Country-level sustainability and cross-border banking flows

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sureyya Burcu Avci ◽  
Gözde Sungu-Esen
Keyword(s):  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Developed Countries ◽  
Least Square ◽  
Real Sector ◽  
Content Type ◽  
The Real ◽  
Cross Border ◽  
Country Level ◽  
The Impact

Purpose This paper aims to investigate the association between country-level sustainability scores and cross-border bank-to-non-bank flows within countries. Design/methodology/approach The authors analyze cross-border banking flows into the real sector firms of 26 developed countries from 2006 to 2017. The authors use a dynamic panel ordinary least square along with an instrumental variable and a generalized method of moments regressions to test the relationship between country-level sustainability scores and cross-border banking flows. Additionally, the authors apply Fama-MacBeth cross-sectional regression and non-parametric portfolio tests to obtain robust results. Findings The impact of country-level sustainability scores on cross-border banking flows is positive and significant. This finding is consistent with the signaling theory, which states that a country’s sustainability score is a signal to attract more international fund flows. Notably, the authors deduce that environmental sustainability is more important than the social and governance pillars. Practical implications The findings indicate that the real sector firms located in countries having higher sustainability scores can receive more international bank flows. Consequently, policymakers should focus more on country-level sustainability investments to improve the financing of resident firms. Social implications Policymakers should focus more on country-level sustainability investments to improve the financing of resident firms. Originality/value To the best of the authors’ knowledge, no existing study has investigated the signaling function of country-level sustainability scores in the cross-border banking flow conjecture. By investigating this relationship for real sector firms, this study portrays how the non-banking sector can benefit from such a policy that promotes sustainable practices at the country level.

The effect of corruption on FDI and its modes of entry

2019 ◽  
Vol 11 (2) ◽  
pp. 232-250 ◽  
Author(s):  
Hiep Ngoc Luu ◽  
Ngoc Minh Nguyen ◽  
Hai Hong Ho ◽  
Vu Hoang Nam
Keyword(s):  
Time Windows ◽  
Generalized Method Of Moments ◽  
Least Square ◽  
Least Square Estimator ◽  
Content Type ◽  
Gmm Estimator ◽  
Empirical Results ◽  
Cross Border ◽  
Greenfield Investments ◽  
The Impact

Purpose The purpose of this paper is to empirically investigate the impact of corruption on foreign direct investment (FDI) and its two major modes of entry: greenfield investment (greenfield) and cross-border mergers and acquisitions (M&As). Design/methodology/approach Data are collected from 131 countries. Modern econometric techniques, including the generalized method of moments (GMM) estimator, two-stage least square estimator and two-step system GMM estimator, are used to evaluate the impact of corruption on FDI activities. Findings The empirical results illustrate that corruption is a deterioration factor that significantly hinders FDI inflows. However, this finding turns out to be contradictory when the two major components of FDI – greenfield investment and cross-border M&As – are separately examined. Specifically, while corruption consistently discourages cross-border M&As over time, it appears to exert positive effect on greenfield investments. Originality/value This is among the first to empirically examine the impact of corruption on FDI and its modes of entry in a number of countries spanning different time windows. In this sense, this paper also captures the changing nature of societies and economic conditions overtime and, therefore, enable academic researchers, policy-makers and business practitioners to draw broad inferences from the empirical results.

Reducing the Risks of the Financial Sector to Ensure Sustainable Growth of the Russian Еconomy

2019 ◽  
Vol 12 (3) ◽  
pp. 86-92
Author(s):  
T. I. Minina ◽  
V. V. Skalkin
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Financial Sector ◽  
Developed Countries ◽  
Sustainable Growth ◽  
Necessary Condition ◽  
Real Sector ◽  
Financial Instruments ◽  
The Real ◽  
The Impact

Russia’s entry into the top five economies of the world depends, among other things, on the development of the financial sector, being a necessary condition for the economic growth of a developed macroeconomic and macro-financial system. The financial sector represents a system of relationships for the effective collection and distribution of economic resources, their deployment according to public demand, reducing the risk of overproduction and overheating of the economy.Therefore, the subject of the research is the financial sector of the Russian economy.The purpose of the research was to formulate an approach to alleviating the risks of increasing financial costs in the real sector of the economy by reducing the impact of endogenous risks expressed as financial asset “bubbles” using the experience of developed countries in the monetary policy.The paper analyzes a macroeconomic model applied to the financial sector. It is established that the economic growth is determined by the growth and, more important, the qualitative development of the financial sector, which leads to two phenomena: overproduction in the real sector and an increase in asset prices in the financial sector, with a debt load in both the real and financial sectors. This results in decreasing the interest rate of the mega-regulator to near-zero values. In this case, since the mechanisms of the conventional monetary policy do not work, the unconventional monetary policy is used when the mega-regulator buys out derivative financial instruments from systemically important institutions. As a conclusion, given deflationally low rates, it is proposed that the megaregulator should issue its own derivative financial instruments and place them in the financial market.

