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Muliadi Muliadi, , Jati Kasuma
International Journal of Finance & Banking Studies (2147-4486), Volume 9, pp 01-12; doi:10.20525/ijfbs.v9i2.702

An increase in MSMEs in large numbers is very instrumental in increasing economic growth in developing countries, including Indonesia. The research objective is based on identifying the effect of investment credit, interest rates, and labor on economic growth through the role of MSMEs. The design of this research is descriptive-verification to present a structured, factual and accurate picture and test hypotheses empirically through the MRA model. Empirical analysis proves that investment credit and interest rates through the role of MSMEs can influence positively and significantly on Indonesia's economic growth. In other results, it appears that the role of MSMEs is less able to mediate the effect of labor on Indonesia's economic growth. This fact is based on a negative and insignificant relationship. In a sentence or two, enter the implications and limitations of your research. In Indonesia, increasing bank lending to MSMEs in practice is undermined by lending policies by banks and by macroeconomic factors (economic growth, interest rates, investment credit, and labor).
Sardar Shaket Ibrahim
International Journal of Finance & Banking Studies (2147-4486), Volume 6, pp 113-121; doi:10.20525/ijfbs.v6i1.650

This study examines the influence of liquidity on the profitability of Iraqi commercial banks. Five banks based in Iraq namely: North bank, Iraqi Islamic bank, Sumer bank, Dar Es-Salam bank and Babylon bank randomly selected and analyzed for the current study over the period 2005 to 2013. Moreover, annual reports of these banks have studied and the main ratios of profitability and liquidity were calculated. These reports are available at Iraqi Stock Exchange site. The variables that were identified as independent for liquidity were, loan deposit ratio, deposit asset ratio and cash deposit ratio, while return on assets as dependent variable for profitability. The Ordinary Least Square (OLS) model used to examine the impact of liquidity on profitability. The study observes that any increase in liquidity ratios as above mentioned will lead return on asset to increase as well. Depending on this study it could be better for Iraqi banks to keep a balance between liquidity and profitability.
Bakhita Hamdow Gad Elkreem
International Journal of Finance & Banking Studies (2147-4486), Volume 6, pp 85-100; doi:10.20525/ijfbs.v6i1.669

This study aims to investigate the relation between Islamic securitization representing in Sukuk, and the Islamic banks ‘liquidities in light of Basel 3 requirements. So that the study investigates three variables which include Islamic securitization as independent variable; net cash from financing activities and net noncore funding dependence ratio as dependent variables. The study follows quantitative method by employing cross sectional data context analysis. The data is collected from six banks over six countries through the period 2011-2013. Pearson regression is used to measure causal relation between Sukuk and Net Stable Fund Ratio (NSFR), hence the model is developed to describe the relation. The study uses net noncore funding dependence ratio as (NSFR) which was required by Basel III. The regression result finds that there is positive relation between Sukuk and NSFR for Islamic banks. Also the study uses loans / deposits ratio to discover the relation between Sukuk and Islamic banks ‘liquidity risk, so the regression test shows that there is positive relation between Sukuk and loans / deposit ratio.
Charles Adusei
International Journal of Finance & Banking Studies (2147-4486), Volume 6, pp 101-112; doi:10.20525/ijfbs.v6i1.668

This paper studied how Zoomlion Company Limited manages its accounts receivables. Based on multiple linear regression analysis, Kendall coefficient of concordance and One sample t-test, the result shows effective credit control systems by the company. However, poor monitoring and lack of effective follow up measures were the key challenges to debt management. The paper recommend stricter adherence to the credit policy and vigorously pursued effective recovery strategies and further prescribed best practices in accounts receivables management.
Thi Du Hoang
International Journal of Finance & Banking Studies (2147-4486), Volume 6, pp 69-84; doi:10.20525/ijfbs.v6i1.648

Using the stock index data of financial sector spanned from January 2, 2009 to December 31, 2014, this study examines the effects of some policies on stock returns and volatility in Vietnamese stock market. The empirical results of EGARCH model reveal that two policies, namely, M&A and VAMC have an significantly positive impact on stock returns but they do not represent any effects on stock volatility. The third policy, regulatory reform, does not show any affection on stock return but it has an impact on the stock volatility. It implies that investors should adjust and alter their portfolio accordingly when changing policies. Besides, policymaker needs to know when they should prioritize which policy to be issued because some policies sometimes can hurt the stock market if the stock market is efficient.
Yusuf Kaderli, Umut Tolga Gümüs, Emre Danışman
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 52-70; doi:10.20525/ijfbs.v5i5.635

Küreselleşme, mal ve hizmetlerin dünya ölçeğinde serbest dolaşımıdır. Günümüzde teknolojide yaşanan gelişmeler küreselleşmenin hızını arttırmıştır. Küreselleşmeyle birlikte, ekonomik gelişmelerde yaşanan belirsizlik ve karmaşıklık, toplumların ve bireylerin sosyo- ekonomik yapılarını değiştirmiştir. Toplumların sosyo ekonomik yapıları bireylerin finansal kararlarıyla şekillenmektedir. Bireylerin almış olduğu finansal kararların doğruluğu, bireylerin finansal okuryazarlık düzeyi ile ilgilidir. Karmaşık ve belirsiz koşullar içindeki ekonomide toplumun en küçük yapısı olan ailelerin aldığı finansal kararlar sadece aileyi değil tüm toplumu etkilemektedir. Ailelerin değişimin hızlı ve sürekli olduğu ekonomik hayatta aldığı yanlış finansal kararlar nedeniyle birlik ve düzeni bozulmaktadır. Bunun için demografik özelliği farklı her bireyin sahip olduğu finansal okuryazarlık düzeyini yükseltecek finansal eğitim uygulamalarının önemi yüksektir. Birçok araştırmada, yaşlı ve eğitim düzeyi düşük bireylerin daha çok finansal risk içinde olduğu vurgulanmaktadır. Bu çalışmada, Türk Silahlı Kuvvetlerinde görev yapmış emekli askeri personelin finansal okuryazarlık seviyesi incelenmiştir. Ülkenin savunma hizmetlerinde çalışan Türk Silahlı Kuvvetleri personeli, görev sahası itibariyle finansal sistemlerde yaşanan gelişmelere uzak kalabilmektedir. Bu durum, bilgiye dayalı finansal kararlar alma becerisinin önemini artırmaktadır. Çalışma sonucunda, emekli askeri personelin finansal okuryazarlık seviyesi ve finansal bilgileri tespit edilmiştir. Bu tespitler doğrultusunda aktif olarak görev yapan askeri personelin geleceğe dönük finansal farkındalığını arttırmak amaçlanmıştır.
Funso T. Kolapo, Lawrence B. Ajayi, Olufemi Adewale Aluko
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 30-38; doi:10.20525/ijfbs.v5i4.592

