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2021 ◽  
pp. 26-41

This study has been designed for examining the effectiveness of liquidity management through the relative standing of ROE and ROCE of Nationalized Commercial Banks in Bangladesh for the duration of 2008–2018. Six NCBs are selected purposively as sample. The study relies on a balanced panel data set of 66 observations which are gathered from the annual reports of banks and analyzed by random effects regression model. However, the research only examined a few variables. The empirical results reveal that the selected NCBs have been portraying better standing in case of ROE than ROCE in effective liquidity management. The value of R2 of ROE is 75.25%; it signifies that the explanatory measures could clarify 75.25% of the variations in ROE. Among the liquidity measures, Assets/Shareholders Equity has highly significant negative effect; Tier 1 Capital/Risk Weighted Assets has highly significant positive effect; Deposits/Assets have some significant positive and Bank Size in terms of Deposits has some significant negative effect on ROE of the selected NCBs.


2021 ◽  
pp. 26-41

This study has been designed for examining the effectiveness of liquidity management through the relative standing of ROE and ROCE of Nationalized Commercial Banks in Bangladesh for the duration of 2008–2018. Six NCBs are selected purposively as sample. The study relies on a balanced panel data set of 66 observations which are gathered from the annual reports of banks and analyzed by random effects regression model. However, the research only examined a few variables. The empirical results reveal that the selected NCBs have been portraying better standing in case of ROE than ROCE in effective liquidity management. The value of R2 of ROE is 75.25%; it signifies that the explanatory measures could clarify 75.25% of the variations in ROE. Among the liquidity measures, Assets/Shareholders Equity has highly significant negative effect; Tier 1 Capital/Risk Weighted Assets has highly significant positive effect; Deposits/Assets have some significant positive and Bank Size in terms of Deposits has some significant negative effect on ROE of the selected NCBs.


2021 ◽  
Vol 39 (12) ◽  
Author(s):  
Yue Ma ◽  
Wei Ni Soh

This paper aims to examine the impact of liberalization in 2009 on the determinants of bank efficiency in Malaysia by employing a two-stage approach within the context of the growing number of foreign commercial banks. Commercial banks can play a vital role in the internationalization and diversification of Malaysia's financial sector. In the initial stage, measuring the efficiency score of 19 commercial banks throughout 2008 to 2019 by using the Data Envelopment Analysis (DEA). Multivariate panel regressions were then used to determine the impact of liberalization on the determinants of bank efficiency in 2009. As a result, domestic commercial banks seem to be more competitive than their foreign counterparts. The findings signify that bank size, market power, capitalization, and liquidity all have a positive impact on technical efficiency. However, credit risk, bank diversification, and inflation all have a negative impact. The control of the effects of liberalization, bank size, capitalization, bank’s market power, and liquidity remain positive. However, bank diversification and inflation flip negative to positive, whereas credit risk becomes less explanatory. The findings will provide bank stakeholders, regulators, investors, and regulators with important insights into the impact of liberalization measures on bank efficiency and its determinants.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shakeb Akhtar ◽  
Mahfooz Alam ◽  
Mohd Shamim Ansari

PurposeThis study aims to empirically evaluate the performance of commercial banks operating in India.Design/methodology/approachThe efficiency of the commercial banks is evaluated using the data envelopment analysis (DEA) approach. We measure the technical, pure technical and scale efficiency of the sampled conventional banks using the input-oriented model. We employed an extended DEA window analysis approach based on a panel sample of 47 banks in the Indian scenario. The period of study is from 2009 to 2018.FindingsThe results obtained from CRS and VRS measures envisage that Indian banks have failed to manage their inputs efficiently and convert them into outputs. It implies that Indian banks do not operate at an optimum level. Moreover, the results show that public banks exhibit superior efficiency scores followed by private and foreign banks. Apart from the aggregate sector level, we also investigate the performance of Indian banks at the individual level for in-depth analysis. The individual bank-level analysis reports that the public sector banks (PSBs) are the most efficient followed by foreign banks, whereas, the least efficient are the private banks.Research limitations/implicationsThe findings of our study have implications for government, financial institutions and policymakers to access the verve and flexibility of the Indian banking system. The government should consider restructuring inefficient banks to enhance overall performance. This can be considered by improvement in managerial efficiency, efficient allocation of scarce resources and appropriate scale of operation. However, the findings of the study should be interpreted in light of the period of study for the banks being operational (as we filter out banks that ceased to exist) in India and empirical methods employed. The results may vary if alternative measures are used.Originality/valueThe present paper investigates the efficiency of the Indian banking sector employing the Data Envelopment Window Analysis (DEWA) technique. To the best of our knowledge, the present study is perhaps the first one to employ the DEWA measure on the Indian banking industry to gauge their performance over time.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anas Alaoui Mdaghri

PurposeThe study aims to empirically examine the effect of bank liquidity creation on non-performing loans (NPLs) in the Middle East and North Africa (MENA) region.Design/methodology/approachBerger and Bouwman's (2009) three-step methodology was employed to calculate the level of liquidity creation of a selected sample of 111 commercial banks in ten MENA countries from 2010–2017. Next, the two-step system generalized method of moments (GMM) estimator was used to investigate the linkage between bank liquidity creation and NPLs.FindingsThe results demonstrated a significant negative effect of bank liquidity creation on NPLs in the short and long term, implying that liquidity creation through both on- and off-balance sheet activities decreases NPLs. These findings accord with the “economic-enhancing” view. Furthermore, regression analysis investigated whether this relationship remained similar for Islamic and conventional banks. The results showed that liquidity creation diminishes Islamic and conventional bank NPLs.Research limitations/implicationsThe empirical findings raise several significant policy implications. Bank liquidity creation may decrease rather than increase NPLs, although the process of liquidity creation is viewed as risky by rendering banks more illiquid. Therefore, policy-makers should encourage bank liquidity creation to stimulate the economy. In a robust economy, borrowers are more likely to repay their debts, consequently diminishing banks' NPLs.Originality/valueTo the best of the author's knowledge, the current study is the first to provide empirical evidence on the effect of bank liquidity creation on NPLs in MENA countries.


