The Impact of Monetary Policy on Bank Profitability and the Moderating Role of Funding Patterns in Vietnam

The study investigates the effect of monetary policy on bank profitability while also taking into account the moderating role of bank funding patterns. Uniquely, the study focuses on disaggregate components of bank profits in an environment containing various monetary policy tools. Using a dataset of commercial banks in Vietnam, the results show that monetary policy drives bank profitability asymmetrically. Concretely, interest rates (i.e., lending rates and policy rates) exert positive effects on net interest income, but negative impacts on non-interest income. For quantitative-based policy tools, including the central bank’s security purchases and foreign exchange reserves, monetary policy is positively correlated with non-interest income but negatively associated with net interest income. The reaction of banks’ net interest income to monetary policy adjustments is translated into overall bank profits. Further analysis indicates that the monetary policy/bank profitability nexus across different proxies is less pronounced at banks with more diversified funding patterns. This finding sheds light on prior arguments attributing financially weaker banks’ greater sensitivity in facing monetary shocks to the limited alternative funding.

Do management practices and competition levels increase commercial bank profits? Evidence from Can Tho, Viet Nam

PurposeManagement practices and competition levels have been shown as important factors affecting the performance of enterprises that do not include banks. The paper, thus, aims to measure management practices and to study the effect of management quality and competition level on the performances of the first-level branch of commercial banks in the context of the Viet Nam banking system.Design/methodology/approachThe study employed the approach of Bloom and Van Reneen (2007) to quantify management practices of the commercial banks. The level of competition was measured by the number of competitors suggested by Nickell (1996) and the index suggested by Boone (2008). Finally, the effects of management practices and competition level on the bank performances were jointly estimated through a Cobb–Douglas production function, similar to the one used by Bloom et al. (2014).FindingsThe results show that the management practices score is, on average, above the average. While the management practices are found to positively correlate with profits, the competition level is found to significantly reduce bank profits.Research limitations/implicationsCross-sectional data limit the findings of the paper to a point of time. In the future, studies with panel data are desirable.Practical implicationsThe findings of the study help bank managers to make more informed decisions about management practices. Any policy promoting new entrants to the banking market should be carefully considered.Originality/valueThe paper is the first to measure the management practices of commercial banks and to explore the impacts of management quality and competition level on bank performances.

Pengaruh Tabungan Mudharabah Dan Pembiayaan Musyarakah Terhadap Laba

This study aims to determine (1) Does mudharabah savings have a significant effect on bank profits? (2) Does musyarakah financing have a significant effect on bank profit? (3) Do mudharabah savings and musyarakah financing together have a significant effect on bank profits? The analytical method used in this research is multiple linear regression with the total profit being the dependent variable and two independent variables, namely Mudharabah Savings and Musharaka Financing. The results of data processing have obtained a regression model Y = 36964 + 0.021X1 + -0.002X2. The regression coefficient shows that if each mudharabah savings is 0.021 one unit, it is predicted that it will increase the amount of savings by 36964 units and vice versa. The value of the coefficient of determination (R2) is 0.564, this indicates that the mudharabah savings and musharaka financing variables contribute or influence 56% on the variable amount of profit. Partially, the t test results indicate that each variable the amount of mudharabah savings has a significant effect on the amount of profit so that the hypothesis is accepted and the musyarakah financing has a significant negative effect on the amount of profit. Simultaneously, the results of the F test show that together mudharabah savings and musyarakah financing have a significant effect on total profit so that the hypothesis is accepted. Keywords: Mudharabah Savings, Musharaka Financing, Profit.

The Effect of Penetration, Availability, and Usage on Bank Profit

National banking profit growth has been fairly good, seen from the results of the third quarter of 2017, large-scale banks that dominate the market have seen a significant increase. The increase in profit was due to the ability of banks to reduce costs and reduce the provision for bad loans. Financial inclusion, namely efforts to provide easy access, availability, and use of the formal financial system for all members of the economy without social exclusion. Financial inclusion has 3 indicators, namely penetration, availability, and usage. This study aims to determine the effect of penetration, availability, and usage on bank profits at 10 conventional commercial banks listed on the IDX. The independent variables are penetration, availability, and usage. The dependent variable is bank profit. This research uses quantitative methods and the purposive sampling technique. The author uses descriptive analysis and panel data regression analysis using fixed effects. The results showed that penetration, availability, and usage did not have a significant positive effect on bank profits. Banking companies should provide more effective financial services so that they benefit customers and attract investors.

