scholarly journals POLITICALLY CONNECTED BANKS: SOME INDONESIAN EVIDENCE

2017 ◽  
Vol 18 (1) ◽  
Author(s):  
Bambang Sutopo ◽  
Irwan Trinugroho ◽  
Sylviana Maya Damayanti
Keyword(s):  
Lower Cost ◽  
Time Effect ◽  
Foreign Banks ◽  
Political Connections ◽  
Bank Performance ◽  
Private Banks ◽  
The Impact

We investigate the impact of being politically connected on bank performance and cost of funding. We study 89 Indonesian banks over the 2001-2008 period disentangled into politically connected banks which can be state-owned banks and private banks as well as non-politically connected banks. Controlling for bank fundamental factors and time effect, we do find that political connections improve bank performance. Moreover, our results provide evidence that politically connected banks are benefited by getting a lower cost of funding. Finally, our result reveals that political connections are less valuable for foreign banks. Keywords: Political Connections; Performance; Cost of Funding; Foreign Banks; Indonesia.

scholarly journals Impact of Corporate Political Connections on Cost of Equity: A Dynamic Panel Approach

2021 ◽  
Vol 13 (3) ◽  
pp. 45-65
Author(s):  
Aamir Amanat ◽  
Ahmed Imran Hunjra ◽  
Salman Ali Qureshi ◽  
Muhammad Hanif ◽  
Muhammad Razzaq Athar
Keyword(s):  
Lower Cost ◽  
Stock Exchange ◽  
Generalized Method Of Moments ◽  
Equity Capital ◽  
Political Connections ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Financing Cost ◽  
Corporate Political Strategies ◽  
The Impact

We analyze the impact of corporate political connections on the cost of equity of non-financial firms listed at the Pakistan Stock Exchange. We extract data from the DataStream and Election Commission of Pakistan for the years 2001 to 2018. The Generalized Method of Moments is used for data analysis. This research finds that firms use political connections to enjoy a lower cost of equity capital. Further, firms with strong ties to political power obtain more benefits on financing cost as compared to non-connected firms. Besides, we also find that firms affiliated with a large business group enjoy a lower cost of equity than non-affiliated connected firms. The findings may be helpful for regulators to formulate suitable policies concerning the use of corporate political strategies and to assist unconnected and non-affiliated firms to access finance easily.

Determinants of Bank Performance in a Developing Economy

2012 ◽  
Vol 13 (1) ◽  
pp. 1-23 ◽  
Author(s):  
Fadzlan Sufian ◽  
Mohamad Akbar Noor Mohamad Noor
Keyword(s):  
Banking Sector ◽  
External Factors ◽  
Foreign Banks ◽  
Bank Performance ◽  
Asian Countries ◽  
Network Embeddedness ◽  
Indian Banks ◽  
Internal And External Factors ◽  
The Impact ◽  
Global Advantage

The article seeks to examine the internal and external factors that influenced the performance of banks operating in the Indian banking sector during the period 2000–08. The empirical findings from this study suggest that credit risk, network embeddedness, operating expenses, liquidity and size have statistically significant impact on the profitability of Indian banks. However, the impact is not uniform across banks of different nations of origin. During the period under study, the empirical findings do not lend support for the ‘limited form’ of global advantage hypothesis. Likewise, the liability of unfamiliarness hypothesis is also rejected, since we do not find significant advantage accruing to foreign banks from other Asian countries.

scholarly journals Assessing The Relationship Between Liberalization, Ownership And Performance: The Case Of Turkish Banks

2011 ◽  
Vol 3 (1) ◽  
Author(s):  
Ihsan Isik ◽  
Lokman Gunduz ◽  
Osman Kilic ◽  
Dogan Uysal
Keyword(s):  
Financial Liberalization ◽  
Malmquist Index ◽  
Foreign Banks ◽  
Public And Private ◽  
Index Approach ◽  
Private Banks ◽  
And Performance ◽  
Public Banks ◽  
The Impact ◽  
Productivity Gains

This paper employs a DEA-type Malmquist index approach to evaluate the impact of financial liberalization on the productivity changes of public, private and foreign banks in Turkey during the period between 1981 and 1990. The results indicate that all forms of banks have benefited from financial liberalization. However, foreign banks were found to be the most productive, followed by private banks and public banks respectively. The major source of productivity gains is scale changes for public and private banks and technical progress for foreign banks. It also seems that productivity growth indices of all banks converge towards the end of liberalization period.

