Ethical values and bank performance: evidence from financial institutions in Malaysia

2020 ◽  
Vol 11 (1) ◽  
pp. 233-256
Author(s):  
Tuan Azma Fatiema Tuan Ibrahim ◽  
Hafiza Aishah Hashim ◽  
Akmalia Mohamad Ariff
Keyword(s):  
Banking Sector ◽  
Positive Association ◽  
Annual Reports ◽  
Bank Performance ◽  
Ethical Values ◽  
Return On Assets ◽  
Content Type ◽  
And Performance ◽  
The Relationship

Purpose The purpose of this study is to investigate the relationship between ethical values and performance in the context of the banking sector in Malaysia. Design/methodology/approach Based on the philanthropic model, this study posits that firms undertaking zakat and charity are ethical firms. Zakat disclosure index (ZDI) and charity disclosure index (CDI) were constructed to measure ethical values. This study hypothesises that ethical values are positively associated with bank performance. Ethical values (i.e. CDI and ZDI) and financial performance data (i.e. return on assets) were collected from the disclosures made in the annual reports of 50 banks for a period of five years (2010-2014). Findings A positive association was found between zakat disclosure and bank performance. The results indicate that higher zakat disclosure is associated with greater bank performance. However, no relationship was found between charity disclosure and bank performance. Research limitations/implications Considering the limitation of the index used in this study, other dimensions such as corporate governance, sustainability, products and environment can be considered in the development of index to measure ethical values in future studies. Originality/value This study offers additional explanation on the relationship between ethical values and performance by examining the role of zakat disclosures that characterize the unique aspects of Malaysian companies.

Gender makes the difference: the moderating role of gender on the relationship between management structure and performance in banking

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nikola Stefanovic ◽  
Lidija Barjaktarovic
Keyword(s):  
Gender Diversity ◽  
Threshold Level ◽  
Bank Performance ◽  
Content Type ◽  
Executive Authority ◽  
The Difference ◽  
And Performance ◽  
The Relationship ◽  
Executive Boards

Purpose This study aims to explore the factors moderating possibly indirect relationships between gender diversity and its effect on bank performance. The causality of this relationship remains unclear. Design/methodology/approach The sample consists of all banks (n = 27) operating in Serbia. Findings The gender diversity-performance relationship is indirect. The gender diversity of executive boards positively impacts bank performance, over a threshold level. This is observed only in banks where gender diversity is extended to more than one level of executive authority. Research limitations/implications Gender diversity should be fostered, particularly in small and competitive markets. The gender diversity-performance link is based on gender-related social interactions, which are interdependent and should not be taken into account as isolated factors. Originality/value To the knowledge, this is the first study to provide insight into indirect, gender related, moderatory interactions effecting gender diversity – performance link, in banking.

Directors’ remuneration, governance and performance: the case of Malaysian banks

2015 ◽  
Vol 41 (1) ◽  
pp. 26-44 ◽  
Author(s):  
Siew Peng Lee ◽  
Mansor Isa
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Positive Association ◽  
Multivariate Regression Analysis ◽  
Foreign Banks ◽  
Causality Test ◽  
Content Type ◽  
And Performance ◽  
Domestic Banks ◽  
The Relationship

Purpose – The purpose of this paper is to examine the association between directors’ remuneration and performance and corporate governance in the Malaysian banking sector, using panel data for 21 banks over the period 2003-2011. Design/methodology/approach – The authors use multivariate regression analysis to examine the relationship between directors’ remuneration and performance and corporate governance. The authors also run Granger causality test to determine the existence of causality between directors’ remuneration and performance. Findings – The authors find clear evidence of a positive association between directors’ remuneration and performance. Further, the causality test reveals that directors’ remuneration tends to Granger-cause performance. In terms of governance variables, the authors find that directors’ remuneration is positively related to the percentage of independent directors, and negatively related to board size, but unrelated to duality and percentage of director share ownership. The authors also find that remuneration is positively related to bank size and negatively related to capital ratio. The evidence also shows that foreign banks perform better than domestic banks despite the relatively lower pay received by their directors. Practical implications – The findings imply that high-quality directors, as implied by their remuneration packages, are a significant determinant of performance. Originality/value – The results of this study provide new evidence concerning the relationship between directors’ remuneration and performance in the banking sector in Malaysia.

