The financial and prudential performance of Chinese banks and Fintech lenders in the era of digitalization

The years 2013 to 2019 marked an explosion in Fintech in China. We analyze the financial and prudential performance of 40 exchange-traded banks and 25 listed Fintech lenders in China during this watershed period. Among other things, traditional banks experienced rising operating costs, declining profit margins and softening loan quality. Consistent with a process of adaptation, traditional bank performance stabilized in the latter part of the study period (2018-19) after an initial period of decline. Study findings also highlight rising business and regulatory costs for Fintech providers over the course of the study frame. A marked deterioration in online lenders’ Special Mention and Non-Performing Loan (SML & NPL) positions arose during the period. Within the traditional bank group, smaller entities with fewer growth options and greater foreign ownership fared worst in prudential terms. Traditional banks’ financial and prudential performance also declines with time since IPO. Relative to joint stock commercial, city and rural banks, state-owned lenders registered more resilient performance, especially in relation to asset quality. In a final area, we construct a categorical Fintech proficiency variable for China's established banks. Our preliminary evidence suggests such proficiencies help stabilize SML and NPL rates and support financial returns. Overall, we offer major contribution to the banking literature by analyzing the financial and prudential performance of both incumbent and emerging lenders in one of the world’s most dynamic Fintech settings.

Impact assessment of country risk on logistics performance using a Bayesian Belief Network model

PurposeThis paper aims to assess the impact of different drivers of country risk, including business environment, corruption, economic, environmental, financial, health and safety and political risks, on the country-level logistics performance.Design/methodology/approachThis study utilizes three datasets published by reputed international organizations, including the World Bank Group, AM Best and Global Risk Profile, to explore interactions among country risk drivers and the Logistics Performance Index (LPI) in a network setting. The LPI, published by the World Bank Group, is a composite measure of the country-level logistics performance. Using the three datasets, a Bayesian Belief Network (BBN) model is developed to investigate the relative importance of country risk drivers that influence logistics performance.FindingsThe results indicate a moderate to a strong correlation among individual risks and between individual risks and the LPI score. The financial risk significantly varies relative to the extreme states of the LPI score, whereas corruption risk and political risk are the most critical factors influencing the LPI score relative to their resilience and vulnerability potential, respectively.Originality/valueThis study has made two unique contributions to the literature on logistics performance assessment. First, to the best of the authors’ knowledge, this is the first study to establish associations between country risk drivers and country-level logistics performance in a probabilistic network setting. Second, a new BBN-based process has been proposed for logistics performance assessment and operationalized to help researchers and practitioners establish the relative importance of risk drivers influencing logistics performance. The key feature of the proposed process is adapting the BBN methodology to logistics performance assessment through the lens of risk analysis.

Fintech: A Literature Review

This article analyzes the Fintech evolution. After describing the process of this phenomenon, some of the main definitions are provided both nationally and internationally. Finally, six main models of Fintech are analyzed. Through a systematic literature, 14 articles have been selected that deal with the phenomenon of Fintech. Six Fintech business models implemented by the ever growing number of Fintech startups have been identified, payment, wealth management, crowdfunding, loan, capital market and insurance services. Internationally, Fintech has already been defined by the International Monetary Fund (IMF), the World Bank Group (WBG), the Financial Stability Board (FSB), the Organization for Economic Cooperation and Development (OECD), the International Organization of Securities Commissions (IOSCO), the Bank for International Settlements (BIS). On a national level, on the other hand, Fintech has been analyzed by various countries, USA, United Kingdom, Singapore, China, Switzerland, China, Australia and the European Union. Fintech refers to a broad set of innovations - observable in the financial field in a broad sense - which are made possible by the use of new technologies both in the offer of services to end users and in the internal production processes of financial operators as well as in the design of market enterprises, without thereby compromising new possible configurations of intersectoral activities. Fintech appears to be representative of innovative methods - based on technology - of carrying out activities directly or indirectly connected to financial services rather than being a pre-defined industrial sector. Following the logic of the digital economy, Fintech contributes to designing an open and continuous network of modular services for businesses, individuals and banking, financial and insurance intermediaries, becoming a powerful acceleration force for the integration policies of the financial services markets in the EU.

The World Bank in Asia: An assessment of COVID-19-related investments through a care lens. Care-responsive investments and development finance

International financial institutions (IFIs) and multilateral development banks have been playing a vital role in the response, recovery and ‘build back anew’ agenda from the COVID-19 pandemic. This is especially true of the World Bank Group (WBG), given its high volumes of committed investments across sectors, especially in low-income and vulnerable countries. This report presents, through case studies, how care-responsive the World Bank’s COVID-19-related investments have been in four member countries: Bangladesh, Cambodia, Nepal and the Philippines. It does so by using the Care Principles and Care-Responsive Barometer for IFIs to assess the nature of the WBG’s post-COVID recovery investments in these select countries, and by building evidence through a gender- and care-responsive budget review. The foundation for care inclusion has already been laid in WBG policy. The report uses this as an entry point to urge it to bring women’s unpaid, underpaid and paid work to the centre of the IFI agenda in order to move towards rebuilding a more gender-just and equal future.

