scholarly journals Does risk culture affect banks’ volatility? The case of the G-SIBs

2017 ◽  
Vol 15 (1) ◽  
pp. 33-43 ◽  
Author(s):  
Daniela Coluccia ◽  
Stefano Fontana ◽  
Elvira Anna Graziano ◽  
Matteo Rossi ◽  
Silvia Solimene
Keyword(s):  
Risk Management ◽  
Financial Stability ◽  
Banking Sector ◽  
Positive Impact ◽  
Risk Indicators ◽  
Survey Method ◽  
Risk Governance ◽  
Alternative Measure ◽  
Risk Culture ◽  
Risk Committee

The recent financial crisis highlights the weaknesses of the traditional measures of risk in the banking sector, as Banking Authorities have missed considering the behavioural aspect of the risk culture, which is an essential tool for the value creation process of risk management (Financial Stability Board, 2014; Carretta et al., 2015; Schwizer, 2013; Guiso, Sapienza and Zingales, 2015), usually measured using the survey method. Our paper addresses a central question: What is an alternative measure of risk that estimates the banking risk-taking behaviour, also considering their risk culture? By analysing a panel of the thirty Global Systematically Important Banks (G-SIBs) from 2006 and 2013, our paper provides empirical evidence that the presence of a Risk Committee, the size of the Risk Committee and the number of the Risk Committee’s meetings have a positive impact on a bank’s volatility. Using multiple regression analysis on panel data, we verify the relationship between the bank asset risk and explicative variables that measure risk governance, banks’ size and traditional banks’ risk indicators. Our study extends the literature by providing evidence that separates RCs as having a significant impact on reducing firms’ volatility and as being an important risk governance tool in the hands of boards. Moreover, given the recent emphasis of regulatory bodies on strengthening the risk management and risk reporting systems of financial firms and the overwhelming trend of firms to form a separate RC, our study responds to the opportunity to investigate this relationship.

scholarly journals RISK GOVERNANCE AND FINANCIAL PERFORMANCE: AN EMPIRICAL ANALYSIS

2020 ◽  
Vol 21 (2) ◽  
pp. 758-768
Author(s):  
Olayinka Erin ◽  
Omololu Bamigboye ◽  
Jonah Arumona
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Positive Impact ◽  
Negative Association ◽  
Independent Directors ◽  
Risk Governance ◽  
Management Research ◽  
Enterprise Risk ◽  
Risk Committee ◽  
Financial Environment

This study examines the influence of risk governance on financial performance of 50 quoted firms in the Nigerian financial sector for the period of five years (2013–2017). Panel data was used to examine how the risk governance variables (Enterprise Risk Management_index, Chief Risk Officer_presence, Board Risk Committee_size, Board Risk Committee_activism, and Board Risk Committee_independence) affects financial performance (Return on Asset). The study reveals empirically that most of the risk governance variables (ERM_index, CRO_presence, BRC_activism, and BRC_independence) have a significant and positive impact on the performance of the firm with the exception of BRC_size which shows a negative association with the financial performance of the studied firms. The study empirically reveals that strong Chief Risk Officer (CRO) presence, effective board risk committee, and inclusion of independent directors in the risk committee will go far in serving as factors that would improve the performance of firms in today’s financial environment. This study made a lot of core findings that contribute to the emerging literatures on risk governance and risk management research.

CONCEPTUALISING RISK CULTURE ON ERM IMPLEMENTATION IN CONSTRUCTION COMPANIES

2020 ◽  
Vol 17 (1) ◽  
pp. 59
Author(s):  
Ching Ching Wong
Keyword(s):  
Risk Management ◽  
Risk Identification ◽  
The Body ◽  
Risk Indicators ◽  
Construction Companies ◽  
Risk Appetite ◽  
Risk Culture ◽  
Risk Treatment ◽  
Managing Risk ◽  
The Relationship

