scholarly journals Nonlinear effect of female board directorship on bank financial soundness

2021 ◽  
Vol 16 (4) ◽  
pp. 22-33
Author(s):  
T. Thanh Binh Nguyen
Keyword(s):  
Financial Stability ◽  
Opposite Effect ◽  
Threshold Model ◽  
Capital Adequacy ◽  
Debt Ratio ◽  
Too Big To Fail ◽  
Female Directors ◽  
Capital Adequacy Ratio ◽  
The Board Of Directors ◽  
Financial Soundness

To verify if female directors on the bank’s board play a role in managing bank stability, this paper applies a multi-threshold model to quarterly data from 26 Taiwanese commercial banks over the 2002–2018 period to find the factors that influence bank financial stability and to examine how female board directorship affects it. The empirical results suggest that women on the board do play a guarding role in a bank’s financial soundness when banks reach a high debt ratio regime. The influence of female directors on the capital adequacy ratio is positive for banks with a debt ratio higher than 92.69%, and for non-performing loans it is positive within the regime of the debt ratio 90.71% ≤ τ < 95.39%.In particular, it has been found that the value of total assets is a factor that positively affects a bank’s financial soundness, which supports the “too big to fail” theory for banks with high total assets and debt ratios. Revenue has the opposite effect on financial soundness when it negatively affects the capital adequacy ratio and positively affects non-performing loans. A larger board size reduces banks’ financial soundness, which is contrary to the higher proportion of women on the board of directors, which generally contributes to the financial stability of the bank.

scholarly journals Jordan Banks Financial Soundness Indicators

2016 ◽  
Vol 4 (3) ◽  
pp. 44
Author(s):  
Imad Kutum ◽  
Khaled Al-Jaberi
Keyword(s):  
Financial Crisis ◽  
Research Paper ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Financial Indicators ◽  
2008 Financial Crisis ◽  
Leverage Ratio ◽  
General Outcome ◽  
Capital Adequacy Ratio ◽  
Financial Soundness

<p><em>The aim of this research paper is to examine the Jordanian banks using financial soundness indicators. This is to establish if Jordanian banks were affected because of the 2007/2008 financial crisis and determine the underlying reasons. The research paper was conducted on 25 banks in Jordan listed in the countries securities exchange. The research methodology used consisted of examining the banks financial records in order to derive four crucial Basel III ratio such as the capital adequacy ratio, the leverage ratio, the liquidity ratio and finally the Total Provisions (As % Of Non-Performing Loans) %. The results revealed that out of the four hypotheses under examination Jordan Banks do not meet Basel financial Indicators for Capital Adequacy Ratio, Jordan Banks does not meet Basel financial Indicators for Liquidity Ratio , Jordan Banks do not meet Basel financial Indicators for Leverage Ratio and Jordan Banks do not meet Basel financial Indicators for Total Provisions (As % Of Non-Performing Loans) ratio. Only one hypothesis was accepted based on the research outcomes. The rest of the hypothesis was rejected since the average trend line did not go below the Basel III required ratio level. The general outcome of the research revealed that Jordanian banks were not affected significantly by the financial crisis.</em></p>

General Outlook on Financial Structure and Capital Adequacy of ISE-30 Companies during Economic Crisis (2008-2009)

2013 ◽  
pp. 1189-1205
Author(s):  
Deniz Umut Erhan ◽  
M. Uğur Akdoğan
Keyword(s):  
Financial Stability ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Capital Inflows ◽  
Smooth Transition ◽  
Balance Sheets ◽  
Structural Problems ◽  
Long Run ◽  
Financial Soundness ◽  
Difficult Challenge