Moderating role of Shariah committee quality on relationship between board of directors effectiveness and the performance of Malaysian Takaful

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Monther Eldaia ◽  
Mustafa Hanefah ◽  
Ainulashikin Marzuki
Keyword(s):  
Board Of Directors ◽  
Positive Association ◽  
Moderating Effect ◽  
Board Effectiveness ◽  
Content Type ◽  
And Performance ◽  
High Level ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this study is to examine the effect of Board of Directors Effectiveness (BODE) on the performance of Malaysian Takaful companies licensed by the Central Bank of Malaysia. In addition, the study investigates the moderating effect of Shariah Committee Quality (SCQ) on the relationship between BODE and companies’ performance. Design/methodology/approach This study uses a sample of 11 Malaysian Takaful companies during the period of 2010-2017. While BDE and SCQ are measured using indices, performance is proxied using ROA and ROE. A panel fixed effect regression analysis is used to test the impact of the BDE on the financial performance of Malaysian Takaful companies and the moderator role of SCQ. Findings The main finding of this study shows a positive association between BDE and performance. More specifically, boards with a high presence of independent, Muslim and female directors positively contribute to the performance of Malaysian Takaful companies. Another interesting finding is related to the positive moderating effect of SCQ on the relationship between BDE and performance. This result indicates that a high level of SCQ combined with a high level of board effectiveness improve performance. Practical implications The finding is of great importance to stakeholders and policymakers to improve their board effectiveness and the quality of the Shariah committee to reduce agency costs and to improve the performance of Malaysian Takaful companies. Originality/value This study adds to the prior literature by investigating for the first time the relationship between BDE and performance and the interaction effect of SCQ on the performance of Malaysian Takaful companies.

HRM practices and organizational performance in the UAE banking sector

2016 ◽  
Vol 65 (6) ◽  
pp. 773-791 ◽  
Author(s):  
Sherine Farouk ◽  
Hossam M. Abu Elanain ◽  
Shatha M. Obeidat ◽  
Moza Al-Nahyan
Keyword(s):  
Organizational Performance ◽  
Banking Sector ◽  
Organizational Innovation ◽  
Innovation Strategy ◽  
Equation Modeling ◽  
Content Type ◽  
Hrm Practices ◽  
And Performance ◽  
The Relationship

Purpose – The purpose of this paper is to examine the impact of human resource management (HRM) practices on organizational performance in the banking sector in the United Arab Emirates (UAE), to test the mediating impact of organizational innovation on the HRM-organizational performance relationship, and to test HRM practices as mediator of the relationship between innovation strategy and organizational innovation. Design/methodology/approach – Data were collected from 168 managers working in UAE banks. A structured questionnaire containing standard scales of HRM practices, innovation strategy, organizational innovation, organizational performance, and some demographic variables was used. The analytical method used to empirically test the hypotheses proposed is the structural equation modeling technique using PLS. The two steps are: the assessment of the outer model and the assessment of the inner model. Moreover, a bootstrapping method is employed in order to test indirect effects. Findings – Results found that organizational innovation fully mediates HRM-organizational performance link. Moreover, with the existence of innovation strategy, HRM mediates the relationship between innovation strategy and organizational innovation. Research limitations/implications – The limitations of common method bias and cross-sectional data are discussed in light of implications for future research. Nevertheless, the results provide new insights on the influence of HRM on organization innovation and performance in a non-Western context of the UAE by testing the role of some mediators in influencing the relationship between HRM and performance. Practical implications – In general, enhancing the effectiveness of HRM can result in higher level of performance and innovation. In particular, the choice of an innovation strategy implies the use of an effective incentive-based compensation, training and development, recruitment and selection and performance appraisal. Originality/value – This study is considered the first study to examine the mediating role of organizational innovation on the relationship between HRM and organizational performance in the Middle East. Also, the study is the first study to test the role of HRM as a mediator for the innovation strategy-innovation performance relationship in a non-Western context.