It is theoretically believed that increase in firm size would result to increase in firm profitability. Therefore, this study examines the relationship between size and profitability of six banks in Nigeria after the 2005 consolidation exercise. The measure of profitability is return on assets. Employing the static panel data regression method, the study found that size has an insignificant negative relationship with bank profitability. This study concludes that the 2005 consolidation exercise did not enhance the profitability of the selected banks.
Nicholas Muthuma Mutua, Samuel Kilika
International Journal of Finance & Banking Studies (2147-4486), Volume 2; doi:10.20525/.v2i3.153

This study investigates the environmental conservation costs of the local authorities in Kenya by analyzing the data collected from 90 of these local authorities. The population of the study is the 175 local authorities in Kenya. A sample of 90 local authorities has been used. Both statistical package for social sciences (SPSS) version 17 and Excel have been used to determine the level of environmental conservation costs in the studied local authorities. The results indicated that there was a wide use of environmental conservation costs among the local authorities. The study provides preliminary evidence on environmental conservation costs used by local authorities in Kenya. Further research is suggested to explore the possible motivating factors among different local authorities’ degree of application and level of environmental costs in different activities.
Victor Nilsson, Joakim Nordstrom, Krister Bredmar
International Journal of Finance & Banking Studies (2147-4486), Volume 3; doi:10.20525/.v3i2.181

Banks had a large part in the developments taking place in the years after the outbreak of the crisis in 2007, as many banks had an excessively low capital base, involving too much risk in its businesses. In this study, the largest four banks in Sweden have been investigated. The financial crisis affected the banks differently, depending on the markets of expansion. Excessive risk-taking has been found, where one bank expanded aggressively into new markets and did not appreciate the risks on these new markets. CEO compensation and risk seeking boards are factors that might have caused such behaviour. All of the banks have made noticeable changes to their capital structure, increasing it annually, accompanied by a risk-reduction movement in their assets to improve the stability in most of the banks. The new regulation’s focus on both quality and quantity is in accordance with the views that are expressed in the framework. The banks have altered their goals to levels several per cent above the regulations, in contrast to before the crisis when they were often as close as possible. The impact of the new liquidity regulations has been limited, as the banks continue to work with their internal measures. The banks have all changed their view of capital ratio and liquidity, where many of the banks have doubled the amount of these posts and now find these measures to be both beneficial and a way to gain trust and stability.
Wael Bakhit
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 30-38; doi:10.20525/ijfbs.v5i1.119

Energy efficient technologies contributed substantially to reducing greenhouse gases emissions and contribute to economic growth. Lebanon is facing a serious problem in meeting the population’s excessive demand of electricity this fact urged consumers to lower electricity consumption and seriously rely on alternative energy sources. One of the mature technologies is the Solar Water Heater (SWH), which is considered a key element in shaping households’ demand for electricity and reducing electricity bills. In this paper, SWHs are considered as an environmental innovation. In the Lebanese market, SWH have received considerable attention through implementation of various national initiatives to boost the up-take of this type of micro-generation technology. Regardless of various initiatives, adoption of this technology still has low levels in several Lebanese regions. The aim of this study is to identify and analyze consumers’ resistance to green innovations; particularly studying SWH. The paper relies on the Innovation Resistance Theory to better identify the resistance process that consumers pass through. Data were collected from 150 households in the North region of Lebanon through self-administered questionnaire. The results were analyzed using Cronbach’s alpha for reliability and linear regression analysis. The current study indicated that value and tradition factors had significant impact on consumers’ resistance to innovations. Finally, the author calls for research on resistance of other kinds of green innovations in order to validate the ability of Innovation Resistance Theory to explain resistance of energy efficient technologies.Economic growth; Consumers; Innovation Resistance Theory; Green innovations; Solar Water Heaters.
Jinghua Wang, John Bilson
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 73-80; doi:10.20525/ijfbs.v5i1.343

Over the past fifty years, economic growth in emerging markets has been supported by investments in capital and technology from the developed world. The benefit of this development for the emerging markets, as measured by growth in income, employment, and wealth, is immediately apparent. There have also been significant advantages for the developed world through opportunities for higher risk adjusted returns from investments in emerging markets. This study explores the benefits of the diversification of global government bond portfolio, and provides complete performance evaluations of DMs with or without South Africa emerging market (SAEM) bonds. The study examines the benefits of inclusion of SAEM bonds in DMs, the degrees of financial integration among the research markets, the relative bond returns of dynamic factor models with time-varying coefficients and the robust tests of bond portfolio performance between DMs with SAEM and bond index. The results of this study provide important implications for global investors by identifying diversification gains in SAEM.
Ceren Uzar
International Journal of Finance & Banking Studies (2147-4486), Volume 3; doi:10.20525/.v3i1.168

Data mining technology is one of the new technologies that have become increasingly popular. Data mining enables to form forecasts and models regarding future by making use of past data. It can be costly, risky and time consuming for enterprises to gain knowledge. Firms gain important competitive advantage by data mining methods. This study analyzes on the readiness to implement and the extent of utilization of data mining technologies in the Financial Information Systems (FIS) in Borsa Istanbul and also researches the level of understanding of, perceptions of and readiness to implement data mining technologies within the Borsa Istanbul. Analysis was undertaken using SPSS. Manufacturing and financial enterprises are the universal of this study. Primary data were obtained by using survey method and questionnaire technique and findings of the study were evaulated. Technological, organisational and human resources issues had a significant role in the decision to, or not to utilize data mining technology. The ability to use data mining technology was found to be increased the performance of the Financial Information System.
Viyusani Moss, Vuyisani Moss
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 45-59; doi:10.20525/ijfbs.v2i4.162

