A review of 20 years of takaful literature using a systematic method

PurposeThe study aims to summarize the 20 years of literature published in takaful between 2000 and 2019 and propose some key areas as the directions for future research.Design/methodology/approachThe present study utilizes the systematic method of reviewing the literature. The SCOPUS database has been accessed, and 96 articles have been accounted for the analysis. The articles are grouped in their exclusive themes, such as consumer behavior, financial and nonfinancial performance, takaful models, human resources and governance.FindingsTakaful research has widely covered marketing, finance, human resource, governance and stresses on its legal issues. Both qualitative and quantitative methodologies have been employed. The research gaps have been classified based on the respective areas. Large share of current body of takaful literature consists of the studies related to the application of behavioural theories to examine the behavioural intention to take up takaful services.Originality/valueThe study enriches the literature of takaful by reviewing articles according to their respective themes, thereby contributing to the significant findings missing from existing literature surveys.

Corporate board structures and intellectual capital: evidence from banks in Africa

PurposeThis study examines the nature of the relationship between board structures (BSs) and intellectual capital (IC) of banks in Africa.Design/methodology/approachUsing annual data from financial statements of 366 banks from 26 African countries from 2007 to 2015, the study estimates IC using the value-added intellectual coefficient (VAIC) and BSs using board size, board independence and board gender diversity. The system generalized method of moments and panel-corrected standard error estimation strategies are used to estimate panel regressions.FindingsThere is a significant negative relationship between board independence and intellectual capital. The results also indicate that the IC of banks does not depend on board size and board gender diversity.Practical implicationsThe study's findings provide evidence of the extent to which BSs have been instituted to support investments in intellectual capital as a means of improving the performance of banks in Africa.Originality/valueThis study provides some empirical evidence from Africa's banking sector to justify that banks with better IC have boards that are less independent. This study is one of the few studies that employs many countries' data.

Impact of COVID-19 pandemic on financial reporting and disclosure practices: empirical evidence from Bangladesh

PurposeTo investigate the consequence of COVID-19 pandemic on the financial reporting and disclosure (FRD) practices, the study has been conducted. Moreover, this paper highlights the significance of FRD practices in any emergency period and its relevance with legitimacy theory in Bangladesh Perspective.Design/methodology/approachThe COVID-19 pandemic has adverse impact on business. Hence, all the business activities have been categorized into five major aspects which are financial factors, business operations, business contracts, business value and stakeholders. These five major activities have been considered as independent variable. By analyzing various policy recommendations and guidelines of global and local accounting bodies, a structured questionnaire was developed in association with related IAS and IFRSs. Then, it was distributed among the accounting professionals of Bangladesh who are currently engaged in financial statement preparation and auditing services. Finally, data was analyzed through structural equation modeling (SEM) to test the hypothetical relationship between dependent variable and independent variable.FindingsThis study finds that financial factors, business contracts and stakeholders have significant relationship with the financial reporting and disclosure practices during the COVID-19 pandemic period. However, business operation and business value have no significant relationship with financial reporting and disclosure practices.Research limitations/implicationsThis study tries to analyze why and how firms should disclose essential information (both financial and non-financial) to the financial statement users during the COVID-19 pandemic. This study can be used as benchmark to issue a separate policy or standard for reporting any kind of adverse event in the financial reporting and disclosure practices.Originality/valueTo our best knowledge, we believe that this is first kind of study undertaken to investigate the consequence of COVID-19 pandemic on the FRD practices in the context of Bangladesh. This study is kind of exploratory in nature. Hence, future studies can explore industry-based financial reporting and disclosure practice in any pandemic period.

