The Effects of Ownership Structure on Borrowing Rate: The Case of Listed Iranian Companies

2021 ◽  
pp. 097639962097253
Author(s):  
Sajad Ebrahimi
Keyword(s):  
Interest Rates ◽  
Ownership Structure ◽  
Stock Exchange ◽  
Banking System ◽  
Dynamic Panel Data ◽  
Financial Repression ◽  
Panel Data Regression ◽  
The Difference ◽  
The Government ◽  
Using Data

The Iranian banking system engages in financial repression, and there are legal restrictions on interest rate. However, micro-evidence shows that the interest rates paid by Iranian firms in this condition are different across firms. This article aims to investigate the roots of the difference in borrowing rates by exploring the effects of the borrowers’ ownership structure and bank–firm relationship features. Using data collected from companies listed in the Tehran Stock Exchange (TSE) for the period 2007–2016, empirical models are estimated through applying the dynamic panel data regression method. According to the estimation results, the presence of an institutional stockholder, and particularly banks, among a firm’s shareholders can generally reduce its borrowing rate. Moreover, the results show that the financing rate is significantly lower in the firms with more than 20 per cent of their shares owned by the government. In addition, the findings suggest that borrowers of unhealthy banks, in terms of non-performing loans (NPL), bear a higher finance rate.

scholarly journals PENGARUH STRUKTUR KEPEMILIKAN DAN UKURAN (SIZE) PERBANKAN TERHADAP KINERJA PERBANKAN 2009-2014

2018 ◽  
Vol 8 (2) ◽  
pp. 101-111
Author(s):  
Henny Ritha
Keyword(s):  
Panel Data ◽  
Data Processing ◽  
Ownership Structure ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Term Survival ◽  
Panel Data Regression ◽  
Data Regression ◽  
The Government

The ownership structure and size is an important part of long-term survival of banking industry, both of which can affect  the quality of manager (agent) to manage a bank, and encourage shareholders (principals) to manage banking operations in order to improve the performance of the banking system.This study is conducted to analyze the effect of Ownership Structure and size of banks on banks performance. Both Ownership structure which is represented by Institutional Ownership and Managerial Ownership and.size are independend variables, with Return On Equity is used as a proxy for performance valuation. This study used 6 samples of banks listed in Indonesian Stock Exchange for the period 2009-2014. Technique analysis used panel data regression analysis with Microsoft Excel 2003 data processing and Eviews.8. From the results of the panel data processing, the Common Effect Model approach is obtained as the best model for estimating panel data regression model. The research proves that managerial ownership and banks size  have significant impact on banks performance, meanwhile institutional ownership has no significant impact on banks performance. Simultaneously, the three variables have a significant effect and contributed 63.07 percent to the banks performance in Indonesian Stock Exchange from 2009 to 2014, meanwhile the remaining 36,93 percent is  influenced by other variables.Researcher suggests prolonging the research period, extending the sample criteria and increasing the ownership structure of foreign ownership, the government and society as well as adding the variable of Price Earning Ratio (PER) as a proxy for banking performance.

Consumers’ choice of the services of Islamic banks in dual banking system

2020 ◽  
Vol 13 (5) ◽  
pp. 935-947
Author(s):  
Abdul Quadir
Keyword(s):  
Interest Rates ◽  
Optimization Technique ◽  
Banking System ◽  
Islamic Banks ◽  
Content Type ◽  
Demand Functions ◽  
The Difference ◽  
The Government ◽  
Conventional Banks ◽  
Classical Economic

