scholarly journals The effect of the efficiency of monetary policy educational tools on the financial soundness of banks A pilot study in the Iraq Stock Exchange (2007-2017)

2021 ◽  
Vol 10 (2) ◽  
pp. 54-75
Author(s):  
Nasreen Mohamed AL-hakim ◽  
Akram S. Yousif
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Policy Tools ◽  
Integration Test ◽  
Financial Soundness ◽  
The Impact

The aim of the research is to identify the impact of the quantitative tools of monetary policy on the financial soundness of banks, and the research was based on a set of hypotheses, to determine the nature of the effect between independent and dependent variables, and for the purpose of testing research hypotheses, a number of financial ratios according to CAMEL indicators were used to analyze the historical data of banks, the research sample and the component From (7) banks for the period (2007-2017), the quantitative tools of monetary policy were used from the impact published in the Central Bank of Iraq, and a number of statistical methods were used, including time series testing, joint integration test and multiple regression test according to programs.EVIES10 has been reached through the research to a number of conclusions, the most important of which is that the CAMEL classification system is one of the effective supervisory methods for assessing the financial soundness of banks and determining the duration of the strength and durability of their financial positions and the extent of their ability to adapt to any variables related to their activities, as it ensures that the banks are moving in the direction. Correct or reverse, and the weakness of the monetary policy tools applied by the Central Bank of Iraq due to the limited Iraqi market for securities as it is still incomplete conditions as a secondary market that contributes to expanding the circulation of securities, which constitutes a burden on the use of quantitative tools of the Central Bank of Iraq, especially open market operations,As well as the weakness of the legal reserve ratio in the impact on the ability of commercial banks to grant credit, because commercial banks in Iraq enjoy high liquidity due to the high rate of inflation significantly. The research also presented a set of proposals, the most important of which is the activation of the monetary policy tools of the Central Bank of Iraq, which is currently being used to modernize, develop and increase the efficiency of the stock market in Iraq to keep pace with developments in global markets,nd developing the supervisory and supervisory role of the Central Bank of Iraq over Iraqi banks in terms of the extent of their commitment to regulations and laws and activating and activating the banking sector in a way that serves to build a banking infrastructure that keeps pace with the development of international banks. Delinquency and low capital adequacy ratio, thus hedging and beware of any problems that arise in the banking sector. Key words: monetary policy, quantitative tools of monetary policy, financial soundness, the CAMEL model, Iraq Stock Exchange Market.

scholarly journals Does the target market affect bank performance? Evidence from the geographic diversification of city commercial banks in China

2021 ◽  
Vol 15 (1) ◽  
Author(s):  
Xiaonan Li ◽  
Chang Song
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Bank Performance ◽  
Chinese Government ◽  
Target Market ◽  
Geographic Diversification ◽  
Cross Sectional ◽  
The Impact ◽  
Geographical Diversification

AbstractAfter the opening up of the banking sector to domestic and foreign capitals which is approved by the Chinese government, the China Banking Regulatory Commission (CBRC) has permitted city commercial banks to diversify geographically. Since this deregulation in 2006, city commercial banks began to geographically diversify to occupy the market and acquire more financial resources. To examine the causal relationship between geographical diversification and bank performance, we construct an exogenous geographical diversification instrument using the gravity-deregulation model and a policy shock. We find that bank geographical diversification negatively affects bank performance. Moreover, we conduct some mechanism tests in the Chinese context. We find that the target market with several large- and medium-sized banks and a high level of local protectionism in the target market decreases the performance of city commercial banks. Finally, cross-sectional analyses show that the impact of geographical diversification on banks’ performance is more notable among city commercial banks that are younger, and have a lower capital adequacy ratio and a higher non-performing loan ratio.

scholarly journals THE ROLE OF THE CENTRAL BANK IN THE FUNCTION OF IMPROVEMENT OF LIQUIDITY OF BANKING SECTOR IN BOSNIA AND HERZEGOVINA

2019 ◽  
Vol 12 (24) ◽  
Author(s):  
Goran Mitrović ◽  
Živko Erceg
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Banking Sector ◽  
Banking System ◽  
Policy Instruments ◽  
Foreign Banks ◽  
Dayton Agreement ◽  
The Impact

