The nexus of economic growth, priority sector lending and non-performing assets: case of Indian banking sector

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dolly Gaur ◽  
Dipti Ranjan Mohapatra
Keyword(s):  
Economic Growth ◽  
Banking Sector ◽  
Dynamic Panel ◽  
Content Type ◽  
Generalized Methods Of Moments ◽  
Major Increase ◽  
Dynamic Panel Regression ◽  
Methods Of Moments ◽  
The Impact

PurposeIn recent years, the Indian banking sector is facing a major cause of concern in the form of Nonperforming Assets (NPA), and the priority sector lending (PSL) is generally recognized as the major factor contributing to it. Thus, the present study has been carried out with the objective of examining the relationship between priority sector lending and GDP growth. Thereafter, the role of PSL and certain other bank-specific, industry-specific and macroeconomic variables in determining NPA has been studied.Design/methodology/approachTaking a sample of 45 scheduled commercial banks, the study has been carried out for 14 years (2004–2018). Granger causality between PSL and GDP has been examined by applying the Dumitrescu-Hurlin test. For the purpose of investigating the impact of PSL and other determinants on NPA, both static and dynamic panel regression have been performed. Under the dynamic panel, system generalized methods of moments (S-GMM) approach has been followed.FindingsThe findings show that there exists a positive correlation and bidirectional causal relationship between PSL and GDP, which implies that PSL brings additional growth for the whole economy. In addition to it, PSL is found to be insignificant for the NPA ratio, and thus, it can be inferred that credit extended to government-specified sectors does not bring any major increase in the bad loan portfolio of banks.Practical implicationsThe policymakers and bank management can take a cue from the findings of this study to decrease the exposure to loan nonrepayment issue. The priority sectors are in need of formal credit for their growth, and since the rising population of the country can find employment in these sectors, banks should meet their credit needs while securing their position with regard to the NPA problem.Originality/valueThe issue of NPA determinants, and in particular, the contribution of priority sector lending in it has not been much explored for Indian banking sector. Also, the present study adds to the literature by using the causality approach for examining the importance of directed credit schemes for economic growth.

The impact of globalization on the performance of Banks in South Africa

2016 ◽  
Vol 26 (4) ◽  
pp. 517-542 ◽  
Author(s):  
Fadzlan Sufian ◽  
Fakarudin Kamarudin
Keyword(s):  
South Africa ◽  
Host Country ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Estimation Method ◽  
Bank Performance ◽  
Content Type ◽  
Multinational Banks ◽  
Dynamic Panel Regression ◽  
The Impact

Purpose This paper aims to provide empirical evidence for the impact globalization has had on the performance of the banking sector in South Africa. In addition, this study also investigates bank-specific characteristics and macroeconomic conditions that may influence the performance of the banking sector. Design/methodology/approach The authors use data collected for all commercial banks in South Africa between 1998 and 2012. The ratio of return on assets was used to measure bank performance. They then used the dynamic panel regression with the generalized method of moments as an estimation method to investigate the potential determinants and the impact of globalization on bank performance. Findings Positive impact of greater economic integration and trade movements of the host country, while greater social globalization in the host country tends to exert negative influence on bank profitability. The results show that banks originating from the relatively more economically globalized countries tend to perform better, while banks headquartered in countries with greater social and political globalizations tend to exhibit lower profitability levels. Originality/value An empirical model was developed that allows for the performance of multinational banks to depend on internal and external factors. Moreover, unlike the previous studies on bank performance, in this empirical analysis, we control for the different dimensions of globalizations while taking into account the origins of the multinational banks. The procedure allows us to test for the home field, the liability of foreignness and global advantage hypotheses to deduce further insights into the prospects of banking across borders.

