scholarly journals Government Ability, Bank-Specific Factors and Profitability - An insight from banking sector of Vietnam

2020 ◽  
Author(s):  
V.C. Nguyen ◽  
Thu Thuy Nguyen ◽  
Huu Tinh Nguyen
Keyword(s):  
Banking Sector ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Banking System ◽  
Ordinary Least Squares ◽  
Loan Loss ◽  
Bank Efficiency ◽  
Specific Factors ◽  
The Impact ◽  
Bank Specific Factors

To the best of our knowledge, a very few studies have focused on the effects of government ability on bank performance in developing and emerging countries. The aim of this work is to study the impact of government ability, bank-specific factors on profitability in the banking system in Vietnam. Using a panel data analysis in the period over 2014-2018, the study analyzes based on the methods of fixed, random effects, and pooled ordinary least squares. Data were collected from Vietnam’s Stock Exchange, General Statistics Office, and Worldwide Governance Indicators. Our results demonstrate that government ability has negatively affected bank efficiency while economic growth will not affect bank efficiency. In addition, the prime bank-specific factors that can significantly impact on bank efficiency are non-performing loan, loan-to-deposit ratio, loan loss reserves. A bank with a higher loan-to-deposit ratio can positively impact on the probability of a bank. In contrast to the risk, a bank with a greater risk as well as a higher level in non-performing loan in operation will negatively impact on its efficiency.

Determinants of loan losses of Indian Banks: a panel study

2015 ◽  
Vol 9 (1) ◽  
pp. 17-32 ◽  
Author(s):  
Satyajit Dhar ◽  
Avijit Bakshi
Keyword(s):  
Public Sector ◽  
Panel Data Analysis ◽  
Capital Adequacy ◽  
Content Type ◽  
Specific Factors ◽  
Indian Banks ◽  
Loan Losses ◽  
The Impact ◽  
Bank Specific Factors

Purpose – The purpose of this paper is to examine the factors that influence the variability of loan losses (termed as non-performing advances or NPA in India) of Indian banks in the public sector during the period of five years from 2001 to 2005. Design/methodology/approach – The analysis is based on a panel approach, which considers both spatial and time dimensions of observations. Panel regression was used to explore the impact of different bank-specific factors on NPAs of 27 public sector banks (PSBs). Standard tests were used to find out suitability of different models of panel data analysis. Eight bank-specific factors were identified for analysis on the basis of review of extant literature. Findings – Certain bank-specific factors, in particular, net interest margin and capital adequacy ratio exhibit negative and significant impact on gross non-performing advances (GNPA) ratio of Indian PSBs. The results also suggest that relative quantum of sensitive sector (SEN) (comprised of commercial real estate, commodity and capital market) advances has a positive relationship with NPA ratio, and such a relationship is statistically significant. Research limitations/implications – The sample is restricted to India and may not be reflective of other countries. The study considers bank-level factors, and there are some macro factors (e.g. gross domestic product, interest rate and inflation rate) which could have explained the variability of GNPA ratio. Practical implications – Provisioning against loan losses is a major issue for stability of the banking system. Identification of appropriate causes of variability of such loan losses is important for managing credit portfolio of a bank. A positive and significant relationship between SEN advances and NPA calls for a more cautionary approach toward lending to those sectors. Originality/value – This paper is believed to be the first attempt to empirically examine the role of bank-specific factors. This study attempts to enrich empirical research in the field and provides an insight into the role of various bank-specific factors on loan losses in the context of Indian PSBs. The study provides contrary evidence regarding the role of priority sector advances on a GNPA ratio.

scholarly journals Parameters of Profitability: Evidence From Conventional and Islamic Banks of Bangladesh

2018 ◽  
Vol 8 (4) ◽  
pp. 158
Author(s):  
K. M. Golam Muhiuddin ◽  
Nusrat Jahan
Keyword(s):  
Commercial Banks ◽  
Banking System ◽  
Specific Factor ◽  
Economic Factors ◽  
Islamic Banks ◽  
Specific Factors ◽  
Conventional Banks ◽  
The Impact ◽  
Bank Specific Factors ◽  
Conventional And Islamic Banks

