scholarly journals The Effect of Market Power on Bank’s Net Interest Margin: The Moderating Role of Financial Access

2021 ◽  
Vol 4 (1) ◽  
pp. 129-139
Author(s):  
I Made Pradityarjuna Mahatmyam Mahayana ◽  
Dony Abdul Chalid
Keyword(s):  
Market Power ◽  
Commercial Banks ◽  
Internet Banking ◽  
Annual Data ◽  
Mobile Banking ◽  
Financial Access ◽  
Net Interest Margin ◽  
Moderating Role ◽  
Interest Margin

The research focuses on determining the effect of commercial bank’s market power on net interest margin and the moderating role of financial access. The study uses annual data of 33 commercial banks in Indonesia from 2012 to 2019 based on the category of State-Owned Commercial Banks and National Private Commercial Banks. The data is obtained from secondary data, using financial reports published by commercial banks. The data is analyzed using moderated regression analysis to estimate two models, basic model is used to estimate the effect of market power on net interest margin, while the interaction model is used to estimate the moderating effect of financial access. Market power was measured using the Lerner index of each bank. Financial access was measured by the number of branches and the availability of electronic banking channels such as mobile banking, internet banking, and digital branch. The results show that the increase in commercial bank’s market power significantly increases net interest margin. Other results also show that branch and mobile banking & internet banking significantly moderate the effect of market power on the net interest margin, while the digital branch is not significantly moderating the relationship between market power and net interest margin.

Financial Innovations and Performance of Commercial Banks in Kenya

2020 ◽  
Vol 2 (2) ◽  
pp. 21-33
Author(s):  
Naomi Wanja Ireri ◽  
Gladys Kimutai
Keyword(s):  
Rural Areas ◽  
Commercial Banks ◽  
Internet Banking ◽  
Ease Of Use ◽  
Primary Data ◽  
The Internet ◽  
Mobile Banking ◽  
Good Opportunity ◽  
Financial Innovations ◽  
Automated Teller Machine

Commercial banks in Kenya have embraced alternative banking channels which represent a shift in delivery of banking and financial services since the alternative banking have become synonymous with commercial banks in Kenya. While banks have succeeded in leveraging available technology and provide alternative avenues to customers for banking services, the challenge it faces today is optimizing the usage of these channels so as to improve on their performance. The general objective of this study was to investigate the effects of financial innovations on the performance of commercial banks in Kenya. The specific objectives of the study were to examine the influence of internet banking, mobile banking, agency banking and ATM banking on the performance of commercial banks in Kenya. The study was guided by agency theory, balanced score card and diffusion of innovation theory. This study employed a descriptive research design. The study targeted44 commercial banks in Kenya as at 2017. The 16 banks which embrace all the four financial innovations from 2013 to 2017were selected using purposive sampling method. The sample size was 80 respondents who comprised of 5 senior management employees in each of the selected banks.This study used questionnaire to collect primary data from the respondents. Content analysis technique was used to analyze qualitative data collected from open ended questions in and reported in narrative form. Descriptive statistics such as mean and standard deviation were used to analyse the quantitative data. Multiple regression analysis was used to show the relationship between independent variables against dependent variable. The study revealed that internet banking, mobile banking, agency banking and ATM banking had a positive and significant effect on the performance of commercial banks. Thisstudy concludes that the banking industry has benefited tremendously from the development of the Internet. The Internet fundamentally changed the way in which banking networks are designed to meet the client demands and expectations. Mobile banking provides a good opportunity to commercial banks in Kenya to reach many mobile phone subscribers in Kenya who had remained unbanked and unreached due to limited access to bank branch networks in the country. The access to the large masses through mobile banking of the population gives banks the opportunity to grow by reaching the unbanked population. Agency banking has led to accessibility of financial service to many customer in remote areas and hence an increase in effectiveness and efficiency in service delivery. Customers are satisfied with the automated teller machine services because of ease of use, transaction cost and service security but not satisfy with automated teller machine dispense of cash. The study recommends that the public and businesses must be encouraged to use Internet banking in their daily activities, including deposits, payments and money transfers. Commercial banks in Kenya should ensure convenience and security of mobile banking through written guidelines on convenience and security of mobile banking. Commercial banks in Kenya should increase the number of agents in estates and in the rural areas. This can be done by reducing the requirements of becoming a bank agent. The banks should employ customized software that records relevant information on automated teller machine cards so that banks can establish whether unauthorized transaction has taken place or not.