Farmland transfer and agricultural economic growth nexus in China: agricultural TFP intermediary effect perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yuan-pei Kuang ◽  
Jia-li Yang ◽  
Meseret-Chanie Abate
Keyword(s):  
Economic Growth ◽  
Agricultural Economic ◽  
Test Model ◽  
Promoting Effect ◽  
Content Type ◽  
Effect Model ◽  
Intermediary Role ◽  
Multidimensional Effects ◽  
The Impact

PurposeThe multidimensional effects of farmland transfer in China have been profoundly unstudied. The purpose of this paper is to provide insights on the effects of the intermediary role of agricultural total factor productivity (TFP) of farmland transfer on agricultural economic growth in China.Design/methodology/approachBased on the agricultural data of 30 provinces in China over the period 2005–2018, this paper uses the intermediary effect model to test the relationship between farmland transfer, agricultural TFP and agricultural economic growth. This paper employed an intermediary effect test model to investigate the intermediary role of agricultural TFP in the influence of farmland transfer on agricultural economic growth.FindingsThe findings indicated that farmland transfer has a significant effect on promoting agricultural economic growth. There is a significant “inverted U-shaped” relationship between farmland transfer and agricultural TFP. The sample value of 84.3% of farmland transfers in China is still within the TFP promoting effect range. In addition, farmland transfer has an indirect impact on agricultural economic growth through the channel of agricultural TFP. Agricultural TFP plays a significant intermediary role, but the effect is relatively lowOriginality/valueThis paper is the first to provide fundamental evidence on the impact of farmland transfers on agricultural economic growth in China, driven by agricultural TFP as an intermediary factor. Agricultural TFP can reduce the involution effect of farmland transfer and promote an indirect effect on agricultural economic growth.

The mediation role of public governance in the relationship between entrepreneurship and economic growth

2019 ◽  
Vol 16 (3) ◽  
pp. 316-333
Author(s):  
Allam Mohammed Hamdan ◽  
Reem Khamis ◽  
Ammar Abdulla Al Hawaj ◽  
Elisabetta Barone
Keyword(s):  
Economic Growth ◽  
United Arab Emirates ◽  
Entrepreneurial Activity ◽  
Public Governance ◽  
Content Type ◽  
National Economic ◽  
Oil Revenues ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate the mediation role of public governance in the relationship between entrepreneurship and economic growth in the United Arab Emirates (UAE). Design/methodology/approach To achieve this aim, the study uses a 20-year time series analysis (1996–2015) and tests the effect of entrepreneurship on economic growth, through public governance, via a mediator model. Findings The study has determined that public governance buoys the positive effect that entrepreneurship activities exert on economic growth in the UAE. Based on this determination, the study posits a set of recommendations that focus on supporting entrepreneurship activities that play a significant role in economic growth. Originality/value The study adds to the literature on the impact of entrepreneurship on economies dependent on oil revenues vis-à-vis a public policy perspective. The study provides insights into the type of entrepreneurship that most efficaciously suits the Emirati social and cultural milieu in terms of fostering national economic growth. In addition, the study limns a vision of the role of public governance in creating an enabling environment that stimulates entrepreneurial activity and, in turn, increases economic growth in the Emirates.

Does higher educational attainment imply less crime? Evidence from the Indian states

2020 ◽  
Vol 48 (1) ◽  
pp. 133-165
Author(s):  
Bijoy Rakshit ◽  
Yadawananda Neog
Keyword(s):  
Educational Attainment ◽  
Tertiary Education ◽  
Dynamic Panel Data ◽  
Crime Rates ◽  
Economic Crime ◽  
Dynamic Panel ◽  
Indian States ◽  
Content Type ◽  
The Impact

