The effects of the credit selection criteria on non-performing loans

2020 ◽  
Vol 28 (2) ◽  
pp. 251-275 ◽  
Author(s):  
Francesco Campanella ◽  
Francesco Gangi ◽  
Mario Mustilli ◽  
Luana Serino
Keyword(s):  
Financial Reporting ◽  
Selection Criteria ◽  
Research Question ◽  
Banking System ◽  
Information Criterion ◽  
Content Type ◽  
Thomson Reuters ◽  
Bank Managers ◽  
Small Banks ◽  
Method Approach

Purpose This paper aims to deal with the perceptions of banks’ managers about some criteria for assessing creditworthiness related to firms and how these criteria affect non-performing loans (NPLs). The paper wants to respond to the following research question: “Which criteria influence the magnitude of NPLs?” The evidence is based on the improvement of credit quality in the Italian banking system, which the authors study in aggregate and size-specific analyses, creating two subsamples (large and small banks). Design/methodology/approach The methodology used was a mixed method approach. The values of the variables were quantified according to the information derived from Thomson Reuters (Eikon, Datastream), the financial reporting of the banks and questionnaires directly administered to the bank managers. Findings This research about loans selection criteria provides useful indications for “The Basel Framework”. The results show that managers of the large banks are improving the approach of allocating the loans; the managers of the small banks are getting worse in the period 2006-2016. Therefore, it should be valuable to build a new standard about qualitative and quantitative criteria to recognize credit risk. In particular, these criteria could be adopted to reduce NPLs, and they should be different in small banks and large banks. Originality/value The study is part of empirical research investigating the causes of the significant increase in NPLs in the Italian banking system in 2006-2016. Most research interprets the increase in NPLs in the Italian banking system only as an effect of the crisis in the Italian entrepreneurial system. This research offers a different interpretation of the problem, interpreting the phenomenon as a delay of the banking system in investing in an effective information criterion.

Stakeholders and opportunities of debt settlement as a values-based banking activity in Hungary

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zsuzsanna Győri ◽  
Borbála Benedek
Keyword(s):  
Research Question ◽  
Good Practice ◽  
Banking System ◽  
Financial Inclusion ◽  
Stressful Situation ◽  
Content Type ◽  
Main Research ◽  
The Poor ◽  
Lessons Learnt

Purpose The purpose of this paper is to discuss the stakeholders of debt settlement programmes in general and some lessons learnt from the most significant debt settlement programmes of recent years in Hungary. The study also presents a planned debt settlement programme in Hungary. The paper explores and details behaviours and motivations of different stakeholders in debt settlement in general and also with reference to a specific case study. As for its main research question, the paper seeks to identify the preconditions of a successful debt settlement programme with specially emphasis on the poor. Design/methodology/approach Data from semi-structured in-depth expert interviews, documents and former research papers were collected for identifying previous Hungarian debt settlement programmes and potential lessons learnt. After a general discussion, based on primary and secondary sources, a case study is presented to obtain a more comprehensive understanding of opportunities and challenges of debt settlement. Findings Six preconditions of successful debt settlement targeting the poor are identified. In the case study, the existence and relevance of these preconditions are tested: the main finding is that they all are important for solving the situations, so a partial solution is not sufficient. In the scope of the case study, more precisely within the planned innovative banking solution, the motivations of the bank and the coordinator NGO are identified. On the part of the bank, motivations for solving social problems (both as far as business and moral issues are concerned) are relevant, while – as for the other party – the situation of the debtor is important to understand so that opportunities of cooperation can be identified. In addition, as other stakeholders also influence the potentials of the programme, their cooperative attitude is also needed. Research limitations/implications Limitations consist in generalisation: the study presents some cases from one single country and finally it focuses only on one specific case in one specific social and economic context in Hungary. Having recognized this risk, the author opted for basing research questions on theory, documented the process in detail, and also used triangulation through applying a multiple data collection (interview, content analysis, literature review) method. Practical implications Besides presenting an academic understanding of the phenomena, the goal of the study is to contextualize and interpret the case, to help the realization of currently frozen initiatives and to promote similar future ones. Social implications Indebtedness is a stressful situation affecting families, smaller communities and broader society as well. The planned cooperation of BAGázs and MagNet tries to help people excluded from the banking system. So that a deeper debt trap can be avoided, the goal of this programme is to purchase, partially discharge and reschedule pre-accumulated debts of carefully selected people who have regular income and are willing to undertake bearable repayment. The idea is very innovative with literally no good practice to follow. The research seeks to clarify the pitfalls and opportunities to help the realization of the project and similar future ones. Originality/value A certain form of values-based banking concerns the financial inclusion of the poor, e.g. debt settlement. Nevertheless, over-indebtedness and the settlement of existing debts as well as the relevance of such issues to the financial inclusion are not emphasized enough in the literature or in practice. Besides presenting an academic understanding of the phenomena, the goal of the study is to contextualize and interpret the case, to help the realization of currently frozen initiatives and to promote similar future ones.

