Determinants of bank profitability during oil price decline

This study examines the influence of macroeconomic factors, namely Inflation, Gross Domestic Production (G.D.P.) and changes in oil price and Bank-Specific Factors such as capital, asset size, liquidity risk, loan and deposit on bank profitability as measured by return on equity (R.O.E.) and net profit ratio (NPR) during the period of oil price decline, 2013-2017. The top 7 commercial banks were chosen as a sample of the study based on the availability of the data and the possible influence it can contribute to representing Oman's banking industry. The quantitative approach utilized appropriate statistical tools to analyze and interpret the secondary data gathered, including descriptive statistics, panel regression, Pearson correlation, and correlation matrix. Key findings of the study revealed no significant relationship between macroeconomic factors and the return on equity. There is also no significant relationship between macroeconomic factors and the net profit ratio. On the other hand, bank-specific factors significantly correlate return on equity and the net profit ratio. The study's findings contribute to the bank's management, economic policymakers, a research body, and academia in distinguishing the best indicator for a bank's profitability influenced by macroeconomic and bank-specific factors.

IMPACT OF DIFFERENT PRICE MOVEMENTS ON THE ACCURACY OF NUMERICAL PRICE FORECASTING

The focus of this paper aims at comparison of two prognostic numerical models with different strategies for accuracy improvement. To verify prediction performance of proposed models, the forecasts of aluminium stock exchanges on the London Metal Exchange were carried out as numerical solution of the Cauchy initial problem for the first-order ordinary differential equation. Two techniques for accuracy improvement were utilized, replacing the initial condition value by the nearest known stock exchange and a modification of the differential equation in solved Cauchy initial problem by means of two known initial values. We dealt with an idea of how different price development affected the accuracy of proposed strategies. With regard to obtained results, it was found that the prognoses obtained by using two known initial values were more increasing or decreasing than prognoses calculated by utilizing the initial condition drift. The strategy of a changing form of the differential equation in the Cauchy initial problem can be considered slightly more accurate. Faster increased prognoses were more advantageous especially at a steep price increase and within a price increase following the price decline. A moderate increase of the prognoses determined by the initial condition drift fit reasonably well a price fluctuation and a price decline following the price increase.

Investor Reaction to the Discovery of Accounting Fraud: The Period from the Discovery of the Fraud to the Completion of the Correction

This paper examines the period from the discovery of accounting fraud to the completion of correction and examines the reaction of investors on the date of the first news release suggesting accounting manipulation, the date of the subsequent release of information related to the amount of profit correction that was not disclosed on the date of the first news release, and the date of the submission of the correction report. The verification results show that the stock price falls sharply on the day of the first news release and the day when the information about the amount of profit revision is disclosed, that when the amount of profit revision is large and it takes time to disclose information about the amount of profit revision, there is a rebound in the stock price on the day when the correction report is submitted because investors like the resolution of uncertainty, and that there is a relationship between the amount of profit revision and the size of stock price decline. However, when there is no information about the amount of correction on the first day of the news release, investors react uniformly, and the reaction to a large (small) amount of correction is underreaction (overreaction). These results indicate that investors were misled by the misstatements until the fraud was discovered and made decisions based on overestimates of future cash flows, so they suffered unexpected losses when the fraud was discovered, and during the period from the fraud discovery to the completion of correction. Received: 3 August 2021 / Accepted: 6 October 2021 / Published: 5 November 2021

OIL PRICES DROP EFFECT ON CONSTRUCTION INDUSTRY IN KUWAIT

The oil price has fallen significantly from its peak at $128.14 per barrel in March 2012, reaching a low of $29 in February 2016. Kuwait depends mainly on oil revenue to finance infrastructure governmental projects. Oil price decline has a direct impact on economic and capital expenditure in the construction industry’s resources in Kuwait, specifically construction material. This research investigates the effect of changes in oil prices over range from 2007-2017 on the construction industry in Kuwait. Different types of data regarding global economic data, construction materials, and awarded contracts during the study period were gathered and analyzed. A set of statistical and correlation analysis are performed. The study revealed that many construction materials are affected by oil price in Kuwait. The GDP is highly affected by oil price drop; this implies that there is a limited result of government plans to divers governmental finance. A regression model is proposed to forecast the construction cost per square meter in Kuwaiti dinar based on study variables. The study results can be used to evaluate the effect of oil price drop in similar construction environments such as Gulf countries and to predict construction costs changes due to oil price decline.

