scholarly journals What Factors Drive the Banks Systemic Risk among South Asian Countries

Author(s):  
Raheel Mumtaz ◽  
Quaisar Ijaz Khan ◽  
M.Farooq Rehan

Purpose: This study designs to examine the determinants (size, liquidity ratio, leverage ratio, deposit ratio, asset growth, net interest income ratio and return on asset ratio) of bank’s systemic risk. We use the data of listed commercial banks of the South Asian countries (Pakistan, Bangladesh, and India). Design/Methodology/Approach: The sample consists 30 banks from Bangladesh, 87 banks from India and 22 banks from Pakistan. This study covers the period from 2006 to 2018. The data is collected from the published annual reports of banks and stock exchanges of respective country. The panel data analysis is performed for the estimation of research models. Findings: The findings demonstrate that larger banks contribute lower in the systemic risk of banks. Additionally, highly liquid banks enhance the systemic risk of the banking system. Moreover, the banks with greater reliance on the deposits, net interest income and with high return on asset reduce the systemic risk contribution of the banks. Implications/Originality/Value: This study provides the justification to devise the banking policies like enhance the proportion of liquidity among assets, reliance on net interest income and promote the financing needs through deposits to limit the systemic risk contribution of the banking system.                                                            

2019 ◽  
Vol 12 (3) ◽  
pp. 138 ◽  
Author(s):  
Ngoc Nguyen

In the future, when the process of economic integration in the banking sector is more powerful, and competitive, diversifying revenue is an inevitable and objective trend to help the banks increase profits, minimize risks and improve their competitive position in the system. The research is on the relationship between revenue diversification, risk and bank performance using data from audited financial statements and annual reports of 26 commercial banks listed and unlisted in Vietnam during the period 2010–2018. The research method uses Generalized Method of Moment (GMM) modeling techniques to solve endogenous problems, variance and autocorrelation in the research model. Research results show that diversification negatively impacts profitability and the higher the diversification, the higher the risk of commercial banks. However, the more diversified listed banks, the more increased the bank’s stability. The banks show the weakness and lack of experience of the banking system in developing a reasonable profit transformation model. The revenue diversification of banks is currently passive and moves slowly. Interest income is still the motivation of bank development, boosting profit growth. Growth, as well as the contribution from service activities, is not commensurate with potentials; although there are many positive points, they are not enough to cover risks from net interest income activities.


Author(s):  
Shujaat Abbas ◽  
Shahida Wizarat

AbstractThis study investigates the effect of military expenditure on the exploding external debt in five major South Asian economies, i.e. Pakistan, Bangladesh, India, Nepal and Sri Lanka from 1990 to 2015 using panel fixed effect regression model. The estimated result reveals that the external debt of selected South Asian countries is positively determined by their military expenditure, and negatively explained by their domestic investment activities. The study urges the efficient utilization of available capital resources into more productive investment activities to create employment for the labor force. The future prosperity of the region lies in the peaceful resolution of all outstanding disputes and a corresponding reduction in military spending that can make the region safe for domestic and international investments.


2020 ◽  
Vol 1 (3) ◽  
pp. 52-66
Author(s):  
Emmanuel Uniamikogbo ◽  
Emma I. Okoye ◽  
Akonye Chinazu

This study examined the effect of e-banking income, fee income, and firm size on market value added of Deposit Money Banks in Nigeria. The eight banks categorised by Central Bank of Nigeria in 2014 to be Domestic Systematically Important banks were selected using the purposive sampling technique. Data collected from the annual reports and accounts and the Nigerian Stock Exchange website respectively for a period of 11 years (2008-2018) was used. The descriptive statistics and econometric analysis were employed using the Panel Data Analysis method. Findings from the study revealed that e-banking income and fee income each has a significant positive effect on market value added of DMBs in Nigeria. The study recommends that banks in Nigeria should further develop its internet and other electronic platforms that can improve its income from e-banking operations since e-banking income is shown to be a strong and emerging component that boosts banks' performance. Larger and investment-oriented banks should focus on increasing their share of interest income to become more stable.


2019 ◽  
Vol 11 (22) ◽  
pp. 6222
Author(s):  
Su ◽  
Huang ◽  
Drakeford

We utilized a high dimensional financial network to investigate the systemic risk contagion between different industries in China and to explore the impacts of monetary policy and industry heterogeneity factors. The empirical results suggest that the total level of systemic risk increased quite significantly during the 2008 global crisis and the 2015–2016 Stock Market Disaster. The energy, material, industrial, and financial sectors are the top systemic risk contributors. Industry heterogeneity variables such as the leverage ratio, book-to-market ratio, return on assets (ROA) and size have significant impacts on the systemic risk, but their effects on the systemic risk contribution are more pronounced than those on the systemic risk sensitivity. Moreover, monetary policy can effectively suppress the systemic risk diffusion derived from the leverage ratio. These results are essential for investors and regulators of risk management.


2019 ◽  
Vol 11 (1) ◽  
pp. 197
Author(s):  
Md. Nezum Uddin ◽  
Mohammed Jashim Uddin ◽  
Md. Joynal Uddin ◽  
Monir Ahmmed

Remittances are regarded one of the foremost financial resources globally. Over the past century, in the developing economy, there is a heated debate on the sources of economic growth. The current paper attempts to analyze how economic growth is being impacted by remittance in five selected South Asian countries between the period 1975 and 2017. Estimated results from panel-data estimation techniques exhibit a positive relation between economic growth and remittance in these countries. The results from Granger-causality tests suggest that remittance plays a catalyst role to bring economic growth but economic growth doesn’t play any role to bring remittance while Dumitrescu Hurlin Causality tests found a bi-directional relationship. Important finding of the study is that remittance boost economic growth in South Asian region.