Purpose The purpose of this study is to examine how the Islamic banks fix their mark-up for Murabaha contract strategically when traditional banks also co-exist in a country. This study also aims to investigate what role the varying degree of Iman (faith) plays in shaping the preferences of the consumers to choose between the services of Islamic banks and the traditional banks. Design/methodology/approach This paper constructs a mathematical model like the Bertrand competition in neo-classical economic theory. A religiosity parameter for the consumers has been inserted into their demand functions for their products. A simple optimization technique from mathematics has been used to arrive at the results. Findings This paper applies game theory to analyze how Islamic banks determine their mark-up when they are facing competition with traditional banks. It considers the demand functions of the consumers for the products of Islamic banks and traditional banks. The demand functions depend on the mark-up, as well as on the interest rate with the difference that they also depend on the religiosity of the consumers. The paper shows that Islamic, as well as the conventional banks charge lower prices for their loans if there is consideration of religiosity aspect of the consumers. Further, it shows that as religiosity increases in a country, the lending rates decrease. The theoretical result is also consistent with the real practices of the banks. Therefore, the dual banking system is welfare enhancing for the customers. Research limitations/implications The Islamic banks can leverage the religiosity aspect of the consumers and expand their business competitively by charging them lower mark-up. The adherence of religious customers to the services of Islamic banks creates some kind of loyalty premium for them. This could lead to the reduction of mark-up price triggering competition between both types of banks to attract more customers. Therefore, it is prudent for the government to develop a system for furthering the quality of honesty that is an integral part of Islam. Originality/value To the best of author’s knowledge, this is the first paper where it has been analyzed theoretically how the Islamic banks determine their mark-up for Murabaha contract strategically. This approach explains why the rate of return of Islamic banks hinges on the interest rates of traditional banks. One of the novel feature of this paper is that religiosity character of the consumer is good for banks because religiosity prohibits the people to default on their loans.

scholarly journals Reforming LIBOR and Other Financial Market Benchmarks

2015 ◽  
Vol 29 (2) ◽  
pp. 191-212 ◽  
Author(s):  
Darrell Duffie ◽  
Jeremy C. Stein
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
Banking System ◽  
Economic Role ◽  
News Reports ◽  
Legal Risks ◽  
The Difference ◽  
The Interest Rate ◽  
Orderly Transition

LIBOR is the London Interbank Offered Rate: a measure of the interest rate at which large banks can borrow from one another on an unsecured basis. LIBOR is often used as a benchmark rate— meaning that the interest rates that consumers and businesses pay on trillions of dollars in loans adjust up and down contractually based on movements in LIBOR. Investors also rely on the difference between LIBOR and various risk-free interest rates as a gauge of stress in the banking system. Benchmarks such as LIBOR therefore play a central role in modern financial markets. Thus, news reports in 2008 revealing widespread manipulation of LIBOR threatened the integrity of this benchmark and lowered trust in financial markets. We begin with a discussion of the economic role of benchmarks in reducing market frictions. We explain how manipulation occurs in practice, and illustrate how benchmark definitions and fixing methods can mitigate manipulation. We then turn to an overall policy approach for reducing the susceptibility of LIBOR to manipulation before focusing on the practical problem of how to make an orderly transition to alternative reference rates without raising undue legal risks.

Transformation of the Ecuadorian financial system: regulation and response

2015 ◽  
Vol 23 (1) ◽  
pp. 84-102 ◽  
Author(s):  
Luisa Ana Unda ◽  
Julie Margret
Keyword(s):  
Interest Rates ◽  
Development Strategy ◽  
Initial Conditions ◽  
Political Process ◽  
Banking System ◽  
Financial System ◽  
Reform Process ◽  
Motivating Factors ◽  
Content Type ◽  
The Government

Purpose – The aim of this study is to analyse the transformation of the Ecuadorian financial system using the regulatory dialectic approach (Kane, 1977). This research examines the initial conditions and motivating factors of the reform process, as well as the interplay between government and bankers during the period 2007-2012. Design/methodology/approach – Kane’s regulatory dialectic suggests that regulation of financial institutions is a series of cyclical interactions between opposing political and economic forces. Three main stages are identified: thesis (measures and regulatory actions), antithesis (avoidance/lobby against those reforms) and synthesis (adaptive reregulation resulting from the interaction between interest groups). Findings – Since 2007, the government focused on regulating interest rates, developing a liquidity fund for banking emergencies, increasing taxation and restricting international capital flows. These government initiatives took place against a background of conflicting interests. Private bankers opposed the majority regarding them as burdensome new rules, rather than enlightened reforms. Publicly, these reforms as intended by the government were seemingly supported. Finally through the political process, they were approved. To date, these reforms have strengthened the financial system, produced encouraging social policy results and placed the financial sector to serve the government’s development strategy. Originality/value – Using Kane’s notion of regulatory dialectic, we explain the process of financial reform in Ecuador as part of a cyclical interaction between opposing forces. Drawing on this framework enabled insight into the nature of government intervention. Hence, we show how that intervention affected the growth, development and structure of the banking system.

scholarly journals PERAN DANA PIHAK KETIGA DALAM MEMEDIASI PENGARUH NET INTEREST MARGIN TERHADAP PERTUMBUHAN KREDIT PADA PERBANKAN YANG GO PUBLIC DI BURSA EFEK INDONESIA

