scholarly journals Business efficiency of the commercial banks in ASEAN

2016 ◽  
Vol 13 (1) ◽  
pp. 67-76 ◽  
Author(s):  
Abdul Mongid
Keyword(s):  
The Philippines ◽  
Capital Adequacy ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Business Efficiency ◽  
Personnel Expenses ◽  
Cost Inefficiency ◽  
Asean Countries ◽  
The Cost ◽  
Asset Size

This study examines the determinants of cost inefficiency of banks operating in 8 member countries of the Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines, Cambodia, Brunei and Vietnam. The author defines the cost inefficiency using accounting based efficiency known as business efficiency (CIR). Second, the researcher regresses the cost inefficiency ration on a set of bank specific variables (size, equity to total asset, personnel expenses to total expenses) and economic variables (economic growth and inflation rate) using ordinary least squared (OLS) regression analysis. The dataset of 504 banks in the ASEAN countries is used for the period from 2008 to 2012. The results show that the average cost inefficiency ratio during the period is about 59%. Banks from Vietnam exhibit the lowest cost inefficiency relative to banks in the other ASEAN countries. It is found that cost inefficiency is positively determined by inflation, loan loss provision, personnel expenses, capital adequacy and negatively by asset size and liquidity position

scholarly journals Characteristics of banks as determinants of profit management for Islamic and conventional banks in ASEAN

Accounting ◽  
2021 ◽  
pp. 1179-1188 ◽  
Author(s):  
Suripto Suripto ◽  
Supriyanto Supriyanto
Keyword(s):  
Discriminant Analysis ◽  
Earnings Management ◽  
Capital Adequacy ◽  
Multiple Discriminant Analysis ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Brunei Darussalam ◽  
Capital Adequacy Ratio ◽  
Asean Countries ◽  
Conventional Banks

This study aims to analyze company characteristics as a determinant of conventional and Islamic bank earnings management in several ASEAN countries (Association of South East Asian Nations). The Multiple Discriminant Analysis was applied to determine the differences between Islamic and Conventional Banks. This test was conducted based on Capital Adequacy Ratio, Income Before Tax and Interest, Non-Performing and Changing Loans, and Company's Size in the banks of Indonesia, Malaysia, and Brunei Darussalam from 2014 to 2018. The data obtained from 200 banking entities were analyzed discriminatively. The results showed that there were simultaneous differences between Capital Adequacy Ratio, Earnings Before Tax, Loan Loss Provision, Non-Performing and Changing Loans, and Company's Size as determinants of earnings management between Islamic and conventional banks. Also, it was found that Company's Size was the dominant variable determining the management differences. Based on Discriminant Analysis, there were significant differences in the determinants of conventional and Islamic earnings management. The Changing Loan variable showed the highest contribution in determining earnings management in Islamic banks. Overall, this study found that conventional banks dominated Islamic system in practicing earnings management.

scholarly journals ON THE NEXUS BETWEEN RISK TAKING AND PROFITABILITY: EVIDENCES FROM INDONESIA

2017 ◽  
Vol 18 (2) ◽  
Author(s):  
Abdul Mongid ◽  
Muazaroh Muazaroh
Keyword(s):  
Risk Taking ◽  
Total Risk ◽  
Loan Loss ◽  
Paper Test ◽  
Two Stage ◽  
Loss Reserve ◽  
Bank Rate ◽  
Cost Inefficiency ◽  
The Cost ◽  
Asset Size

This paper test interrelationship between risk taking and profitability (ROAA) using two stage regression. We study 150 bank sample for 2008-2014 from Indonesia. Instrumented variable is total risk taking (RT) and the instruments are asset size, equity to total asset, loan asset ratio, loan loss reserve, efficiency, liquidity. For macroeconomic variables, we use economic growth, Central bank -rate (CBDR) and inflation rate (CPI). We find a positive relationship between risk taking (RT) and bank profitability (ROAA). Further, the relationship between risk taking (RT) and profitability (ROAA) is endogenous. The result confirms that bank's motivation to take more risk is to earn higher profit. In addition, capital ratio is negative to risk taking (RT) and profitability (ROAA). Interestingly, credit risk taking is negative due to the high correlation with a problem loan (LLRGL). The cost inefficiency is negative to bank’s profitability. Finally, for improving profitability, bank’s manager should manage the operation better such as reducing problem loan and improving cost efficiency as these actions are more effective than taking more risk taking (RT).Keywords: Risk Taking; Profitability; Two-Stage Regression; Macroeconomic; Indonesia.

scholarly journals The Ef ciency and Inef ciency of the Banking Sectors: Evidence From Selected ASEAN Banking

