Operational Risk Framework and Fraud Management

2021 ◽  
pp. 75-94
Author(s):  
Elpida Tsitsiridi ◽  
Christos Lemonakis ◽  
Constantin Zopounidis
Keyword(s):  
Banking Sector ◽  
Operational Risk ◽  
Basel Iii ◽  
Severe Damage ◽  
Unexpected Event ◽  
Risk Framework ◽  
Pass Through ◽  
Safety And Stability

The universal financial shake of 2008 altered business and occupational circumstances and will inevitably trigger the outbreak of new forms of operational risk. Under normal conditions, OR does not cause significant losses; thus, severe damage is likely to occur when an operational miscarriage or an unexpected event takes place. Under the Basel III context, the banking sector is trying to increase safety and stability, by focusing on the quality of historical loss data, while cultivating an inside operational risk awareness culture. One of the most perilous types of OR is fraud, and its effects are often dangerous and may have long-term spillovers. In this chapter, an analysis of the meaning and the main characteristics of fraud is provided, focusing on contemporary trends of the issue. Going further, the business anti-fraud strategic plan is described along with how it maximizes its efficiency, while the chapter aims to analyze the demands for an organization to pass through fraud-fragile to fraud-resistant.

Do Quality of Governance, Remittance and Financial Development affect Growth?

2021 ◽  
Vol 39 (2) ◽  
Author(s):  
Faqeer Muhammad ◽  
Naveed Razaq ◽  
Khair Muhammad ◽  
Rehmat Karim
Keyword(s):  
Stock Market ◽  
Financial Development ◽  
Diagnostic Tests ◽  
Banking Sector ◽  
Market Development ◽  
Stock Market Development ◽  
Quality Of Governance ◽  
The Given

The newly elected government of the Pakistan considered corruption as a main hurdle in long-term development of the country on one hand. On the other hand, it is put emphasis on enhancing remittances to maintain Marco-economic stability in Pakistan. Therefore, the aim of this study is to highlight the effects of remittance, quality of governance and financial development in Pakistan for the time 2000 to 2016 using Ordinary Least Square Method (OLS). The aftermaths of the study has shown the positive influence of remittance, quality of governance and financial development on economic development in Pakistan. Conversely, as expected the sign of inflation is negative with in-significant effect. Furthermore, the present study has categorized financial development into banking sector and stock market development to explore their effects separately. For this purpose, two indicators have chosen for banking sector and two for stock market development. Lastly, this paper uses various diagnostic tests to check the various econometric issues in the given models. The results of the diagnostic tests have showed that residual is normally distributed, homoscedastic and absence of serial correlation in all the given models. Moreover, descriptive statistics also shows that variables of present study are normally distributed. In sum, based on the findings this research recommends that by improving the quality of the governance and by increasing the remittances long-term economic growth is possible in Pakistan. In addition, financial development is also an important determinant of growth in Pakistan. Therefore, government focus on eradicating corruption and increasing remittances are the right policies for economy of Pakistan in the long run. 

scholarly journals Financial Stability of Banks and Its Monitoring in Ukraine

2020 ◽  
pp. 69-77
Author(s):  
Svitlana Yehorycheva ◽  
Oksana Vovchenko
Keyword(s):  
Financial Stability ◽  
Business Processes ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Bank Management ◽  
The World Bank ◽  
Banking Institutions ◽  
National Bank

The concept of financial stability of banks as a complex and multifaceted category, the content of which is constantly enriched, has been developed. Approaches to determining the financial stability and financial stability of banks, in particular, are considered. It is noted that modern operational, functional, institutional, technological features of banks cannot but affect the content of their financial stability and update the mechanisms for its ensuring. Emphasis is placed on the need for early adaptation of banking institutions to objective transformations of the economic environment through the integration of risk-oriented approach and the use of advanced methods of bank management in all its business processes. The level of financial stability of banks in Ukraine is monitored, for which the main volume indicators of their activity and the Bank Z-score indicator calculated by the World Bank are analyzed. The analysis of indicators of banks’ penetration into the economy shows that the development of the banking sector lags behind the needs of the real sector, so its financial stability is relative, although there are trends to strengthen it. The constant increase in the capital base of Ukrainian banks and their compliance with capital adequacy ratios is particularly positive. However, the quality of banks’ loan portfolios is unsatisfactory, which poses a threat to their financial stability, even given the large amounts of formed provisions for loan impairment. The dynamics of financial stability indicators calculated by the National Bank of Ukraine confirms the existence of prerequisites for its long-term provision, despite the difficult environmental conditions. The directions of monitoring of financial stability offered in the article allow diagnosing its deterioration in time to prevent critical consequences for the national economy.