This article reflects on social welfare system and governance of housing markets from an end-user perspective. The article criticallyanalyses the way in which social welfare has correlated to unsustainable development and created self entitlement behaviours andattitudes in the South African low income housing market. The phenomenon was demonstrable by empirical research whosefindings confirmed an existence of an association between a fully subsidized social housing model (as underpinned by South Africa’s social welfare) and propensity to default on mortgages. The study found that the risk of default by homeowners in the low income housing market in South Africa is influenced by government’s housing grant model. In other words, the research established that the principle of servicing a mortgaged starter property (that is almost similar to a government free house by both structure and design) is not universally accepted by homeowners of these mortgaged houses. The unintended consequences are that the system has created indefinite expectations that potentially could; (i) erode the country’s balance sheet; (ii) add to non-payment behaviour; (iii) pressurize the economic and credit systems; (iv) propagate entitlement attitudes and mindsets; (v) create social instability and (v) widened the country’s balance of payment deficits.
Muhammad Abdur Rahim, Zahangin Alam
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 1-12; doi:10.20525/ijfbs.v2i4.159

This study is about foreign exchange reserves of Bangladesh. The main purpose of this study is to the influence of exchange rateson foreign exchange reserves to the Bangladesh context. Both the primary and secondary data has been used in this study. The primary data has been collected through a structured questionnaire from 50 respondents. The secondary data, namely Bangladesh foreign exchange reserves (FER), Bangladesh current account balance (CAB), Bangladesh capital and financial account balance (CFAB), and BDT/USD exchange rates (ER). This study covers yearly data from July 01, 1996 to June 30, 2005 and quarterly data from July 01, 2005 to June 30, 2012. Findings of this study shows that out of the selected 16 factors affecting foreign exchange reserves, exchange rates occupy the first position, weighted average score (WAS) being 4.56. Foreign exchange reserves (FER) and current account balance (CAB) have increased by 502.9087% and 1451.218%, whereas capital and financial account (CFAB) has decreased by -649.024% on June 30, 2012 compared to June 30, 1997. The influence of other factors held constant, as ER changes by 285.6894 units due to one unit change in FER, on average in the same direction which represents that ER has positive effect on the FER and this relationship is statistically significant. 62.1526 percent of the variation in FER is explained by ER. The outcomes of Breusch-Godfrey test (LM test), ARCH test, and the Normality test are that there is a serial correlation among residuals, the variance of residuals is not constant, and the residuals are not normally distributed.
Lionel Artige,
International Journal of Finance & Banking Studies (2147-4486), Volume 4; doi:10.20525/.v4i1.201

This paper proposes an empirical analysis of the role of memory in determining the size of credits granted by the European Bank for Reconstruction and Development (EBRD) during 1991–2003. We first build an original database from information associated with the number and contract types granted by clients, after which we develop an empirical strategy for capturing the role of memory, namely by defining three different indicators to approximate each client’s reputation. These indicators rely on the client’s identity and, when available, information associated with previous EBRD-financed investment projects. With the fixed-effects estimation technique, our results unambiguously show that the value of the first investment project financed by the EBRD, as a proxy for reputation, is the most effective indicator for established clients to determine the size of the credits they receive to finance further investments.
Ali Kablan
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 21-30; doi:10.20525/ijfbs.v2i1.138

Nowadays the role of local governments is bigger than ever considering the central authority in Turkey. Especially, one can observe that the municipalities’ tasks are depended on their financial structures. In this study the financial resources of Turkish municipalities are evaluated. The obtained findings illustrate that the municipalities have three different financial resources and these resources might be sufficient to make their activities.
Jugnu Ansari
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 60-77; doi:10.20525/ijfbs.v2i4.163

This study examines bank competition in the loan markets in India using a new competitiveness index, the Augmented Relative Profit Difference (ARPD). The ARPD quantifies the impact of marginal costs on performance, measured in terms of market shares. The theoretical foundation of the ARPD is robust when compared to other conventional measures. Applying this unbiased competition indicator to loan markets shows that financial reform has contributed to significant improvements in competition. Public sector banks and private sector banks are more competitive than foreign banks too. In addition, we find that the Indian loanmarkets are monopolistic in nature.
Aysel Gündoğdu
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 37-45; doi:10.20525/ijfbs.v5i2.129

Bankacılığın bir risk yönetme sanatı olduğu genel kabul görmüş bir durumdur. Bu sanatı icra ederken belirli kurallar ve bir sürecin varlığı gereklidir. Risk denilince akla “karşılığında net bir zararın hesaplanabileceği olumsuz bir durum” gelmektedir. Ne var ki, bankacılığın ilk çağlardan beri bankacılık faaliyetlerinin temelinde olan “güven” unsuru gibi daha soyut riskleri içerisinde barındırmaktadır. Güvenin sarsılması ile hızlı bir şekilde yayılabilecek zarar, bankalara öngörülemez sonuçlar hazırlayabilir. Bu nedenle, bankaların risklerini hesap ederken sadece finansal, hesaplanabilir riskler için değil finansal olmayan riskler için de gerekli önlemleri almaları gerekmektedir. Türk bankacılık sisteminde finansal olmayan risklerin başında önemi giderek artan “itibar riski” gelmektedir. Bankacılıkta faaliyet alanı hesaplar ve rakamlar üzerine olduğundan, itibar riski sorununun böyle bir alana oturtulduğunda açıklaması ve hesaplaması ne kadar zor bir sürecin ortaya çıktığı anlaşılacaktır. İtibar riskinin yönetilmesi, süreci konusunda literatürde Türkiye’de bankacılık sistemine dair çalışmalar yok denecek kadar azdır. Bu çalışmada, itibar riskinin önlenmesi, yönetilmesi ve süreci için Türk bankacılık sistemindeki düzenlemeler irdelenecek olup yine Türk bankacılık sistemindeki itibar riskinin gerçekleştiği vakalar incelenecektir.
Baah Aye Kusi, Kwadjo Ansah-Adu, Rockson Sai
International Journal of Finance & Banking Studies (2147-4486), Volume 4; doi:10.20525/.v4i3.226

