The operational risk disclosure practices of banks: evidence from India and Romania

2019 ◽  
Vol 14 (2) ◽  
pp. 61-87
Author(s):  
Muneesh Kumar ◽  
Harshmeeta Kaur Soni ◽  
Mihaela Mocanu
Keyword(s):  
Operational Risk ◽  
Risk Disclosure

scholarly journals The Role of Operational Risk Management in Performance of Banking Sector: A Study on Conventional & Islamic Banks of Pakistan

2018 ◽  
Vol 6 (1) ◽  
pp. 1-16
Author(s):  
Muhammad Yasran Rasheed ◽  
Asif Saeed ◽  
Ammar Ali Gull
Keyword(s):  
Financial Institutions ◽  
Asset Management ◽  
Banking Sector ◽  
Operational Risk ◽  
Risk Disclosure ◽  
Return On Equity ◽  
Equity Ratio ◽  
Ratio Spread ◽  
Operational Activities ◽  
The Impact

Operational risk has a great impact on the functions of financial institutions. As the complexity and size of firms in increasing, it also enhancing the operations risk in more harmful ways. If a firm is not able to perform its operational activities properly, then it is not possible for banks to get high profitability ratio. Firstly, the operational risk has not achieved the greater importance but with the passage of times all financial institutions have come to know that it is very important for all institutions to cover up the rate of risk in financial operations. By selecting 15 banks (Islamic & Commercial Banks) from the year 2007 to 2011 focused on the internal factors of the banks which are mostly affected by the operational risk. Regression and correlation methods are used to evaluate the impact of Return on Asset, Debt/Equity Ratio, Spread Ratio, Capital Ratio and Asset management on the Return on Equity. The empirical results are shown that the awareness regarding operations risk has greater impact on the management of operational risk. Results are also shown that the operational risk disclosure also vary among different banks.

Risk reporting appraisal in post-revolutionary Tunisia

2018 ◽  
Vol 16 (4) ◽  
pp. 522-542 ◽  
Author(s):  
Wael Hemrit
Keyword(s):  
Corporate Governance ◽  
Liquidity Risk ◽  
Operational Risk ◽  
Risk Information ◽  
Risk Disclosure ◽  
Board Size ◽  
Content Type ◽  
Tunisian Revolution ◽  
The Impact ◽  
Risk Reporting

Purpose This paper aims to investigate the determinants of operational and liquidity risk reporting for the Tunisian insurance and banking sectors after the outbreak of the Tunisian revolution on 14 January 2011. Design/methodology/approach A manual content analysis approach was used to measure risk disclosure by counting the number of risk-related words within risk-related sentences in a wide range of publications. Findings The results show that operational risk disclosure is associated positively with operational losses frequency, institution size and the proportion of independent non-executive members of the board of directors. Also, board size is found to be negatively associated with risk disclosure. Moreover, net stable funding ratio, size and proportion of independent non-executive members have a positive effect on liquidity risk disclosure. The authors also discover that infrequency of board meetings and the presence of young members on the board increase the extent of liquidity risk information. Research limitations/implications The research focuses on a small number of observations which somewhat restrict the generalization of results to the entire class of financial sector in Tunisia. Also, the qualitative character of some supposed explanatory variables (frequency and severity of operational risk) relies heavily on the experiences of interviewees and their basic perceptions. Practical implications Investors might do well to rely on such characteristics (large board size, less active board and a high proportion of non-executive directors) to predict the disclosure of risk information, either operational or liquidity risk. Board members should keep an eye on reporting on risk, by promoting the success keys of governance, because good corporate governance has to be recognizable at first to be an effective value driver. Originality/value The findings rationalize the debate over the impact of improved corporate governance on risk disclosure practices within the context of the Tunisian revolution. The logic of this rationalization may help to promote political incentives that will encourage a risk management culture based on a dynamic communication framework.

scholarly journals Readability of Operational Risk Disclosures of Banks

2019 ◽  
Vol 14 (3) ◽  
pp. 108-116 ◽  
Author(s):  
Mocanu Mihaela ◽  
Grose Christos ◽  
Kargidis Theodoros
Keyword(s):  
Financial Institutions ◽  
Commercial Banks ◽  
Textual Analysis ◽  
Banking System ◽  
Operational Risk ◽  
Risk Disclosure ◽  
Financial Firms ◽  
Risk Disclosures ◽  
Technical Terms