Knowledge management, workplace climate, creativity and performance

2018 ◽  
Vol 30 (8) ◽  
pp. 592-612 ◽  
Author(s):  
Amro Alzghoul ◽  
Hamzah Elrehail ◽  
Okechukwu Lawrence Emeagwali ◽  
Mohammad K. AlShboul
Keyword(s):  
Job Performance ◽  
Knowledge Sharing ◽  
Authentic Leadership ◽  
Equation Modeling ◽  
Workplace Climate ◽  
Content Type ◽  
And Performance ◽  
The Impact ◽  
The Relationship

Purpose This study aims at providing empirical evidence pertaining to the interaction among authentic leadership, workplace harmony, worker's creativity and performance in the context of telecommunication sector. These research streams remain important issues and of interest as the world continues to migrate toward a knowledge-based economy. Design/methodology/approach Applying structural equation modeling, this study diagnosed the impact of Authentic leadership (AL) on employees (n = 345) in two Jordanian telecommunication firms, specifically, how it shapes workplace climate, creativity and job performance. The study also tests the moderating role of knowledge sharing in the model, as well as the mediating role of workplace climate on the relationship between AL and positive organizational outcomes. Findings The empirical result suggests that AL positively influences workplace climate, creativity and job performance; workplace climate positively influences creativity and job performance; workplace climate mediates the relationship between AL and creativity, and job performance; and knowledge sharing behavior moderates the relationship between AL and workplace climate. Originality/value This study highlights the magnificent power of AL and knowledge sharing, not only in shaping the workplace atmosphere but also in delineating how these variables stimulate creativity and performance among employees. The implications for research and practice are discussed.

Frontline employees’ engagement and business performance: the mediating role of customer-oriented behaviors

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Behrooz Ghlichlee ◽  
Fatima Bayat
Keyword(s):  
Business Performance ◽  
Banking Sector ◽  
Retail Banking ◽  
Mediating Effect ◽  
Business Trend ◽  
Frontline Employees ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship

Purpose Within the retail banking sector, the customer-centric business model has become an important and new business trend in recent years. The enhancement of the frontline service employees’ engagement and their customer-oriented behaviors are among the key factors affecting business performance (BP) in this sector of the banking industry. The purpose of this paper is to improve management decisions to enhance BP through examining the relationship between the frontline employees’ engagement and BP while taking into account the mediating effect of customer-oriented behaviors on this relationship. Design/methodology/approach A quantitative approach was adopted to conduct the present study, and the respondents were sampled from a large commercial bank in Iran using a structured questionnaire. Overall, 50 branch managers and 90 frontline employees were selected using random sampling. A confirmatory factor analysis was conducted to ascertain the validity and reliability of the observed items and a structural equation model was used for testing the proposed hypotheses and research framework. Findings The findings showed that customer-oriented behaviors mediated the relationship between the frontline employees’ engagement and bank’s branches’ BP. Higher levels of the frontline employees’ engagement enhance the customer-oriented behaviors. It was revealed that the frontline employees are engaged in their job and organization. Moreover, the engaged frontline employees listen carefully to customers, the customer’s problem is important to them and they complete their tasks precisely for customers. It has been confirmed that customer-oriented behaviors enhance branches’ BP. The bank frontline employees’ engagement and customer-oriented behaviors, in turn, affected the bank’s branches’ financial performance, process performance and employee performance compared with the bank’s key competitors. Research limitations/implications This study highlights the value of empirically establishing how employee customer-oriented behaviors are affected by employee engagement as an integrative construct bringing together BP. Practical implications This study can help improve BP by increasing the frontline employees’ engagement and their customer-oriented behaviors. This study suggests that organizations using the findings of this study could effectively assess their frontline employees’ engagement and their customer-oriented behaviors and then plan for improving them. Social implications This study offers a customer-oriented initiative as a social responsibility to be considered by retail banks. In light of the social exchange theory, the banks valuing customer-oriented can provide employees with knowledge, skills, values and support to develop motivation and abilities to demonstrate customer-oriented organizational citizenship behaviors. Originality/value Previous studies demonstrated that the employees’ engagement affects their customer-oriented behaviors. In addition, studies have referred to the effect of employees’ customer-oriented behaviors on BP. However, to the best of the knowledge, key questions regarding how the employees’ engagement at the branch level fosters customer-oriented behaviors and, in turn, the bank’s branches’ BP, remain unanswered. Hence, this study contributes to the investigation of the mediating role of the frontline employees’ customer-oriented behaviors in the relationship between their engagement and branches’ BP in the retail banking sector.