The monetary policy of Bosnia andHerzegovina is rather limited because it is basedon the principles of a currency boardcharacterized by the impossibility of implementingthe basic monetary policy instruments incomparison with the monetary policy of theEuropean Union. However, the constant presenceof European integrations should point the need fora more drastic change in the monetary policy ofBosnia and Herzegovina. By entering theEuropean Monetary Union (EMU), the monetaryterritory of Bosnia and Herzegovina will becomeone of the branches of the European Central Bank(ECB). In addition, it is not difficult to concludewhy the Law about the Central Bank of Bosnia andHerzegovina has been adopted with the first lawsof the Dayton Agreement, if it is known that thelargest part of the banking system, and thereforethe financial market, is owned by foreign banks.This work will point out the significance of theCentral Bank of Bosnia and Herzegovina, as oneof the most important factors for maintaining thepermanent liquidity of the banking sector inBosnia and Herzegovina. The possibilities andlimitations of the Central Bank of Bosnia andHerzegovina will be determined, with theassumption of macroeconomic sustainability overa longer period of time. The need of reforming thebanking system in Bosnia and Herzegovina will beanalyzed through the constant implementation ofthe Basel standards with the increasingparticipation of foreign banks in the Bosnia andHerzegovina. It will be determined the impact ofthe implementation of the Basel III in the bankingindustry in Bosnia and Herzegovina and itsconsequences on the banking and economicsystem.models, on the ways of financing theelimination of adverse consequences of naturaldisasters.

scholarly journals The Threats of Unsystematic Risks in Jordanian Commercial Banking Sector

2017 ◽  
Vol 9 (9) ◽  
pp. 175
Author(s):  
Ghaith N. Al-Eitan ◽  
Ismail Y. Yamin
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Fixed Effect Model ◽  
Commercial Banking ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Effect Model ◽  
The Impact ◽  
The Empirical Analysis

The objective of this study is to empirically examine the effect of unsystematic risks on the performance of commercial banks in Jordan, using panel data for the period of 10 years (2005-2015). The study uses earning per share and dividends as dependent variables to represent Banks’ performance. The empirical analysis based on the fixed effect model selected on the basis of Hausman test. The results indicate that the impact of Non-performing loans on commercial banks’ dividends is positive and significant while the impact of capital adequacy is negative and statistically significant on dividends. The results indicate that the credit risk, liquidity risk, non-performing loan and capital adequacy have significant effect on earnings per share and the effects are negative as expected. Based on the study it is recommended that the Jordanian commercial banks needs enhance the process of credit risk management to determine loan defaulter and impose the appropriate legal action against them.

scholarly journals Effect of Capital Adequacy Ratio, Nonperporming Loan, Third Party Funds on Loan to Deposit Ratio in Private Commercial Banks in Indonesia Stock Exchange

2019 ◽  
Vol 13 (2) ◽  
pp. 153-164
Author(s):  
Nur Salma ◽  
Nur Salma
Keyword(s):  
Regression Analysis ◽  
Commercial Banks ◽  
Annual Report ◽  
Stock Exchange ◽  
Financial Statements ◽  
Capital Adequacy ◽  
Third Party ◽  
Capital Adequacy Ratio ◽  
Private Banks ◽  
The Impact

The study aims to analyze the impact of capital adequacy ratio, non-performing loan,   third party fund on loan to deposit ratio of the private banks in Bandar Lampung. The sample used in this research were obtained from six private banks in Bandar Lampung.  Data obtained based on financial statements Annual Report of Indonesia stock Exchange (IDX) from 2009 to 2014.  The method used in this research is the dependent variable and independent, multiple regression analysis and Classical Assumption. Variable used Capital Adequacy Ratio (CAR), Nonperforming Loan (NPL), and Third-Party Fund (DPK) on Loan to Deposit Ratio (LDR). Based on the result of the research showed that the F variable CAR, NPL, and DPK together influential significantly to Loan to Deposit Ratio. The Result of partial T-test CAR negatively influential and significant with significant value is 0.007. NPL is not positively influential and not significant on LDR with significant value is 0,277 while DPK has positive influential and significant value is 0,005. The value of Adjusted R Square the value is 0.266 showed that LDR can explain by variables research as big as 26,6 %, while the rest can be explained by other factors.