Enterprise Risk Management (ERM) is an effective technique in managing risk within an organization strategically and holistically. Risk culture relates to the general awareness, attitudes and behaviours towards risk management in an organisation. This paper presents a conceptual model that shows the relationship between risk culture and ERM implementation. The dependent variable is ERM implementation, which is measured by the four processes namely risk identification and risk assessment; risk treatment; monitor and consult; communicate and consult. The independent variables under risk culture are risk policy and risk appetite; key risk indicators; accountability; incentives; risk language and internal relationships. This study aims to empirically test the relationship between risk culture and ERM implementation among Malaysian construction public listed companies. Risk culture is expected to have direct effects and significantly influence ERM. This study contributes to enhance the body of knowledge in ERM especially in understanding significant of risk culture that influence its’ implementation from Malaysian perspective.

scholarly journals Impact of Emotional Needs on Intention to Stay and the Mediating Role of Perceived Organizational Support.an Empirical Study of Gen Y Employees’ in the Banking Sector in Malaysia

2019 ◽  
Vol 8 (2S9) ◽  
pp. 86-94
Keyword(s):  
Organizational Support ◽  
Perceived Organizational Support ◽  
Banking Sector ◽  
Positive Impact ◽  
Survey Method ◽  
Emotional Needs ◽  
Intention To Stay ◽  
Gen Y ◽  
Mediating Role

It is anticipated that over the next 10 years, the banking sector would require a workforce of about 200,000. Gen Y employees makes up about 40% of the current workforce in Malaysia. This number is expected to increase to 75% within a relatively short span of time. The present study examined the influence of emotional needs of Gen Y employees towards intention to stay and the mediating role of perceived organizational support. This was a quantitative research that used a survey method. Data was collected from a sample of 470 Gen Y employees in the banking sector in Malaysia. The findings revealed that emotional needs had a significant impact on intention to stay. Perceived organizational support was found to mediate the relationship between the two. The findings have significantly contributed to the advancement of knowledge in the emotional needs and intention to stay of Gen Y employees in the banking sector. The significant and positive impact of emotional needs and perceived organizational support suggests the importance of these factors in retention of Gen Y employees. The paper's primary contribution is that it provides an understanding that emotional needs and the mediating role of perceived organizational support have an impact on improving the intention to stay of Gen Y employees in the banking sector in Malaysia. From the practical implications perspective, organizations need to implement policies and procedures to help lessen employees quitting intentions. The results of this study suggest that organizations can implement policies covering the employee emotional needs and employees’ perception that their work and contributions are valued. With current trends of globalizations and diversity, the finding of this study can be beneficial to improve retention of Gen Y employees in other countries

Maintaining Financial Stability in the Banking Sector

2019 ◽  
pp. 30-48
Author(s):  
Meltem Gurunlu
Keyword(s):  
Risk Management ◽  
Management System ◽  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
Capital Adequacy ◽  
Basel Accords ◽  
Risk Management System ◽  
Strategic Approach ◽  
Global World

Maintaining financial stability in the banking sector through a well-functioning risk management system is a strategic approach in today's global world where the risks have become much more diversified than ever. This chapter was undertaken in order to investigate the risk management topic by focusing on the experiences learned from the banking crises up-to-date and implications of the Basel Accords which outlined capital adequacy standards to prevent such crises. With paying special attention to the case of Turkish banking system, main challenges and possible solutions are also discussed.

scholarly journals FINANCIAL CRISIS, MACROPRUDENTIAL POLICIES AND DEPOSITOR DISCIPLINE

2017 ◽  
Vol 62 (01) ◽  
pp. 5-25 ◽  
Author(s):  
AHMET FARUK AYSAN ◽  
MUSTAFA DISLI ◽  
HUSEYIN OZTURK
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Banking Sector ◽  
Positive Impact ◽  
Bank Performance ◽  
Macroprudential Policies ◽  
Bank Behavior ◽  
Depositor Discipline

This paper examines to what extent macroprudential policies in the Turkish banking sector affected the functioning of depositor discipline. Our results suggest that depositors’ responses for poor bank performance get stronger after the 2008 crisis, when various macroprudential measures were implemented to preserve financial stability. In the aftermath of the crisis, bank behavior toward depositors also alters. Ahead of the crisis, banks did not significantly respond to the discipline exerted by depositors, however, banks begin offering higher rates to curb deposit withdrawals afterwards. Our findings suggest that the implementation of macroprudential tools seem to have a positive impact on financial stability, since, in the post-2008 period, regulatory supervision have been more firmly assisted by the market.