This paper evaluates the commercial banks of Bangladesh in terms of profitability dimension of performance and also examines the impact of selected determinants and banking system on this dimension of performance. Evaluation of trend in profitability of listed commercial banks of Bangladesh reveals that, on an average, profitability is exhibiting a decreasing trend over the selected period; however, the profitability performance of Islamic banks remained rather high compared to Conventional banks. Profitability measured by Return on Asset is found to be significantly affected by the bank-specific factors, industry-specific factor and the banking system. However, macro-economic factors evidently have no significant impact on profitability of commercial banks of Bangladesh.

scholarly journals The impact of macroeconomic and bank-specific factors toward non-performing loan: evidence from Indonesian public banks

2017 ◽  
Vol 12 (1) ◽  
pp. 67-74 ◽  
Author(s):  
Hanifan Fajar ◽  
Umanto
Keyword(s):  
Panel Data ◽  
Banking Sector ◽  
Negative Impact ◽  
Good Condition ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Specific Variable ◽  
Specific Factors ◽  
The Impact ◽  
Bank Specific Factors

The present study focuses on the need for banking sector to be more reactive when facing globalization that could bring impact on banking industries complexity. Based on empirical studies, there is a need to analyze non performing loan determinants comprehensively using macroeconomic and bank-specific factors to make a good condition on bank, because combining macroeconomic and bank-specific variable as NPL determinants has made a big improvement to analyze NPL. The object of present study is 20 Banks listed in Indonesia Stock Exchange (IDX) between q12005-q42014. Using dynamic panel data GMM-system method shows that the previous period of NPL (non performing loan), change of PDB (Gross Domestic Product) and inflation rate have a significantly negative impact on NPL. However, BOPO (Operations Expenses to Operations Income) and ROE (Return on Equity) has a significantly positve relationship to NPL. On the other hand, this research does not find any significance on BI rate (interest rate), solvency ratio, and size to NPL. From the result, it can be concluded that combining macroeconomic and bank-specific variable could be an alternative method to analyze NPL determinants on bank. Keywords: nonperforming loans, banks, credit risk, globalization, dynamic panel data, banking industries. JEL Classification: G21, E44, E51, E5, F60

scholarly journals Credit Risk and Shareholders’ Value in a Developing Economy: Evidence from Pakistani Banking System

2012 ◽  
Vol 4 (2) ◽  
pp. 87-95
Author(s):  
Ahmed Arif ◽  
Mohammad Afzal .
Keyword(s):  
Credit Risk ◽  
Value Creation ◽  
Panel Data Analysis ◽  
Banking System ◽  
Capital Adequacy ◽  
Loan Loss ◽  
Creation Process ◽  
The Impact ◽  
Value Creation Process

The present study examines the role of credit risk in value creation process in banking system of Pakistan. This study here develops a conceptual model with three antecedents to credit risk. These antecedents are loan loss provision, advances, and capital adequacy ratio. The study analyzes the impact of these antecedents on accounting return on equity (ROE) and market return on shares (ROS). The data come from 20 banks listed on Karachi Stock Exchange (KSE) for 2004-2009. The study includes panel data analysis to analyze the relationship between the selected variables. The results of this study expose a minimal role of credit risk in value creation process in banking system of Pakistan. The results further reveal that banks with higher advances in their portfolio are successful in getting the confidence of shareholders.

scholarly journals Banks’ risk and the impact of audit quality on income smoothing

2021 ◽  
Vol 20 (3) ◽  
pp. 425-453
Author(s):  
Konstantinos Vasilakopoulos ◽  
◽  
Christos Tzovas ◽  
Apostolos Ballas
Keyword(s):  
European Union ◽  
Banking Sector ◽  
Audit Quality ◽  
Ordinary Least Squares ◽  
Income Smoothing ◽  
Fiscal Year ◽  
Loan Loss ◽  
Industry Specialization ◽  
Quality Dimensions ◽  
The Impact