The bidirectional relationship between ESG performance and earnings management – empirical evidence from Germany

2019 ◽  
Vol 10 (4) ◽  
pp. 322-338 ◽  
Author(s):  
Patrick Velte
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Negative Impact ◽  
Social Performance ◽  
Negative Influence ◽  
Content Type ◽  
Thomson Reuters ◽  
Tier System ◽  
Bidirectional Relationship ◽  
The Impact

Purpose This study aims to focus on environmental, social and governance (ESG) performance as a whole and individually in its three pillars and their influence on earnings management. Design/methodology/approach Companies listed on the German Prime Standard (DAX30, TecDAX and MDAX) for the business years 2011-2017 (548 firm-year observations) are included in the empirical quantitative study. A correlation and regression analysis is conducted to analyze the impact of ESG performance as determined by the Asset4 database of Thomson Reuters on accruals-based earnings management (AEM) and real earnings management (REM). Findings ESG performance has a negative influence on AEM but not on REM. Moreover, by dividing the three different factors of ESG performance, governance performance has the strongest negative impact on AEM in comparison to environmental and social performance. This study also suggests a bidirectional relationship between ESG performance and earnings management. Originality/value The analysis makes a key contribution to research as the link between ESG performance and their three components and earnings management are analyzed for the German two-tier system for the first time. Corporate practice, regulators and researchers should recognize that ESG performance and financial reporting should be discussed together.

Can the staff recognition ensure planned process of organizational change?

2016 ◽  
Vol 29 (5) ◽  
pp. 782-792 ◽  
Author(s):  
Amira Sghari
Keyword(s):  
Organizational Change ◽  
Planning Process ◽  
Research Question ◽  
Political Process ◽  
Banking System ◽  
The Political ◽  
Motivation To Change ◽  
Content Type ◽  
Employee Recognition ◽  
Global Banking

Purpose Employee recognition is presented in the literature as a mean to achieve change according to a schedule already established by the management of the enterprise (planning process). Such an approach overlooks the fact that organizational change can be explained by other processes such as the political process, the interpretive process, the incremental process and the complex process. Each of these processes offers specific characteristics of change. Through this research, the author tries to answer the following question, while driving an organizational change project does employee recognition favour a change according to the planned process? The paper aims to discuss these issues. Design/methodology/approach To answer the research question, a qualitative research case study is conducted within Basic Bank, a banking leader institution on the Tunisian market. The author analysed a proposed change induced by the implementation of a Global Banking System. Findings The results show that monetary recognition helps develop employee motivation to change, thus, ensuring a planned change. However, its variability has encouraged the emergence of conflicts between the actors resulting in an increase of change according to the political process. Originality/value Found results enrich the previous work on the role of the staff recognition in the change process. Its originality lies in the study of the relationship between employee recognition and explanatory process of change in a dynamic perspective which enables having an overall view on the evolution of this relationship throughout the implementation of the change.