scholarly journals Linkage between satisfaction with colleagues, promotion, nature of work, and three-dimensional organizational commitment

2021 ◽  
Vol 19 (1) ◽  
pp. 127-136
Author(s):  
Arjun Rai ◽  
Prem Bahadur Budhathoki ◽  
Chandra Kumar Rai
Keyword(s):  
Organizational Commitment ◽  
Banking Sector ◽  
Positive Impact ◽  
Ordinary Least Squares ◽  
Three Dimensions ◽  
Survey Method ◽  
Normative Commitment ◽  
Private Bank ◽  
Continuance Commitment ◽  
Bank Employees

Employees’ job satisfaction is a leading factor in determining their organizational commitment. The organizational commitment level affects the employees’ decision to leave or remain in their organization. The banking sector of Nepal has been facing a problem of high employee mobility from one bank to another. In the backdrop of this context, this survey intends to examine the effect of satisfaction with colleagues, promotion, and the nature of work on the three dimensions of organizational commitment using the Ordinary Least Squares model in the context of private bank employees in Nepal. This study used a survey method to collect data from 199 employees working in private banks in Nepal, using a standardized questionnaire. The collected data were coded, entered, and processed in Statistical Package for Social Sciences version 25. The outcomes of the study – satisfaction with the colleagues, promotion, and the nature of the work – had a significant positive impact on the affective and normative commitment of the employees, but the regressors had an insignificant effect on continuance commitment. The employees’ satisfaction from their colleagues, promotion, and the nature of work positively improves their affective and normative commitment. Nevertheless, this study found the predictor variables as irrelevant factors for explaining the continuance commitment of the employees in the context of the study. This study’s contribution is the idea of how satisfaction with colleagues, promotion, and work nature contribute to the three dimensions of organizational commitment among Nepalese private bank employees.

scholarly journals Investigating the Market Interest Rate on Commercial Banks Financial Performance in Bangladesh

2021 ◽  
Vol 5 (1) ◽  
pp. 3-12
Author(s):  
Debashis Saha ◽  
Prodip Chandra Bishwas ◽  
Md. Mustofa Ahmed Sumon
Keyword(s):  
Interest Rate ◽  
Financial Performance ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking Sector ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Market Interest Rate ◽  
The Relationship

The banking sector is the most vital partner of development for countries' economies. It has a remarkable contribution to the country's Gross Domestic Product. This study investigates the relationship between the market interest rate and commercial banks' financial performance. As Bangladesh's banking industry is growing, it is vital to maintain a more robust profitability level for its financial stability and soundness. Banks have some determinants that have a significant impact on their performance. The convenience sampling method is used to select the targeted sample. The study includes the time series data of eight years of fifteen commercial banks listed on the Dhaka Stock Exchange in Bangladesh. Multiple variable linear regression and correlation analysis are performed to examine the relationship of market interest rate with banks' profitability with statistical software, IBM SPSS version 25, and Microsoft excel. The study explored that the market interest rate has a significant positive impact on banks' profitability. It is also found that the lending rate and interest rate spread are significantly correlated with the banks' financial performance. The study recommended that banks make their investment to make a higher profit margin to enhance their management and financial soundness efficiency.

scholarly journals MODERN APPROACHES TO ASSESS BANKING RISKS

2021 ◽  
Author(s):  
Olena Zarutska ◽  
Ludmila Novikova ◽  
Tetiana Rudianova ◽  
Anna Kovalenko
Keyword(s):  
Risk Management ◽  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
Interest Rate Risk ◽  
Risk Modeling ◽  
Mathematical Methods ◽  
Risk Management Process ◽  
National Bank ◽  
Domestic Banks