2018 ◽  
Author(s):  
abdul.mongid
Keyword(s):  
Economic Growth ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Economic Variable ◽  
Loan Loss ◽  
Frontier Analysis ◽  
Loan Loss Provision ◽  
The Cost ◽  
Asset Size ◽  
Loan Losses

This paper examines the cost ef ciency of banks operating in selected countries of the Association of Southeast Asian Nations (ASEAN). We calculate the cost ef ciency base on accounting ef ciency and economic ef ciency using Stochastic Frontier Analysis (SFA) and then classify it as ef cient and not. Further, bank speci c and economic variables are combined to determine the cost ef ciency and the ef ciency category (ef ciency dummy) using linear regression and logistic regression. The results show that bank ef ciency determined by asset size, dummy of economic crisis, interest rate gap, economic growth, in ation, capital, earning assets and loan losses provision. Only capital, earning asset and loan loss provision are consistent for accounting and economic ef ciencies. For economic variable, economic growth and in ation rate are only signi cant in the accounting ef ciency. The result implied that ASEAN banking should continue to consolidate the asset size and the authority should create high economic growth and a low in ation environment to make their banking industry more ef cient.

scholarly journals The Relationship Between Credit Risk Management Practices And Profitability In Malaysian Commercial Bank`S

2019 ◽  
Vol 8 (5C) ◽  
pp. 53-59
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Management Practices ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Loan Loss ◽  
Commercial Activity ◽  
Loan Loss Provision ◽  
Loan Loss Provisions

This research scope looks into credit risk management and its effect on a specific group of banks with intensive commercial activity within Malaysia. Yearly reports from 8 different banks that rely on secondary data gathered from the span of 3 years (2015-2017), form the essence of this research. Return on assets (ROA) was primarily used in this research to measure profitability. Also, two credit risk measuring methods were used, loan loss provisions ratio (LLPR) and ratio of capital adequacy (CAR). From the results we deduced that commercial bank's profitability related positively to capital adequacy ratio and loan loss provision ratio. Therefore, the research calls upon the need of new management structure that optimally keep credit risk in check and boost banks profitability.

scholarly journals The Determinants of Banks’ Profitability under Basel Regulations: Evidence from Lebanon

2016 ◽  
Vol 8 (10) ◽  
pp. 206 ◽  
Author(s):  
Iktimal Abdel Reda ◽  
Husam Rjoub ◽  
Ahmad Abu Alrub
Keyword(s):  
Capital Adequacy ◽  
Loan Loss ◽  
Short Term ◽  
Net Charge ◽  
Loss Reserve ◽  
Loan Loss Provision ◽  
Net Interest Margin ◽  
Lower Extent ◽  
Negative Effect ◽  
Asset Quality

The purpose of this study is to shed some lights on the determinants of banks’ profitability operating in Lebanon. Through applying Panel “EGLS period SUR” technique, for the period spans from 2000 to 2015. We have used a set of micro factors that might affect the banks’ profitability such as; asset quality, liquidity, and capital adequacy, on a sample of twenty four banks operating in Lebanon. Net Interest Margin (NIM) has been used to measure the profitability. The results indicate that most positive powerful effects on NIM are Equity to Liability, and Interest rate on Deposits (on Average), and to a lower extent Loan Loss Reserve to Impairment Loans, the Impaired Loans to Equity, Liquid Assets to Total Deposits and Borrowings, whereas, Capital Funds to Liability, loan loss provision to net interest revenue, are the most significant but with a negative effect; and to lower extent Net charge Off to Average gross loans, Net loans to deposits and short term borrowing affect the NIM negatively. Our findings revealed that banks perform better when they maintain higher level of equity relative to their Liabilities, and then can achieve a higher level of profitability.

scholarly journals ANALISIS INCOME SMOOTHING PADA PERBANKAN ISLAM NEGARA-NEGARA TELUK DI TIMUR TENGAH

2017 ◽  
Vol 6 (2) ◽  
pp. 55-64
Author(s):  
Prima Shofiani
Keyword(s):  
Income Smoothing ◽  
Capital Adequacy ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Capital Adequacy Ratio

Penelitian ini bertujuan menguji income smoothing menggunakan loan loss provision (LLP) pada perbankan Islam. Sampel penelitian ini adalah bank-bank Islam negara-negara Teluk Timur Tengah. Variabel dependen dalam penelitian ini adalah loan loss provision (LLP) dan variabel independen adalah total pembiayaan, non performing finance (NPF) dan capital adequacy ratio (CAR). Analisis data menggunakan regresi data panel dengan EViews 7. Hasil penelitian menunjukkan bahwa non performing finance (NPF) berpengaruh positif terhadap LLP. Total pembiayaan tidak berpengaruh positif terhadap loan loss provision (LLP) dan capital adequacy ratio (CAR) tidak berpengaruh positif terhadap loan loss provision (LLP).   Kata Kunci: loan loss provision (LLP), Income smoothing, Bank Islam

scholarly journals Examining the contributing factors of bank profitability in south Asian countries