We investigate bank profitability in Ghana using periods before, during and after the globe financial crises with the five step du-pont model for the first time. We adapt the variable of the five step du-pont model to explain bank profitability with a panel data of twenty-five banks in Ghana from 2006 to 2012. To ensure meaningful generalization robust errors fixed and random effects models are used.Our empirical results suggests that bank operating activities (operating profit margin), bank efficiency (asset turnover), bank leverage (asset to equity) and financing cost (interest burden) were positive and significant determinants of bank profitability (ROE) during the period of study implying that bank in Ghana can boost return to equity holders through the above mentioned variables.. We further report that the five step du-pont model better explains the total variation (94%) in bank profitability in Ghana as compared to earlier findings suggesting that bank specific variables are keen in explaining ROE in banks in Ghana. We cited no empirical study that has employed five step du-pont model making our study unique and different from earlier studies as we assert that bank specific variables are core to explaining bank profitability.
Reza Zare
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 32-40; doi:10.20525/.v2i2.144

In the present study we try to examine the exchange rate changes and financial flexibility as the economic stable indexes on the financial leverage use in the companies so the main issue in this study is to define the financial leverage relation with exchange rate changes and financial flexibility. That is why 88 companies of the companies listed in Tehran stock exchange in 2005–2011. The study type is descriptive–correlative and the multivariable linear regression was used to analyze the data. The findings from the hypotheses test state there is a significant relation between financial leverage and financial flexibility while there isn't relation between financial leverage and exchange rate changes.
S Ayyappan, M Sakthivadivel, S Ayyappan M Com
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 26-31; doi:10.20525/ijfbs.v2i2.143

The banks in India have over 67,000 branches located across the country. All these are classified into two major categories, nonscheduled banks and scheduled banks. Scheduled banks includes commercial banks and the co-operative banks. The public sector banks are accountable for more than 78 percent of total banking industry in India. Even though private sector banks came later into the market, due to their customer servicing and easy banking features they are also competing equally with already existing public sector banks. so it is very essential to analyze how their financial performance is influenced by number of factors which willfurther suggest them where they need to concentrate more. in this article we have analyzed the correlation between return on total assets and other financial variables of selected private and public banks in India.
Senol Emir
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 111-117; doi:10.20525/ijfbs.v2i3.158

The aim of this study to examine the performance of Support Vector Regression (SVR) which is a novel regression method based on Support Vector Machines (SVM) approach in predicting the Istanbul Stock Exchange (ISE) National 100 Index daily returns. For bechmarking, results given by SVR were compared to those given by classical Linear Regression (LR). Dataset contains 6 technical indicators which were selected as model inputs for 2005-2011 period. Grid search and cross valiadation is used for finding optimal model parameters and evaluating the models. Comparisons were made based on Root Mean Square (RMSE), Mean Absolute Error (MAE), Mean Absolute Percentage Error (MAPE), Theil Inequality Coefficient (TIC) and Mean Mixed Error (MME) metrics. Results indicate that SVR outperforms the LR for all metrics.
Serpil Kuzucu
International Journal of Finance & Banking Studies (2147-4486), Volume 4, pp 1-10; doi:10.20525/.v4i3.220

Banking industry worldwide has been transformed due to globalization, financial liberalization, technological developments, government policies, deregulation of financial services, financial crises and increase in mergers and acquisitions since 1980. With these changes, there is a trend towards decrease in the number of banks and increase in banking concentration. Increase in banking concentration might affect competition conditions in banking industry. The decrease in the number of banks and the increase in banking concentration dominate the Turkish banking industry after the banking crises in 2000 and 2001. This paper examines the relationship between concentration and competition in Turkish banking industry. I measure the size of banking concentration by concentration ratios and Herfindahl-Hirschman index with the data of commercial deposit banks in Turkey from 2000 to 2012. Competition degree is measured by using Panzar Rosse model. The results of the study suggest that there is no permanent relation between banking concentration and competition in Turkish banks.
Vedat Akgiray, Seda Peksevim, Emrah Sener
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 01-20; doi:10.20525/ijfbs.v5i2.267

Emeklilik fonları, i) uzun vadeli yatırım perspektifine sahip olması, ii) finansal piyasalardaki oynaklığı uzun vadeye yayarak absorbe edebilmesi, ve iii) yatırımlarını hisse senedi ve altyapı fonları ile reel ekonomiye aktarmaları sayesinde; finansal piyasalardaki oynaklığın azalmasına katkıda bulunmaktadır. Bu çalışma, gelişmekte olan ülkelerde (GOÜ), emeklilik fonlarının ekonomideki payının en düşük olduğu ülkelerden Türkiye'de (%2) ve en yüksek olduğu ülkelerden Şili'de (%66) emeklilik sistemlerinin karşılaştırmalı analizini sunarak, emeklilik fonlarının finansal piyasalardaki oynaklığa olan etkisini 2004-2014 dönemi için incelemektedir. Çalışma aynı zamanda, Türkiye’de uygulanması planlanan ‘otomatik katılım sistemi’ ve bu sistemi tamamlayıcı ‘fon ürünleri’ üzerine politika önerilerini de kapsamaktadır.
Clements Akinsoyinu
International Journal of Finance & Banking Studies (2147-4486), Volume 4, pp 1-10; doi:10.20525/ijfbs.v4i2.207

The Great Financial Crisis has been touted to be the worst crisis since the Great Depression of 1930; its effect has profound ramifications on the global economy. The nature and the severity of the crisis provoked an unprecedented policy response from policy makers at both global and domestic levels. To address the rampaging crisis, the Bank of England implemented a number of conventional and unconventional policy measures to curtail the economic rot and to stimulate economic growth. There is a broad consensus in the empirical literature and other evidence found in this paper that a number of the policies implemented in the United Kingdom played a significant role in re-directing and stimulating the economy. This paper reviews the various policy measures adopted by the Bank of England from the inception of the financial crisis in 2008 and assesses their effectiveness in bringing back the economy from the brink of collapse. Our review shows that quantitative easing (QE) policy and the expansionary fiscal policy adopted by the Bank of England were effective policy tools used in stimulating economic growth, stemming the effect and shortening the duration of the crisis in the United Kingdom
Hakan Bilir
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 58-72; doi:10.20525/ijfbs.v5i2.126