Financial access and economic development: the moderating role of financial consumer protection

2019 ◽  
Vol 15 (4) ◽  
pp. 406-424 ◽  
Author(s):  
Maryam Kriese ◽  
Joshua Yindenaba Abor ◽  
Elikplimi Agbloyor
Keyword(s):  
Economic Development ◽  
World Bank ◽  
Financial Literacy ◽  
Compliance Monitoring ◽  
Financial Access ◽  
Policy Makers ◽  
Content Type ◽  
The World Bank ◽  
Moderating Role

Purpose The purpose of this paper is to examine the moderating role of financial consumer protection (FCP) in the access–development nexus. Design/methodology/approach The study is based on cross-country data on 102 countries surveyed in the World Bank Global Survey on FCP and Financial Literacy (2013). The White heteroscedasticity adjusted regressions and Two-stage least squares regressions (2SLS) are used for the estimation. Findings Interactions between FCP regulations that foster fair treatment, disclosure, dispute resolution and recourse and financial access have positive net effects on economic development. However, there is no sufficient evidence to suggest that interactions between financial access and enforcement and compliance monitoring regulations have a significant effect on economic development. Practical implications First, policy makers should continue with efforts aimed at instituting FCP regimes as part of strategies aimed at broadening access to financial services for enhanced economic development. Second, instituting FCP regimes per se may not be enough. Policy makers need to consider possible intervening factors such as the provision of adequate resources and supervisory authority, for compliance monitoring and enforcement to achieve the expected positive effect on economic development. Originality/value This study extends evidence in the law–finance–growth literature by providing empirical evidence on the effect of legal institution specific to the protection of retail financial consumers on the access–development nexus using a nouvel data set, the World Bank Global survey on FCP and Financial Literacy (2013).

scholarly journals PENGARUH RASIO CAPITAL ADEQUACY, LOAN TO DEPOSIT, NET INTEREST MARGIN TERHADAP PERTUMBUHANLABA (STUDI KASUS PADA BANK UMUM KONVENSIONALYANG TERDAFTAR DI BURSA EFEK INDONESIA)

AKUNTABILITAS ◽  
2019 ◽  
Vol 11 (2) ◽  
pp. 115-126
Author(s):  
Bambang Suryadi ◽  
Lis Djuniar
Keyword(s):  
Commercial Banks ◽  
Stock Exchange ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Test Results ◽  
Net Interest Margin ◽  
Capital Adequacy Ratio ◽  
Research Population ◽  
Profit Growth ◽  
Interest Margin

This study is how Influence Ratio Capital Adequacy Ratio, Loan to Deposit Ratio, Net Interest Margin Against Profit Growth at Conventional Commercial Banks Listed on Indonesia Stock Exchange. the purpose of this study is to analyze the Influence of Capital Adequacy Ratio Ratio, Loan to Deposit Ratio, Net Interest Margin on Profit Growth at Conventional Commercial Banks Listed on Indonesia Stock Exchange. The type of research used is associative research. The research population is conventional commercial bank in Indonesia. The research variables are Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), Net Interest Margin (NIM), and Profit Growth. The data used is secondary data. Data collection methods are quantitative. Partial test results show that NIM has a significant effect on Profit Growth, While CAR and LDR have no significant effect to Profit Growth.

scholarly journals Electronic Banking and Financial Performance of Commercial Banks in Kenya

2019 ◽  
Vol 3 (II) ◽  
pp. 293-304
Author(s):  
Maria Mueni Mutisya ◽  
Gerald Atheru
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Internet Banking ◽  
Business Environment ◽  
Mobile Banking ◽  
Electronic Banking ◽  
Return On Assets ◽  
Independent Variables ◽  
Net Profit ◽  
Automated Teller Machine