Binge watching and college students: motivations and outcomes

2017 ◽  
Vol 18 (4) ◽  
pp. 425-438 ◽  
Author(s):  
Swati Panda ◽  
Satyendra C. Pandey
Keyword(s):  
College Students ◽  
Video Streaming ◽  
Research Question ◽  
Qualitative Interviews ◽  
Time Frame ◽  
Group Discussions ◽  
Content Type ◽  
Second Stage ◽  
Television Shows ◽  
Method Approach

Purpose The purpose of the paper is to explore various motivations that influence college students to spend more time binge watching and the subsequent gratifications. Video streaming websites such as Netflix and Amazon Video have changed the viewing habits of consumers. Viewers have more control and can enjoy on-demand content as per their convenience. This has resulted in viewers watching multiple episodes of television shows in a compressed time frame – a phenomenon termed as binge watching. College students engage in binge watching because of the various gratifications that it promises. This paper investigates the various triggers and consequences of binge watching. Design/methodology/approach Data were collected through a mixed method approach. The first stage involved qualitative interviews and focused group discussions with college students to understand the phenomenon of binge watching. The second stage involved administering a questionnaire to address our research question. Findings Findings indicate that social interaction, escape from reality, easy accessibility to TV content and advertising motivate college students to spend more time binge watching. If students are negatively gratified after binge watching, then they intend to spend more time doing it. Originality/value The findings have important implications on the overall wellbeing of college students and strategic implications for video streaming companies.

The level of compliance with International Financial Reporting Standards (IFRS 7)

2015 ◽  
Vol 11 (3) ◽  
pp. 231-244 ◽  
Author(s):  
Adel Mohammed Sarea ◽  
Zahra Abdulla Al Dalal
Keyword(s):  
Financial Reporting ◽  
Research Question ◽  
Financial Sector ◽  
Listed Companies ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Ifrs 7 ◽  
High Level

Purpose – The purpose of this paper is to examine the level of compliance with International Financial Reporting Standards (IFRS 7) by listed companies in Bahrain Bourse (BB). Design/methodology/approach – First, the authors design disclosure compliance checklist of ten requirements of IFRS 7. Second, a score of 3 is assigned if high level of compliance, 2 is assigned if medium level of compliance, 1 is assigned if low level of compliance. The sample of the study comprises of (21) companies listed in BB for year 2013. Findings – The main findings are, the level of compliance varied by industry and the highest level of compliance reported for the investment sector whereas the lowest for the insurance industry. This result indicates that all listed companies are complying with IFRS 7 in terms of the standard disclosure requirements. Practical implications – In this paper attempt has been made to support the argument of previous studies. The paper attempts to test and answer the research question; does the financial sector in Bahrain comply with IFRS 7? These results could lead to high level of awareness about the financial instruments. Adoption of the IFRS 7 could lead to high level of compliance and play a significant role in attracting global investors’ interest to the local markets, especially in a developing country like Bahrain. Originality/value – This paper provides an insight from the reality of the financial market in Bahrain as a result of answering this question; does the financial sector in Bahrain comply with IFRS 7?

scholarly journals Determinants of the performance of Moroccan banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdelkader Derbali
Keyword(s):  
Banking System ◽  
Bottom Line ◽  
Bank Profitability ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Economy Of Scale ◽  
Effect Model ◽  
Bank Managers ◽  
Banking Networks ◽  
The Impact

PurposeThe economic and financial literature dealing with the subject of bank profitability has often been based in the measurement of banking results on three main indicators: ROA, ROE and MIN. This article aims to determine and analyze the different determinants that influence bank profitability and to identify the impact of these determinants on the profitability of Moroccan banks.Design/methodology/approachFor this purpose, a fixed individual effect model was adopted for the case of six Moroccan banks during the period of study from 1997 to 2018. The authors carried out their estimates at three levels according to three categories of profitability factors: bank factors, factors of the banking system and macroeconomic factors.FindingsThe empirical findings show that Moroccan banks react on their size to boost their performance, which further explains the continued expansion of Moroccan banking networks. The authors confirm that Moroccan banks have not yet reached a level of size that will be detrimental to their performance. Therefore, the authors can conclude that the big Moroccan banks do not follow the concept of economy of scale. The effects of the variation in the level of economic growth as well as the evolution of the level of inflation on the performance of Moroccan banks are not significant.Originality/valueThe authors’ findings and results have some important originality and value. Primarily, these results would consist of better helping the State, bankers, and bank managers to better understand the various determinants of bank profitability. The results may also help to better examine the effect of each factor, whether internal or external, on banks' bottom line.