2020 ◽  
Vol 21 (1) ◽  
pp. 51
Author(s):  
Pristin Prima Sari ◽  
Ardian Prima Putra
Keyword(s):  
Interest Rates ◽  
Stock Exchange ◽  
Bank Lending ◽  
Third Party ◽  
Bank Credit ◽  
Process Data ◽  
Credit Growth ◽  
Net Interest Margin ◽  
The Government ◽  
Interest Margin

AbstractsThe study found empirical proof the role of third party funds (DPK) mediate the influence of net interest margin (NIM) on bank credit growth listed in Indonesia Stock Exchange on 2015-2018. The study uses data from the bank�s annual financial statements. The Study covers 22 commercial banks resulting in 88 bank-year observations. Research using Smartpls 3.0 statistical tools to process data and path analysis to compute data. The results obtained are third party funds (DPK) that can positively mediate the influence of net interest margin (NIM) on credit growth. The greater DPK create the profitability of bank interest rates increases bank credit growth. Partially Net interest margin (NIM) and third party funds (DPK) can increase bank credit growth. Net interest margin (NIM) also can increase the amount of third party funds (DPK). This study is useful for bank management to make decisions on determining bank margins, obtaining third party funds (DPK) and credit, for the government for study and mapping materials related to bank lending and the amount of bank interest rates, for further research is for reference material related to factors affecting lending.Keywords : Net Interest Margin, Third Party Fund, Credit, IDX

scholarly journals ANALISIS PENGARUH FAKTOR INTERNAL DAN EKSTERNAL TERHADAP PENGAMBILAN SAHAM PERBANKAN BUMN YANG TERDAFTAR DI BEI PERIODE 2010-2014

2020 ◽  
Vol 6 (2) ◽  
pp. 167
Author(s):  
Sanuri Sanuri ◽  
Desta Rizky Kusuma
Keyword(s):  
Interest Rates ◽  
Stock Returns ◽  
Stock Exchange ◽  
Hypothesis Test ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Panel Data Regression ◽  
Capital Adequacy Ratio ◽  
Data Regression ◽  
Independent Variable

This study aims to determine the influence of factors internal and external to the return of registered banking shares Indonesia Stock Exchange in 2010-2014. The population in this study were 4 BUMN bank companies registered in Indonesia Stock Exchange period 2010-2014 sampling techniques used is purposive sampling. obtained by 4 state-owned bank companies included in the independent variable criterion studied is Return On Assets (ROA), Capital Adequacy Ratio (CAR), Inflation Rate, and Rate of Interest Interest and the dependent variable studied is stock returns. Analysis Techniques used is Panel Data Regression and Hypothesis test using t-test. The results showed that both variables were simultaneously independent Return On Asset (ROA) has no effect on stock returns Partially the variables of the four independent variables are Return On Assets (ROA), Capital Adequacy Ratio (CAR), Inflation and Interest Rates are only Inflation and Interest rates that have a significant effect on stock returns. R-square value 33.42%.

User Interface and Firsthand Experience in Retail Investing

2020 ◽  
Author(s):  
Li Liao ◽  
Zhengwei Wang ◽  
Jia Xiang ◽  
Hongjun Yan ◽  
Jun Yang
Keyword(s):  
Interest Rates ◽  
Time Pressure ◽  
Credit Ratings ◽  
Loan Default ◽  
Slowing Down ◽  
Physical Attributes ◽  
Per Se ◽  
The Difference ◽  
Using Data ◽  
Firsthand Experience

Abstract Using data from a major online peer-to-peer lending platform, we document that, due to time pressure, investors appear to focus on interest rates and only partially account for credit ratings in their decisions. The effect is stronger for mobile-based investors than for PC-based ones. Our evidence suggests that this variation is caused by the difference in information content on the interfaces rather than differences in the devices’ physical attributes per se. Investors improve their decisions by slowing down and paying more attention to credit ratings after experiencing a loan default firsthand, but not after observing others experiencing defaults.

scholarly journals The Effects of Financial Performance on Stock Returns: Evidence of Machine and Heavy Equipment Companies in Indonesia

2020 ◽  
Vol 11 (6) ◽  
pp. 131
Author(s):  
A. Razak ◽  
Febrian Vingky Nurfitriana ◽  
Desty Wana ◽  
Ramli Ramli ◽  
Ismail Umar ◽  
...  
Keyword(s):  
Financial Performance ◽  
Interest Rates ◽  
Stock Returns ◽  
Stock Prices ◽  
Stock Exchange ◽  
Performance Factors ◽  
Heavy Equipment ◽  
Panel Data Regression ◽  
Data Regression ◽  
Equity Ratio