Yatırım fırsatlarının değerlendirilmesi süreci beklenen getiri ve riskin ölçümüne bağlıdır. Finansal Varlıkları Fiyatlama Modeli (FVFM), çok uzun yıllardır modern finans teorisinin temel taşlarından bir tanesini oluşturmaktadır. Model, varlıkların beklenen getirisi ve sistematik riski arasındaki basit doğrusal ilişkiyi ortaya koymaktadır. Model halen, sermaye maliyetinin hesaplanması, portföy yönetiminin performansının ölçülmesi ve yatırımların değerlendirilmesi amacıyla kullanılmaktadır. FVFM’in çekiciliği, beklenen getiri ve risk arasındaki ilişkinin ölçümlenmesi konusundaki güçlü tahmin yeteneğinden gelmektedir. Bununla birlikte modelin bu yeteneği 30 yılı aşkın bir süredir akademisyenler ve uygulamacılar tarafından sorgulanmaktadır. Tartışmalar büyük ölçüde ampirik düzeyde gerçekleştirilmektedir. FVFM’in ampirik düzeydeki problemleri, çok sayıda basitleştirilmiş varsayımı içermesi nedeniyle teorik hatalardır. Çok sayıdaki gerçekçi olmayan varsayım modeli pratik olarak kullanışsız hale getirmektedir. Model ile ilgili temel eleştiriler ise risksiz faiz oranı, pazar portföyü ve beta katsayı üzerinde yoğunlaşmaktadır. Bu çalışmada, modelin varsayımları ve temel bulgularının yanı sıra uygulamasına yönelik yapılan eleştiriler ele alınacaktır.
Ahmed Zemzem, Oumeїma Kacem
International Journal of Finance & Banking Studies (2147-4486), Volume 3, pp 186-200; doi:10.20525/ijfbs.v3i1.179

The aim of our research is to investigate the relationship between risk management, corporate governance and performance in lending institutions. Mainly, this research seeks to examine the effect of risk management and some board’s features on financial performance. Empirical analyses are conducted from a sample of 17 Tunisian lending institutions over the period 2002-2011 using an OLS regression. The study shows that board size affect performance significantly. Most importantly, the existence of a risk committee within the institution has a negative and significant effect on performance.
Adam Zaremba
International Journal of Finance & Banking Studies (2147-4486), Volume 3; doi:10.20525/.v3i1.177

The paper concentrates on value and size effects in country portfolios. It contributes to academic literature threefold. First, I provide fresh evidence that the value and size effects may be useful in explaining the cross-sectional variation in country returns. The computations are based on a broad sample of 66 countries in years 2000-2013. Second, I document that the country-level value and size effects are indifferent to currency conversions. Finally, I introduce an alternative macro-level Fama-French model, which, contrary to its prototype, employs country-based factors. I show that applying this modification makes the model more successful in evaluation of funds with global investment mandate than the standard CAPM and FF models.
Akbar Heidary, Hashem Kozechian, Siavash Rashidi
International Journal of Finance & Banking Studies (2147-4486), Volume 1, pp 35-38; doi:10.20525/ijfbs.v1i1.135

Theories associated with job satisfaction are based on the principle that all environmental elements could shape entire career satisfaction. In literature, major studies illustrate that positive and negative emotions are largely associated with job satisfaction. Job satisfaction source is not only job position but also other factors such as the physical and social work environment, relationships with supervisors and colleagues, group culture and management style of the managers. In this study, it is aimed to evaluate and prioritize the five dimensions of job satisfaction in Zanjan Refah Bank employees: (i) the nature of the job (ii) supervisor, (iii) peer, (iv) promotion and (v) payment. In this study a field research was applied with a survey study. To testify the hypothesis, the Pearson parametric and Friedman test was conducted. The major findings of this study are (i) there is a negative correlation exists between level of education and nature of the job (ii) job promotion and payment, (iii) there is not any significant differences in job satisfaction between men and women.
Ali Görener, Hasan Dincer, Umit Hacioglu
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 41-52; doi:10.20525/.v2i2.145

Location selection problem in banking is an important issue for the commercial success in competitive environment. There is a strategic fit between the location selection decision and overall performance of a new branch. Providing physical service in requested location as well as alternative distribution channels to meet profitable client needs is the current problematic to achieve the competitive advantage over the rivalry in financial system. In this paper, an integrated model has been developed to support in the decision of branch location selection for a new bank branch. Analytic Hierarchy Process (AHP) technique has been conducted to prioritize of evaluation criteria, and multi-objective optimization on the basis of ratio analysis (MOORA) method has been applied to rank location alternatives of bank branch.
Ilker Yilmaz
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 53-65; doi:10.20525/ijfbs.v2i2.146

In recent decades, it is gaining more and more dominance in both academic and business life that the company exists for and has responsibilities toward a wider group of stakeholders and it must have some objectives other than profitability. To achieve sustainable development and growth, the companies must assume more duties, which is called the term “corporate social responsibility (CSR).” In the literature, it is questioned whether CSR activities benefit the company or not; whether there is any relationship exists between CSR activities and the company’s financial performance and the direction of the relationship. We aimedto explore that whether there is any effect corporate social performance (CSP) on financial performance and position and vice versa. We performed content analysis through annual reports and derived a social score composed of the items included in disclosure guidelines and some criteria used in CSR ratings. We also used several financial position and financial performance indicators. In order to explore the relationship between CSP and financial indicators, we run panel data regressions. We found significant results for some of the indicators, where some of the indicators gave insignificant results. The reporting of CSR activities is in very low levels. The conscious toward CSR and sustainability must be promoted and the companies must assume more active roles. The reporting of those activities is also important.
Siti Balqis Noor, Rashidah Abdul Rahman, Tariq Ismai
International Journal of Finance & Banking Studies (2147-4486), Volume 2; doi:10.20525/.v2i3.152

The perceptions of Islamic banking professionals are surveyed through a questionnaire to explore whether the process of risk management mediates board involvement in risk management and risk management practices of Islamic banks in Malaysia and Egypt. The findings of this study identified that the Islamic banks in the selected countries are somewhat efficient in their riskmanagement process. It was noticed that board involvement in risk management, process of risk management and risk managementamong Islamic banks in Malaysia are significantly higher than their counterparts in Egypt. Furthermore, high involvement of boards in risk management significantly increases the risk management process, and in turn, leads to significantly higher risk management practices in Islamic banks. Hence, boards should take formal responsibility for setting, managing and periodicallyassessing the risk management culture of the banks. It is expected that the outcomes of this study would help policy setters in the selected countries to develop a well-structured and harmonized risk management process that enhance risk management practices, with emphasis on the effective involvements of the board of directors and Shari’ah supervisory boards in risk managementpractices.
Anwar Hossain Repon, Zahidul Islam, K.M Zahidul Islam
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 16-29; doi:10.20525/ijfbs.v5i1.44