AN ANALYSIS OF NON PERFORMING ASSETS OF INDIAN SCHEDULED COMMERCIAL BANKS

Non-performing Asset breaks the recycling procedure of deposit and investment as it does not generate substantial income and blocks the cash flow. The motive of the paper is to conduct comparative analysis among Gross NPA, Net NPA, and Net Profit by adopting correlation, ANOVA, the average for selected bank groups which are analyzed in MS-EXCEL and SPSS. The aggregate data of 16 years from 2004-05 to 2019-20 is taken from the RBI website. Public Sector banks acquire more GNPA and NNPA and less Net Profit as compared to other two due to various reasons explained in this paper. Pearson correlation in SPSS shows that there is strongly negative and significant correlation between net profit and GNPA of public sector bank group which reflects that rising bad assets can reduce the banks’ profitability. But in case of foreign banks group, a strong but positive association between net profit and GNPA is observed. The Private bank group shows no significant association between these two variables. ANOVA test result shows there is a significant difference in the movement of GNPAs and NNPAs (in amounts) for different groups of banks during the study period. But in the case of Net profit, no significant difference was observed for these bank groups.

Economic Multilateralism in Peril

The Doha Round of multilateral negotiations is at a stalemate. The aid situation is changing as many countries are graduating from the soft loan arm of the World Bank Group. Developing countries built up their foreign exchange reserves to avoid borrowing from the International Monetary Fund (IMF), leading the IMF to retrench. This article explores the evolution of multilateralism from, essentially, its political roots to the economic area after the First World War (FWW), though in a limited way, and more fully after the Second World War (SWW). We then discuss how the workings of these economic multilateral institutions resulted in the current situation, where they risk becoming irrelevant. Finally, the article discusses the possible role of theG20 in the revival of multilateralism and, in particular, the role that developing countries might play in the revival.

IDB Group and Climate Action

As one of the leading development partners for Latin American and the Caribbean (LAC), the Inter-American Development Bank Group (IDB Group) is fully committed to lead by example on climate change action. Since the signing of the Paris Agreement, the IDB Group has provided over $20 billion in Climate Finance, amounting to about 60% of all Climate Finance to the region from Multilateral Development Banks (MDBs).

URBAN COMMUTERS’ EXPECTATION LEVELS ON THE e-VTOL VERTICAL AIRPORT DESIGN IN KUALA LUMPUR, MALAYSIA

The world’s urban dwellers are rapidly growing by 60.3% over six decades (1960-2019) (The World Bank Group, 2020), and two third of the world’s population is projected to reside in the urban setting by 2050. The same issue occurred in Malaysia, where the shifting from 73% rural to 73% urban population is real (Mohd Hussain, N. H.; Byrd, H.; & Ahmad, N. A., 2017), and this phenomena contributed to the increasing number of population in big cities such as Kuala Lumpur. Therefore, it is expected that the existing challenging traffic congestion will worsen if a better traffic dissemination planning strategy is not developed. Hence, the development of an e-VTOL (electrical vertical take-off landing) vehicle is a possible strategy to ease the urban traffic congestion problem. Serious collaboration among the departments such as planning, engineering, architecture, aviation developers, policy makers, and the sponsors, is important to establish sustainable future urban mobility and connectivity. This study aims to obtain information on the needs and expectations of urban commuters on the development of a vertiport in the city of Kuala Lumpur. A series of surveys involving 157 commuters using public transportation within the city centre, and a case study analysis, were conducted to gain an understanding of the viability of building a vertiport in Kuala Lumpur. Initially, findings show that nearly 50% of the respondents totally agree with the proposed development idea, while approximately 13% are really against this future urban air mobility strategy.

Self-Organising (Kohonen) Maps for the Vietnam Banking Industry

This is the first study to use the self-organisation (Kohonen) map technique, an artificial neural network based on a non-supervised learning algorithm, to categorise Vietnamese banks into super-class groups. Drawing on unbalanced yearly data from 2008 to 2017, this study identifies two super-class groups (one and two). While group one consists of joint stock banks, group two consists of commercial state and joint stock banks. Using the non-structural indicator, the Lerner index, to capture market power, and the data enveloped analysis technique to measure bank performance, our result shows significant differences in Lerner scores (which represent bank market power) of the two groups of banks. Differences in the Lerner scores provide evidence of a group of strong banks that is isolated from other banks. This implies that this strong bank group has the potential to be monopolist and impairs Vietnam’s competitive banking environment. The reason is that group two banks may be more profitable due to greater market power, whereas group one banks may struggle to cut costs to remain viable. These findings provide a better understanding for bank executives, policymakers and regulators of the Vietnam banking industry, and ensure an efficient and competitive Vietnam banking environment.