AbstractOperational risk has been acknowledged as a major source of material failures in financial firms. Despite the increased concern of financial institutions and their stakeholders on this topic, the literature that deals specifically with the operational risk disclosure in the banking system is scarce. The present research investigates the readability in transparency reports of Romanian banks, and focuses in particular on the operational risk disclosures. The sample consists of 13 commercial banks operating in Romania in 2017. A concise transparency report is characterized by clarity in the expression of concepts, usage of as few words as possible, limited use of technical terms and avoidance of highly generic disclosures. Drawing upon prior research, we expect that banks with lower levels of performance are foggier (i.e. less concise) in order to improve the image resulting from their transparency reports. Additionally, it is expected that the longer an entity has been established, the higher the quality of disclosures, thus the transparency reports of older banks are more concise compared to the recently established banks. Moreover, we posit that larger banks are more likely to provide more readable reports. The research is part of the larger debate related to disclosure and its various impacts on both the recipient and the giver of information. The main contribution is the innovative approach consisting in the textual analysis of transparency risk reports. To the best of our knowledge, we are not aware of any study that examined conciseness in the setting of operational risk disclosure by banks.

scholarly journals ANALISIS TINGKAT PENGUNGKAPAN RISIKO OPERASIONAL BANK UMUM SYARIAH PERIODE 2015-2019

2021 ◽  
Vol 8 (5) ◽  
pp. 655
Author(s):  
Reza Rahmania Putri ◽  
Dian Filianti
Keyword(s):  
Firm Size ◽  
Supervisory Board ◽  
Operational Risk ◽  
Sampling Technique ◽  
Coefficient Of Determination ◽  
Islamic Banking ◽  
Company Size ◽  
Risk Disclosure ◽  
Purposive Sampling ◽  
Analysis Technique

ABSTRAKPenelitian ini bertujuan untuk menginvestigasi pengaruh dari Dewan Pengawas Syariah (DPS), efisiensi, profitabilitas, dan ukuran perusahaan secara simultan dan parsial terhadap pengungkapan risiko operasional pada perbankan syariah di Indonesia. Metode yang digunakan adalah metode kuantitatif. Teknik analisis data akan menggunakan analisis statistik deskriptif, analisis regresi data panel, koefisien determinasi (R2), serta uji F dan uji t. Teknik penentuan sampel yang digunakan adalah teknik purposive sampling. Hasil penelitian ini menunjukkan bahwa ukuran perusahaan, profitabilitas, efisiensi, jumlah anggota DPS dan frekuensi rapat DPS secara simultan berpengaruh signifikan terhadap pengungkapan risiko operasional. Secara parsial, ukuran perusahaan dan frekuensi rapat Dewan Pengawas Syariah berpengaruh positif dan signifikan, sedangkan efisiensi berpengaruh negatif dan signifikan. Profitabilitas dan jumlah anggota Dewan Pengawas Syariah tidak berpengaruh signifikan terhadap pengungkapan risiko operasional. Penelitian ini memberikan kontribusi terhadap pengetahuan mengenai keputusan pengungkapan risiko operasional perbankan syariah dan dapat menjadi rujukan bagi akademisi, pemerintah, investor syariah, dan stakeholders perbankan syariah dalam mengetahui indikator-indikator yang mempengaruhi pengungkapan risiko operasional perbankan syariah.Kata Kunci: risiko operasional, Dewan Pengawas Syariah, efisiensi, profitabilitas, ukuran perusahaan. ABSTRACTThis study aims to investigate the effect of the Sharia Supervisory Board, efficiency, profitability, and firm size simultaneously and partially on operational risk disclosure in Islamic banking in Indonesia. The method used is a quantitative method. The data analysis technique will use descriptive statistical analysis, panel data regression analysis, coefficient of determination (R2), as well as F test and t test. The sampling technique used is purposive sampling technique. The results of this study indicate that company size, profitability, efficiency, number of members of the Sharia Supervisory Board and the frequency of meetings of the Sharia Supervisory Board simultaneously have a significant effect on operational risk disclosure. Partially, company size and frequency of Sharia Supervisory Board meetings have a positive and significant effect, while efficiency has a negative and significant effect. Profitability and the number of members of the Sharia Supervisory Board have no significant effect on the disclosure of operational risk. This research contributes to knowledge about decisions on disclosure of Islamic banking operational risk and can be a reference for academics, government, sharia investors, and sharia banking stakeholders in knowing the indicators that affect the disclosure of Islamic banking operational risks.Keywords: Operational Risk, Sharia Supervisory Board, Efficiency, Profitability, Firm Size.

