scholarly journals Bank risk and performance in an emerging market setting: the case of Bangladesh

2018 ◽  
Vol 23 (46) ◽  
pp. 199-229
Author(s):  
Md. Tofael Hossain Majumder ◽  
Xiaojing Li
Keyword(s):  
Banking Sector ◽  
Emerging Market ◽  
Capital Requirements ◽  
Policy Implications ◽  
Bank Capital ◽  
Content Type ◽  
Generalized Methods Of Moments ◽  
And Performance ◽  
One Year ◽  
Bank Capital Requirements

PurposeThis study aims to investigate the impacts of bank capital requirements on the performance and risk of the emerging economy, i.e. Bangladeshi banking sector.Design/methodology/approachThe study applies an unbalanced panel data which comprises 30 banks yielding a total of 413 bank-year observations over the period 2000 to 2015.FindingsUsing generalized methods of moments, the empirical results of this research reveal that bank capital is positively and significantly impressive on bank performance, whereas negatively and significantly impact on risk. The study also finds the inverse relationship between risk and performance in both the performance and risk equations. The results also indicate that there is a persistence of performance and risk from one year to the next year.Originality/valueThis is the unique investigation on Bangladeshi bank industry that considers the simultaneous effect of bank capital requirements on risk and performance. Therefore, it is predicted that the empirical evidence of this research shows policy implications to the regulatory authority of Bangladeshi banking industry to determine relevant policies.

scholarly journals Basel IV implementation: a review of the case of the European Union

2020 ◽  
Vol 4 (1) ◽  
pp. 7-24
Author(s):  
Mete Feridun ◽  
Alper Özün
Keyword(s):  
European Union ◽  
Financial Stability ◽  
Banking Sector ◽  
Capital Requirements ◽  
Policy Implications ◽  
The European Union ◽  
Content Type ◽  
Secondary Sources ◽  
Global Banking ◽  
Risk Framework

PurposeIntroducing radical changes to the methodologies for the determination of capital requirements, the final stage of the Basel III standards, which is referred to as “Basel IV” by the industry, will be a significant challenge for the global banking sector. This article reviews the main components of the new framework, analyses its ongoing implementation in the European Union and discusses its potential impact on banks, putting forward policy recommendations.Design/methodology/approachThis article uses primary sources such as the publications by the Basel Committee for Banking Supervision and the European Commission. It also reviews the secondary sources, including both academic articles and analyses by various stakeholders. However, this article does not undertake any empirical analysis.FindingsThis article discusses that Basel IV will introduce strategic, operational and regulatory challenges for banks in scope. It also identifies a number of areas which are subject to further debate in the European Union such as the enhanced due diligence requirements under the new credit risk framework; governance, reporting and control rules under the operational risk framework; exemptions for certain derivative transactions under the credit valuation adjustment framework and the level of application of the capital floors within banking groups. This article concludes that the global implementation of the reforms by all jurisdictions and transposition into national banking laws concurrently with the European Union in line with the Basel Committee's implementation timeline is important from a financial stability standpoint.Originality/valueThe article presents an up-to-date and comprehensive review of the practical implications of Basel IV standards. It analyses the implementation of the standards in the case of the European Union, reviews the potential policy implications and presents recommendations for risk management practitioners.

Do corporate social responsibility and bank performance matter for financial inclusion in Vietnam?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Duc Hong Vo ◽  
Ngoc Phu Tran ◽  
Hien Thi-Thu Hoang ◽  
Loan Thi-Hong Van
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Banking Sector ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Financial Inclusion ◽  
Policy Implications ◽  
Content Type ◽  
Corporate Social

Purpose This paper aims to provide empirical evidence and policy implications on the link between corporate social responsibility, financial inclusion and financial performance of the banking sector in an emerging market. Design/methodology/approach This study uses data collected from the annual reports of 13 listed banks in Vietnam from 2011 to 2019. CSR is proxied by the ratio between charitable contributions and bank profits. Besides, this study uses the number of branches and the number of agents as the proxies for a level of financial inclusion. The generalized method of moments and various tests are used to ensure the robustness of the findings. Findings Findings in this study indicate that CSR activities do matter, and they contribute positively to financial inclusion. In addition, the bank’s size is also associated with an increased level of financial inclusion. Practical implications Findings from this study provide important implications for bank executives and policymakers in Vietnam in managing and extending CSR activities with the view of supporting and enhancing financial inclusion. Originality/value To the best of the author’s knowledge, this is the first empirical study in the context of the banking sector in Vietnam in which the impact of CSR activities and financial performance of the banking sector on financial inclusion at the bank level is examined.