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.

Does the origin matter? The effects of cross-border mergers and acquisitions in France

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Federico Carril-Caccia
Keyword(s):  
Foreign Direct Investment ◽  
Mergers And Acquisitions ◽  
Direct Investment ◽  
Developed Countries ◽  
Emerging Countries ◽  
Intangible Asset ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
The Impact

PurposeThe present article analyses the effects of cross-border mergers and acquisitions (CBM&As) on targets' total factor productivity (TFP), employment, wages and intangible-asset investment. The author investigates whether the impact of CBM&As differs depending on the origin of the investing multinational (MNE). The author distinguishes between CBM&As from European countries, other developed countries and emerging countries.Design/methodology/approachThe author makes use of a unique firm-level data set of foreign direct investment in the French manufacturing sector. The authors applies propensity score matching and difference in differences to estimate the effect of CBM&As.FindingsThe results show that the consequences of CBM&As differ strongly depending on the origin. CBM&As from European MNEs have a positive impact on TFP, wages and intangible-asset investment, and those from emerging countries seem to increase wages and intangible-asset investments. In contrast, CBM&As that originate from MNEs from other developed countries do not have a significant effect.Originality/valueThis article contributes to the growing literature on the effects of foreign direct investment that highlights the relevance of accounting for the MNEs' origin. In particular, it is the first to address the impact of emerging-country MNEs' CBM&As in Europe.

IPO initial return in Pakistan: influence of country-level institutional quality

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Waqas Mehmood ◽  
Rasidah Mohd-Rashid ◽  
Abd Halim Ahmad ◽  
Ahmad Hakimi Tajuddin
Keyword(s):  
Stock Exchange ◽  
Significant Risk ◽  
Institutional Quality ◽  
Political Stability ◽  
Least Square ◽  
Cross Sectional ◽  
Content Type ◽  
Country Level ◽  
Initial Return ◽  
The Impact

PurposeThe present study investigated the influence of country-level institutional quality on IPO initial return using World Bank Governance indices.Design/methodology/approachThis study analysed 84 IPOs listed on Pakistan Stock Exchange between 2000 and 2017 using cross-sectional data. The impact of country-level institutional quality on IPO initial returns was examined using ordinary least square, robust least square, stepwise least square and quantile regression.FindingsEmpirically, the values of political stability, government effectiveness and regulatory quality were positively significant, whereas rule of law and control of corruption were negatively significant in explaining the intensity of IPO initial return. The results also show the presence of significant risk in the market. Hence, investors were compensated with higher initial returns for weak country-level institutional quality. The results also reveal that improving country-level institutional quality would improve the financial market transparency, thereby reducing IPO initial returns.Originality/valueNo studies have been conducted regarding the influence of country-level institutional quality on IPO initial return in Pakistan. This study is a pioneering study that seeks to give insights into the link between these variables in the context of Pakistan.

СОВРЕМЕННЫЕ ТЕНДЕНЦИИ И ПЕРСПЕКТИВЫ РАЗВИТИЯ БАНКОВСКОГО СЕКТОРА

2021 ◽  
Author(s):  
A.A. Mussina ◽  
M.A. Svyatova ◽  
А.А. Мусина ◽  
М.А. Святова
Keyword(s):  
Financial Market ◽  
Banking Sector ◽  
Integrated Approach ◽  
Real Sector ◽  
The Real ◽  
Current Trends ◽  
The World ◽  
State Of The Economy ◽  
Banking Business ◽  
The Impact