scholarly journals Risk-adjusted efficiency and bank size in a developing economy: an analysis of Vietnamese banks

2020 ◽  
Vol 47 (2) ◽  
pp. 386-404 ◽  
Author(s):  
Minh Le ◽  
Viet-Ngu Hoang ◽  
Clevo Wilson ◽  
Thanh Ngo
Keyword(s):  
Credit Risk ◽  
Empirical Evidence ◽  
Developing Economies ◽  
Returns To Scale ◽  
Banking System ◽  
Developed Countries ◽  
Content Type ◽  
Empirical Results ◽  
Increased Risk ◽  
Small Banks

PurposeThere is ample empirical evidence to show that larger banks are more efficient than smaller banks in developed countries. However, there is very little empirical evidence to show that in small developing economies, such as Vietnam, bank size is associated with increased risk, especially credit risk. This paper aim to provide empirical evidence to fill in this gap. This paper employs a slack-based directional distance function using the intermediation approach in measuring the inefficiency of banks in Vietnam during the period 2006–2015. Non-performing loans are used as an undesirable output to capture credit risk. The results show that small banks are more efficient than large banks at the mean level and across the entire distributions of inefficiency of the two groups. Input waste, output shortage and risk surplus of big banks are nearly three times higher than those of small banks. The results are robust under constant and variable returns to scale for production technologies. The study’s empirical results contribute to the ongoing debate on the merits of enlarging bank size in a small transitional economy and suggest that policy makers should pay attention to the risk and inefficiency of large banks to enhance the performance of Vietnam's banking system as a whole.Design/methodology/approachThis paper uses the non-radial slack-based directional technology distance function developed by Färe and Grosskopf (2010) to estimate the efficiency of banks using the data envelopment analysis technique. Data for 44 commercial banks are used.FindingsThe empirical results of the paper contribute to the ongoing debate on the merits of enlarging bank size in a small transitional economy and suggest that policy makers should pay attention to the risk and inefficiency of large banks to improve the performance of Vietnam's banking system as a whole.Originality/valueThis paper extends the extant literature by examining whether efficiency is associated with size in a typical transitional developing economy. The classic Cournot model, the structure-conduct-performance and the efficiency structure hypotheses state that larger banks are more efficient than smaller banks (Bikker and Bos, 2008). Empirical studies of Berger (2003), Mester (2005), Wheelock and Wilson (2012) lend support to the statement in developed countries. However, not much empirical literature focuses on small developing economies such as Vietnam to show that bank size is associated with increased risk, especially credit risk. The study’s empirical results show that size enlargement is not positively associated with risk-adjusted efficiency. Input waste, output shortage and risk surplus of big banks are nearly three times higher than those of small banks. The results are robust under constant and variable returns to scale for production technologies.

The interrelationship between net interest margin and non-interest income: evidence from Vietnam

2017 ◽  
Vol 13 (5) ◽  
pp. 521-540 ◽  
Author(s):  
Tu DQ Le
Keyword(s):  
Negative Impact ◽  
Rank Order ◽  
Banking System ◽  
Policy Makers ◽  
Content Type ◽  
Interest Income ◽  
Net Interest Margin ◽  
Bank Managers ◽  
The Impact ◽  
Interest Margin

Purpose The purpose of this paper is to investigate the interrelationship between non-interest income (NII) and net interest margin (NIM) in the Vietnamese banking system between 2006 and 2015. Thereafter, the impact of NII on risk-adjusted returns is also examined. Design/methodology/approach Various analysis techniques are used to achieve the research objectives. Findings The findings show a negative two-way link between NII and NIM, thus supporting the subsidisation hypothesis. Furthermore, NII is found to have a negative impact on risk-adjusted returns. When observing this relationship in sub-samples, the findings indicate that the negative impact of NII on risk-adjusted returns still holds in the first subsample (2006-2011). The coefficient of NII becomes positive but not significant for the subsequent period (2012-2015). In addition, the Spearman rank-order correlations of returns on assets and NII for both sub-samples are negative. Together, the author concludes that there are no diversification benefits in the Vietnamese banking system. Practical implications The evidence suggests a trade-off between non-interest activities and traditional lending ones. In addition, the findings demonstrate that the Vietnamese banks may use NIIs to expand leverage and herd by coordinating NII strategy during the economic downturns. Thus, the banking system may be exposed to a greater risk. The research has implications for bank supervisors, policy-makers and bank managers. Originality/value This study is the first attempt to investigate the interrelationships between net NII and NIM in the Vietnamese banking system.

