scholarly journals Efficiency of Commercial Banking in Developing Countries

Mathematics ◽  
2021 ◽  
Vol 9 (14) ◽  
pp. 1597
Author(s):  
Violeta Cvetkoska ◽  
Katerina Fotova Čiković ◽  
Marija Tasheva
Keyword(s):  
Developing Countries ◽  
Commercial Banks ◽  
Feasible Solution ◽  
Banking System ◽  
Efficiency Score ◽  
Commercial Banking ◽  
Real Situation ◽  
Super Efficiency ◽  
Bank Management ◽  
The Stability

The aim of this paper is to evaluate the relative efficiency of commercial banks in three developing countries in Europe (North Macedonia, Serbia, and Croatia) in the period from 2015 to 2019, and to provide targets for improvement for the inefficient banks by using DEA. The variables are selected under the income-based approach. Based on the output-oriented BCC model, unusual results are obtained for a few commercial banks in each country, that is, they are BCC relative efficient, which is contrary to the real situation. In order to identify outliers that can affect the efficiency results, a super-efficiency procedure is applied so that banks with a super-efficiency score higher than 1.2 (outliers) or for which a feasible solution was not found are considered in detail and removed, and then the output-oriented BCC model is rerun. Based on the obtained results, the Macedonian commercial banking system shows the highest efficiency (91.1%), followed by the Croatian (90.9%) and the Serbian (81.9%) banking system. The estimated targets for improvement of the inefficient commercial banks could help their top bank management in better resource allocation and making fact-based and faster decisions by which they can improve the operation of the banks they lead and contribute to the stability of the financial system.

scholarly journals Efficiency of banks in Malaysia: A super efficiency approach

2019 ◽  
Vol 30 (4) ◽  
pp. 442-450
Author(s):  
Maznah Mat Kasim ◽  
Razamin Ramli ◽  
Md. Azizul Baten ◽  
Jastini Mohd Jamil ◽  
Mushtaq Taleb
Keyword(s):  
Commercial Banks ◽  
Efficiency Score ◽  
Data Envelopment ◽  
Super Efficiency ◽  
Second Stage ◽  
Sbm Model ◽  
Measuring Efficiency ◽  
Dea Models ◽  
The Stability ◽  
Two Stages

The stability of the economic system of a country very much depends on its banking industry. Data Envelopment Analysis (DEA) has been applied widely for measuring efficiency of banks. Limited studies, however, have employed the radial and non-radial DEA models to evaluate efficiency of banks without considering the ranking of the fully efficient banks since those banks have the same efficiency score. Considering the weakness of the radial and non-radial DEA, this paper aims to calculate the banks efficiency of nine commercial banks in Malaysia from 2004 to 2013 by adopting the two-stage of super efficiency slack-based measure (SE-SBM) model. This model can discriminate between the efficient banks and recalculate their efficiency scores. Then, the selected banks were able to be ranked according to their final efficiency scores. Moreover, comparative analyses of the efficiency of the banks and the year-wise efficiency of the selected banks were also conducted. The methodology consists of two stages.  In the first stage the SBM model is run to classify efficient and inefficient banks. In the second stage the super efficiency model is run to rank the efficient banks obtained from the first stage by calculating their super efficiency scores. Our empirical results show that: (1) the efficiency status of the banks fluctuated over the examined period, the high number of the efficient banks is achieved in the years 2006 and 2008, while the year 2012 has the lowest number of the efficient banks. (2) the ranking of the banks fluctuated in the studied period. (3) most of the banks are inefficient in terms of their average efficiency scores. This paper has two limitations. First, the paper did not integrate undesirable output, despite it deals with non-interest income. Second, performance evaluation of Malaysian commercial banks was only compared among the Malaysian banks.