scholarly journals The Impact of Earnings variability and Regulatory Measures on Income Smoothing: Evidence from Panel Regression

2021 ◽  
Vol 10 (1) ◽  
pp. 183-201
Author(s):  
Amina Malik ◽  
Haroon Aziz ◽  
Buerhan Saiti ◽  
Shahab Ud Din
Keyword(s):  
Commercial Banks ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Income Smoothing ◽  
Capital Adequacy ◽  
Panel Regression ◽  
Loan Loss ◽  
Loan Loss Provisions ◽  
Regulatory Measures ◽  
The Impact

Abstract This study investigates the impact of variability in earnings, stringent regulatory measures and the trend of extending loans while keeping in view deposit ratio on income smoothening practices for a sample of 20 commercial banks listed on the Pakistan Stock Exchange (PSX) from the year 2010 to 2017. The likelihood of smoothing activities is measured through its widely used proxy, i.e. loan loss provisions (LLPs). Moreover, earnings before tax and provisions (EBTP) and loan to deposit ratio (LD) have been incorporated to determine the impact of earnings and loans to deposit ratio on income smoothening. We find that commercial banks are less likely to manage earnings through smoothening practices, which shows that commercial banks adhere to regulatory restrictions. This is further supported by the fact that income smoothing activities decrease as a result of the increase in capital adequacy ratios after the imposition of stringent rules, which exert greater regulatory pressure on banks, whereas the pace of income smoothing increases as a result of an increase in loans to deposit ratio, which reveals that banks take credit risk but manage within the ambit of regulatory restrictions. Based on the findings, we argue that the imposition of regulatory restrictions through the State Bank of Pakistan (SBP) has not only discouraged income smoothening through loan loss provisions but also enhances reporting quality. The results of this study provide useful insights for investors, creditors and stakeholders.

scholarly journals Short-Term Currency in Circulation Forecasting for Monetary Policy Purposes – The Case of Poland

e-Finanse ◽  
2015 ◽  
Vol 11 (1) ◽  
pp. 65-75
Author(s):  
Witold Koziński ◽  
Tomasz Świst
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Short Term ◽  
Dummy Variables ◽  
Forecasting Performance ◽  
Significant Factors

Abstract One of the most significant factors which influences the level of banking sector liquidity is Currency in Circulation. Although the central bank is in charge of distribution of the currency it can’t assess the demand for the currency, as that demand is generated by the customers of commercial banks. Therefore, the amount of Currency in Circulation has to be modelled and forecasted. This paper introduces ARIMA(2,1) and SARIMA(2,1)(5,0) models with dummy variables and discusses its applicability to the forecasting of Currency in Circulation. The forecasting performance of these models is compared. The results indicate that the performance of SARIMA(2,1)(5,0) is better and that both models might be applied for monetary policy purposes as supportive tools for banking sector liquidity forecasting.

scholarly journals The Impact of Fair Value Accounting on Information Asymmetry: Evidence from Jordanian Banking Sector

2020 ◽  
Vol 13 (9) ◽  
pp. 55
Author(s):  
Mohammad Abdullah Fayad Altawalbeh
Keyword(s):  
Information Asymmetry ◽  
Commercial Banks ◽  
Banking Sector ◽  
Stock Exchange ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Financial Reports ◽  
Bid Ask Spread ◽  
Amman Stock Exchange ◽  
The Impact

This study aims at examining the impact of Fair value accounting measured by other comprehensive income on information asymmetry measured by the bid-ask spread in the Jordanian banking sector between 2010 and 2017. The study sample consisted of the thirteen commercial banks listed in Amman Stock Exchange, and panel data analyses were employed to test the study hypothesis, data for the study was gathered through the annual financial reports disclosed on Amman Stock Exchange. The findings revealed that fair value has a negative and significant impact on information asymmetry in the Jordanian commercial banks, indicating that fair value accounting supplies stakeholders with accurate and appropriate data and reflects the informational value of fair value numbers to investors.

scholarly journals Comparing the Influence of Green Credit on Commercial Bank Profitability in China and Abroad: Empirical Test Based on a Dynamic Panel System Using GMM