How do resources and diversification strategy explain the performance consequences of internationalization?

2014 ◽  
Vol 52 (5) ◽  
pp. 897-915 ◽  
Author(s):  
Yan Chen ◽  
Yiwei Jiang ◽  
Chengqi Wang ◽  
Wen Chung Hsu
Keyword(s):  
Emerging Market ◽  
Product Diversification ◽  
Firm Resources ◽  
Diversification Strategy ◽  
Data Set ◽  
Content Type ◽  
Listed Firms ◽  
Performance Consequences ◽  
Performance Effects ◽  
And Performance

Purpose – The purpose of this paper is to examine how firm resources and diversification strategy explain the performance consequences of internationalization of emerging market enterprises. Design/methodology/approach – The paper conducts a regression analysis by using a novel panel data set comprising of 685 listed Chinese firms over the period of 2008-2011. Findings – The results show that the relationship between internationalization and performance is inverse U-shaped. Further, marketing resources play a greater role in enhancing the performance effects of internationalization than technological resources do. Related product diversification enhances the performance effects, while unrelated product diversification does the contrary. Research limitations/implications – The study focusses on listed firms in one country, and as a result, the findings cannot be generalized to non-listed firms and firms in other countries. Practical implications – This paper offers guidelines for international managers to improve performance of internationalization by developing a particular type of resources and diversification strategy. Originality/value – This paper extends the literature on the functional form of the internationalization-performance relationship, and further suggests that the analysis of the performance consequences of internationalization should go beyond the nexus between internationalization and performance, and focusses on firm-specific resources and strategies that may facilitate or constrain the performance effects of internationalization.

Exploring the nonlinear effect of size on profitability: evidence from an insurance brokerage industry in an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Richard Angelous Kotey ◽  
Richard Akomatey ◽  
Baah Aye Kusi
Keyword(s):  
Nonlinear Effect ◽  
Emerging Market ◽  
Empirical Studies ◽  
Random Effect ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Growth Strategies ◽  
Content Type ◽  
And Performance ◽  
Brokerage Firms

PurposeThis study examines the possible nonlinear effect of size on stakeholder and shareholder profitability in the Ghanaian insurance brokerage industry.Design/methodology/approachThis study employs a panel dataset of 64 Ghanaian insurance brokerage firms spanning 2011–2015. Static [ordinary least squares (OLS), fixed effect and random effect and dynamic (two-step generalized method of moments (GMM))] estimation techniques are employed to analyze the data.FindingsThe study finds the existence of both economies and diseconomies of scale and scope theories in the Ghanaian insurance brokerage industry confirming the existence of nonlinear nexus between size and performance. This finding is consistent for both stakeholder and shareholder profit performance. Thus, the results show that size improves profitability of insurance brokerage firms, but beyond a certain threshold, the relationship turns negative as size negatively affects profitability.Practical implicationsThe research findings have implications for both policy and research; the study recommends that Ghanaian brokerage managers should understand that not all growth is good and exercise a duty of care when applying growth strategies by monitoring size effect on performance so as not to go beyond the inflection point. Further research can be done to examine this effect in other contexts, timeframes and jurisdictions.Originality/valueThis research is unique in that it employs a panel dataset consisting of 96% of insurance brokerage firms in Ghana whilst employing both static and nonstatic regression models to examine the effect of size. The research analysis adopted is robust, and the findings are significant. Also, the lack of empirical studies on the operations and dealings of auxiliary institutions such as the insurance brokerage firms adds value to this research.