Income Diversification and Bank Efficiency in Vietnam

2017 ◽  
pp. 52-67
Author(s):  
Sang Nguyen Minh
Keyword(s):  
Regression Model ◽  
Commercial Banks ◽  
Banking System ◽  
Operational Efficiency ◽  
Commercial Banking ◽  
Tobit Regression ◽  
Income Diversification ◽  
Positive Effects ◽  
Study Results ◽  
The Impact

This study uses the DEA (Data Envelopment Analysis) method to estimate the technical efficiency index of 34 Vietnamese commercial banks in the period 2007-2015, and then it analyzes the impact of income diversification on the operational efficiency of Vietnamese commercial banks through a censored regression model - the Tobit regression model. Research results indicate that income diversification has positive effects on the operational efficiency of Vietnamese commercial banks in the research period. Based on study results, in this research some recommendations forpolicy are given to enhance the operational efficiency of Vietnam’s commercial banking system.

scholarly journals Commitments of commercial bank management

2019 ◽  
pp. 21-24
Author(s):  
Olena POLOVA ◽  
Hanna BALALAIEVA
Keyword(s):  
Commercial Banks ◽  
Banking System ◽  
Common Source ◽  
Resource Base ◽  
Future Directions ◽  
Bank Management ◽  
Liability Management ◽  
Commercial Bank Management ◽  
The Interest Rate ◽  
Banking Institution

One of the basic problems of the banking system is the resource providing for the bank activities, and so the question of the resource potential management of the institution is actual today. The article deals with the economic essence and structure of the liabilities of commercial banks. A review of the specific features of banking and bank management defines the goal in the liability management. The dynamics of the resource base of Ukrainian banks. The article deals with the overall analysis of management problems for involved and borrowed resources of banks. Attention is concentrated on factors of banks' resources. Summarizes the main methods of deposit liability management. Considers the features of the borrowed resources management. Defines the main parameters of the resource base formation. Proposed future directions of research in the field of the liabilities management . The purpose of the study is to determine the peculiarities of managing the obligations of commercial banks and improve the methodology of this process. In the course of the study, attention was drawn to the process of forming a commercial bank's resource base, where two main management parameters need to be considered - the value of borrowed and borrowed funds and their volume. The most common source of formation of bank resources is customer deposits. The need to attract non-deposit resources arises in the event of a lack of current liquidity or as a result of an attempt to balance payment flows at subsequent dates. Further research should be directed to substantiate the methods, instruments and instruments of deposit and non-deposit policy, which will provide not only sufficient capital but also a high rating of a banking institution. It is determined that price and non-price management methods are used to provide the desired structure, volume and level of expenses on deposit liabilities. The essence of pricing methods is to use the interest rate on deposits as the main lever in the competition for free cash of individuals and legal entities. Raising the bid offered by the bank makes it possible to attract additional resources.

scholarly journals Governance of Vietnam's Financial Institutions in Accordance with International Standards until 2020

2016 ◽  
Vol 23 (01) ◽  
pp. 50-76
Author(s):  
Huong Tram Thi Xuan ◽  
Canh Nguyen Phuc ◽  
Nhu Nguyen Tu
Keyword(s):  
Multiple Regression ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Banking System ◽  
Commercial Banking ◽  
International Standards ◽  
Bank Performance ◽  
Related Factors ◽  
Regression Approach ◽  
Shed Light

In this article, using a combination of risk-related factors, we address the governance of financial institutions, mainly Vietnam’s commercial banks, in light of such international standards as of Basel II and III. Additionally, we employ multiple regression approach to shed light on the effect of each type of risk on bank performance and propose a few recommendations for effectively governing the commercial banking system of Vietnam until 2020.

MODELING THE INFLUENCE OF THE STRUCTURE AND QUALITY OF ASSETS ON THE PROFITABILITY OF A COMMERCIAL BANK

2021 ◽  
pp. 10-18
Author(s):  
Alena S. Kudriavtseva ◽  
Olga G. Arkadeva
Keyword(s):  
Economic Analysis ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Factors Affecting ◽  
Correlation And Regression Analysis ◽  
The Stability ◽  
Classical Economic ◽  
Sound Management

In modern conditions, the methods of classical economic analysis are not enough to solve the problem of bank stability. This requires the development of methods and tools to analyze the current situation in the bank and to develop sound management decisions aimed at ensuring the stability of the bank. The article notes that the analysis of the influence of the structure and quality of assets on the profitability of commercial banks is an important step for assessing the financial position and reliability of a bank, and a method is proposed for constructing a model of the dependence of bank’s profitability on the factors that determine it. The scientific sources were the works of Russian and foreign researchers in the field of modeling and characteristics of the banking system, financial stability of credit institutions, assessment of the creditworthiness of potential borrowers, system organization and information technology. The article uses the methods of economic analysis, differential calculus and mathematical statistics, as well as the achievements of the main scientific schools dealing with the problems of economic and mathematical modeling and economic analysis of banking. In order to determine the most significant economic factors affecting the profitability of commercial banks, generalization of the theoretical, methodological and applied aspects of studies devoted to the study of the influence of the structure and quality of assets on the profitability of commercial banks was carried out, and a correlation and regression analysis was made. The model presented in the article can be used to predict changes in the profitability of Russian commercial banks and to predict promising directions for growth in profit and profitability of the bank.