The article examines modern approaches to the organization of the risk management process in Ukrainian banks. Requirements for modeling banking risks are growing in modern conditions. Recent financial and economic crises have demonstrated the devastating effects of unforeseen risks. The dynamic development of banking technologies and products requires a detailed analysis of the possible consequences of their implementation. Contingency losses require a probabilistic study. The buffer for the absorption of these losses is the capital of the bank. Losses from anticipated risks include the creation of reserves. The basis of modern approaches to risk modeling is the recommendations of the Basel Committee on Banking Supervision. The National Bank of Ukraine clearly regulates the requirements for the organization of risk management systems, but does not interfere in the construction of models. Banks develop internal policies, procedures and risk management models independently. In recent years, domestic banks have made significant progress in modeling and stress testing of risks. Each bank carries out a comprehensive assessment of at least the following significant types of risks: credit risk, liquidity risk, interest rate risk of the banking book, market risk, operational risk, compliance risk, and other significant types of risks. The issue of validation of risk assessment models by external experts is very relevant. Such specialists may be scientists who conduct research in the field of finance, banking and economic and mathematical methods of modeling complex systems. The interaction of scientists and practitioners has a double effect. Scholars are able to provide useful advice on the features of models and tools for assessing risks, systemic risks and financial stability of the banking sector at the macro level. Specific models of banks lay the foundations for current research topics of teachers and graduates. The authors of the article share the experience of model validation, analyze the current state of the banking system and the risk profile of domestic banks. Bank reporting data are considered in the dynamics and analyzed in terms of specific risks. The obtained conclusions are compared with the Risk Map of banks of the National Bank of Ukraine.

scholarly journals THE RELATIONSHIP BETWEEN MARKET INTEREST RATE AND COMMERCIAL BANK FINANCIAL PERFORMANCE IN BANGLADESH

2021 ◽  
Vol 9 (01) ◽  
pp. 537-543
Author(s):  
Debashis Saha ◽  
◽  
Prodip Chandra Bishwas ◽  
Md. Mustofa Ahmed Sumon ◽  
◽  
...  
Keyword(s):  
Interest Rate ◽  
Financial Performance ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking Sector ◽  
Time Series Data ◽  
Positive Impact ◽  
Series Data ◽  
Market Interest Rate ◽  
The Relationship

The banking sector is the strongest partner of development for countries economy as it has a remarkable contribution to the countrys Gross Domestic Product. This study aims to find out the relationship between the market interest rate and commercial banks financial performance. As the banking industry of Bangladesh is a growing industry, therefore, it is very necessary to maintain a stronger level of profitability for the banks financial stability and soundness. Banks have some determinants that have a significant impact on their performance. The convenience sampling method is used to select the targeted sample. The study includes the time series data of eight years of fifteen commercial banks that are listed on the Dhaka Stock Exchange in Bangladesh. Multiple variable linear regression and correlation analysis are performed to find out the relationship of market interest rate with banks profitability with the help of statistical software, SPSS 25, and Microsoft excel. The study explored that the market interest rate has a significant positive impact on banks profitability. It is also found that the lending rate and interest rate spread are significantly correlated with the banks financial performance. The study recommended that banks should make their investment in a way so that they can make a higher level of profit margin that can enhance their efficiency of management as well as the financial soundness.

scholarly journals Financialization as mathematization: The calculative and regulatory consequences of risk management

2018 ◽  
Author(s):  
Nathan Coombs ◽  
Arjen van der Heide
Keyword(s):  
Risk Management ◽  
Value At Risk ◽  
Financial Stability ◽  
Banking Sector ◽  
Options Pricing ◽  
Regulatory Capital ◽  
Balance Sheets ◽  
Financial Valuation ◽  
Collateralized Debt Obligation ◽  
Collateralized Debt

Financialization is commonly understood as the increasing centrality of financial actors and logics in the economy. However, building upon literature which relates financialization to the mathematization of financial valuation practices, this chapter argues that the banking sector was itself financialized since the 1980s. Our historical overview of the changing nature of banking traces the thread running from the Black-Scholes options pricing formula through to Value-at-Risk modelling and Collateralized Debt Obligation valuation. We explore the calculative and regulatory consequences of these risk management techniques and how they allowed large volumes of risk to be removed off banks’ balance sheets and regulatory capital minimized, with deleterious results for financial stability.

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