Research question: This paper investigates the impact that specific audit quality dimensions have upon European Union Banks’ income smoothing behavior. Motivation: Although previous studies have investigated the characteristics of audit quality, little is known about the audit quality in the banking sector. Excessive risk taking and business complexity may further impair auditors’ work and an audit’s outcome may be conditioned upon banks’ risk. Idea: We examine whether auditors’ independence influences bank managers’ decision to smooth income and whether this attribute depends on bank risk and systemic importance. We investigate the association between auditors’ industry specialization and auditors’ tenure with the level of Loan Loss Provisions Data: We use a sample of 133 banks from 26 European Union countries for the period 2006-2013. Tools: Similar to previous research, we use ordinary least squares analysis to test the results. Findings: Empirical findings provide evidence that the auditors’ industry expertise limits management’s discretion of high-risk banks to a greater extent relative to low risk banks. In contrast, our results imply that banks that retain the same auditor for a consecutive fiscal year are more likely to engage in income smoothing through LLPs. Furthermore, our study examines whether audit quality dimensions have different outcomes on income smoothing decisions between globally systemically important banks (GSIBs) and the rest of banks. Our results provide evidence that the impact of industry specialization and auditor tenure on EU banks accounting policy decisions differs between GSIBs and non-GSIBs. Contribution: Our analysis contributes in the existing body of research by focusing on the impact of audit quality on managements’ accounting discretion and the influence of banks’ special attributes on the audit process.

scholarly journals Determinants of Liquidity Considering Role of Market Competition; Evidence from Pakistan’s Banking Sector

2020 ◽  
Vol 2 (2) ◽  
pp. 51-59
Author(s):  
Amir Rafique ◽  
Muhammad Adeel ◽  
Kalsoom Akhtar ◽  
Muhammad Amir Alvi
Keyword(s):  
Credit Risk ◽  
Banking Sector ◽  
Panel Data Analysis ◽  
Market Competition ◽  
Data Set ◽  
Macroeconomic Factors ◽  
Negative Effect ◽  
Specific Factors ◽  
Bank Specific Factors

Current study empirically analyzes bank specific factors and macroeconomic factors that determine the liquidity reserves of banks functioning in Pakistan. To highlight the association, current study performed random effects estimates on a data set of 20 banks from 2006 to 2016.  Bank specific factors include bank size, capital and credit Risk. GDP and Inflation are the macroeconomic factors that were considered. Market competition has been measured through HHI. Based on panel data analysis, current study suggests that bank specific factors (except capital), macroeconomic factors and market competition significantly affect liquidity reserves of banks in Pakistan. These factors include bank size, credit risk, market competition, GDP and inflation. In addition, bank size, credit risk, GDP and Inflation revealed a negative effect on bank liquidity. On the other hand, market competition revealed a positive effect on bank liquidity. Capital showed an insignificant effect on bank liquidity.

scholarly journals Bank Interest Rate Margin, Portfolio Composition and Institutional Constraints

2019 ◽  
Vol 12 (3) ◽  
pp. 121
Author(s):  
Liu ◽  
Sathye
Keyword(s):  
Banking Sector ◽  
Panel Data Analysis ◽  
Institutional Constraints ◽  
Institutional Variables ◽  
Credit Quality ◽  
Portfolio Composition ◽  
Gdp Growth Rate ◽  
Interest Margins ◽  
Specific Factors ◽  
Bank Specific Factors

This study empirically examines how the bank specific factors, macro-economic, and institutional variables impact interest margins in China’s banking sector. A panel data analysis of bank data for the period 1988–2015 was carried out. We found a significant association between credit quality, risk aversion, liquidity risk, and the proportion of corporate and industrial loans and the adjusted interest spread (AIS). GDP growth rate, inflation, and the proportion of national savings to the GDP were found to have significant association with the AIS. Furthermore, institutional variables were found to have a significant moderating effect on the AIS. We contribute to the literature by examining a unique context and a more accurate measure of bank interest margin not used in prior studies.

scholarly journals Bank-Specific Factors as Determinants of Dividend Yield: Case of the Indonesia Stock Exchange

2020 ◽  
Vol 3 (3) ◽  
pp. 229-237
Author(s):  
Muhamad Umar Mai
Keyword(s):  
Design Methodology ◽  
Sampling Method ◽  
Stock Exchange ◽  
Dividend Yield ◽  
Return On Assets ◽  
Final Sample ◽  
Specific Factors ◽  
The Impact ◽  
Positive Effect ◽  
Bank Specific Factors

Objective – The purpose of this study is to observe the impact on dividend yields caused by bank-specific factors of profitability, liquidity, bank size, leverage, and bank growth. Design/methodology – This study was conducted on the bank sub-sector of the Indonesia Stock Exchange for the period of 2009-2018, which resulted in 367 bank-year observations. The sample is determined using a purposive sampling method with a criteria of bank that paid dividends hence resulting in 134 bank-year observations. However, to achieve the fit model's goodness, the final sample used was 120 bank-year observations. This paper used OLS Multiple Linear Regression for analyzing data. Results – The results show that return on assets and leverage negatively affects dividend yield, and bank size has a positive effect. Meanwhile, growth and liquidity do not affect dividend yield. These results are useful for investors in determining their investment decisions in the banks’ shares on the Indonesia Stock Exchange and for managers in considering bank-specific factors to meet investors' preferences for dividends.