scholarly journals Qualitative Assessment of Basel III Liquidity Standards and its Application in the UAE

2020 ◽  
Vol 4 (2) ◽  
pp. 118-129
Author(s):  
Manoj Kapur ◽  
Arindam Banerjee ◽  
Kunjana Malik
Keyword(s):  
Banking Sector ◽  
Financial Statements ◽  
Jel Classification ◽  
Qualitative Assessment ◽  
Basel Iii ◽  
Coverage Ratio ◽  
Disclosure Requirements ◽  
Short And Long Term ◽  
Made In

The Basel Committee for Banking and Supervision (BCBS) introduced two key liquidity ratios to strengthen the short- and long-term liquidity positions of the banks around the globe. These ratios were designed to achieve two key distinct objectives. Firstly, to encourage banks' short-term resilience to the liquidity risks by ensuring there are sufficient high-quality liquid assets to survive a significant stress which may last for 30 days. Calculation of this ratio is called as Liquidity Coverage Ratio (LCR). Secondly, to promote bank resilience over a longer time horizon, at least annually, by creating additional incentives for banks to fund their activities with more stable sources of funding. This led to creation of Net Stable Funding Ratio (NSFR). While these structural ratios are mostly quantitative, the underlying factors that are needed to calculate these ratios include qualitative factors as well. The paper analyzed the implementation of Basel III standards for the banking sector in the UAE. In particular, the timelines specified by the Central bank of the UAE and its implementation by the Domestic-Systemically Important Banks (D-SIBs) in the UAE was tracked by this paper. The study found a disconnect between the disclosure requirements by Basel III and disclosure made in the published annual financial statements of the banks. The study also discussed the extent of disclosures made by the D-SIBs and how relevant disclosures may improve the transparency of the liquidity risk management of the bank. JEL Classification Codes: E58, G32, G38.                        

scholarly journals SOCIO-DEMOGRAPHIC VARIABLES FORMING A PERCEPTION OF CORPORATE IMAGE BRAND IN THE CROATIAN BANKING INDUSTRY

2020 ◽  
Vol 3 (2) ◽  
pp. 96-111
Author(s):  
Valentina Pirić ◽  
Maja Martinović ◽  
Mirna Koričan Lajtman
Keyword(s):  
Banking Sector ◽  
Banking Industry ◽  
Demographic Variables ◽  
Corporate Image ◽  
Sustainable Competitive Advantage ◽  
Social Variables ◽  
Migration Rates ◽  
Business Profitability

The banking industry is currently at the forefront of the development of technolo¬gy-based service delivery, and the survival of banks depends on their ability to deal with the environmental challenges. Due to these challenges, many banks are faced with an identity crisis and increased customer migration rates that negatively affect the levels of business profitability. Croatian market ads additionally challenge almost 30 banks currently operating with customers that are extremely price sensitive. Research shows that in the banking sector, a favorable image is considered a critical aspect of a company’s ability to maintain its market position, as the image has been related to core attributes of organizational success. This paper studies the dimensions of corporate image, focusing on the corporate image concept in the Croatian banking industry as perceived by consumers and its possible impact on their choice of banks. The purpose of this study is to give an insight and provide a deeper understanding of how the banks, by developing a strong and consistent corporate image using corporate communication activities, ensure a long-term source of sustainable competitive advantage and influence on customers’ end choice. A study was carried out in Croatia during 2019 using 250 respondents-consumers who used different types of banking services in different banks. Series of ANOVA analysis shows how the perception of the corporate image of the bank and its influence on the customer’s choice of the bank, bank loyalty and the quality of the bank services varies depending on some demographic and social variables. Results pose implications for bank communications and service positioning within customer segments. This research raises ideas for future studies as well.

Do Quality of Governance, Remittance and Financial Development affect Growth?

2021 ◽  
Vol 39 (1) ◽  
Author(s):  
Faqeer Muhammad ◽  
Naveed Razaq ◽  
Khair Muhammad ◽  
Rehmat Karim
Keyword(s):  
Stock Market ◽  
Financial Development ◽  
Diagnostic Tests ◽  
Banking Sector ◽  
Market Development ◽  
Stock Market Development ◽  
Quality Of Governance ◽  
The Given