Complexity ◽  
2018 ◽  
Vol 2018 ◽  
pp. 1-15 ◽  
Author(s):  
Hong Fan ◽  
Allan Alvin Lee Lukaya Amalia ◽  
Qian Qian Gao

The present paper aims to assess the systemic risk of the Kenyan banking system. We propose a theoretical framework to reveal the time evolution of the systemic risk using sequences of financial data and use the framework to assess the systemic risk of the Kenyan banking system that is regarded as the largest in the East and Central African region. Firstly, we estimate the bilateral exposures matrix using aggregate financial data on loans and deposits from annual reports and analyze the interconnectedness in the market using network centrality measures. Next, we extend the Eisenberg–Noe method to a multiperiod setting to the systemic risk of the Kenyan banking system, in which the multiperiod includes the dynamic evolutions of the Kenyan banking system of every bank and the structure of the interbank network system. We apply this framework to assess dynamically the systemic risk of the Kenyan banking system between 2009 and 2015. The main findings are the following. The theoretical network analysis using network centrality measures showed several banks displaying characteristics of systematically important banks (SIBs). The theoretical default analysis showed that a bank suffering a basic default will trigger a contagious default that caused several other banks in the sector to go bankrupt. Further stress test proved that the KCB bank theoretically caused a few contagious defaults due to an unusually high interconnectedness. This methodology can contribute by being part of monitoring system of the Central Bank of Kenya (regulatory body) as well as the implementation of policies (such as bank-internal stress tests) that assist in preventing default contagion.


2020 ◽  
Vol 6 (4) ◽  
pp. 799-809
Author(s):  
Noreen Safdar ◽  
Shezza Ashraf ◽  
Fatima Farooq ◽  
Junaid Qadir

The following study shows the economic consequences of population and environmental degradation in selected South Asian Countries for the time period 2000- 2018. Panel cointegration shows the long-run association among population, urbanization, environment and economic growth. By using PMG estimation technique, the results show that environmental degradation has a negative influence on economic growth while the urban population has a progressive impact on economic growth while the total population has a negative impact on economic growth. The results of causality analysis show that there is bidirectional causality among all variables which indicates that population, urbanization, environment and economic growth are causing each other. It is also noticed by the causality analysis that population, urbanization and economic growth are causing environmental degradation in south Asian countries. Further the results show that there is cross-sectional dependency among all variables in selected countries which reveals that all these countries should make collaborative strategies to increase economic growth and to cope up the problem of environmental degradation.


Author(s):  
Abu K. ◽  
Monzurul I.U.

According to Joseph Schumpeter (1911), services provided by financial intermediaries are essential for technical innovation and economic growth. Later, empirical work by Goldsmith (1969) and McKinnon (1973) supported that there were close ties between financial and economic development for a few countries. But numerous other economists, including Robinson (1952) believed that finance was not so important for economic growth; financial development simply follows economic growth. Despite this debate, Levine (1993), among others suggests a positive relationship between financial sector development and economic growth. Moreover, there remains further debate whether the country's financial structure exerts differential impact on economic growth. Empirical studies across the countries (Rajan and Zingales, 1999) suggest that banking sector plays a key role in some countries. In this paper, I intend to investigate whether higher levels of financial development are positively correlated with economic growth using empirical evidence from five South Asian countries namely Bangladesh, India, Nepal, Pakistan and Sri Lanka. I have used Panel data analysis, Linear regression model, Levin-Lin-Chu unit root test, Covariance, Correlation and VIF test based on aggregate annual data from 1993 to 2016. My analysis suggests that development in banking sector has a moderately strong tie to promoting economic growth. The result implies that the policy should focus on banking sector development by enhancing its quality of credit products and offers to private sector as it is the main stimulator for growth in these five South Asian countries.


2020 ◽  
Vol 9 (2) ◽  
pp. 221-236
Author(s):  
Shujaat Abbas ◽  
Shahida Wizarat ◽  
Sadia Mansoor

This study is an attempt to explore social and economic determinants of external debt distress in five selected South Asian countries, that is, Bangladesh, India, Nepal, Pakistan and Sri Lanka, from 1980 to 2018, by using the contemporary panel fixed effect model and system generalized methods of moments. The findings revealed that the major determinants of external debt distress in selected South Asian countries are large and increasing current account deficits, lower gross capital formation, foreign direct investment and large military expenditures. Among selected socio-economic variables, the increase in life expectancy increases external debt distress, whereas urbanization reduces it considerably. The study urges selected South Asian countries to correct highly unfavourable current account balance, resolve regional conflicts leading to the reduction of the arms race and make the macroeconomic environment friendly for domestic and foreign investment to reduce exploding external debt distress. JEL Classification: C33, E22, F32, H63


2011 ◽  
Vol 50 (4II) ◽  
pp. 423-433 ◽  
Author(s):  
Zafar Mueen Nasir ◽  
Arshad Hassan

This study empirically examines the role of economic freedom, market size and exchange rates in attracting foreign direct investment in south Asian countries for the period 1995-2008 by employing panel data analysis in fixed effect setting. Results clearly indicate the presence of significant positive relationship between economic freedom and FDI inflows in South Asian countries during the period of study. The real effective exchange rate was having negative association with it indicating that depreciation in host country currency negatively influences the inflow of FDI to that country. Therefore, monetary policy should focus on providing stability to currencies of host countries. The model explains approximately 90 percent of total variation in FDI. The paper concludes that South Asian countries should make concerted efforts in devising polices that improve level of economic freedom. In other words, they should provide more investment friendly climate, trade openness, efficient monetary and fiscal policies and freedom from corruption. This can help to attract more foreign direct investment in the South Asian countries.


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