The purpose of this paper is to investigate the market structure and degree of concentration of Bangladeshi banking industry. The study measured market concentration by using widely recognized measures like k-bank concentration ratio and Herfindahl-Hirchman Index (HHI). It evaluates market structure by applying Panzar-Rosse Model over 8 years period from 2006 to 2013. The result of concentration measures indicates a decreasing trend and low level of market concentration in Bangladeshi banking industry over the sample period. The panzer-Rosse “H-Statistic” suggests that banks in Bangladesh are operating under monopolistic competition. Present paper contributes to a burgeoning literature on banking competition that has evolved significantly over the past periods on a developing country perspective like Bangladesh.
Bouri Abdelfettah, Bilel Jarraya
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 30-44; doi:10.20525/ijfbs.v2i4.161

In recent years the financial markets known a rapid development and become more and more complex. So, many regulatory requirements, focused on banks as well as insurance sector, have been developed. These regulatory are concentrated essentially on business risk control and required capital to cover risks. These requirements have influenced the asset allocation issue in insurance industry. These requirements have influenced the asset allocation issue in insurance industry. This section is interested by this issue. In first time it highlights some research works in this issue. Then we will investigate the relation between Solvency and optimal asset allocation. Finally we will explore the principal used methods in modeling asset and in choosing the optimal portfolio composition.
Srinivasan Palamalai
International Journal of Finance & Banking Studies (2147-4486), Volume 3; doi:10.20525/.v3i3.187

The link between stock market development and economic activity has always been the subject of considerable debate in the field of economics and it raises empirical question whether stock market development influences economic activity or whether it is a consequence of increased economic activity. This study attempts to investigate the direction of causality between stock market development and economic growth in the Indian context. Using the cointegration and causality tests for the period June 1991 to June 2013, the study confirms a well defined long-run equilibrium relationship between the stock market development indicators and economic growth in India. The empirical results show bidirectional causality between market capitalisation and economic growth and unidirectional causality from turnover ratio to economic growth in the long-run and short-run. By and large, it can be inferred that the stock market development indicators viz. market capitalisation and turnover ratio have a positive influence on economic growth in India.
Engin Oner
International Journal of Finance & Banking Studies (2147-4486), Volume 4, pp 11-20; doi:10.20525/ijfbs.v4i2.213

Adam Smith being its founder, in the Classical School, which gives prominence to supply and adopts an approach of unbiased finance, the economy is always in a state of full employment equilibrium. In this system of thought, the main philosophy of which is budget balance, that asserts that there is flexibility between prices and wages and regards public debt as an extraordinary instrument, the interference of the state with the economic and social life is frowned upon. In line with the views of the classical thought, the classical fiscal policy is based on three basic assumptions. These are the "Consumer State Assumption", the assumption accepting that "Public Expenditures are Always Ineffectual" and the assumption concerning the "Impartiality of the Taxes and Expenditure Policies Implemented by the State". On the other hand, the Keynesian School founded by John Maynard Keynes, gives prominence to demand, adopts the approach of functional finance, and asserts that cases of underemployment equilibrium and over-employment equilibrium exist in the economy as well as the full employment equilibrium, that problems cannot be solved through the invisible hand, that prices and wages are strict, the interference of the state is essential and at this point fiscal policies have to be utilized effectively.Keynesian fiscal policy depends on three primary assumptions. These are the assumption of "Filter State", the assumption that "public expenditures are sometimes effective and sometimes ineffective or neutral" and the assumption that "the tax, debt and expenditure policies of the state can never be impartial".
Ben Jabeour Sami
International Journal of Finance & Banking Studies (2147-4486), Volume 2; doi:10.20525/.v2i3.157

A number of authors suggested that the impact of the macroeconomic factors on the incidence of the financial distress, and afterward in case of failure of companies. However, macroeconomic factors rarely, if ever, appear as variables in predictive models that seek to identify distress and failure; modellers generally suggest that the impact of macroeconomic factors has already been taken into account by financial ratio variables. This article presents a systematic study of this domain, by examining the link between the failure of companies and macroeconomic factors for the French companies to identify the most important variables and to estimate their utility in a predictive context. The results of the study suggest that several macroeconomic variables are strictly associated to the failure, and have a predictive value by specifying the relation between the financial distress and the failure.
Gatot Soepriyanto, Paulina Santoso
International Journal of Finance & Banking Studies (2147-4486), Volume 2, pp 76-86; doi:10.20525/ijfbs.v2i2.147

The objective of this study is to assess the share price reactions to smoking ban fatwa on Indonesia tobacco’s company. We expect that the smoking ban fatwa in the world’s largest Muslim population will hit the tobaccos industry revenues, lower tobacco’s company profit and eventually affect the share price of those firms. We use event study methodology and standard market model to calculate abnormal returns of the tobacco’s firms related to the news of smoking ban fatwa. Our study failed to find a statistically significant effect of smoking ban fatwa on tobacco’s firm stock market return. It suggests that the investors do not see the fatwa as a factor that may control the tobacco consumption in Indonesia – thus it may not affect the tobacco’s firm revenues and profit in the future
Özge Sezgin Alp
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 70-84; doi:10.20525/ijfbs.v5i3.285

In this study, the option pricing performance of the adjusted Black-Scholes model proposed by Corrado and Su (1996) and corrected by Brown and Robinson (2002), is investigated and compared with original Black Scholes pricing model for the Turkish derivatives market. The data consist of the European options written on BIST 30 index extends from January 02, 2015 to April 24, 2015 for given exercise prices with maturity April 30, 2015. In this period, the strike prices are ranging from 86 to 124. To compare the models, the implied parameters are derived by minimizing the sum of squared deviations between the observed and theoretical option prices. The implied distribution of BIST 30 index does not significantly deviate from normal distribution. In addition, pricing performance of Black Scholes model performs better in most of the time. Black Scholes pricing Formula, Carrado-Su pricing Formula, Implied Parameters
Mohamed Aymen Ben Moussa, Wiem Majouj
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 103-116; doi:10.20525/ijfbs.v5i3.252