Value that matters: intellectual capital and big data to assess performance in healthcare. An empirical analysis on the European context

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ginevra Gravili ◽  
Francesco Manta ◽  
Concetta Lucia Cristofaro ◽  
Rocco Reina ◽  
Pierluigi Toma
Keyword(s):  
Big Data ◽  
Organizational Performance ◽  
Healthcare System ◽  
Healthcare Sector ◽  
Healthcare Organizations ◽  
Content Type ◽  
Structural Capital ◽  
And Performance ◽  
The Relationship

PurposeThe aim of this paper is to analyze and measure the effects of intellectual capital (IC), i.e. human capital (HC), relational capital (RC) and structural capital (SC), on healthcare industry organizational performance and understanding the role of data analytics and big data (BD) in healthcare value creation (Wang et al., 2018). Through the assessment of determined variables specific for each component of IC, the paper identifies the guidelines and suggests propositions for a more efficient response in terms of services provided to citizens and, specifically, patients, as well as predicting effective strategies to improve the care management efficiency in terms of cost reduction.Design/methodology/approachThe study has a twofold approach: in the first part, the authors operated a systematic review of the academic literature aiming to enquire the relationship between IC, big data analytics (BDA) and healthcare system, which were also the descriptors employed. In the second part, the authors built an econometric model analyzed through panel data analysis, studying the relationship between IC, namely human, relational and structural capital indicators, and the performance of healthcare system in terms of performance. The study has been conducted on a sample of 28 European countries, notwithstanding the belonging to specific international or supranational bodies, between 2011 and 2016.FindingsThe paper proposes a data-driven model that presents new approach to IC assessment, extendable to other economic sectors beyond healthcare. It shows the existence of a positive impact (turning into a mathematical inverse relationship) of the human, relational and structural capital on the performance indicator, while the physical assets (i.e. the available beds in hospitals on total population) positively mediates the relationship, turning into a negative impact of non-IC related inputs on healthcare performance. The result is relevant in terms of managerial implications, enhancing the opportunity to highlight the crucial role of IC in the healthcare sector.Research limitations/implicationsThe relationship between IC indicators and performance could be employed in other sectors, disseminating new approaches in academic research. Through the establishment of a relationship between IC factors and performance, the authors implemented an approach in which healthcare organizations are active participants in their economic and social value creation. This challenges the views of knowledge sharing deeply held inside organizations by creating “new value” developed through a more collaborative and permeated approach in terms of knowledge spillovers. A limitation is given by a fragmented policymaking process which carries out different results in each country.Practical implicationsThe analysis provides interesting implications on multiple perspectives. The novelty of the study provides interesting implications for managers, practitioners and governmental bodies. A more efficient healthcare system could provide better results in terms of cost minimization and reduction of hospitalization period. Moreover, dissemination of new scientific knowledge and drivers of specialization enhances best practices sharing in the healthcare sector. On the other hand, an improvement in preventive medicine practices could help in reducing the overload of demand for curative treatments, on the perspective of sharply decreasing the avoidable deaths rate and improving societal standards.Originality/valueThe authors provide a new holistic framework on the relationship between IC, BDA and organizational performance in healthcare organizations through a systematic review approach and an empirical panel analysis at a multinational level, which is quite a novelty regarding the healthcare. There is little research focussed on healthcare industries' organizational performance, and, specifically, most of the research on IC in healthcare delivered results in terms of theoretical contribution and qualitative analyzes. The authors even contributed to analyze the healthcare industry in the light of the possible existence of synergies and networks among countries.