Contemporaneous or causal? Evaluating the triumvirate of insolvency risk, capitalization and efficiency in Indian commercial banking

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Navendu Prakash ◽  
Shveta Singh ◽  
Seema Sharma
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Commercial Banking ◽  
Seemingly Unrelated Regression ◽  
Bank Capital ◽  
Short Term ◽  
Content Type ◽  
Insolvency Risk

PurposeThis paper empirically examines the short-term and long-term associations between risk, capital and efficiency (R-C-E) in the Indian banking sector across 2008–2019 to answer the presence of causation or contemporaneousness in the R-C-E nexus.Design/methodology/approachThe paper focuses on three objectives. First, the authors determine short-term causality in the risk–efficiency relationship by studying the simultaneous influence of a wide array of banking risks on DEA-based technical and cost efficiency in static and dynamic situations. Second, the authors introduce bank capital and contemporaneously determine the interplay between R-C-E using seemingly unrelated regression equation (SURE) and three-staged least squares (3SLS). Last, the authors assess stability in inter-temporal associations using Granger causality in an autoregressive distributed lag (ARDL) generalized method of moments (GMM) framework.FindingsThe authors contend that high capital buffers reduce insolvency risk and increase bank stability. Technically efficient banks carry lesser equity buffers, suggesting a trade-off between capital and efficiency. However, capitalization makes banks more technically efficient but not cost-efficient, implying that over-capitalization creates cost inefficiencies, which, in line with the cost skimping hypothesis, forces banks to undertake risk. Concerning causal relationships, the authors conclude that inefficiency Granger-causes insolvency and increases bank risk. Further, steady increases in capital precede technical and cost efficiency improvements. The converse also holds as more efficient banks depict temporal increases in capitalization levels.Originality/valueThe paper is perhaps the first that acknowledges the influence of the “time” perspective on the R-C-E nexus in an emerging economy and advocates that prudential regulations must focus on short-term and long-term intricacies among the triumvirate to foster a stable banking environment.

The Effects of Higher Bank Capital Requirements on Credit in Peru

2018 ◽  
Author(s):  
Xiang Fang ◽  
David Jutrsa ◽  
Maria Soledad Martinez Peria ◽  
Andrea Presbitero ◽  
Felix Várdy ◽  
...  
Keyword(s):  
Capital Requirements ◽  
Bank Capital ◽  
Bank Capital Requirements

Comparing retail formats in an emerging market

2014 ◽  
Vol 6 (1) ◽  
pp. 48-69 ◽  
Author(s):  
Gordhan K. Saini ◽  
Arvind Sahay
Keyword(s):  
Purchase Intention ◽  
Emerging Market ◽  
Retail Store ◽  
Policy Implications ◽  
Content Type ◽  
Consumer Responses ◽  
Consumer Purchase Intention ◽  
Low Levels ◽  
Low Price Guarantee ◽  
Retail Formats

Purpose – This study aims to examine the importance of credit and low price guarantee (LPG) on consumer purchase intention across types of retail store formats in an emerging market context. Design/methodology/approach – A 2 (kirana/modern retail)×2 (high/low LPG)×2 (credit/no credit) experimental design was used for this study. A sample of 200 respondents was asked about their purchase intention for a newly introduced hypothetical toothpaste brand and six hypotheses were tested. Findings – Findings show that credit and level of LPG determine consumer's purchase intention across store formats. The presence of credit and high LPG increases the purchase intention; however, relatively importance of these two varies by type of store. The absence of credit at kirana store definitely reduces the buying intention, while same is not true for modern retail store, where level of LPG is more important than the credit. Interestingly, buyer is likely to discount high LPG for a month's credit offered by a kirana store. Practical implications – The study can help practitioners and scholars to understand consumer responses to credit and LPG in buying decisions, and subsequently in designing a better product offer at a particular store format in emerging markets. Originality/value – Important insights are provided about the consumer behavior resulting from the presence or absence of credit and high or low levels of LPG in an emerging market context. The study also has public policy implications in a country where FDI in retail is a hotly debated topic.

Bank Capital Requirements, Capital Structure and Regulation

2012 ◽  
Vol 43 (2) ◽  
pp. 127-148 ◽  
Author(s):  
John P. Harding ◽  
Xiaozhong Liang ◽  
Stephen L. Ross
Keyword(s):  
Capital Structure ◽  
Capital Requirements ◽  
Bank Capital ◽  
Bank Capital Requirements
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