In the simplest terms, economic crises could be recognised as abnormal fluctuations adversely impacting market conditions. Despite subsequent economic recoveries, markets and the financial system remain in a period of significant uncertainty after such crises. The baseline scenario is for balance sheets to strengthen gradually as the economy recovers and as progress is made in addressing structural problems in financial positions. However, substantial downside risks always remain for companies. Even companies with a high “Capital Adequacy Ratio” (CAR) face the difficult challenge of managing a smooth transition to self-sustaining growth while stabilising debt burdens under low and uncertain economic prospects. Without further bolstering of balances sheets, markets remain susceptible to funding shocks that could intensify deleveraging pressures and place further drag on public finances and recovery. Companies have proven resilient to economic turbulence but are vulnerable to a slowdown and face risks in managing sizable and potentially volatile capital inflows. Policy actions need to be intensified to contain risks, address debt burdens, and implement effective and institutional frameworks to ensure financial stability. Based on this perspective and through applying the financial soundness indicators methodology, the financial structures and soundness indicators of the top 30 companies on the Istanbul Stock Exchange (ISE-30) are subjected to an assessment for determining the impact of the global crisis. The short- and long-run credits and non-monetary debit lines of ISE-30 companies are investigated together with the momentum of growth in assets, liabilities, and cash-flow stabilities. The financial soundness of ISE-30 companies is discussed in terms of the “capital-liabilities ratios” performance measure. Finally, the study focuses on long-run economic impacts and the analysis assumes that companies should transition to new levels of capital and liquidity to strengthen their financial stability and sustainability.

scholarly journals Capital adequacy ratio and a bank’s financial stability in Vietnam

2021 ◽  
Vol 16 (4) ◽  
pp. 61-71
Author(s):  
Nguyen Minh Sang
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Generalized Method Of Moments ◽  
Capital Adequacy ◽  
Policy Implications ◽  
Ho Chi Minh City ◽  
Loan Loss ◽  
Control Variables ◽  
Capital Adequacy Ratio ◽  
The Impact

The objective of this study is to provide more empirical evidence on the impact of the capital adequacy ratio, as well as control and micro variables, on the financial stability of commercial banks in emerging markets such as Vietnam. The study analyzes the impact of the capital adequacy ratio on the financial stability of 18 Vietnamese commercial banks in the period 2010–2020 using the Generalized method of moments (GMM) model. Empirical research results show that the capital adequacy ratio has a positive correlation with the financial stability of Vietnamese commercial banks during the study period. Besides, the study also uses control variables such as Profitability through ROA and ROE, Bank Size (SIZE), Loans to Assets Ratio (LTA), Deposits to Assets Ratio (DTA), and Loan Loss Ratio (LLR), to analyze their impact on the financial stability of Vietnamese commercial banks. Based on the above results, the study proposes some policy implications to enhance the financial stability of Vietnamese commercial banks using the capital adequacy ratio and the control variables from the GMM model that are statistically significant. The paper also pointed out four limitations of the study in terms of data, research samples, methods and research models, so that further research can be more complete. AcknowledgmentThe author wishes to acknowledge support from the Banking University of Ho Chi Minh City. This research was made possible thanks to all valuable support from relevant stakeholders.

The impact of the board of directors and the Shariah board on the financial soundness of Islamic banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Afef Khalil
Keyword(s):  
Board Of Directors ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Z Score ◽  
Data Set ◽  
Content Type ◽  
The Board Of Directors ◽  
Financial Soundness ◽  
The Impact ◽  
The Relationship

