace with developments in global markets,nd developing the supervisory and supervisory role of the Central Bank of Iraq over Iraqi banks in terms of the extent of their commitment to regulations and laws and activating and activating the banking sector in a way that serves to build a banking infrastructure that keeps pace with the development of international banks. Delinquency and low capital adequacy ratio, thus hedging and beware of any problems that arise in the banking sector. Key words: monetary policy, quantitative tools of monetary policy, financial soundness, the CAMEL model, Iraq Stock Exchange Market.

scholarly journals Credit Portfolio Management in Nepalese Commercial Banks

2018 ◽  
Vol 10 (1) ◽  
pp. 101-109
Author(s):  
Buddhi Kumar Malla
Keyword(s):  
Financial Institutions ◽  
Portfolio Management ◽  
Commercial Banks ◽  
Quantitative Methods ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Credit Portfolio ◽  
Credit Portfolio Management

Credit portfolio management is a key function for banks (and other financial institutions, including insurers and institutional investors) with large, multifaceted portfolios of credit, often including illiquid loans (Nario, Pfister, Poppensieker & Stegemann, 2016). After global financial crisis of 2007-2008, the credit portfolio management function has become most crucial functions of the bank and financial institutions. The Basel III, third installment of Basel accord was developed after crisis to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage that encourages banks to measure credit risk of bank's portfolios. The Basel committee also raises an issue concerning the application of the risk weights used in the capital adequacy framework to determine exposure to risk assets for the purpose of determining large credit exposure (Morris, 2001).The portfolio management of the Nepalese banking sector has been improved remarkably during last 10 years due to the strict regulation of Nepal Rastra Bank. This journal will try to describe the present credit portfolio management practice of Nepalese commercial banks by using qualitative and quantitative methods. In this study, concentration of banks for credit portfolio management has been studied by analyzing security wise loan, product wise loan and sector wise concentration of loan where the researcher has found assorted outcomes. This research also aims to provide some suggestions to overcome with problems associated with credit portfolio.The Journal of Nepalese Business Studies Vol. X No. 1 December 2017, Page: 101-109

scholarly journals The Influence of Currency Risk Upon the Market Value of Commercial Banks Operating in the Polish Banking Sector

e-Finanse ◽  
2015 ◽  
Vol 11 (4) ◽  
pp. 57-63
Author(s):  
Zbigniew Korzeb
Keyword(s):  
Exchange Rate ◽  
Commercial Banks ◽  
Banking Sector ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Market Value ◽  
Warsaw Stock Exchange ◽  
Floating Exchange Rate ◽  
Credit Portfolio ◽  
The Impact

Abstract The objective of the paper is to analyse the impact of the Swiss National Bank’s decision to introduce the floating exchange rate of the franc on January 15th, 2015, upon the market value of commercial banks operating in the Polish banking sector. The analysis involved twelve commercial banks quoted on the Warsaw Stock Exchange. The results are inconclusive. The predicted reduction of the banks’ market value was less significant than indicated by market investors’ reaction on the day after the announcement of the decision to introduce the floating exchange rate of the franc. The banks most prone to granting credit denominated in CHF did experience the largest reduction of their share quotations. However, the Pearson product-moment correlation coefficient calculated for the correlation between the average cumulative abnormal returns on shares for the entire analysed sample, and the proportion of credits denominated in Swiss francs in the total credit portfolio, indicated only a moderate correlation between both variables.

scholarly journals Determinants of non-performing loans in the banking sector in developing state

2020 ◽  
Vol 5 (1) ◽  
pp. 135-145 ◽  
Author(s):  
Muhammad Asif Khan ◽  
Asima Siddique ◽  
Zahid Sarwar
Keyword(s):  
Fixed Effects ◽  
Banking Sector ◽  
Developing Economies ◽  
Stock Exchange ◽  
Negative Association ◽  
Capital Adequacy ◽  
Operating Efficiency ◽  
Income Diversification ◽  
Content Type ◽  
The Stability

PurposeThe size of non-performing loans (NPLs) plays a key role in the stability of the banking sector of a country. The factors that explain the NPLs contain very important information for banks. Studies in this regard with respect to developing states such as Pakistan have received little attention. This study aimed to scrutinize the determinants of NPLs observing a case of the banking sector in Pakistan over the period from 2005 to 2017.Design/methodology/approachThe sample consists of the banking sector (i.e., commercial banks) listed in Pakistan Stock Exchange over the period of 2005–2017. The banking factors, including profitability, operating efficiency, capital adequacy and income diversification, were evaluated. The estimations were done by regression modeling using random and fixed effects through STATA software.FindingsResults show that the operating efficiency and profitability indicators have a negative association with NPLs but were statistically significant, while capital adequacy and income diversification have a negative association with NPLs but were statistically insignificant.Research limitations/implicationsThe present study has considered limited banking indicators as determinants of NPLs and was limited to a specific time period from 2005 to 2017.Originality/valueThe study is an attempt to investigate various banking factors that affect the NPLs with respect to developing economies such as Pakistan.

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