The newly elected government of the Pakistan considered corruption as a main hurdle in long-term development of the country on one hand. On the other hand, it is put emphasis on enhancing remittances to maintain Marco-economic stability in Pakistan. Therefore, the aim of this study is to highlight the effects of remittance, quality of governance and financial development in Pakistan for the time 2000 to 2016 using Ordinary Least Square Method (OLS). The aftermaths of the study has shown the positive influence of remittance, quality of governance and financial development on economic development in Pakistan. Conversely, as expected the sign of inflation is negative with in-significant effect. Furthermore, the present study has categorized financial development into banking sector and stock market development to explore their effects separately. For this purpose, two indicators have chosen for banking sector and two for stock market development. Lastly, this paper uses various diagnostic tests to check the various econometric issues in the given models. The results of the diagnostic tests have showed that residual is normally distributed, homoscedastic and absence of serial correlation in all the given models. Moreover, descriptive statistics also shows that variables of present study are normally distributed. In sum, based on the findings this research recommends that by improving the quality of the governance and by increasing the remittances long-term economic growth is possible in Pakistan. In addition, financial development is also an important determinant of growth in Pakistan. Therefore, government focus on eradicating corruption and increasing remittances are the right policies for economy of Pakistan in the long run. 

Customer satisfaction and loyalty in the United Arab Emirates banking industry

2015 ◽  
Vol 33 (3) ◽  
pp. 351-375 ◽  
Author(s):  
Hameedah Sayani
Keyword(s):  
United Arab Emirates ◽  
Banking Sector ◽  
Banking System ◽  
Related Factors ◽  
Content Type ◽  
Managerial Implications ◽  
Conventional Banks ◽  
Customer Satisfaction And Loyalty

Purpose – The purpose of this paper is to identify the determinants of consumer loyalty in Islamic and conventional banks in the United Arab Emirates (UAE). The study has relevance and importance in a country with a dual banking system. Since the products and services offered by the banks are largely homogenous, customer loyalty is mostly associated with the quality of certain tangible and intangible dimensions of service. It is important for the banks to understand the factors that lead to higher satisfaction and subsequent loyalty among consumers in the context of the UAE. Design/methodology/approach – More than 300 respondents were surveyed to understand the factors that lead to continuing a relationship with Islamic and conventional banks. The data were analyzed using ANOVA and stepwise regression. Findings – The findings of the study indicate that Islamic banks’ customers are satisfied with the Shariah Advisory Board, convenience-related factors such as number of branches, and efficiency-related factors like handling issues on the phone. However, an inverse relationship is found between advice by the personnel and length of association with the bank. On the other hand, the importance of reputation and efficient handling of issues on the phone is highlighted with respect to conventional banks. Research limitations/implications – The study focusses only on consumers that bank either with Islamic or conventional banks and excludes those who deal with both Islamic and conventional banks simultaneously. Practical implications – The research has several managerial implications, as the findings of the study not only highlight the factors that banking consumers value the most in the UAE banking sector, but also provide insight into the factors which need immediate attention. These decisions have strategic and resource-related implications for banks. This knowledge will allow banks to align services with their long-term objectives and invest into resources and capabilities that will provide them competitive advantage. Originality/value – The study allows identification of factors that are valued the most by banking consumers in a culturally and religiously diverse country with a dual banking system.

The Effects of Component Defects on Utility Gas Turbine Operational Risk and Mitigation Practices

2014 ◽  
Author(s):  
Andrew R. Narcus ◽  
John W. Appleby ◽  
Russell B. Jones
Keyword(s):  
Gas Turbine ◽  
Operating Time ◽  
Operational Risk ◽  
Maintenance Costs ◽  
Manufacturing Defects ◽  
Functional Quality ◽  
Path Component ◽  
Original Equipment Manufacturers

Component deterioration is observed in fleet gas turbine units during overhaul and maintenance activities of utilities providing electric power, co-generation or mechanical drive operations. Affected components include those provided by Original Equipment Manufacturers (OEM) and newly-manufactured and repaired hardware from OEM or aftermarket suppliers. This study details: i) the gas turbine flow path component deterioration and distress typically observed from operation, ii) some of the typical reasons (expected and abnormal) for the component damages, iii) the resulting effects and detriment to the utilities, and iv) a means for reducing the potential for component damages and operational risk to the utilities. Abnormal gas path component deterioration is one of the leading causes for forced opening of IGT units. Unscheduled opening of production gas turbine units during normal and critical operating time periods can result in significant costs to the utilities and insurance providers due to unplanned overhaul and maintenance costs, replacement components costs, and lost production revenue during the outage. Often the majority of the premature component deterioration within a set can be attributed to the quality of manufacturing or repair processing and inadequate inspections of the components. Escapes in quality assurance can occur resulting in components being supplied to utilities that do not meet design intent, such as debris contamination, coatings issues, and mis-machined features. Additionally, component suppliers are often pressured to meet production deadlines and provide delivery of the components to the utilities to avoid contractual penalties. This scenario can result in the potential for reduced focus on the quality of the components and quality-control escapes of design-deviated components delivered to the utilities for unit operation. Any uncontrolled deviations, damage, and discrepancies that result from hardware manufacturing and repair processes can have a significant impact on the long term durability of turbomachinery components. These component “damages” and manufacturing defects can be reduced or eliminated through proper functional quality inspections and component assessment, prior to unit installation. Additional issues concerning, improper tooling and methods employed during component removal and re-installation during maintenance activity can also result in damage to components and premature deterioration. This study focuses on how utilities can perform or audit the functional checks on components prior to unit installation in an effort to reduce component degradation, operational risk and potential of forced outage of units resulting in additional maintenance costs and lost revenue.