Purpose The purpose of the study is to examine the relationship between the board of directors (BODs) and the Shariah board (SB) and assess its impact on the financial soundness of Islamic banks (IBs). Design/methodology/approach The authors use a regression model to test the effects of the relationship between the BOD and the SB on the financial soundness of IBs by applying a panel data set of 61 IBs, covering 18 countries from 2008 to 2014. The dependent variable is the Z-score indicator. To test the robustness of the results, the authors use dependent variables other than the Z-score [A rating of Capital adequacy (C), Asset quality (A), Management (M), Earnings (E), Liquidity (L), and Sensitivity (S) (CAMELS)] for 2018. Findings The results show that meetings between directors and SB members significantly reduce the financial soundness of IBs. The relationship between the BOD and the SB increases conflicts of interest and agency costs. However, a representation of the SB at the BOD meetings and vice versa does not affect financial soundness. The Accounting and Auditing Organization for Islamic Financial Institutions and the Islamic Financial Services Board corporate governance standards do not require the presence of the SB representative at the BOD meetings or vice versa, which justifies the results. Practical implications This study attempts to fill gaps in the literature by investigating the impact of meetings between the SB and the BOD on the financial soundness of IBs across the world. The results suggest that the BOD’s frequent interference in the affairs of the SB can have adverse effects on IBs and should be avoided. Originality/value The authors depart from the previous literature by using three new characteristics that link the BOD to the SB. Methodologically, the authors use three new measures to evaluate this relationship and its effect on the financial soundness of IBs. This study is unique because it explores the comparative impacts of the presence of a SB representative at the BOD meetings and a director at the SB meetings and meetings between the two governing boards of IBs.

scholarly journals PENGARUH FIRM SIZE, DEBT RATIO DAN CAPITAL ADEQUACY RATIO TERHADAP PROFITABILITAS

Equity ◽  
2019 ◽  
Vol 18 (2) ◽  
pp. 153
Author(s):  
Diah Suryati ◽  
Fitri Yetti
Keyword(s):  
Firm Size ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Analysis Tool ◽  
Debt Ratio ◽  
Return On Assets ◽  
Independent Variables ◽  
Percentage Points ◽  
Capital Adequacy Ratio ◽  
Statistical Analysis Tool

This study examind the effect of firm size, debt ratio and capital adequacy ratio in the banking companies listed in Indonesia Stock Exchange (IDX) during 2011 - 2014. The methodology in this research is descriptive quantitative by using multiple regression analysis. This model is a statistical analysis tool that is used to describe the effect of independent variables on the dependent variable (partially and simultaneously). In partial results of the study concluded that the profitability of using formulas return on assets, the ratio of financial performance in banking that firm size has a positive and significant impact on profitability. And the debt ratio has a negative and significant impact on the profitability of the banking company. The higher firm size will lead to improved profitability in the banking company, the higher the debt ratio will cause a decrease in the profitability of the banking company. While the capital adequacy ratio has no significant effect on profitability. Simultaneously, the influence of three independent variables on profitability in the banking company is 30.5 percentage points.

scholarly journals The role of corporate governance in reducing the global financial crisis implications in light of the Central Bank of Jordan

2020 ◽  
Vol 15 (3) ◽  
pp. 10-19
Author(s):  
Fouzan AL Qaisi
Keyword(s):  
Financial Crisis ◽  
Central Bank ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Capital Adequacy ◽  
Capital Adequacy Ratio ◽  
Study Results ◽  
Dependent Variables ◽  
The Global Financial Crisis

The study aims to test the role of the measures implemented by the Central Bank of Jordan to reduce the effect of financial crisis on the Jordanian banks, using two independent variables (loans and advances rate, overnight deposit window), which are the actions of the Central Bank of Jordan, and four dependent variables (liquidity ratio, ROA ratio, capital adequacy ratio, non-performing loans ratio), which are financial stability indicators for the banks for six years (2005–2011). To get the study results, these data are measured and analyzed using SPSS (Statistical Package for Social Sciences). It was found that the actions of the Central Bank of Jordan (loans and advances rate, overnight deposit window rate): have a statistically significant impact on the non-performing loans ratio (2005–2011); do not have a statistically significant impact on the capital adequacy ratio (2005–2011); have a statistically significant impact on ROA ratio (2005–2011); do not have a statistically significant impact on the liquidity ratio (2005–2011).

scholarly journals NPAs in Indian Scheduled Commercial Banks: Origination and Impact on Economy

2019 ◽  
Vol 8 (2S6) ◽  
pp. 538-541
Keyword(s):  
Banking Sector ◽  
Global Financial Crisis ◽  
Capital Adequacy ◽  
Credit System ◽  
Secondary Sources ◽  
Root Cause ◽  
Reserve Bank ◽  
Capital Adequacy Ratio ◽  
Financial Soundness ◽  
The Government