Impact of firm’s specific factors on audit fee of quoted consumer goods firms

2020 ◽  
Vol 4 (1) ◽  
pp. 47-55
Author(s):  
Wasiu Ajani Musa ◽  
Ramat Titilayo Salman ◽  
Ibrahim Olayiwola Amoo ◽  
Muhammed Lawal Subair
Keyword(s):  
Consumer Goods ◽  
Audit Quality ◽  
Audit Fees ◽  
Ordinary Least Squares ◽  
P Value ◽  
Chi Square ◽  
Ifrs Adoption ◽  
Audit Fee ◽  
Specific Factors ◽  
The Impact

Greater pricing presume on audit service has been put by the regulations of the auditing and accounting practices for the disclosure of audit fees, since audit fee is directly related to audit quality. However, the audit fees perceived by the client is often different from the amount charged by the auditors. Hence, this study investigated the impact of firm-specific characteristics on audit fees of quoted consumer goods firms in Nigeria using a purposive sampling technique. Secondary data were obtained from annual reports of the companies for the period from 2009-2016. The empirical result from Breusch-Pagan Lagrange Multiplier Test (BP-LM) produced a chi-square value of 13.94 with p-value of 0.0001 indicating that pooled ordinary least squares (OLS) will not be appropriate for the study. The Hausman test showed a chi-square of 23.55 with a p-value of 0.001 indicating that the null hypothesis is strongly rejected. Thus, the only estimate from the fixed effect model was interpreted to explain the relationship between firm-specific characteristics and audit fees of quoted consumer goods firms in Nigeria. The result revealed that auditee size, auditee risk, auditee profitability and IFRS adoption are the firm specific characteristics that impact on audit fees with only auditee size and IFRS adoption being positively related to audit fees while the other factors are negatively related to audit fees. Based on this finding, this study concluded that the firm’s specific factors are the major drivers of audit fees in Nigeria consumer goods firms. This study recommends among others that companies should implement corporate governance principles that address issues relating to board independence and committee sizes to guide activities in the consumer goods sector since profitability behave negatively with audit fees.

scholarly journals Assessing the Impact of Corporate Governance Index on Financial Performance in the Romanian and Italian Banking Systems

2021 ◽  
Vol 13 (10) ◽  
pp. 5535
Author(s):  
Marco Benvenuto ◽  
Roxana Loredana Avram ◽  
Alexandru Avram ◽  
Carmine Viola
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Banking Sector ◽  
Research Question ◽  
Interactive Effect ◽  
Banking System ◽  
Capital Adequacy ◽  
Banking Systems ◽  
Governance Index ◽  
The Impact

Background: Our study aims to verify the impact of corporate governance index on financial performance, namely return on assets (ROA), general liquidity, capital adequacy and size of company expressed as total assets in the banking sector for both a developing and a developed country. In addition, we investigate the interactive effect of corporate governance on a homogenous and a heterogeneous banking system. These two banking systems were chosen in order to assess the impact of corporate governance on two distinct types of banking system: a homogenous one such as the Romanian one and a heterogeneous one such as the Italian one. The two systems are very distinct; the Romanian one is represented by only 34 banks, while the Italian one comprises more than 350 banks. Thus, our research question is how a modification in corporate governance legislation is influencing the two different banking systems. The research implication of our study is whether a modification in legislation, thus in the index of corporate governance, is feasible for two different banking sectors and what the best ways to increase the financial performance of banks are without compromising their resilience. Methods: Using survey data from the Italian and Romanian banking systems over the period 2007–2018, we find that the corporate governance has a significant, positive and long-lasting effect on profitability and capital adequacy in both countries. Results: Taking the size of the company into consideration, the impact of the Index of Corporate Governance (ICG) on a homogenous banking system is positive while the impact on a heterogeneous banking system is negative. Conclusions: Our study provides evidence of the impact of IGC on financial performance and sheds light on the importance of the size of the company. Therefore, one can state that the corporate governance principles applied do not encourage the growth of large banks in heterogeneous banking sectors, thereby suggesting new avenues of research associated with new perspectives.

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