Net interest margin is a significant indicator of the efficiency of the banking financial intermediation. In general, the level of net interest margin is primarily a consequence of result of the level of development and competitiveness of the financial system of country.Therefore, It is important to determine their determinants. In this article, we analyze the determinants of net interest margin of 18 banks in Tunisia between ( 2000…2013). We found that among the internal factors, size, deposits, TLA, CEA, risk have an significant impact on net interest margin. In external factors, only inflation have a significant impact on net interest margin..
Mavhungu Abel Mafukata
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 24-41; doi:10.20525/ijfbs.v5i6.596

The main objective of this paper is to predict the consequences of China's impending economic crisis on global economy – with reference to Sub-Saharan Africa (SSA) in particular. The specific objective of this paper is to investigate and explore the increasing dominance of economic practice of China in SSA. China is a critical principal player in the economy of SSA. China's influence and dominance of the SSA economy might have negative effect on SSA in case of any implosion of the Chinese economy. Data were collected from print and electronic sources extracted from the vast body of empirical scholarship of different disciplines on China in SSA. The results of this paper revealed that China is indeed dominating the economy in SSA. Pointers are that China's economic implosion would have consequences for SSA in the same way as the 2008-2009 global economic recession had around the world. This paper positively predicts that China's economic and financial implosion remains a possibility, and would impact on SSA.
Kwangsoo Lim
International Journal of Finance & Banking Studies (2147-4486), Volume 5, pp 09-14; doi:10.20525/ijfbs.v5i6.600

This paper investigates how firms shifted their dividend policies and leverage policies in response to the economic shock caused by the 2008 financial crisis. The sample countries are United States, Great Britain, France, Germany, Australia, Japan, China, and Korea. The empirical relationship of firms’ dividend policies with their capital structures and earnings was likely to undergo a major change around the 2008 financial crisis, as firms adjusted their capital structures and dividend policies in response to the extreme credit crunch caused by the financial crisis. The extent and the speed that firms deleverage themselves and reduce their dividends were likely to be influenced by countries’ cultural and social norms. This paper finds a significant reduction in dividends across sample countries except Great Britain and France after the 2008 crisis. This finding supports the free cash flow theory that dividends are paid to dissipate free cash flow to address agency conflicts between managers and shareholders. This paper finds a higher correlation between dividends and leverages before the 2008 crisis, and that it strengthened after the crisis except Great Britain and Korea. This finding is consistent more with the pecking order theory than with the trade-off theory of leverage.
Zafer Adalı, Bilgin Bari
International Journal of Finance & Banking Studies (2147-4486), Volume 6; doi:10.20525/ijfbs.v6i2.739

The main purpose of this study is to evaluate whether the bank lending channel exist or not. Within this context, quarterly data of for the periods between 2002q1 and 2016q4 was taken into the consideration. Additionally, VAR model was used to reach the objective. According to the result of impulse response function, it was reached that producer price index, real exchange rate and policy rate are effective determinants. Additionally, banks balance sheet has important and positive influence on total credits but industrial production index is regarded as partially effective. While considering this result, it was also found that both bank balance and macroeconomic variables used in this study is the main determinants of bank total credit.
Nihal Kalaycı Oflaz, Nadir Eroglu
International Journal of Finance & Banking Studies (2147-4486), Volume 6; doi:10.20525/ijfbs.v6i2.745

Dünyada sağlığın geliştirilmesi ve sağlık bilincinin oluşturulması için birey temelli uygulamalara odaklanılmış ve bu kapsamda sağlık okuryazarlığı (SO) kavramı gündeme gelmeye başlamıştır. SO, bireylere kendi sağlık kararları ile ilgili doğru tercihlerde bulunma yetisinin kazandırılması yanında tıbbi bilgileri doğru anlama, yorumlama ve sağlığı ile ilgili uygun kararları verecek davranışlar geliştirmesinin sağlanmasını ifade etmektedir. Bireylerin demografik özellikleri, genetik faktörler, beslenme alışkanlıkları, hastalıkları yönetme şekli, sosyoekonomik özellikleri gibi pek çok faktör ile ilişkilendirilebilen sağlık okuryazarlığı düzeyinin yetersizliği elde edilen bulgulara göre sağlık hizmetlerine tahsis edilen kaynakların aşırı ya da gerektiği gibi kullanılmamasına neden olmaktadır.Bu çalışma ile yetersiz SO’nın sağlık harcamalarına olan etkilerinin analiz edilmesi ve Türkiye (TR)’nin sağlık harcamaları içerisinde yetersiz SO’dan kaynaklanan mali yükün tespit edilmesi amaçlanmaktadır. Bu amaçla Vernon ve Diğerlerinin (2007), Friedland (2002)’nin varsayımlarını kullanarak geliştirdiği maliyet tahmin modeli ile Sağlık ve Sosyal Hizmet Çalışanları Sendikası tarafından 2014 yılında yayınlanan “Türkiye Sağlık Okuryazarlığı Araştırması”nın verileri kullanılarak TR için yetersiz SO’nın tahmini maliyetleri hesaplanmıştır.
Jane Gathiga Muriithi, Kennedy Munyua Waweru
International Journal of Finance & Banking Studies (2147-4486), Volume 6; doi:10.20525/ijfbs.v6i3.691

Operational risk threatens banks financial viability and long-term sustainability. The purpose of this paper is to explore the effect of operational risk on financial performance of commercial banks in Kenya. The qualitative research design and ordered logistic model were employed. The data was analysed with the aid of STATA software. The conclusion of the study was that there exists an inverse relationship between operational risk and financial performance. The study also finds that bank size moderates the effect internal and external fraud on financial performance of commercial banks in Kenya by shrinking it. Bank size moderates the effect execution, delivery and process management on financial performance of commercial banks in Kenya by enhancing it. The guidelines and procedures provided by the Central bank of Kenya on operational risk management should be fully adhered into.
International Journal of Finance & Banking Studies (2147-4486), Volume 7, pp 27-32; doi:10.20525/ijfbs.v7i1.837