2019 ◽  
Vol 6 (5) ◽  
pp. 01-12
Author(s):  
Naseem - Ashraf ◽  
Qurra Tul Ain Butt
Keyword(s):  
Research Design ◽  
Banking Sector ◽  
Financial Sector ◽  
Capital Adequacy ◽  
Loan Loss ◽  
Poor Growth ◽  
Bank Profitability ◽  
Loan Loss Provision ◽  
Effect Model ◽  
The Impact

Purpose: Using panel data approach in Pakistani banking sector for 7 year time period from 2010 to 2016, the aim behind this study was to examine the bank specific, industry specific and macroeconomic determinants of bank profitability Research Design: Quantitative research design has been employed with OLS, random effect model and fixed effect model, moreover regression and correlation analysis has been used in this study Findings: Rise in NPLs ratio, Loan loss provision, inflation and exchange rate reduces the profitability of banks while increase in market power, bank size, capital adequacy enhance the profitability Practical Implication: The deleterious impact of different indicators on profitability of banks shows that distressed banking sector can cause hindrance in not only growth of financial sector but can also cause the poor growth of economy. Outcomes of the study emphasis on the need of clear-out of NPLs to keep financial sector sound as NPLs cause high loan loss provision which effect the capitalization of banks that ultimately effect the economic growth of financial as well as other sectors of economy. Banking supervisory agencies should pay attention towards banking monitory policies and banks macroeconomic policies Originality/value: This study examine the impact of all three types of indicator (Bank specific, industry specific and macroeconomic) on banks profitability by employing latest data from 2010 to 2016 in which major reforms were held in banking industry of Pakistan because there exist rare studies with all three types of variables with latest figures

scholarly journals Stress Testing of the Montenegrin Banking System with Aggregated and Bank-Specific Data

2014 ◽  
Vol 3 (2) ◽  
pp. 85-119
Author(s):  
Sanja Vuković
Keyword(s):  
Stress Testing ◽  
Management Practices ◽  
Banking Sector ◽  
Stress Test ◽  
Banking System ◽  
Capital Adequacy ◽  
Loan Loss ◽  
Aggregated Data ◽  
Loan Loss Provision ◽  
Capital Adequacy Ratio

Abstract There are many different approaches to the process of stress testing and two of them will be investigated in this paper. The first one is a stress test performed on aggregated data i.e. the banking system as a whole. The variable of interest in both exercises is the Loan Loss Provision ratio (hereinafter: the LLP). The main goal of the thesis is to find an answer to the following question: what are the macroeconomic variables that influence LLP the most and how will LLP, as a variable of interest, behave in a situation when all these variables were to experience negative performance at the same time? The resilience of the banking system to such scenario will be tested through the capital adequacy ratio. In order to find out more about the management practices of banks, microlevel data on banks were also used in the analysis. The focus was to see which of the variables are able to explain the LLP ratio for each bank individually and how is this information helpful for possible improvements in the banking sector. The relations between these variables will be able to explain some of the banks’ losses and some of the banks’ practices regarding credit activities. The analysis there will provide for some recommendations for the banks but also for the Central Bank and its way to influence the practices in the banking sector.

scholarly journals Factors Affecting the Loan Loss Provision in Vietnamese System of Commercial Banks

2014 ◽  
Vol 222 ◽  
pp. 89-106
Author(s):  
Hiền Nguyễn Thị Thu ◽  
Tuấn Phạm Đình
Keyword(s):  
Commercial Banks ◽  
Financial Risk ◽  
Capital Adequacy ◽  
Loan Loss ◽  
Factors Affecting ◽  
Loan Loss Provision ◽  
Loan Loss Provisions ◽  
Capital Adequacy Ratio ◽  
Loan Risk ◽  
Theoretical Evidence

Establishing loan loss provisions may affect bank’s profitability and capital adequacy ratio. The paper employs regression analysis to explore operations of loan loss provisions in Vietnamese commercial banks in 2008-2012 in its relationship with bank characteristics. The results show that loan loss provisions of Vietnamese commercial banks are positively related to size and proportion of bad debt and negatively related to financial risk ratio. The paper provides theoretical evidence of the opportunism in selection of accounting policy concerning loan risk management by Vietnamese bank managers.

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