Information technology has changed the traditional ways of doing business to a digital and electronic way that has led to globalization. The banking industry has been forced by the wave of electronic payment system in the business environment to change from its traditional ways such as: long queues as customers waited to be served, delay in the clearing house as representatives of different banks waited to settle their dues and manual work that resulted to errors. The main purpose of the study was to determine the effect of electronic banking on the financial performance of commercial banks in Kenya. The specific objectives were to determine the extend of internet, mobile, automated teller machine and debit/credit card banking adoption and its effect on financial performance. The study covered a period of five years that is from the year 2011 to the year 2015 and adopted descriptive research design. The data collected was analyzed by the use of both descriptive and inferential statistics procedures. Primary and secondary data was collected from the 34 commercial banks that responded leading to a respond rate of 79.04% out of the 43 commercial banks. The trade analysis showed that internet banking was recognized and accepted by the Kenyan commercial banks and the Kenyans as a way of transacting. Electronic banking was found to be positive and significantly related to the financial performance of the commercial banks in Kenya. This was attributed by an R Square of 0.688 for Return On Assets, 0.63 for Net Profit and 0.277 for Return On Equity indicating that the independent variables in the study were able to give information of up to 68.8%, 63% and 27.7% respectively while the remaining 31.2%, 27% and 72.3% could not be explained in the study but could be explained using other variables outside the study. All the independent variables were (internet banking, Mobile banking, Automated Teller Machine banking and Debit/Credit banking) found to be positively and significantly related to the Return On Assets while only mobile banking and internet banking were found to be positively and significantly related to Net Profit since their p Values were less 0.05. Automated Teller Machine banking showed a positive relation that was insignificant with the Return On Equity.The study recommends that, electronic banking should be employed by commercial banks through proper management policies since it has shown improved efficiency and financial performance. For further studies, areas of crime technology, quality of banking services, electronic fund transfer and performing loans should be looked at. This is an open-access article published and distributed under the terms and conditions of the Creative Commons Attribution 4.0 International License of United States unless otherwise stated. Access, citation and distribution of this article is allowed with full recognition of the authors and the source.

scholarly journals Factors affecting net interest margin of joint-stock commercial banks in Vietnam

2017 ◽  
Vol 24 (01) ◽  
pp. 92-103
Author(s):  
An Pham Hoang ◽  
Loan Vo Thi Kim
Keyword(s):  
Commercial Banks ◽  
Secondary Data ◽  
Regression Method ◽  
Factors Affecting ◽  
Managerial Efficiency ◽  
Net Interest Margin ◽  
Panel Data Regression ◽  
Data Regression ◽  
Negative Effect ◽  
Interest Margin

This study analyzes factors affecting net interest margin of joint-stock commercial banks in Vietnam. The paper uses the secondary data of 26 banks with 182 observations for the period of 2008–2014 and applies the panel data regression method. The empirical results indicate that lending scale, credit risk, capitalization, and in-terest rate have positive impacts on net interest margin. In contrast, managerial efficiency has a negative effect on net interest margin. However, bank size and loan to deposit ratio are statistically insig-nificant to net interest margin.

scholarly journals Effect of Bank Innovations on Profitability and Return on Assets (ROA) of Commercial Banks in Lebanon

2017 ◽  
Vol 9 (4) ◽  
pp. 35 ◽  
Author(s):  
Hiyam Sujud ◽  
Boutheina Hashem
Keyword(s):  
Social Sciences ◽  
Commercial Banks ◽  
Positive Impact ◽  
Credit Cards ◽  
Internet Banking ◽  
Mobile Banking ◽  
Significance Tests ◽  
Return On Assets ◽  
Point Of Sale ◽  
The Impact

The purpose of this research is to study bank innovations in the field of mobile banking, debit and credit cards, automated machines (ATM), internet banking, point of sale terminals (PST) and electronic funds transfer (EFT). It purposely looked into those innovations in relation to their influence on profitability and return on assets (ROA) of Lebanese commercial banks. Data was collected through a research questionnaire, and statistical analysis was done using the Package of Social Sciences Software (SPSS). The results revealed that there is a significant positive impact of bank innovations on profitability and return on assets of Lebanese commercial banks and significance tests also showed that the impact was statistically significant. Based on the results of the study, it can be concluded that bank innovations affect profitability and return on assets (ROA) of commercial banks in Lebanon positively.