Cointegration test for the long-run economic relationships of East Africa community: evidence from a meta-analysis

PurposeThe purpose of the paper is to test and analyze the equilibrium economic relationships of the East Africa Community (EAC).Design/methodology/approachTo attain the study's purpose the authors applied the Johansen cointegration test, including long-run structural modeling (LRSM), vector-error-correlation-model (VECM) and variance-decomposition (VDC).FindingsAt I(1), both Philips‐Peron (PP) and Kwiatkowski–Phillips–Schmidt–Shin (KPSS) tests show that the East Africa member states' economies are cointegrated. The result was further substantiated by the tests based on Johansen cointegration and VECM procedures, showing significant long-run and short-run economic relations. The result further reveals that despite some uncommon issues among member states such as Tanzania and Kenya, however, their economic relationships remain significant though it is negative. Moreover, the finding revealed positive and significant short-run economic relationships between Kenya, Burundi and Rwanda.Originality/valueThe paper applies the cointegration techniques in the context of EAC. The result is likely to be adding value to the policymaker and also to the existing literature on the subject. This may trigger policy implications and open new research direction within the region and out.

Does the monetary policy have any short-run and long-run effect on economic growth? A developing and a developed country perspective

PurposeThe study aims to empirically examine the relationship between monetary policy and economic growth, as well as to explore the long-run and the short-run effect of monetary policy on the economic growth of a developing country (Bangladesh) and a developed country (the United Kingdom).Design/methodology/approachDepending on data availability, the study employed secondary data covering the period of 1980–2019. The augmented Dickey–Fuller test and the Phillips–Perron test were used for the stationarity test. Further, the F-bounds test was run to justify the long-run relationship between monetary policy and economic growth. Thereafter, long-run coefficients were revealed from the auto-regressive distributed lag (ARDL) model and short-run coefficients from the error correction model. Furthermore, the vector error correction model (VECM) Granger causality approach was employed to demonstrate the causality of studied variables. Lastly, different diagnostics tests ensured the robustness of the models.FindingsF-bounds test outcomes suggest that monetary policy has a long-run relationship with economic growth in both countries. Long-run coefficients revealed that money supply has a positive long-run impact on economic growth in both countries. Unlike the UK, the exchange rate exhibits an adverse effect on the economic growth of Bangladesh. The bank rate seems to promote economic growth for the UK. Findings also depict that increase in lending interest rates hurts the economic growth for both countries. Besides, the short-run coefficients portray random effects at different lags in both cases. Lastly, causality among studied variables is revealed using the VECM Granger causality approach.Originality/valueThe novelty of this study lies in consideration of both developing and developed countries in the same study.

How bank capital structure decision-making change in recessions: Covid-19 evidence from Pakistan

PurposeThis study contributes to existing literature by investigating bank capital structure dynamics during the Covid-19 pandemic. The role of contemporary bank-specific determinants of capital structure during this period is analyzed.Design/methodology/approachAn independent t-test is carried out to check the response of bank leverage to the crisis. Using fixed effect estimation and difference general method of moments (GMM), the impact of the shock is examined. An unbalanced quarterly data set from 2016q1 to 2020q3 of all commercial banks in Pakistan is used.FindingsThe study finds that due to procyclicality of capital, during the Covid-19 crisis, the banks preempted a fall in capital and improved their capital positions. The role of bank specific variables in determining capital structure like profitability, size and competition weakened during this period. Evidence suggests that policy rate intervention by the central bank was a significant factor in capital structure decisions during the Covid-19 period. The study finds that macroeconomic shocks have significant impact on capital structure decision-making of banks which goes beyond the bank-specific factors.Originality/valueIt finds evidence of a moderating role of monetary policy in capital structure decision-making which has not been previously highlighted in literature. Monetary policy is found to become an important factor deciding the capital structure of banks during the Covid-19 first 3 quarters. This study also explores the impact of Covid-19 on the bank-specific determinants of capital structure of banks.