2019 ◽  
Vol 7 (4) ◽  
pp. 64 ◽  
Author(s):  
Song ◽  
Deng ◽  
Wu
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Empirical Test ◽  
Generalized Method Of Moments ◽  
Capital Adequacy ◽  
Dynamic Panel ◽  
Bank Profitability ◽  
Dynamic Panel Model ◽  
Asset Size ◽  
The Impact

This study establishes a dynamic panel model for 12 Chinese-listed commercial banks and seven international commercial banks. More specifically, it examines the impact of green credit on the profitability of commercial banks and the differences between China and other countries while using the generalized method of moments. The research shows that the Equatorial Principles project-financing ratio of international banks positively affects bank profitability, while the ratio of green credit for Chinese commercial banks is inversely related to their profitability. Further, a comparative study of China and other countries highlights that the green credit business is at significantly different stages in China and the rest of the world. This study also finds that the profitability of China’s banking sector is positively affected by asset size, management expense ratio, cash ratio, and GDP growth rate, in addition to the common influencing factor of non-performing loan ratio, whereas asset size and capital adequacy ratio negatively affects the international banking sector. Drawing on these empirical conclusions, this study offers suggestions for the further development of green credit in Chinese commercial banks.

scholarly journals The Impact of Capital Adequacy Ratio (CAR) on Islamic Banks’ Performance in Selected MENA Countries

2021 ◽  
pp. 116-133
Author(s):  
ADEL Z. A. ALNAJJAR ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
United Arab Emirates ◽  
Commercial Banks ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Mena Countries ◽  
Capital Adequacy Ratio ◽  
The Impact

A strong capital adequacy ratio is crucial to a financial institution's success and helps it to survive any potential financial crisis. From Q1 2017 to Q4 2019, the influence of the Capital Adequacy Ratio (CAR) on the performance of Commercial Islamic Banks in MENA nations (Qatar, Oman, Bahrain, Kuwait, United Arab Emirates, Saudi Arabia, and Jordan) is examined. The performance measures utilized in this study are Return on Assets (ROA) and Return on Equity (ROE). The study's sample frame comprises all Islamic commercial banks in the designated MENA nations, with a sample size of 18 Islamic commercial banks. Panel data, fixed and random models, are applied in this study since there are multiple entities and time series. The findings of the study showed that the selected Islamic banks are committed to Capital Adequacy Ratio (CAR) which is defined under Basel III. This is considered the largest percentage regulated by the Basel Committee. The study also found that there is a statistically negative significant influence of CAR on both performance indicators ROE and ROA in the commercial Islamic banks in the selected MENA countries. The results of the study can be useful to a policymaker or decision-makers in the Islamic Banks industry. First, the research could be a reference to financial regulators such as central banks which may use the findings to provide regulation on optimal capital levels for local banks in terms of regulations, deregulations, and financial disruption. Next, the practice implications in the Islamic banking sector will provide them with insight as to how a bank’s capital influences its earnings. Hence, management can work towards attaining an optimal structure that maximizes their performance as well as identifying “best” and “worst” practices associated with capitalization levels.

scholarly journals INTERNALISASI SEKTOR PERBANKAN DALAM MODEL DSGE

2014 ◽  
Vol 17 (1) ◽  
pp. 23-60
Author(s):  
Harmanta Harmanta ◽  
Nur M. Adhi Purwanto ◽  
Fajar Oktiyanto Oktiyanto
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Banking Sector ◽  
Small Open Economy ◽  
Jel Classification ◽  
Capital Adequacy ◽  
Macroprudential Policy ◽  
Financial Friction ◽  
Policy Bank ◽  
The Impact

We build DSGE model for small open economy with financial friction in the form of collateral constrain on banking sector, designed for Indonesian economy. The constructed model is capable to simulate the monetary policy (Bank Indonesia rate) and macroprudential policy (reserve requirement, capital adequacy ratio – CAR, and loan to value – LTV). By internalizing banking sector into the model, this model also enable us to simulate the impact of any shock originated from banking sector.  Keywords: monetary policy, DSGE with banking sector, macroprudential policy JEL Classification: E32, E44, E52, E58 

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