Features of Forming of Profits of Commercial Banks in Terms of Coronaries

2020 ◽  
Vol 8 (6) ◽  
pp. 75-82
Author(s):  
A. Novikov ◽  
A. Zverev ◽  
M. Mishina
Keyword(s):  
Commercial Banks ◽  
Banking System ◽  
Internal Factors ◽  
Russian Economy ◽  
Internal Characteristic ◽  
The Stability ◽  
Constituent Elements ◽  
The Impact ◽  
Entire Economy

A significant role of the banking system in ensuring the functioning of the entire economy, by means of organizing the movement of borrowed capital between individual industries and the implementation of financial needs is achieved only if this system, and therefore its constituent elements, are stable. In this regard, the stability of the banking system should be considered as a fundamental internal characteristic, which ensures the existence and stable development of the Bank in a market economy under the influence of external and internal factors. In 2020, commercial banks were faced with the impact of the coronavirus pandemic on the Russian economy and the banking system in particular. At the same time, the current situation of banks ' functioning is characterized not only by the presence of a corona crisis, but also by the internal development of the system itself, which, following the uberization of the world economy, dictates to commercial banks the need to develop and implement financial technologies and form ecosystems. In these conditions, the need for commercial banks in financial resources increases, which is reflected in the increasing role of profit in the Bank's activities and development. This article focuses on the impact of the coronavirus pandemic on the banking system of the Russian Federation and the economy as a whole, and also identifies the features of profit formation and the specifics of the functioning of commercial banks in the coronavirus crisis period.

scholarly journals FINANCIAL STABILITY OF A BANK - FACTOR OF STABILITY OF BANKING SYSTEM

2018 ◽  
pp. 5-11
Author(s):  
Andrii Ramskyi ◽  
Inna Budnichenko
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Development Program ◽  
Financial Sustainability ◽  
Internal Factors ◽  
Financial Condition ◽  
Stage Of Development ◽  
Banking Institutions ◽  
The Stability

The article is devoted to the analysis of the financial stability of Ukrainian banks at the present stage of development and the identification of the main factors of influence that are associated with it. The main tendencies of development of the banking system of Ukraine are considered. The present state of the banking system of Ukraine is determined. Financial stability plays a significant role in planning the activities of commercial banks. In general, its indicators reflect the level of riskiness of the functioning of the entity of the banking system. Managing financial sustainability has a significant impact on the functioning of banks. That is why it is necessary to create special control departments in banking institutions. The research of financial stability of banks is based on financial sustainability indicators developed and used by the IMF and the World Bank as the basis for the "Integrated Financial Sector Development Program until 2020". The necessity of applying different methods for evaluating the financial stability of commercial banks has been established in order to identify a wider range of problems related to the efficiency of the functioning of the banking system. The description of  two main groups of factors, under the influence of which the financial stability of banks  undergoes changes, is presented. It was revealed that external factors have a more significant impact on the financial stability of a bank. In particular, the factors of mega environment have become more important when banks enter the international financial space. Internal factors lie mostly in the management plane, and it is just the inefficient management of the bank that leads to the disruption of its stable financial condition. Specific features of management of financial stability and methods of its evaluation are considered. The analysis of economic standards of the banking system of Ukraine is carried out. The measures are proposed to minimize the risks and maintain the stability of banking institutions at the required level for normal functioning in modern conditions. It has been proved that providing, supporting, analyzing and evaluating the financial stability of commercial banks is a driving force in the development of the banking system, and hence the entire Ukrainian economy.

scholarly journals Analysis of Chinese Commercial Banks’ Risk Management Efficiency Based on the PCA-DEA Approach

2021 ◽  
Vol 2021 ◽  
pp. 1-11
Author(s):  
Xiao Shi ◽  
Wenqi Yu
Keyword(s):  
Risk Management ◽  
Technical Efficiency ◽  
Commercial Banks ◽  
Economies Of Scale ◽  
Banking System ◽  
Principal Component ◽  
Commercial Banking ◽  
Scale Efficiency ◽  
Management Efficiency ◽  
Chinese Banking Industry