Inflation targeting and economic performance over the crisis: evidence from emerging market economies

PurposeInflation targeting has increasingly become a popular monetary framework since its first introduction in New Zealand at the beginning of 1990. However, the causality effects of this policy on economic performance, particularly in periods of economic turmoil remain controversial. Thus, this paper re-examines the treatment effect of inflation targeting on two important macro indicators which are inflation rate and output growth with the focus on emerging market economies. The global financial crisis, which is known as the great recession since the last decade, is investigated as an exogenous shock to test for the effectiveness of this popular regime.Design/methodology/approachThe difference-in-difference approach in the fixed-model is employed for this investigation using a balanced panel data of 54 countries with 15 inflation-targeting countries for the period 2002 to 2010.FindingsThe examination finds that there is no significant difference in terms of the inflation rate and gross domestic product growth over the whole research period between the treatment and control groups. However, the outcome suggests that emerging economies can control the increase in inflation rate when the economy has to cope with the exogenous uncertainties.Research limitations/implicationsThis finding indicates important policy implications for central banks in many countries.Originality/valueInflation targeting can help emerging countries to reduce an increase in inflation rate in the crisis period without many trade-offs in the growth of output.

Designing a comprehensive model of organizational resilience in the banking industry of Iran

PurposeThis research aims to design a comprehensive resilience model in the banking industry for identifying the dimensions and components that can enhance organizational resilience in the industry, which can contribute to the existing literate as a promising comprehensive model.Design/methodology/approachAfter reviewing the literature and studying the models of organizational resilience, semistructured interviews were conducted with managers and prominent experts in the banking industry. To analyze the interviews, the thematic analysis technique was used with three coding stages. After designing the research model in two main dimensions of micro and macro management in the banking industry, the relation between the main components and subcomponents was identified by using Interpretive Structural Modeling (ISM) and DEMATEL techniques.FindingsThe study findings indicating that proper observation and predicting the bank's problems and making suitable connections with the government are two major indicators of the resilience of the banking network, which can realize through influencing the components of risk management, financial resource management and system corruption. The results of this research can lead to the expansion of theoretical foundations of the past research and the concept of organizational resilience in the field of financial services and especially the banking industry.Originality/valueThis paper provides the components with a more significant impact, which bank managers should consider the relationship among them to enhance organizational resilience for more effectiveness of their decisions.

Money supply, inflation and output: an empirically comparative analysis for Vietnam and China

PurposeThis study focuses on analyzing the relation between money supply, inflation and output in Vietnam and China.Design/methodology/approachUsing the error correction model and the vector autoregression model (ECM and VAR) and the canonical cointegration regression (CCR), the study shows similar patterns of these variable relations between the two economies.FindingsThe study points out the difference in the estimated coefficients between the two countries with different economic scales. While inflation in Vietnam is strongly influenced by expected inflation and output growth, inflation in China is strongly influenced by money supply growth and output growth.Originality/valueTo the best of the authors’ knowledge, this is the first empirical and comparative research on the relation between money supply, inflation and output for Vietnam and China. The study demonstrates that the relationship between money supply, inflation and output is still true in case of transition economies.

Risk-taking behavior, competition, diversification and performance of frontier and emerging economy banks

PurposeThe study examines the dynamic association between competition, risk-taking, performance and income diversification of frontier and emerging economy (FEE) banks. It additionally, explores the effect of banking sector depth and economic performance on the level of competition, performance and risk-taking behavior of banks in these economies.Design/methodology/approachThe paper adopts a panel vector auto-regressive technique and collects data across ninety (90) FEEs.FindingsThe paper finds that competition increases with improvement in the depth of the banking sector, a surge in risk-taking behavior and the adoption of focused strategy by banks. Similarly, income diversification activities are driven by competition, banking sector depth, the state of the economy and bank performance. Additionally, risk-taking behavior, banking sector depth and the state of the economy are relevant in describing bank performance. Also, risk-taking behavior is influenced by bank performance, banking sector depth and economic growth.Originality/valueThe evidence indicates that although competition improves banking sector health, excessive competition and non-competitive banking environment constrain banks’ performance and stability.