The Impact of Loan Portfolio Diversification on Tunisian Bank’s Profitability

2018 ◽  
Vol 6 (6) ◽  
pp. 35
Author(s):  
Houda Belguith ◽  
Meryem Bellouma
Keyword(s):  
Panel Data ◽  
Negative Impact ◽  
Bank Lending ◽  
Foreign Banks ◽  
Portfolio Diversification ◽  
Loan Portfolio ◽  
Bank Profitability ◽  
Private Banks ◽  
The Impact ◽  
Positive Effect

This paper examines the effect of loan portfolio diversification on Tunisian banks profitability over the period 2000-2015. By using panel data method, our finding, show that focusing on few sectors is more profitable than diversifying bank lending operations. In addition, we find that this negative impact is more pronounced in private banks. However, for foreign banks loan portfolio diversification is found to be positively associated with higher bank profitability. Also, we find support to the hypothesis stating that the positive effect of loan portfolio diversification is more pronounced for credit risky banks.

Foreign banks in MENA countries: how important? How relevant?

2016 ◽  
Vol 32 (1) ◽  
pp. 77-98 ◽  
Author(s):  
Saibal Ghosh
Keyword(s):  
Positive Impact ◽  
Spillover Effects ◽  
Dynamic Panel Data ◽  
Foreign Bank ◽  
Foreign Banks ◽  
Bank Performance ◽  
Content Type ◽  
Mena Countries ◽  
Domestic Banks ◽  
The Impact

Purpose – The role of foreign banks in impacting the behavior of domestic banks has been a relatively unaddressed topic in the literature. Employing bank-wise data on MENA countries during 2000-2012, the purpose of this paper is to examine how the behavior of foreign banks impact domestic bank performance. For this purpose, the authors focus on not only their profitability and stability, but also on broader numbers such as loan portfolio and funding costs. In addition, the authors also explore the impact of foreign banks on the growth of domestic economies and its implications for the allocation of capital and labor. Design/methodology/approach – The authors employ the dynamic panel data methodology as compared to alternate techniques owing to the ability of this technique to effectively address the endogeneity problem of some of the independent variables. Findings – The results suggest that foreign bank presence exerts significant spillover effects. At the same time, increased foreign banks appear to impel domestic banks to cut back lending. As regards its impact on growth, the results indicate that although labor does not exert any discernible impact on GDP growth, capital exerts a positive impact on output when foreign bank penetration is high, supportive of the real effects of foreign banks. Originality/value – To the best of the authors’ knowledge, this is one of the early studies for MENA countries to examine this issue in a systematic manner. Most studies of this genre focus on a limited set of banks/countries, thereby limiting their empirical evidence. By focussing on an extended sample of MENA country banks covering an extended period that subsumes the financial crisis, the analysis is also able to shed light as to how foreign presence impacts domestic bank performance.

scholarly journals The Impact of Bank Governance on Bank Performance in Pakistan

2011 ◽  
Vol 16 (Special Edition) ◽  
pp. 271-300
Author(s):  
Abid A. Burki ◽  
Shabbir Ahmad
Keyword(s):  
Foreign Banks ◽  
Bank Performance ◽  
Governance Reform ◽  
Mixed Effect ◽  
Cost Frontier ◽  
Governance Changes ◽  
Bank Governance ◽  
Frontier Efficiency ◽  
The Impact ◽  
Unbalanced Panel Data

This study attempts to investigate the impact of changes in bank governance on bank performance in Pakistan. Governance changes entail the privatization and restructuring of state-owned banks, and the merger and acquisition of private and foreign banks. Using the concept of frontier efficiency, we adopt an empirical framework that allows us to study the impact of all governance reform variables in the same model. First, we estimate a stochastic cost frontier model using unbalanced panel data on commercial banks for the period 1991–2005. Second, we decompose banks’ total factor productivity (TFP) change into its different components, using the estimated frontier. In general, the results show an improvement in banks’ cost efficiency following changes in bank governance. We note that governance changes bring about an improvement in banks’ TFP vis-à-vis that of banks that did not undergo governance changes. We find a declining trend in TFP change (TFPC), which could be a consequence of the banking industry’s increased profitability. We also note that bank selection for governance changes has a mixed effect on TFPC, while bank consolidation seems to be more effective in improving TFPC.