PurposeThe primary purpose of this paper is to empirically investigate the impact of educational attainment on crime rates across 33 Indian states over the period 2001 to 2013. This paper also examines the role of various macroeconomic, socio-economic and demographic factors in determining the variation of crimes in India.Design/methodology/approachFirst, this paper provides a representative theoretical model and discusses the possible relationship between crime and education. Second, the paper applies a dynamic panel data (DPD) model to extract more precise, unbiased and reliable estimates of the effect of education in abating different crime rates. The main advantage of using the dynamic panel model is to address the problem of endogeneity in some regressors and capture the time persistent effect of education on crime.FindingsEmpirical findings reveal that a 1% increase in gross enrolment ratio leads to the reduction of total crime by 8%. However, a unique finding identifies a positive association between tertiary education and economic crime. This finding further goes against the general belief that criminals tend to be less educated than non-criminals.Practical implicationsThis paper recommends that instead of punishment and mandatory law enforcement for offenders, increase in government expenditure and different educational attainment ratios can go a long way to combat crime in India, which has posed a serious threat to the stability of society. Furthermore, utilizing the information on offenders' educational attainment in examining the crime rates can be a future research agenda for policymakers.Originality/valueThis study contributes to the empirical debate of ‘crime-education nexus’ by examining the role of education on crime in India. This study is the first of its kind that focuses on the aspects of crime and education more recently and investigates the relationship between crime and education due to the recent changes in educational attainment ratios and crime rate.

scholarly journals THE ROLE OF BANKS AND SECURITIES MARKETS IN THE POST-TRANSITION ECONOMIES OF EASTERN EUROPE

2020 ◽  
Author(s):  
Sasho Arsov
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Eastern Europe ◽  
Banking Sector ◽  
Positive Impact ◽  
Financial Sector ◽  
Securities Markets ◽  
Positive Role ◽  
The Impact

Economic theory predicts that the development of the financial sector should have a positive impact on the overall economic development. Research has predominantly confirmed this expectation, with the remark that at earlier stages of economic development this impact should be higher, while a disproportionate banking sector has detrimental effect on growth through its impact on attracting highly skilled workforce, increased presence of moral hazard and the associated banking crises. This issue has been studied only occasionally in the case of the former socialist economies of Central and Eastern Europe and the former USSR. This paper represents an attempt to analyze the impact of the banking sector and securities markets development on the economic growth of these countries. A sample of 22 countries is assembled, using data from 1995 to 2018 and a panel regression and a GMM technique are used to derive conclusions on the researched topic. The analysis has shown that the banking sector has played a positive role in the economic growth throughout the analyzed period, while the role of the stock market is not significant. This is in line with the previous studies which have confirmed that the positive role of the securities markets should be expected only at higher levels of economic development. Also, the impact of the overall financial sector is deemed to be positive.

Determinants of bank profitability: evidence from 47 Asian countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdulazeez Y.H. Saif-Alyousfi
Keyword(s):  
Opportunity Cost ◽  
Banking Sector ◽  
Balance Sheet ◽  
Asian Countries ◽  
Dynamic Panel ◽  
Bank Profitability ◽  
Content Type ◽  
Estimation Techniques ◽  
Demand Deposits ◽  
The Impact

PurposeThe paper examines the effect of bank-specific, financial structure and macroeconomic factors on the profitability of banks in Asian economies during 1995–2017.Design/methodology/approachIt uses the data of 2,446 banks across 47 Asian countries between 1995 and 2017 (41,582 year observations). The static and dynamic panel generalized methods of moments (GMM) estimation techniques are applied.FindingsThe results show that banks that are highly dependent on nontraditional activities have lower net interest revenue and net interest margin but higher return on assets, return on equity and profit before tax. Higher opportunity cost, capitalization, demand deposits and market risk result in a better bank profits. Furthermore, banks with higher loan exposure and growth have more profit. However, nonperforming loans have negative and significant impact on bank profitability. Asian banks do not suffer from diseconomies of scale and scope. The author also finds that banks located in countries with high gross domestic product, inflation rates and high rates of interest or in financially developed economies offer better profits. High credit to the private sector reduces the bank profitability. This study finds evidence to support the structure-conduct-performance (SCP) hypothesis. It also provides evidence that the impact of financial turmoil on the profitability of the Asian banking sector is negative and significant and has severely weakened the Asian banking system.Originality/valueAs Asia has become an important economic area and the Asian topic has not earned enough discussions, this paper is the first to examine Asian banks with the latest and a wider range of panel data that cover 2,446 banks at 47 Asian countries over the period 1995–2017. The present study is among the first to address the influence of financial turmoil on bank profitability in this region. It also studies new variables, such as demand deposits, opportunity cost and off-balance sheet activities, which have not been examined in relation to bank profitability. It also applies both static techniques and dynamic panel estimation techniques to analyze the data.