Mounting non-performing assets (NPAs) in the Indian banking sector has been drawing the attention of policymakers, economists, academicians, and other stakeholders. More particularly, during the last ten years, the rise in NPAs of banks has sent the alarming bell both to the Reserve Bank of India and the Government. Per a few studies, one of the root cause for the huge and gigantic rise in NPAs is the 2008 global financial crisis besides lending to Priority sector. The necessity of provisions and high funding costs has also caused an increase in NPAs while bringing down the profitability of banks. Hence, the consequent impact of NPA includes poor recycling of funds due to the weak deployment of credit which potentially could thwart the financial soundness of the credit system. Higher NPAs not only shakes the confidence of investors, depositors, lenders, etc., but also imperil liquidity, solvency position, profitability, capital adequacy ratio, and so on. A few measures that are required for management of NPAs like the establishment of monitoring department, reformulation of banks’ credit appraisal techniques, among others. The paper examines the trends of NPAs and the factors responsible for mounting NPAs in the banking sector from non-identical aspects. The use of secondary sources of data from authentic websites of RBI, Finance Ministry, and Banks has been made.

scholarly journals FINANCIAL STABILITY OF ISLAMIC AND CONVENTIONAL BANKS IN BANGLADESH: REVISITING STABILITY MEASURES AND ANALYZING STABILITY BEHAVIOR

2018 ◽  
Vol 3 (2) ◽  
pp. 293-314
Author(s):  
Md Enayet Hossain ◽  
Mahmood Osman Imam
Keyword(s):  
Financial Stability ◽  
Panel Data Analysis ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Z Score ◽  
Panel Regressions ◽  
Capital Adequacy Ratio ◽  
Z Scores ◽  
Conventional Banks ◽  
The Stability

This study intends to assess the relative financial stability of Islamic banks in Bangladesh using three different Z-Scores as financial stability measures, based on a sample of 29 listed commercial banks (23 conventional and 6 Islamic) in Bangladesh over the period 2005-2016. Apart from the existing measure of financial stability, Z-Score, the paper contributes to the literature by developing an alternative Z-Score based on bank’s loan portfolio infection ratio. We first use pair-wise comparison and find that Islamic banks are financially more stable in two stability measures i.e. Z-Score (based on Capital Adequacy Ratio) and Z-Score (based on Infection Ratio). We then perform static (random effects) and dynamic (GMM) panel data analysis. By controlling for bank-specific, industry-specific and macroeconomic variables in the regressions, we find that Islamic banks are financially more stable in 2 panel regressions of Z-Score (based on Infection Ratio). We also find that the presence of Islamic banks increases the stability of all banks in the system including their conventional peers.

Pengaruh Capital Adequacy Ratio (Car) terhadap Return On Assets (Roa) Perbankan Syariah (Studi Kasus: Bank Umum Syariah Devisa di Indonesia Periode 2012-2016)

WADIAH ◽  
2018 ◽  
Vol 2 (2) ◽  
Author(s):  
Khusnul Imamah, Achmad Munif
Keyword(s):  
Exchange Rate ◽  
Capital Adequacy ◽  
Debt Ratio ◽  
Return On Assets ◽  
Capital Adequacy Ratio