scholarly journals Impact of ownership structure on risk-taking behavior of South Asian banks

2020 ◽  
Vol 17 (3) ◽  
pp. 108-120 ◽  
Author(s):  
Ahmed Imran Hunjra ◽  
Tahar Tayachi ◽  
Rashid Mehmood
Keyword(s):  
Ownership Structure ◽  
Risk Taking ◽  
Capital Adequacy ◽  
Foreign Banks ◽  
Management Policy ◽  
Public And Private ◽  
Coverage Ratio ◽  
Private Banks ◽  
Risk Taking Behavior ◽  
The Impact

The implementation of an effective risk management policy is necessary for the survival and success of banks. Ownership structure changes the risk-taking behavior of banks. Therefore, we analyze the impact of the ownership structure on risk-taking behavior of banks in emerging markets (i.e., Pakistan, India, and Bangladesh). We take public, private and foreign ownership of banks in this study. We collect the data from 64 banks of selected countries from 2011 to 2018. We measure risk-taking as capital adequacy, leverage coverage ratio, non-performing loan ratio, and return volatility. We use two-step system dynamic panel estimation for analyzing the results. We find that public and private banks have significant relationship with the risk-taking of banks. Furthermore, public and private banks show more risk-taking behavior as compared to foreign banks in all selected countries.

scholarly journals Financial Technology Disruption in Indonesian Banking: From Loan and Interest Rate Perspectives

2021 ◽  
Vol 58 (1) ◽  
pp. 120-128
Author(s):  
Hizkia H. D. Tasik, Daniel D. Rumani
Keyword(s):  
Interest Rate ◽  
Banking Industry ◽  
Foreign Banks ◽  
Time Threshold ◽  
Panel Data Regression ◽  
Data Regression ◽  
Private Banks ◽  
Regional Banks ◽  
The Impact ◽  
Financial Technology

The presence of Fintech has contributed to the changes in many industries in Indonesia. Among others, banking industry has been one of the most resilient to alterations and skeptical to disruption by Fintech. Using the data of banking industry covering national banks, regional banks, national private banks and foreign banks, from 2009 to 2019, this study aims to examine the impact of interest rate in pre-Fintech period compared to the impact in post-Fintech period. This study sets 2016 as the time threshold. Using panel data regression model, the findings suggest that the power of interest rate in changing the level of loans is lower in the post-Fintech than in the pre-Fintech.Additionally, in many cases, the power is even statistically insignificant in the post-Fintech. Reforms in banking loan regulation is necessary to respond to the presence of Fintech.

scholarly journals Impact of Macroeconomic and Endogenous Factors on Non Performing Bank Assets

2012 ◽  
Author(s):  
Vighneswara Swamy
Keyword(s):  
Emerging Economies ◽  
Default Risk ◽  
Foreign Banks ◽  
Credit Management ◽  
Endogenous Factors ◽  
Management Procedures ◽  
Private Banks ◽  
Bank Privatization ◽  
Lending Rates ◽  
The Impact

Determinants of default risk of banks in emerging economies have so far received inadequate attention in the literature. Using panel data techniques, this paper seeks to examine the impact of macroeconomic and endogenous factors on non-performing assets during 1997-2009. The findings reveal some interesting inferences contrary to the perception of few opinion makers. Lending rates have been found to be not so significant in affecting the non-performing loans, which is contrary to the general perception. Such assets have a negative and significant influence, indicating that large banks may have better risk management procedures and technology which definitely allows them to finish up with lower levels of non-performing assets compared to smaller banks. Further, this study suggests that private banks and foreign banks have advantages in terms of their efficiencies in better credit management that contains non-performing assets. That indicates that bank privatization can lead to better management of default risk.  

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