scholarly journals Estimating the national logistics outsourcing market size: a multi-method approach and an application to the Italian context

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lorenzo Bruno Prataviera ◽  
Elena Tappia ◽  
Sara Perotti ◽  
Alessandro Perego
Keyword(s):  
Financial Reporting ◽  
Local Governments ◽  
Service Providers ◽  
Market Size ◽  
Logistics Outsourcing ◽  
Content Type ◽  
Secondary Sources ◽  
Multi Method Approach ◽  
Method Approach ◽  
Reporting Data

PurposeToday logistics is an ever-growing multi-billion-dollar business, and logistics operations have been increasingly outsourced to specialised players. The intended aim of this paper is to offer a multi-method approach for estimating the size of the national logistics outsourcing market by building upon financial-reporting data of logistics service providers (LSPs).Design/methodology/approachThe proposed approach is structured into four steps, clustered around two main stages: framework setting and data collection, and processing. A combination of methods is offered, including a review of academic literature and secondary sources, focus groups, interviews and data extractions from national databases.FindingsThe proposed approach is meant to be replicable in different countries, thus allowing for comparison amongst markets. With reference to a specific country and year, the following outputs are provided: market size in terms of the number of players and generated turnover – total and split by LSPs type – and market concentration measures. A practical application of the proposed approach to a specific context, i.e. Italy is finally offered.Originality/valueThe study focusses on the logistics outsourcing market and considers financial-reporting data from LSPs, avoiding the need for introducing assumptions about the value of logistics operations for shippers. The proposed approach can contribute to strengthening the accuracy of LSPs' market analyses, and supporting the development of national policies by local governments. The adoption of multiple methods brings rigour and reliability to the study. Finally, high flexibility is ensured, as the method may be adaptable over time to cope with future changes in the logistics landscape.

scholarly journals Real earnings manipulation surrounding mergers and acquisitions: the targets’ perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tariq Zaglol Elrazaz ◽  
Moataz Elmassri ◽  
Yousry Ahmed
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Firm Heterogeneity ◽  
Reporting Quality ◽  
Fixed Effect Model ◽  
Production Costs ◽  
Real Earnings Management ◽  
Agency Conflicts ◽  
Content Type ◽  
Thomson Reuters

Purpose This paper aims to investigate whether UK public targets manage their earnings using real activities manipulation in the period prior to the announcement of a mergers and acquisition (M&A). It also examines whether the payment method in M&As affects the degree to which takeover targets manipulate earnings. Design/methodology/approach Using a sample of 131 UK listed targets acquired over the period 1995–2013, this paper examines real earnings management (REM) by employing OLS regression models. The data related to deals have been mainly collected from Thomson One Banker and Thomson Reuters Eikon databases. REM is examined by investigating abnormal cash flow from operations, abnormal discretionary expenses and abnormal production costs. This analysis was supplemented by conducting additional robustness checks. Findings The results show that UK takeover targets manage earnings upwards through cutting discretionary expenses in the year prior to the acquisition, while they do not do so by manipulating sales or production costs. Moreover, targets of cash-only or mixed-payment deals do not have the same strong motivation to manage their earnings as stock-financed deal target counterparts do. Our results continue to hold after using alternative accrual earnings management (EM) measures, controlling for unobservable firm heterogeneity using the fixed-effect model and controlling for endogeneity using the two-stage Heckman (1979) model. Practical implications The main findings of this study could be beneficial for various parties involved M&As, such as standard setters and regulators. A need arises to improve disclosure rules and enhance overall financial reporting quality in the capital markets with the aim of reducing information asymmetry and agency conflicts. Originality/value As far as the literature on EM around M&As is concerned, only EM by acquirers has been examined, and not much attention has been paid to targets’ EM.

Sign in / Sign up

Export Citation Format

Share Document