Banks’ Lending Relationship Quality Index (LRQI) for the Small and Medium-Sized Enterprises: A Review

2018 ◽  
Vol 4 (3) ◽  
pp. 32-40
Author(s):  
Tury Retap ◽  
Firdaus Abdullah ◽  
Jamil Hamali
Keyword(s):  
Relationship Quality ◽  
Relationship Marketing ◽  
Quality Index ◽  
Banking Sector ◽  
Service Providers ◽  
Reliability And Validity ◽  
Measuring Instrument ◽  
Sampling Procedures

Stiff competition in the service industry like banking sector has forced banks to search for the best approach to create, attract and retain a segment of satisfied customers. Relationship marketing is a comprehensive strategy used by many service providers to maintain an on-going long-term relationship with their existing customers. A proper implementation of relationship marketing activities is evident from good relationship quality built between the customer and the service provider. Due to the above needs, development of a new measuring instrument (Lending Relationship Quality Index (LRQI) to assess the quality of lending relationship between the banks and their SM E borrowings’ customers, a nationwide survey is proposed to identify factors presumed to influence the quality of lending relationship from SME borrowings’ customers perspective A sample size of 2,000 will be drawn from the SME customers having lending relationship with domestic commercial banks. The sampling procedures to be used for this study will be Convenient Sampling. The items in the questionnaire will be measured on a five-point Likert – type scale. Previous researches had focused on assessing relationship quality between the banks and their customers but have neglected to determine the quality of relationship in the context of lending between the banks and their SME borrowings’ customers. The new measuring instrument will be empirically tested for multi-dimensionality, reliability and validity by using both exploratory and confirmatory factor analysis. The findings from this study will add value to the existing literatures on relationship quality by linking the proposed seven factors of lending relationship quality namely, trust, communication quality of relationship, amount of information sharing, long-term relationship orientation, satisfaction with the relationship, closeness and commitment as the independent variables to the dependent variables which consist of lending relationship quality and how it relates to satisfaction and retention.

Global banking sector will see more structural changes

2016 ◽  
Keyword(s):  
Structural Change ◽  
Structural Changes ◽  
Banking Sector ◽  
Credit Scoring ◽  
Content Type ◽  
Global Banking ◽  
The 2008 Financial Crisis ◽  
Alternative Finance

Subject Structural changes in the banking sector. Significance The 2008 financial crisis and the subsequent tightening of the regulatory framework weakened banks. Now they are also facing increasing competition from technology-driven disintermediated finance alternatives. The combination is set to bring long-term structural change to the banking sector. Impacts Alternative finance can gain market share in consumer and small business lending. There are uncertainties about the extent and speed of structural change that alternative finance could achieve. These questions centre on the quality of algorithmic credit scoring, regulation and the extent of institutional participation.

CURRENT TRENDS IN THE BANKING CREDIT MARKET OF UKRAINE

InterConf ◽  
2021 ◽  
pp. 29-36
Author(s):  
Lidiia Avramchuk ◽  
Oleksii Muravskyi
Keyword(s):  
Interest Rates ◽  
Banking Sector ◽  
Foreign Currency ◽  
Credit Market ◽  
Current Trends ◽  
Loan Portfolios ◽  
Banking Institutions ◽  
Banking Credit

In recent years, the banking sector of Ukraine has witnessed low lending standards and insufficient protection of creditors' rights. In addition, there were two crises in the country and, as a result, borrowers were unable to repay funds in time. At the same time the quality of loan portfolios deteriorated, therefore more than 50% of all loans became "problematic". Due to the increase in interest rates, most borrowers began to take loans for up to 3 years and in the national currency, because they are less risky. According to statistics, only about 25% of all loans are long-term. In order to encourage borrowers to take long-term loans and borrowings in foreign currency, banking institutions have reduced interest rates on these types of loans, but these actions have given only a slight increase in such loans.

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