PEMBIAYAAN UMKM, KINERJA BANK SYARIAH DAN PERTUMBUHAN EKONOMI DI INDONESIA

Sharia banks have an important role to do with the development of MSMEs and the economy in Indonesia. The share of sharia bank financing in MSMEs decreased beyond the minimum limit set. This study aims to look at the role of MSME financing on the performance of Sharia banks and economic growth in Indonesia. The study used monthly data for the period 2016-2019 with the two stage least square (TSLS) analysis method. The results of this study revealed that financing in MSMEs contributes greatly to the improvement of the performance (ROA) of Sharia banks. The financing of MSMEs of Sharia banks does not contribute directly to economic growth. The contribution of MSME financing to economic growth occurs through the role of profit (ROA) of Sharia banks. There is a two-way relationship and mutual influence between sharia bank profits and economic growth. The role of economic growth towards bank profits is greater than the role of sharia banks in economic growth. It is important to pay attention to the portion and quality of financing in MSMEs that can improve the performance of Sharia banks and at the same time boost economic growth in Indonesia.

ANALISIS PENGARUH CAR, NIM, NPL, DAN LDR TERHADAP ROA (Studi Kasus pada Bank Umum Persero BUMN Periode 2013-2018)

Banks must carry out their activities with the precautionary principle so as not to harm the wider community such as the banking crisis of 1998 and 2008, therefore Bank Indonesia issued regulation no. 13/1 / PBI / 2011 in 2012 as a guideline for banks to maintain banking health using the RGEC method. This research was conducted to determine the effect of the CAR, NIM, NPL, and LDR ratio to the ROA ratio. With all of the above ratios are from the Bank Indonesia RGEC assessment method, on BUMN banks consisting of BNI, Mandiri, BRI, and BTN. This study uses multiple linear regression analysis using SPSS 21 application with a six-year observation period (2013-2018) from four state-owned banks with independent variables CAR (X1), NIM (X2), NPL (X3) and LDR (X4) and variables dependent on ROA (Y). The results of this study shows that simultaneously CAR, NIM, NPL, and LDR ratios have a significant effect on ROA, while partialy each of the ratio CAR has a significant and negative effect on ROA, NIM has a positive and significant effect on ROA, and NPL has a significant and negative effect on ROA while LDR ratio does not significantly influence ROA. So the researcher's suggestion is that the capital in CAR can be channeled back into the productive assets to increase bank profits both in terms of interest (NIM) and overall profit (ROA) while the NPL ratio can be improved risk management so as not reduce bank profits both NIM and ROA and for the LDR ratio so that Bank BTN adjusts its LDR ratio in accordance with Bank Indonesia regulations.

Polish bank profits remain uncertain after CJEU ruling

Subject CJEU ruling on Swiss-franc mortgages. Significance A long-anticipated ruling by the Court of Justice of the European Union (CJEU) on October 3 opens the way for the annulment of foreign currency (FX)-linked mortgage contracts in Poland whose terms have been deemed to be unfair by local courts. It is a partial victory for the mortgage holders. Impacts The ruling will shield banks from the immediate conversion of loans into zloty-based contracts at a favourable exchange rate for borrowers. The ruling is non-binding and merely provides guidance for Polish courts. Polish bank stocks and the zloty have fared well since the CJEU announced its decision.

The impact of financial regulation policy uncertainty on bank profits and risk

Purpose The purpose of this paper is to explore the impact of financial regulation policy uncertainty (FRPU) on bank profit and risk. Design/methodology/approach This study applies dynamic panel techniques and uses the Baker et al. (2016) FRPU index and macroeconomic variables to assess FRPU’s impact on bank profit and risk using Federal Deposit Insurance Corporation call reports from Q1 2000 to Q4 2016 for over 4,760 commercial banks. Findings The effect of FRPU on profitability (Return on Assets [ROA] and Return on Equity [ROE]) and risk (standard deviation of ROA and ROE) produces complex results. FRPU negatively (positively) impacts profits for small and large banks (money center banks). There is a positive impact on FRPU for small and medium-sized banks, with no impact reported for the large and money center banks. Practical implications Findings lead to several implications for financial services regulators, investors and executives as summarized in the conclusion. It is essential to ensure that clear communication channels are open especially to small and medium-sized banks for proper strategic planning, given their greater sensitivity to regulatory uncertainty. Originality/value This paper contributes to the literature as follows. First, it explores the impact of FRPU on bank profits and risk using a novel index introduced by Baker et al. (2016). This news-based continuous measure presents a bank profit modeling approach that differs from traditional event study methodology. Second, a large sample of US commercial banks is used which represents an important departure from banking regulation studies.