Impact of internal and external CSR on organizational performance with moderating role of culture: empirical evidence from Chinese banking sector

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdul Waheed ◽  
Qingyu Zhang ◽  
Abaid Ullah Zafar ◽  
Hashim Zameer ◽  
Muhammad Ashfaq ◽  
...  
Keyword(s):  
Organizational Performance ◽  
Banking Sector ◽  
Content Type ◽  
Managerial Implications ◽  
Corporate Social ◽  
The Impact ◽  
The Relationship ◽  
Moderating Role ◽  
Chinese Banking

PurposeThis study investigates the impact of corporate social responsibility (CSR) on organizational performance, especially competitive performance (CP) along with moderating role of the organizational culture (OC) from the banking sector of China. Drawing on the stakeholder theory, the first goal is to examine the relationships between CSR and organizational CP. Second, the purpose is to evaluate the moderation of OC between the relationship of CSR and CP, respectively.Design/methodology/approachSEM using SmartPLS was majorly engaged to ascertain the relationship and to inquire the assumed hypotheses. The convenience sampling was engaged to collect the data from the Chinese banking market with the help of students, colleagues and personal visits.FindingsThe findings exhibited that CSR both external and internal CSR has significant correlations on organizational CP within banking sector of China. Second, the findings revealed a positive moderation influence of OC between the relationships of CSR and organizational CP. The comprehensive analysis of each factor of CSR on organizational CP was autonomously inspected to understand the insights which ensure that how the incorporation of CSR and OC activities may improve organizational CP.Research limitations/implicationsThis study faces numerous limitations related to sample and geographic locations that assure new work possibilities for researchers across the world.Practical implicationsThis study equips insightful information for management on how organizations can obtain CP by consolidating CSR and OC activities as their more productive strategic tools. This article endows with potential theoretical and managerial implications with empirical addition to concerned literature of OC, CSR and organizational CP.Social implicationsUnderstanding OC and CSR activities can provide interesting and helpful insights for the personnel to perform well within the banking institutes.Originality/valueThe topic of CSR and culture has been known as the evolving concept that is getting strong concern for the researchers. The additional work particularly empirical is yet required to explore the insights on CSR and OC themes worldwide, especially in developing nations.

Competition law and policy for the EU banking sector in a period of increased economic uncertainty

2012 ◽  
Vol 54 (4) ◽  
pp. 284-301 ◽  
Author(s):  
Ilias Kapsis
Keyword(s):  
Banking Sector ◽  
Government Support ◽  
Bank Failures ◽  
The European Union ◽  
Content Type ◽  
Regulation And Supervision ◽  
The Impact ◽  
State Aids

PurposeThe purpose of this article is to discuss the long‐term impact of the current financial and economic crisis on competition in the European Union (EU) banking sector.Design/methodology/approachThe article first discusses the long term role of competition in the banking sector, commenting on policy developments prior to the crisis. Then the impact of the crisis is discussed focusing on two main areas of policy state: aids and bank regulation and supervision. The article culminates with the conclusions.FindingsThe main findings about state aids are that the efforts of the Commission to ensure that aided companies would not use the government support to distort competition seem to be working. However, given that the full impact on competition of these aids may take years to be felt, the Commission should be prepared to take action where necessary to ensure that competition will be protected. The provision of state aids could not have been avoided due to the grave systemic risks associated with bank failures. In respect of regulation and supervision, the article concluded that there is a lot of work to be done in this area to ensure that mistakes that led to the crisis will not be repeated but also that there is need for the Commission to ensure that the reforms to the regulatory and supervisory architecture do not occur at the expense of competition.Originality/valueThe article contains proposals about policy adjustments, thus contributing to the ongoing debate about the role of competition policy in the efforts to address the impact of the crisis.