This study was made to determine the effect of Current Ratio (CR), Total Assets Turnover (TAT), Return on Assers (ROA), Debt to Equity Ratio (DER) on stock returns in the machinery and heavy equipment sub-sector companies listed on the Stock Exchange Indonesia (IDX) in the period 2014 - 2018. Stock returns are calculated based on changes in closing stock prices and estimated influence of financial performance factors using the panel data regression method. Based on empirical findings show that financial performance that has been proxy using; CR, TAT, ROA, and DER do not affect stock returns. The results of the study have implications that the company's financial performance is not an important consideration for investors in the decision to buy shares in the Machinery and Heavy Equipment sub-sector company. In many studies, stock prices are much influenced by macroeconomic variables, such as; exchange rates, inflation, interest rates, and oil prices.

Ownership Structure and Intellectual Capital Performance

2021 ◽  
pp. 203-228
Author(s):  
Siti Rochmah Ika ◽  
Ari Kuncara Widagdo
Keyword(s):  
Intellectual Capital ◽  
Ownership Structure ◽  
Value Creation ◽  
Stock Exchange ◽  
Value Added ◽  
Positive Association ◽  
Foreign Ownership ◽  
Government Ownership ◽  
Family Control ◽  
Panel Data Regression

The objective of this study is to examine the impact of ownership structure on intellectual capital performance. Ownership structure used in this study consists of family control, government ownership, and foreign ownership. Family control was measured by two proxies, namely the number of shares owned by a family and the presence of family on the boards. Meanwhile, this study uses the Value-Added Intellectual Coefficient to measure intellectual capital performance. Ninety-two bank observations listed on the Indonesia Stock Exchange in the period 2013-2016 are used as a sample. Results of panel data regression indicate that the number of shares owned by the family positively associated with VAIC, on the other hand, the presence of families on the boards has no association with IC performance. The result indicates that a high degree of family ownership is likely to encourage managerial incentives to improve value creation activities. Government ownership and foreign ownership are also found to have a positive association with IC performance indicating that state-owned banks and foreign-owned banks in Indonesia tend to focus their attention more towards activities that can increase value creation than privately owned and domestic owned banks. This research provides insight into the role of the business owner to the capital market regulator in scrutinizing the efficiency of value creation activities.

Bank Ownership vs Credit Growth: Empirical Evidence from Vietnamese Commercial Banks

2021 ◽  
Vol 8 (11) ◽  
pp. 32-43
Author(s):  
Nam V. Nguyen ◽  
Ngoc T. Nguyen ◽  
Mai T.T. Ngo
Keyword(s):  
Growth Rate ◽  
Interest Rates ◽  
Commercial Banks ◽  
Growth Management ◽  
Banking System ◽  
Maximum Growth ◽  
Maximum Growth Rate ◽  
Credit Growth ◽  
Bank Ownership ◽  
The Government

This paper is aimed at analyzing the relationship between bank ownership and credit growth of Vietnamese commercial banks. With the data of 20 commercial banks in period 2009-2018 period, the REM method is applied. The key findings are: First, credit growth rate of state-owned commercial banks in Vietnam is higher than of private commercial banks, which is opposite to the expected signal. The main reasons are (i) decision making of state-owned commercial banks on lending are backed by the government, which is more straight-forward than private banks; (ii) State Bank of Vietnam considers credit policy as one of the important monetary policy tools, of which state-owned commercial banks are the key drivers; (iii) state-owned commercial banks have stable and cheap funding sources, which create the good base for expanding credit with cheap interest rates. Second, asset size does not have any impact on credit growth. Credit growth rates are determined by the bank’s overall performance and maximum growth rate set by State Bank of Vietnam, not on assets. Third, the other bank-specific factors are statistically significant with credit growth, of which liquidity and ROA have the strongest influences. Recommendations for better credit growth management of commercial banks include: (i) State Bank of Vietnam and the Government to ensure soundness of the banking system, including applying the Basel II requirements to all banks; and establish more support packages in order to boost the lending activities of privately-owned banks. (ii) Commercial banks to reduce its non-performing loans in order to stimulate the growth in lending. Keywords: bank liquidity, bank ownership, credit growth, non-performing loans, ROA.

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