Does Ownership Structure Influence Bank Performance?: Evidence from an Emerging Economy

2018 ◽  
Vol 17 (2_suppl) ◽  
pp. S282-S297 ◽  
Author(s):  
Brijesh K Mishra ◽  
L. V. Ramana
Keyword(s):  
Data Analysis ◽  
Panel Data ◽  
Ownership Structure ◽  
Commercial Banks ◽  
Panel Data Analysis ◽  
Emerging Economy ◽  
Bank Performance ◽  
Return On Assets ◽  
Net Interest Margin ◽  
Interest Margin

Banks’ ownership and their performance form two important dimensions of the entire gamut of banking function. This article strives to establish a link between the two by studying commercial banks in India. Conducting a panel data analysis of 89 commercial banks over the period from 2008–2009 to 2012–2013, one could observe that ownership indeed mattered when net interest margin (NIM) or per-employee profitability was considered, but when return on assets (ROA) was considered, there was not much of a difference among banks when differentiated on ownership basis.

scholarly journals Regulatory Capital is a Panacea for Efficiency, Credit Growth and Reducing Non-Performing Loans in Commercial Banks

2021 ◽  
Vol 16 (2) ◽  
pp. 265-287
Author(s):  
Amina Malik ◽  
◽  
Babar Zaheer Butt ◽  
Shahab Ud Din ◽  
Haroon Aziz ◽  
...  
Keyword(s):  
Commercial Banks ◽  
Financial Statements ◽  
Capital Adequacy ◽  
Regulatory Capital ◽  
Credit Growth ◽  
Minimum Capital ◽  
Capital Adequacy Ratio ◽  
The Impact ◽  
Interest Margin

This study examined the effectiveness of regulatory capital in enhancing efficiency and credit growth and reducing bad loans in commercial banks listed on the Pakistan Stock Exchange (PSX) from 2010 to 2019. Precisely, the impact of capital adequacy ratio (CAR) was studied on net interest margin (NIM), credit growth (CR) and non-performing loans (NPLs). The impact of capital adequacy regulations was assessed by retrieving data from financial statements analysis (FSA), Bank Financial statements and the World Bank website. Panel regression models including ordinary least squares (OLS), fixed and random effects under robust title were applied in this study. Results revealed that the implementation of stringent CAR plays the role of panacea and increases interest margin & credit growth and a reduction of NPL in Pakistani commercial banks. The study provides practical results for regulators to customize regulations on credit growth to reduce non-performing loans and maintain healthy growth of loans by not compromising on interest margins as well as maintenance of minimum capital adequacy ratios. With the high significance of stringent minimum capital adequacy for banks, the findings of the study are valuable for regulators, banks, auditors and investors, as capital adequacy ratio commonly plays the role of Panacea in terms of efficiency, credit growth and reduction in non-performing loans. Keywords: capital adequacy ratio, efficiency, credit growth, non-performing loans

scholarly journals Analyzing Effect of Alternative Banking Channels on Financial Performance of Burundi Commercial Banks: Evidence from Kenya Commercial Bank in Burundi

2020 ◽  
pp. 1-11
Author(s):  
Nkeshimana Carlos ◽  
Martin Onsiro Ronald
Keyword(s):  
Financial Performance ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Strong Relationship ◽  
Target Population ◽  
Internet Banking ◽  
Sample Population ◽  
Mobile Banking ◽  
Significance Level ◽  
Descriptive Survey

The study sought to assess the effect of channels of alternative banking on financial performance of Kenya Commercial Banks in Burundi. The specific objectives were: to examine the effect of mobile banking on financial performance of Kenya Commercial Bank, Burundi; to assess the effect of internet banking on financial performance of Kenya Commercial Bank, Burundi; to examine the effect of auto teller machines on financial performance of Kenya Commercial Bank, Burundi; and to assess the effect of agency banking on financial performance of Kenya Commercial Bank, Burundi. The study employed descriptive survey research design as well as correlation research designs. Based on information obtained from KCB, the target population for the study was 37 employees and 114 customers. The researcher used Slovin’s formula to define the sample population n = 60 (14 employees and 46 customers). A questionnaire was used for data collection. The data was qualitatively and quantitatively analyzed. The results of the study showed that there was a strong relationship between the different banking distribution channels and the financial performance of KCB Bank. It also found that 14.1% of the total variance in financial performance of KCB Bank could be attributed to alternative banking channels. The remaining 85.9% of the variance in financial performance could be attributed to other determinants of financial performance that were not the focus of this study. ANOVA statistics revealed that the regression model was ideal since it had a significance level of 0.0%. The study also found that mobile banking, Automated Teller Machine, agencies and Internet banking affected the performance of commercial banks in a positive and statistically significant way. The study recommends that Burundian commercial bank sought to invest heavily in alternative banking as this will lead to an improvement in banks' financial performance. The study also recommended that KCB should examine the competitive environment and determine the means to achieve the goal of interoperability, and continue to make electronic banking products available, offering various types of bank cards adapted to the needs of each client.

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