Penelitian ini bertujuan untuk mengetahui pengaruh CAR terhadap ROA Bank Umum Syariah Devisa di Indonesia periode tahun 2012-2016. Di dalam Salinan Surat Edaran Otoritas Jasa Keuangan Nomor 10/SEOJK.03/2014 Tentang Penilaian Tingkat Kesehatan Bank Umum Syariah dan Unit Usaha Syariah, parameter yang digunakan adalah capital dan earning. Parameter capital dinilai menggunakan indikator Capital Adequacy Ratio (CAR) dan parameter earning dinilai menggunakan indikator Return On Assets (ROA). Semakin tingginya permodalan suatu bank (CAR), maka kinerja bank (ROA) akan semakin tinggi. Jika dihubungkan dengan teori CAR dan ROA, selama periode tahun 2012-2014 CAR dan ROA Bank Umum Syariah di Indonesia mengalami fluktuasi dan tidak sesuai dengan teori hubungan CAR dan ROA. Perbankan Syariah yang digunakan dalam penelitian memfokuskan pada 4 bank dengan jumlah kantor cabang dalam negeri terbanyak di Indonesia. Dan ke-4 bank tersebut merupakan bank yang terdaftar dalam Bank Umum Syariah Devisa di Indonesia.Penelitian ini berjenis penelitian kuantitatif, yakni penelitian yang disajikan dalam bentuk angka dan statistik. Data yang digunakan adalah data sekunder, yakni data yang sudah tersaji di website masing-masing bank, website Bank Indonesia, dan website Otoritas Jasa Keuangan (OJK). Sampel yang digunakan dalam penelitian ini adalah laporan keuangan publikasi triwulan yang fokus pada laporan rasio keuangan dari masing-masing bank yang menjadi anggota Bank Umum Syariah Devisa di Indonesia periode tahun 2012-2016 sebanyak 80 sampel.Hasil penelitian ini menunjukkan bahwa CAR berpengaruh terhadap variabel ROA dengan nilai thitung 8,276 > ttabel 1,665. H0 : ditolak dan Ha : diterima. Jadi CAR berpengaruh terhadap ROA pada Bank Umum Syariah Devisa dengan nilai kontribusi CAR terhadap ROA sebesar 46,8%. Sebesar 53,2% dipengaruhi oleh faktor lain yaitu Efisiensi Operasional, Financing Debt Ratio (FDR), Non Performing Financing (NPF) dan Exchange Rate (Nilai Tukar). Kata Kunci : Capital Adequacy Ratio (CAR), Return On Assets (ROA), Bank Umum Syariah Devisa

General Outlook on Financial Structure and Capital Adequacy of ISE-30 Companies during Economic Crisis (2008-2009)

2013 ◽  
pp. 163-179
Author(s):  
Deniz Umut Erhan ◽  
M. Ugur Akdogan
Keyword(s):  
Financial Stability ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Capital Inflows ◽  
Smooth Transition ◽  
Balance Sheets ◽  
Structural Problems ◽  
Long Run ◽  
Financial Soundness ◽  
Difficult Challenge

In the simplest terms, economic crises could be recognised as abnormal fluctuations adversely impacting market conditions. Despite subsequent economic recoveries, markets and the financial system remain in a period of significant uncertainty after such crises. The baseline scenario is for balance sheets to strengthen gradually as the economy recovers and as progress is made in addressing structural problems in financial positions. However, substantial downside risks always remain for companies. Even companies with a high “Capital Adequacy Ratio” (CAR) face the difficult challenge of managing a smooth transition to self-sustaining growth while stabilising debt burdens under low and uncertain economic prospects. Without further bolstering of balances sheets, markets remain susceptible to funding shocks that could intensify deleveraging pressures and place further drag on public finances and recovery. Companies have proven resilient to economic turbulence but are vulnerable to a slowdown and face risks in managing sizable and potentially volatile capital inflows. Policy actions need to be intensified to contain risks, address debt burdens, and implement effective and institutional frameworks to ensure financial stability. Based on this perspective and through applying the financial soundness indicators methodology, the financial structures and soundness indicators of the top 30 companies on the Istanbul Stock Exchange (ISE-30) are subjected to an assessment for determining the impact of the global crisis. The short- and long-run credits and non-monetary debit lines of ISE-30 companies are investigated together with the momentum of growth in assets, liabilities, and cash-flow stabilities. The financial soundness of ISE-30 companies is discussed in terms of the “capital-liabilities ratios” performance measure. Finally, the study focuses on long-run economic impacts and the analysis assumes that companies should transition to new levels of capital and liquidity to strengthen their financial stability and sustainability.

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