The state of the economy in any country determines the level of development of banking, since these two areas are directly interconnected and interdependent. This was confirmed again in 2020-21, when the world was hit by a pandemic associated with Covid19, which led to a fall in the economies of the countries of the world and, accordingly, to restrictions on the activities of all spheres, including the banking sector. The banking statistics of recent years characterize a rather tense situation in the industry, which cannot but arouse interest in studying both the causes and possible consequences not only for the banking business, but also for the economy as a whole. Despite the fact that in 2020 the banking sector of Kazakhstan showed a positive result, it is impossible to make an optimistic conclusion about a favorable situation in the banking business. It is necessary to pay attention to the importance of such an integrated approach due to the fact that recently there is often a one-sided interpretation of a commercial bank as a financial intermediary, which infringes on its role as a producer of loans, which are one of the main banking products. The bank, as a credit provider, has recently begun to lose its position in terms of its target direction in the real sector, reorienting itself to profitable and risky areas. The consequences of such a policy are felt, first of all, on the general state of the economy, the lag in the development of the real sector, and the outstripping growth of the financial market, which is disconnected from real projects. The article presents the results of a study conducted to assess the impact of current trends in the development of the banking sector on the prospects of the banking activities in Kazakhstan. Состояние экономики в любой стране определяет уровень развития банковской деятельности, поскольку эти две сферы непосредственно взаимосвязаны и взаимообусловлены. Это еще раз подтвердилось в 2020-21 годах, когда на мир обрушилась пандемия, связанная с Covid19, приведшая к падению экономик стран мира и, соответственно, к ограничениям деятельности всех сфер, в том числе банковского сектора. Статистика банковской деятельности последних лет характеризует достаточно напряженную ситуацию в отрасли, что не может не вызывать интереса к исследованию как причин, так и возможных последствий не только для банковского бизнеса, но и для экономики в целом. Несмотря на то, что за 2020 год банковский сектор Казахстана показал положительный результат, нельзя сделать оптимистичный вывод о благоприятной ситуации в сфере банковского бизнеса. Следует обратить внимание на важность такого комплексного подхода в связи с тем, что в последнее время часть встречается однобокая трактовкакоммерческого банка как финансового посредника, ущемляющая его роль как производителя кредитов, являющихся одними из главных банковских продуктов. Банк, как поставщик кредита, в последнее время стал терять свои позиции в части его целевого направления в отрасли реального сектора, переориентировавшись на прибыльные и рисковые направления. Последствия такой политики ощутимы, в первую очередь, на общем состоянии экономики, отставании развития реального сектора, опережении темпов роста финансового рынка, оторванного от реальных проектов. В статье приведены результаты исследования, проведенного с целью оценки влияния текущих трендов развития банковского сектора на перспективы банковской деятельности в Казахстане.

Does the country’s religion affect the financial performance of conventional and Islamic banks? Comparative study in the international framework

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Achraf Haddad ◽  
Achraf Haddad
Keyword(s):  
Financial Performance ◽  
Generalized Method Of Moments ◽  
Developed Countries ◽  
Emerging Countries ◽  
Islamic Banks ◽  
Governance Mechanism ◽  
Content Type ◽  
Conventional Banks ◽  
The Impact ◽  
Conventional And Islamic Banks

Purpose The purpose of this study is to compare the impact of religion on the financial performance of conventional and Islamic banks in the framework of stakeholders’ theory. Design/methodology/approach Few studies have focused on studying the impact of religion on banking performance. Although religion represents an external governance mechanism for financial institutions, by using the generalized method of moments (GMM), this topic constitutes a research opportunity. The already modeled variables are collected from 76 countries located on 5 continents. The data were collected from DATASTREAM, banks’ annual reports, WIKIPEDIA and World Bank. It concerns 210 banks of each type during the period (2010–2020). Findings The author retained that religion negatively affects the financial performance of both conventional and Islamic banks. More specifically, results showed that religion affected the liquidity and solvency of two bank types. It also affected conventional banks’ profitability and efficiency of conventional banks. Research limitations/implications I summarized the theoretical contribution in the integration of a new original governance category to enhance its presence with impacts directly affecting the banks’ financial performance. Empirically, the study can be seen as a compass for all stakeholders to consider environmental, behavioral and doctrinal factors in studying the financial performance evolution and to become more competitive in the banking market. Originality/value Although conventional banks located in developed countries are different from those existing in emerging countries and Islamic banks located in developed countries are different from those existing in emerging countries, I carried out a diversified study in the global context. Referring to the comparative literature review between conventional and Islamic banks, the study was the first conditional research that compared the impacts of religion on the financial performance of conventional and Islamic banks.

The role of technical efficiency, market competition and risk in the banking performance in G20 countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yaoteng Zhao ◽  
Supat Chupradit ◽  
Marria Hassan ◽  
Sadaf Soudagar ◽  
Alaa Mohamd Shoukry ◽  
...  
Keyword(s):  
Technical Efficiency ◽  
Economic Performance ◽  
Banking Sector ◽  
Market Competition ◽  
Generalized Method Of Moments ◽  
Content Type ◽  
Banking Institutions ◽  
Sector Performance ◽  
The Impact ◽  
Risk Element