Study of banking sector in Ghana shows importance of HRD training practices in developing employee effectiveness through the mediating role of employee competencies

2020 ◽  
Vol 28 (5) ◽  
pp. 23-24
Keyword(s):  
Human Resource Development ◽  
Organizational Effectiveness ◽  
Banking Sector ◽  
Training And Development ◽  
Content Type ◽  
Impact Performance ◽  
Mediating Role ◽  
Employee Competencies ◽  
The Relationship

Purpose The purpose was to examine the mediating role of employee competencies in the relationship between human resource development (HRD) practices and organizational effectiveness. Design/methodology/approach Data were collected through questionnaire from 550 employees of the selected banks. The author tested four hypotheses Findings The results confirmed Hypothesis One, indicating training and development have a big influence on employee competencies. There was also support for Hypothesis Two, revealing employee involvement influences employee competencies. But the results did not support Hypothesis Three, which stated that career development has a significant influence on employee competencies. Finally, there was support for Hypothesis Four, which said HRD practices influence organizational effectiveness through the mediating role of employee competencies. Originality/value The author chose to focus on the banking sector because of its significance to a country’s economy. A further justification was that similar studies have focused on Western banks and there is a paucity of research into HRD practices in the West African banking industry. More broadly, there have been very few studies of the mediating processes through which HR practices impact performance.

Corporate reputation and retail bank selection: the moderating role of brand image

2019 ◽  
Vol 48 (2) ◽  
pp. 109-127 ◽  
Author(s):  
Bedman Narteh ◽  
Mahama Braimah
Keyword(s):  
Service Provider ◽  
Corporate Reputation ◽  
Structural Equation ◽  
Banking Sector ◽  
Brand Image ◽  
Retail Banking ◽  
Content Type ◽  
The Relationship ◽  
Moderating Role

Purpose Even though scholars have proposed multiple dimensions to measure corporate reputation, the relationship between these dimensions and service provider selection has received a dearth of research. Moreover, the moderating role of brand image on this relationship has hardly been considered. The purpose of this paper is to fill these gaps in the literature. Design/methodology/approach The study employed a quantitative approach, collecting data from 540 retail bank customers using surveys. Results were analyzed using structural equation modelling in AMOS. Findings The study found out that emotional engagement, corporate performance, customer centricism and service quality directly predicted customer selection of retail banks in Ghana. The results further indicated that brand image moderates the relationship between social and ethical engagement, which was not directly significant and bank selection. Practical implications The findings of the study indicate that some of the dimensions of corporate reputation have a direct impact on bank selection by customers, and that brand image could also be used to improve social and ethical dimension of corporate reputation to ensure bank selection by retail customers. The study thus provides practical guidelines for managing corporate reputation to achieve retail bank selection in Ghana. Originality/value The paper provides support to some of the prior studies on corporate reputation in the retail banking sector. Thus, the study provides useful insights into how corporate reputation can be managed to ensure service provider selection by retail bank customers.

Determinants of co-creation in banking services

2017 ◽  
Vol 35 (2) ◽  
pp. 187-204 ◽  
Author(s):  
Emerson Wagner Mainardes ◽  
Aridelmo Teixeira ◽  
Paula Cristina da Silveira Romano
Keyword(s):  
Risk Assessment ◽  
Banking Sector ◽  
Empirical Work ◽  
Positive Association ◽  
Investment Banks ◽  
Content Type ◽  
Customer Perceptions ◽  
Service Production ◽  
Retail Banks ◽  
The Relationship

Purpose The purpose of this paper is to identify the factors that favor the activity of co-creation with customers in the banking sector. The way in which consumers co-create with banking organizations was also examined. Design/methodology/approach The “dialogue, access, risk and transparency” model was employed with the variables dialogue, access, risk assessment and transparency, as per Prahalad and Ramaswamy (2004). The final data sample accounted for 265 clients of a large Brazilian bank and multiple linear regression was used to analyze the data. Findings The results indicated a significant and positive association with access, risk assessment and transparency when the bank co-created with these clients. Dialogue did not appear significantly affect to the co-creative process between clients and the bank. Research limitations/implications The study was conducted with customers of only one major Brazilian bank. The authors recommend that the same study is conducted in other retail banks, investment banks and smaller banks, with a specialized focus. Limitations notwithstanding, the outstanding findings of this research relate to customer perceptions, which, it should be noted, do not necessarily reflect the totality of the relationship between client and bank. Originality/value Understanding co-creation in the banking sector is a new learning perspective on consumer behavior and interactions within the service production process. The justification and relevance of this study derive from the construction of this knowledge and the scarcity of empirical work in this area.

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