As a special type of enterprises with high risks, Chinese commercial banks’ risk management plays an important role in banks’ business process. Measuring and improving the risk management efficiency of the Chinese commercial banking system has recently attracted increasing interest. Previous studies analyze the business performance of commercial banks from the perspective of the overall management level of banks, and few articles focus on the risk management ability of banks. This paper evaluates the technical efficiencies of Chinese commercial banks’ risk management by the DEA-BCC model with window analysis to come up with some recommendations for policy makers. The technical efficiency is then decomposed into pure technology efficiency and scale efficiency. According to the banking risk supervision indicators released by the China Banking Regulatory Commission, we choose the indicators of 26 commercial banks’ risk management during the period of 2011 to 2019. Principal component analysis (PCA) is applied to delete redundant input indicators. The paper gives a dynamic evaluation of technology efficiency, pure technology efficiency, and scale efficiency. The main empirical results are as follows: (1) the technical efficiency of Chinese commercial banks’ risk management is low, and the differences among three different types of banks are large. (2) The pure technology inefficiency of Chinese commercial banks’ risk management has become a key factor restricting the improvement of the risk management of the Chinese banking industry. (3) The Chinese commercial banks’ risk management faces a serious problem which is economies of scale. (4) The technical efficiencies of Chinese commercial banks’ risk management fluctuate greatly, and management capabilities need to be enhanced urgently.

scholarly journals Performance of Vietnamese commercial banks in ASEAN Economic Community

2020 ◽  
Vol 164 ◽  
pp. 09001
Author(s):  
Trinh Doan Tuan Linh
Keyword(s):  
Technical Efficiency ◽  
Commercial Banks ◽  
Stochastic Frontier Analysis ◽  
Banking System ◽  
Commercial Banking ◽  
Average Output ◽  
Frontier Analysis ◽  
Average Efficiency ◽  
Asean Countries ◽  
Research Period

In this study, the author assesses and compares the performance of commercial banks in Vietnam and ASEAN countries in the period of 2013-2017 by using parametric approach, using SFA method (Stochastic Frontier Analysis). The results showed that the average efficiency of ASEAN commercial banks in the study period was 0.77, the lowest efficiency was 0.11, the highest efficiency was 0.96. This result also shows that the efficiency of ASEAN commercial banks in the period of 2013 - 2017 is relatively low, with this result if the average output does not change, commercial banks can save as much as possible. 23% of the input. The results also show that the average efficiency of Brunie commercial banks is the highest at 0.87%, ranked second is Thai1and with average technical efficiency of 0.83. Ranked last among the 9 ASEAN commercial banking systems in the research period is Singapore commercial banks with average technical efficiency of 0.72 above are Lao commercial banks with an efficiency of 0.73. Vietnam's commercial banking system with technical efficiency in the research period was 0.75, ranked 6th among 9 ASEAN countries.

Impact of Financial Crisis on Credit Risk: Pre- and Post-financial Crises 
in an Emerging Economy

2020 ◽  
Vol 9 (2) ◽  
pp. 118-132
Author(s):  
Syed Moudud-Ul-Huq ◽  
Rabaka Akter ◽  
Tanmay Biswas
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Credit Risk ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Banking System ◽  
Commercial Banking ◽  
Real Economy ◽  
Credit Risk Management ◽  
The Global Financial Crisis

This aim of the article is to establish a model to discuss the reasons for changing the level of credit risk among the commercial banks of Bangladesh during the global financial crisis (GFC). Credit risk has been remaining as the essential and core risk in commercial banking activities. Multiple regression analysis is used to test the relationship among the level of credit risk as a dependent variable and financial crisis, other bank-level variables and macroeconomic variables. The causes of the GFC revealed not only systematic or structural imbalances but also the necessity to keep and strengthen the principles of credit risk management. We analyse the leading causes of the recent GFC. Moreover, the lessons that must be learnt from the weaknesses of credit risk management systems. Credit risk was found to respond to macroeconomic conditions, which indicate strong feedback effects from the banking system to the real economy. This article represents the analysis of the influence of the financial crisis on credit risk management in commercial banks and summarizes the challenges faced by banks for credit risk improvement. We hope that this reality creates new opportunities for managing credit risk in the future to increase this importance in the banks and the overall economy of Bangladesh.

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