PurposeRecently, the financial sector has faced significant challenges regarding the market competition, its technical efficiency and risk factors around the globe and gain recent researchers' intentions. Thus, the present study aims to examine the impact of technical efficiency, market competition and risk in banking performance in Group of Twenty (G20) countries.Design/methodology/approachData have been obtained from the World Development Indicator from 2008 to 2019. For analysis purpose, random effect model and generalized method of moments (GMMs) have been executed using Stata.FindingsThe results revealed that market competition and banks' capital efficiency have a positive impact on banking performance, while banks' lending efficiency and non-performing loans have a negative association with the banking sector performance of G20 countries. These outcomes provide the guidelines to the regulators that they should formulate the effective policies related to the lending practices and non-performing loans that could improve the banking sector performance worldwide.Research limitations/implicationsThe study has examined only three economic factors like the technical efficiency rate, market competition and risk element, and their influences on banking institutions' operational and economic performance. But the analysis has proved that except these factors, several factors affect banking institutions' operational and economic performance. Thus, future scholars recommend they analyze all the banking sector areas, pick more factors and enlighten their operational and economic performance influences. Moreover, the author of this article has chosen a particular source for collecting data to meet his study's objective. Only a single piece of software has been applied to analyze data; thus, the data collected for this paper may be incomplete, lack accuracy and reliability. Therefore, the future authors are recommended to use multiple sources to collect data and its analysis to ensure the comprehension, completeness and accuracy.Originality/valueLast but not least, this study with the evidences from the banking sector of G20 countries tries to show on the banking management how the risk element matters in the banking sector in an economy. It makes it clear in which areas the banking institutions may be exposed to the risks, and how much sever different kinds of risks may be. Thus, it motivates the management to set a body of persons within the organization to monitor the risks, to try to avoid them and to overcome the problems created by these risks events.

Do corporate bond recovery rates monitored by corporate governance mechanisms?

2016 ◽  
Vol 42 (8) ◽  
pp. 830-848
Author(s):  
Mehdi Mili ◽  
Sami Abid
Keyword(s):  
Corporate Governance ◽  
Generalized Method Of Moments ◽  
Corporate Bonds ◽  
Corporate Bond ◽  
Firm Level ◽  
Recovery Rates ◽  
Content Type ◽  
Country Level ◽  
The Impact ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between corporate governance (CG) and firms’ bond recovery rates (RRs). The authors hypothesize that governance features impact RRs by controlling agency costs that result from conflicts between bondholders and shareholders. The authors also test the relationship between CG and RRs during the last crisis. Design/methodology/approach – The authors use a generalized method of moments regression model to test the relationship between CG and firms’ bond RRs. The authors employ a direct measure of recoveries rates from Moody’s ultimate recovery database covering the period from 2003 to 2012. Both firm-level CG and country-level variables are used to examine the determinants of corporate bonds RRs. Findings – The results support a significant impact of CG mechanisms on bond RRs mainly during crisis period. The authors find that firms operating with CEO-Duality decrease their bond RRs during financial crisis. This implies wealth transfers from bondholders to shareholders and provides one explanation why some firms operate with weak governance. Originality/value – This paper provides the first direct evidence that corporate bond RRs are directly related to CG mechanisms. The authors combine firm-level CG and country-level variables to examine the determinants of corporate bonds RRs. Earlier studies focussed on financial firm-level data and macro-economic variables. The authors also test the impact of board composition and ownership structure on bond recoveries.

scholarly journals The impact of Islamic banking model and Islamic financial development on bank performance: evidence from dual banking economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tanveer Ahsan ◽  
Muhammad Azeem Qureshi
Keyword(s):  
Financial Development ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Country Level ◽  
Conventional Banks ◽  
The Impact

Purpose The purpose of this study is to develop an Islamic Banking Index representing the Islamic banking model and to investigate its impact on the performance of Islamic and conventional banks. This study also analyzes the impact of Islamic financial development on bank performance. Design/methodology/approach The authors collected the data from 23 countries for the period from 2010 to 2018 and developed a composite Islamic Banking Index. The authors applied the generalized method of moments on 3,542 bank-year observations for both Islamic and conventional banks to analyze the impact of the Islamic Banking Index on bank performance. The results of the study are robust to time-fixed effects, country-level time-varying factors and endogeneity issues. Findings The authors found that Islamic Banking Index positively contributes to the return on assets (ROAit) of Islamic banks only. This impact becomes highly significant in countries with comparatively higher Islamic financial development. This finding suggests that the Islamic financial development in a country provides a supportive operating environment to Islamic banks and increases their performance. The authors also found that Islamic Banking Index positively contributes to the return on equity (ROEit) of both types of banks. Practical implications The authors argue that moving away from interest-based products and focusing more on diversified portfolios can boost the performance of both types of banks without increasing their risk levels. Originality/value To the best of the authors’ knowledge, this is the first study that develops a composite Islamic Banking Index based on differentiating factors of the Islamic banking model and investigates the impact of Islamic Banking Index and Islamic financial development on bank performance.

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