Operational Risk Disclosure Practices in Emerging Economies

2020 ◽  
pp. 172-195
Author(s):  
Harshmeeta Kaur Soni ◽  
Muneesh Kumar
Keyword(s):  
Risk Management ◽  
Operational Risk ◽  
Risk Disclosure ◽  
Management Framework ◽  
Operational Risks ◽  
Risk Management Framework ◽  
Reserve Bank ◽  
Indian Banks ◽  
New Guidelines ◽  
Risk Disclosures

Risk disclosures provide an insight into the risk management policies and practices adopted by institutions and are useful in assessing the risk for various stakeholder groups. With the increasing incidence and complexity of operational risks in banks, it is imperative for banks to establish and follow suitable operational risk disclosure practices. The chapter attempts to examine the operational risk disclosure practices and the impact of bank specific characteristics on disclosure practices among Indian banks. Findings indicate disclosure levels to be inadequate, showing an insignificant improvement over the years. Bank profitability and depositor confidence significantly impact disclosure practices. The authors suggest that Indian banks should enhance their current operational risk disclosure levels to communicate to the stakeholders about the strength of their operational risk management framework. The Reserve Bank of India may issue new guidelines with respect to minimum disclosure requirements on operational risk to improve the quality of disclosures.

Basel disclosure by private and public sector banks in India: assessment and implications

2016 ◽  
Vol 24 (4) ◽  
pp. 453-472
Author(s):  
Prodyot Samanta ◽  
Mohinder Dugal
Keyword(s):  
Public Sector ◽  
Operational Risk ◽  
Banking Regulation ◽  
Capital Adequacy ◽  
Regulatory Regime ◽  
Exploratory Research ◽  
Risk Disclosure ◽  
Content Type ◽  
Public Sector Banks ◽  
Private And Public

Purpose The aim of this paper is to assess the nature and characteristics of regulatory risk management reporting by private and public sector banks in India. Design/methodology/approach Using a sample of 38 banks, a content analysis of their Basel II disclosure reports for the year 2012-2013 is examined. Findings The assessment shows that while the majority of the disclosure across banks focuses on credit risk and capital adequacy ratios, the total quantity of disclosure varies significantly across banks. Of the three broad risk categories (market, credit and operational), operational risk disclosure is the least, with minimal to no disclosure on several key aspects of operational risk, suggesting that operational risk issues are likely to emerge as an area of concern among Indian banks. Further, for the sector as a whole, the authors observe that asset size and net income are positively correlated with the quantity of regulatory disclosure and negatively correlated with the variation of this disclosure, suggesting a possible precautionary behavior on the part of larger and more profitable banks toward excessive scrutiny by the regulators and a regulatory regime in which no institution is too big to fail. Originality/value As an exploratory research article to address the characteristics of regulatory disclosure of private and public sector banks in India, it is informative, particularly for those working in the area of banking regulation and compliance. Areas for further research are suggested.

scholarly journals Corporate Governance and Operational Risk Disclosure: Evidence from Shariah-Compliant Companies in Malaysia

2021 ◽  
Vol 16 (3) ◽  
pp. 31-53
Author(s):  
Nurhafiza Mohammad ◽  
◽  
Rina Fadhilah Ismail ◽  
Saunah Zainon ◽  
Juliana Mohd Abdul Kadir ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Significant Relationship ◽  
Information Disclosure ◽  
Audit Committee ◽  
Operational Risk ◽  
Women Directors ◽  
Risk Disclosure ◽  
Governance Practices ◽  
Education Levels ◽  
The Relationship

This study aimed to examine the level of operational risk disclosure among Shariah-compliant companies in Malaysia. The relationship between corporate governance characteristics and operational risk disclosure was also examined by focusing on board characteristics, i.e. independent directors, audit committee meetings, Muslim directors, women directors and education levels of the directors. The sample comprised of 285 Shariah-compliant companies listed in the ACE Market of Bursa Malaysia for the financial years 2014 to 2018. The study used content analysis to assess operational risk disclosure. The information disclosure was scored using an adapted disclosure index. Findings revealed that the disclosure of operational risk information in Shariah-compliant companies was at a moderate level, specifically not more than sixty per cent. More importantly, the analysis showed a positive significant relationship between a woman director and operational risk disclosure. However, a negative significant relationship was found between Muslim directors and operational risk disclosure. Other independent variables were found to have no relationship with the operational risk disclosure. The findings may provide future researchers and regulators with references for assessing the level of operational risk disclosure among public listed companies in Malaysia and are expected to deliver some improvement in examining other characteristics to strengthen the governance practices in Malaysia. Keywords: operational risk disclosure, women director, Muslim director, Shariah-compliant companies

Sign in / Sign up

Export Citation Format

Share Document