Shari’ah Issues in Short Selling: Critical Analysis and The Alternatives

This study aims to investigate the Shari’ah issues related to short selling and a discussion on its alternatives. Short selling refers to selling the stocks that the seller does not own, expecting a price decline, and then the seller will be able to repurchase it and profit from the price difference. The study critically discusses three Shari’ah issues related to short selling: the issue of selling something without having possessed, the issue of getting any benefit out of a loan, followed by the issue of gambling and speculation in short selling. This is a library research study, which critically analyses the issues with the help of secondary data comprising the related academic materials in both English and Arabic languages. The study finds that with the presence of few Shari’ah issues, the practice of short selling does not comply with Shari’ah injunctions. Furthermore, in the context of Malaysia, though the inclusion of Securities Borrowing and Lending (SBL) principles in Regulated Short Selling (RSS) reduce uncertainty (gharar), it does not make the practice of short selling fully complied with Shari’ah principles. Finally, the study discusses the incorporation of wa’d (promise) and salam (forward delivery sale) in the practice of short selling.

Slowing deforestation in Indonesia follows declining oil palm expansion and lower oil prices

Much concern about tropical deforestation focuses on oil palm plantations, but their impacts remain poorly quantified. Using satellites, we estimated annual expansion of large-scale (industrial) and smallholder oil palm plantations and their overlap with forest loss from 2001 to 2019 in Indonesia, the world’s largest palm oil producer.Over nineteen years, the area under oil palm doubled, reaching 16.24 million hectares (Mha) in 2019 (64% industrial; 36% smallholder), more than official estimates of 14.72 Mha. This expansion was responsible for nearly one-third (2.85 Mha) of Indonesia’s loss of old-growth forests (9.79 Mha). Industrial plantations were associated with three times as much forest conversion as smallholder plantings (2.13 Mha vs 0.72 Mha). New plantations peaked in 2009 and 2012 and declined thereafter. Deforestation peaked in 2016 and fell below pre-2004 levels in 2017-2019. Expansion of industrial plantations and forest loss were correlated with palm oil prices. A price decline of 1% was associated with a 1.08% decrease in new industrial plantations and with a 0.68% decrease of forest loss. This slow-down provides an opportunity for the Indonesian government to focus on details of sustainable oil palm management. If prices rise, effective regulations will remain key to minimising deforestation.

Price decline, land rental markets and grain production in the North China Plain

PurposeThis study examines the heterogeneous correlations between rural farmers' land renting behavior and their grain production when they experienced a significant price decline.Design/methodology/approachWe used well-timed panel data obtained from a two-round survey held in 2013 and 2017 among 621 households in the North China Plain. The empirical analyses were conducted by using the pooled ordinary least squares (OLS) and fixed effects models.FindingsRural tenants were having heterogeneous responses in land renting behavior and agricultural production when there was a price decline. A group of optimistic tenants (as professional farmers) were more likely to enlarge the farm scale for grain production through land rental markets but decrease variable investment levels (and subsequently decreased productivity) to cope with price decline. In contrast, nonprofessional farmers (the other rural tenants) were rather pessimistic about market performance, and they significantly decreased their grain production area to cope the price decline, but there was no decrease in grain productivity through reducing variable inputs.Originality/valueThis study contributes to the extant literature on the relationship between farmers' land renting-in behavior and agricultural production. By dividing the tenants into professional and nonprofessional farmers, we argue that there is a significant heterogeneous correlation between rural tenants' land renting behavior and grain production when farmers experience a price decline.