Non-interest income and bank profitability: Evidence from Tunisian banks

This study investigates the impact of banks' diversified income structure on profitability among Tunisian banks during 2010-2018. We examine banks’ profitability using accounting and market measures as relevant indicators. We focus on each category of non-interest income separately rather than on non-interest income as an overall measure to provide a clearer analysis helping bank managers assess relevant strategies, and show that income structure diversification enhances banks’ profitability, albeit with their mixed effects. The empirical analysis of panel data indicates that Tunisian bank’s market-to-book value is very sensitive to all types of non-interest income. Banking activity diversification improves stock market profitability particularly in large banks and a safe macroeconomic environment. However, only fees and commissions incomes increase Tunisian banks’ assets profitability. Positive fees and commissions incomes’ effect is more pronounced for large banks and in a deflationary environment. We conclude by recommending to Tunisian banks, the diversification of their activities and the search for non-interest income while trying to control the costs of adopting these innovations, to take the necessary precautions, and to develop their personal skills.

Financial inclusion in the digital banking age: Lessons from rural India

In the digital age, financial inclusion continues to be connected to social inclusion. While most personal financial transactions are shifting from cash currency to digital transactions, we must ensure that marginalized members of society are not unbanked and excluded from financial opportunities. Many countries are declaring their intention to transform to cashless societies. India is one such country. As a case study, we investigated rural Indian villages that declared themselves as cashless to assess the financial reality of villagers. We conducted a survey of households (N=3,159) within villages across seven Indian states. In each state, we studied a village that was officially declared cashless and a nearby comparison village. Our findings suggest that the comparison villages did as well as the cashless villages, as financial inclusion via digital banking was minimal to nonexistent. Alongside significant state variations, we found that financial literacy and online access were the best predictors of performing any digital banking activity. This study concludes with a warning against rushing toward digital banking and the formation of cashless societies, as marginalized populations may be excluded.

The Role of Liquidity Indicators to Assess its Risks and Enhance Capital Adequacy in Banking Activity

This purpose of the research is to test liquidity ratios to assess bank liquidity risks represented by liquidity ratios (current assets / current liabilities, current assets / total deposits, current assets / total assets, cash credit / total deposits, liquidity coverage ratio LCR, net stable financing ratio NSFR). This research involves evaluating these risks in banks via these ratios, and reveal the most important means used to solve these risks, including the capital adequacy ratio under the Basel II decisions and for selected period (2017-2019).The research reached the most important conclusion, which is the bank sample did not fall into bank liquidity risks throughout the years of research. Tracking specific ratio with adequacy capital of Basel II decisions of the Bank, it is noticed that it exceeds the minimum capital adequacy ratio in all valid measures, whether in Basel II decisions with 8% or the requirements of the central bank of Iraq with 12%. The research suggests some recommendations; one of the most important one is the need for the bank’s management to recognize the risks of liquidity in advance, in addition to increasing its investments to increase the bank’s profitability. Moreover, the bank needs to plan a clear strategy to maintain capital at the appropriate and required level to face liquidity risks

Too Much Technology and Too Little Regulation? The Spectacular Demise of P2P Lending in China

In this paper we trace the rapid growth and spectacular demise of online peer to peer lending in China. Drawing on a series of interviews conducted in China in 2017 and 2018, we follow the expansion of the sector from the establishment of the first major platform in 2007, through the introduction of limited regulation in 2015 in response to a series of platform failures to the final de facto closure of the whole sector by the regulator in 2019–20. However, contrary to claims that technology would reduce risk, the new platforms appear to have given rise to new risks by connecting dispersed borrowers and lenders whilst the regulator had decided to leave the sector to evolve without specific regulation. While there were hopes that P2P lending might increase flows of finance to the SMEs that are excluded from the formal banking system, ultimately too much of the activity on the P2P platforms was characterised by what we term ‘transactional ambiguity’ and ‘legal fluidity’: it occurred on the fringes of legality, often amounting to Ponzi schemes, fraud or unlicensed banking activity. In contrast to the banking sector, where their intermediation role ensures that banks are the focal point in the event of borrower default, and conventional moneylending, where moneylenders bear the risk of default, defaults and platform failures in the P2P sector distributed losses far and wide around the country, often to lenders who were not capable of bearing them. Whilst the central government did not formally stand behind the P2P sector (as it does with banks because of the systemic implications of their operations), the government could not help but become involved where P2P lending transmitted losses to lenders who were dispersed around the whole country. Ultimately, central government announced a wholesale reversal of policy that led to the sector effectively being closed down. The episode cautions against overly optimistic claims that technology can eradicate the risks of fraud and fundamental uncertainty inherent in lending, and reminds us that, without appropriate regulation and adequate internal controls, financial institutions will always operate in ways that result in instability.