scholarly journals The impact of banking sector development on economic growth: Comparative analysis of Ukraine and some EU countries

2021 ◽  
Vol 18 (2) ◽  
pp. 193-208
Author(s):  
Nadiya Rushchyshyn ◽  
Olha Mulska ◽  
Yuliia Nikolchuk ◽  
Mariia Rushchyshyn ◽  
Taras Vasyltsiv
Keyword(s):  
Economic Growth ◽  
Banking Sector ◽  
Principal Component ◽  
Causality Analysis ◽  
Eu Countries ◽  
Banking Sector Development ◽  
Reverse Relationship ◽  
The Stability ◽  
The Impact

The effective functioning of the banking sector has a key impact on the stability of economic growth. The study is aimed at monitoring the banking sector development and identifying causality between the banking sector and economic growth. The methodological tools of the research are Principal component analysis, causal relationship, and vector regression modeling. The empirical study is based on the World Bank databank by eight components (for integral analysis) and seven indicators (for causality analysis). The study presents an improved algorithm for monitoring the level of banking sector development based on calculating the integral coefficient. According to assessment, the level of banking sector development and realization of its potential in Ukraine is low and significantly inferior to the EU countries; in 2000–2019, the development of the banking sector in Ukraine was 0.061-0.153. The results obtained confirmed the large discrepancy in the development of Ukraine’s banking sector with some EU countries (the highest lag values were observed with the Czech Republic and Poland). The causality analysis revealed a strong favorable relationship between the level of development of the banking sector in Ukraine and GDP per capita (0.796), a moderate one – with foreign direct investment (0.400), and a reverse relationship with the level of national poverty (0.678). This study is of practical value for identifying two possible trajectories of a country’s development, namely, sustainable development and economic turbulence, and has allowed forming a conceptual vision of the role of the banking sector in achieving social and economic goals.

The role of infrastructure on economic growth in belt and road participating countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mui-Yin Chin ◽  
Sheue-Li Ong ◽  
Chew-Keong Wai ◽  
Yee-Qin Kon
Keyword(s):  
Economic Growth ◽  
Capital Expenditure ◽  
Panel Cointegration ◽  
Infrastructure Development ◽  
Content Type ◽  
Long Run ◽  
Belt And Road ◽  
The Impact ◽  
Determinants Of Economic Growth

Purpose This study aims to delve deeply into the role of infrastructure on economic growth in 59 belt and road initiative (BRI) participating countries from various regions of the world as the main objective of BRI is to encourage the participating countries to improve investment and trade facilitation via infrastructure. Besides, the development of infrastructure is in line with the United Nations’ 2030 sustainable development goals (SDG). Design/methodology/approach This study encompasses all of the important physical infrastructure factors to compute a composite infrastructure index. Thereafter, this study used both the panel cointegration and the panel Granger causality tests to investigate the impact of the infrastructure index and other essential factors on economic growth. Findings The empirical results signify the importance of infrastructure development on economic growth in both the long-run and short-run. Besides, it is evident that capital, expenditure on health and education, as well as exports, will accelerate economic growth. Originality/value The findings of this study could contribute to the literature regarding BRI in two ways. First, it will provide insight to the policymakers of China and the BRI participating countries on whether infrastructure development is worthy of huge investment so as to enhance the success of the BRI. Second, the outcome of this study will give policymakers a better understanding of the determinants of economic growth, which, in turn, will help them in designing effective policies.

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