2021 ◽  
Vol 14 ◽  
pp. 63-68
Author(s):  
Jiuding Li ◽  
Youchuan Cui

the maturity of interest rate marketization marks the transformation of China's interest rate system from the traditional interest rate model to the new one.As an important participant in the reform of interest rate marketization, commercial banks are faced with many challenges, such as the decline of profit level, the substantial increase of operational risk, the increase of financial market instability, and the increase of liquidity risk.They should actively explore new business and management concepts, adopt measures to improve the prices of financial products and derivatives, introduce risk management and control mechanism, develop bank's intermediate business, and promote the development of bank's intermediate business In order to ensure the healthy and stable development of commercial banks, we should take positive measures such as strengthening the ability of debt management, reasonably dealing with the challenge of interest rate marketization.


2021 ◽  
Vol 14 ◽  
pp. 270-274
Author(s):  
Jiayang Cai

The spread of COVID-19 has caused a huge impact on China's economic situation, and the industry has been significantly affected. Therefore, accelerating the strategic transformation of all industries is the only way to seek sustainable development in the post-epidemic era. This paper reviews the theory of strategic transformation through the study of the concept, classification, development stage, and various industries of strategic transformation, including education, steel, manufacturing, and commercial banks. This paper summarizes the theory of strategic transformation and its development in recent years to a certain extent and puts forward the future research direction of strategic transformation. On the one hand, the research results of this paper provide literature support for the theoretical development of strategy and strategic transformation. On the other hand, it provides a practical basis for studying strategic issues in various industries based on the background of COVID-19.


2021 ◽  
Vol 14 ◽  
pp. 9-14
Author(s):  
Mengdie Chai

On March 31, 2017, the Ministry of Finance revised and issued three new financial instrument accounting standards including Accounting Standards for Enterprises No.22- Recognition and Measurement of Financial Instruments. The banks of China’s A and H stocks have implemented the new standards since January 1, 2018. From January 1, 2021, the scope of implementation of the standards covers all non-listed commercial banks. The new financial instrument standards have undergone great changes in the classification and impairment treatment of financial assets, which is bound to have a profound impact on Chinese commercial banks. This article analyzes the impacts of new standards on Chinese commercial banks from the aspects of financial asset classification and measurement, impairment, credit risk management, profit and earnings management. Finally, the paper puts forward several suggestions and measures on the system and model construction, credit policy and post-loan risk management and talent training, in order to facilitate banks smooth the transition to the new standards.


2021 ◽  
Vol 4 (1) ◽  
pp. 22-33
Author(s):  
Ahmada Kaimu ◽  
Seif Muba

This research study purposed to determine the relationships between credit risks and the performance of commercial banks in Tanzania. Generally, the study aimed to establish the relationship between credit risk and financial performance in Tanzanian Banks. Specifically, to determine if the long-run relationship between credit risk and performance existed and investigated if credit risk and financial performance existed with a causal relationship in Tanzanian Banks. The research collected secondary data samples of 15 commercial banks in Tanzania from 2005-2019. This study adopted an explanatory approach to fulfil the above objectives. Both fixed and random effects models were engaged to determine the relationship. Hausman Test executed to determine the appropriate model. In the model, NPLR, LLPR, CAR, and BAS were used as the credit risk proxies, while return on asset (ROA) was used as the dependent variable. The findings reveal that the credit risk has both negative and positive relationships with the proxies used. The performance was inversely significant with NPLR and negatively insignificant with LLPR, while positively significant with CAR and positively insignificant with LBAS. The study concluded that the credit risk proxies, i.e., there was a significant relationship between NPLR and CAR with the commercial banks’ performance in Tanzania. Furthermore, the researchers concluded that the long-run relationship existed on the variables in the study, while granger causality existed in all variables except LLPR, i.e., Credit risk proxies except LLPR can granger cause the performance of commercial banks while the granger causality reveals no causal relationship among independent variables themselves. The study recommended that commercial banks in Tanzania should put more emphasis on handling credit risk and management of capital adequacy so as to have better financial performance.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peter Njagi Kirimi ◽  
Samuel Nduati Kariuki ◽  
Kennedy Nyabuto Ocharo

PurposeThis study analyzed the moderating effect of bank size on the relationship between financial soundness and financial performance of commercial banks in Kenya.Design/methodology/approachThe study employed data from 39 commercial banks for ten years from 2009 to 2018. Panel data regression model was used to analyze data.FindingsThe study results established a negative moderating effect of bank size on the relationship between commercial banks' financial soundness and net interest margin (NIM) and return on assets (ROA) with the results indicating a correlation coefficient of −0.1699 and −0.218, respectively. However, an absence of moderating effect was established when return on equity (ROE) was used as a measure of financial performance.Practical implicationsThe paper finding recommends that banks' management and other policy makers should consider the effect of bank size while devising financial soundness policies to ensure optimal level of banks' financial soundness aimed at improving banks' financial performance. In addition, bankers associations should come up with policies to standardize asset quality management practices to ensure continuous positive performance of the banking sector.Originality/valueThe study shows the contribution and applicability of the theory of production in the banking sector.


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