Performance of arithmetical operations on mobile gadgets using axioms of classical and nonstandard interval analysis

We propose a programming system for calculation of economical standards of regulating banking activity by means of Euclidian and interval arithmetic using mobile gadgets. The program was created by means of Microsoft Visual Studio 2017 Express for Windows Phone using C#. The feature of this programming system is the possibility to be used anywhere: during business negotiations, in the absence of PCs and WiFi, etc. For its application, one needs a smartphone with Android operation system. The smartphone needs to have a capacitive screen with multi-touch input with the possibility of more than four touches at once. The size of the screen can vary, but the resolution must be 480*480 pixels. During the progress, the system calculates the indicators of banking activity approved by National bank of Ukraine. Using of the interval arithmetic gives the possibility to analyse the financial status of the bank under any conditions. The comparison of the results of arithmetical operations by using the axioms of classical and nonstandard interval analysis was carried out. The criterion of the efficiency is the value of the relative change of the final interval of the calculations that were carried out using the axioms of the nonstandard interval analysis related to the same calculations that were carried out using the axioms of the classical interval analysis. For efficiency comparison we choose standard indicators that define the financial safety of the bank. The results of the calculations show that the intervals defined according to the rules of the nonstandard interval mathematics have the size of the interval 12-90% less than the intervals calculated according to the rules of the classical interval mathematics.

Possible Directions of Evolution for Banking Activity in European Union under the Impact of Blockchain Technology

European Union banking industry is subject to numerous changes in the daily activities performed, having to adapt the business to a wide range of impacting factors. Among these, the blockchain technology has a significant potential in updating the current context, aspect highlighted by academic environment, researchers and innovation specialists. Current research paper has the intent to identify the areas where the blockchain technology could impact the EU banking industry, analyse the scenarios and make possible praises for the evolution of business in banking.

RATIONALE BEHIND AND DILEMMAS OVER CONSOLIDATION AND COOPERATION OF COOPERATIVE BANKS IN POLAND

The study analyses the processes of consolidation of cooperative banks in Poland in 2010-2020 and the cooperation of banks within operating cooperative banking associations. The essence of the processes of consolidation and cooperation of cooperative banks was determined and their premises, scale and effects to date were presented. The main focus was on the analysis of factors determining the need for the further transformation of the cooperative banking sector in Poland and the role that may be played by bank consolidation and various forms of cooperation of cooperative banks in this process. It has been shown that the consolidation of banks, consisting of taking over economically weak banks by larger cooperative banks, better performing on the market, is necessary, but it is not a solution leading to the development of the sector. Such a solution may be the tightening of cooperation between banks within associations, leading to the gradual integration of selected areas of banking activity while maintaining the autonomy of local banks in relations (at the contact) with customers.

HOW DO BANKERS WORK DEVIANTLY IN THE CREDIT SECTOR?

This research is implemented in the banking sector. Knowledge about counterproductive behavior that emerged in banking activity is still limited. Bankers, human resources in the banking sector, deal a lot with customers in their day-to-day job activity by assessing the credit proposal of their bank customers. Qualified credit assessment is essential to determine the approval of bank credit. The failure to assess qualified debtors will result in bad credit in which debtors do not repay the credit they receive. To get qualified credit assessment, bankers follow the 5C Principles in assessing credit proposals. Counterproductive work behavior occurs when workers perform indifferently from what the rules and norms of a company have stated. Qualitative research with a phenomenology approach was conducted to determine how these deviances performed while bankers assessed their customers’ credit loan proposals under the 5C Principles. Six bankers with different job positions were the subjects of this study and were interviewed to get in-depth information. This research reveals items of behaviors related to production deviances in each principle they assessed. Deviances are reported in each principle then categorized into production ones since these behaviors deal a lot with how they perform their job in the credit sector.

Determination of attributes of bank's bankruptcy in the light of digitalization of banking supervision

The article is devoted to the current measures of regulation of banking supervision in connection with the implementation of international standards of the Basel Committee on Banking Supervision. The authors come to the conclusion about the importance of the implementation of these standards in the light of the possibility of identifying attributes of bank bankruptcy. The ways of practicing banking supervision are subjects to modernization and legal updating in connection with digitalization and new forms of banking activity.