This paper observes the impact of working capital management on profitability of industrial sector in Iraq. Four companies based in Iraq namely: Iraqi Date processing, Iraqi carton manufactories, Baghdad soft drinks and Iraqi for tufted carpets randomly selected and analyzed for the present study over the period 2007 to 2016. Annual reports of these companies have been studied and significant ratios calculated. The variables that were identified as independent for working capital were, current ratio and quick ratio, while return on equity ROE as dependent variable for profitability. The Ordinary Least Square (OLS) model used to examine the impact of working capital management on profitability. Results indicate that ROE is positively related with working capital variables.
Marcin Korytowski
International Journal of Finance & Banking Studies (2147-4486), Volume 7, pp 1-12; doi:10.20525/ijfbs.v7i1.847

The purpose of this article is to examine the impact of selected internal and external factors on a bank’s profitability. The research investigates the impact of operational size, liquidity, risk appetite, management efficiency, product diversification, concentration, GDP growth and inflation change on the profitability of sample of 4179 European commercial banks for the period between 2011 and 2015. The input data were obtained from the Orbis Focus and the World Bank databases. The determinants were used to construct two models with ROAA and ROAE as a proxies and regression analysis using between groups panel approach was conducted. It has been found that growing economy impacts banks’ profitability positively. The liquidity has been found to impact profitability positively, but statistically significant results were obtained only with the ROAA model. It has been robustly confirmed that management efficiency, product diversification, market concentration and inflation result in decreased profitability. The operational size has been found to be negatively linked to changes in net results but was confirmed only with ROAA model. Similarly, statistically significant results with regard to liquidity were found only for ROAA model and the correlation was positive. The strong negative impact of market concentration on profitability is an interesting finding allowing for further exploration of reasons for this unexpected vector of correlation.
Bashkim Bellaqa, Halil Bajrami
International Journal of Finance & Banking Studies (2147-4486), Volume 8, pp 21-32; doi:10.20525/jfbs.v8i3.833

One of the important aspects of a country's economic development is Foreign Direct Investment (FDI), these investments impact on economic development and improve social aspects. At the international level as well as at the country level, FDI has a relevant significance which as an issue is related to the sustainable management policy that makes the country more attractive in absorbing FDI. The purpose of this paper is to present the trends of FDI in the Western Balkan countries with an open look in Kosovo and their comparison, investment policy management, GDP FDI correlation and comparison of the trends of the remittances .Firstly in the introduction of this paper there is a theoretical review of the literature on the definitions of FDI in the economic aspect. Secondly, FDI has been presented and compared over the years in the Western Balkans countries with a vacant look in Kosovo. Third, it analyzes the FDI trends in Kosovo based on the country of origin of these investments, etc. Fourth, in the framework of this research paper, country-level management policies were analyzed in terms of creating an incentive environment for FDI. Fifth, as part of this paperwork, there are also empirical analysis of the correlations between FDI and GDP in the case of Kosovo, etc. Keywords: One of the important aspects of a country's economic development is Foreign Direct Investment (FDI), these investments impact on economic development and improve social aspects. At the international level as well as at the country level, FDI has a relevant significance which as an issue is related to the sustainable management policy that makes the country more attractive in absorbing FDI. The purpose of this paper is to present the trends of FDI in the Western Balkan countries with an open look in Kosovo and their comparison, investment policy management, GDP FDI correlation and comparison of the trends of the remittances .Firstly in the introduction of this paper there is a theoretical review of the literature on the definitions of FDI in the economic aspect. Secondly, FDI has been presented and compared over the years in the Western Balkans countries with a vacant look in Kosovo. Third, it analyzes the FDI trends in Kosovo based on the country of origin of these investments, etc. Fourth, in the framework of this research paper, country-level management policies were analyzed in terms of creating an incentive environment for FDI. Fifth, as part of this paperwork, there are also empirical analysis of the correlations between FDI and GDP in the case of Kosovo, etc. Keywords: Foreign Direct Investment, Investment Policy Management, Correlations, Remittances JEL classification: F21, M12, C33, F24 JEL classification: F21, M12, C33, F24
Wael Bakhit, Salma Bakhit
International Journal of Finance & Banking Studies (2147-4486), Volume 3, pp 60-80; doi:10.20525/ijfbs.v3i2.184

This paper employs a quarterly time series to determine the timing of structural breaks for interest rates in USA over the last 60 years. The Chow test is used for investigating the non-stationary, where the date of the potential break is assumed to be known. Moreover, we empirically examined the deviation from an assumed interest rate as given in a standard Taylor rule and consequences on financial sectors. The empirical analysis is strengthened by analysing the rule from a historical perspective and look at the effect of setting the interest rate by the central bank on financial imbalances. The empirical evidence indicates that deviation in monetary policy has a potential causal factor in the build up of financial imbalances and the subsequent crisis where macro prudential intervention could have beneficial effect. Thus, our findings tend to support the view, which states that the probable existence of central banks has been one source of global financial crisis since the past decade.
Mavhungu Abel Mafukata, Grace Kancheya, Willie Dhlandhlara
International Journal of Finance & Banking Studies (2147-4486), Volume 4, pp 37-50; doi:10.20525/ijfbs.v4i1.203

The majority of income earners of small-scale informal economic sectors in most developing regions abstain from mainstream formal banking systems. These income earners rather “bank” informally. Mainstream formal banking institutions also argue that low income earners are “unbankable” and posed business risk. However, emerging literature posits that low income earners would instead provide a profitable formal niche market. Trends with regard adoption and non-adoption of mainstream formal banking systems amongst small income groups were mixed. This paper investigates such patterns in South Africa, Zambia and Zimbabwe. The results of this paper revealed that the informal cross-border traders who trade between Zambia and South Africa were good adopters of mainstream formal banking. The results however found a sharp contrast in Zambia. In Nyanga, Zimbabwe, the results of this paper revealed that there were a few respondents who had adopted mainstream formal banking while 47.2% of communal cattle farmers in South Africa had adopted mainstream formal banking systems through savings against 52.8% who were left out. Adoption or non-adoption of mainstream formal banking systems patterns vary from region to region, and sector to sector even where income earners were almost equals in terms of household income earnings. Mobile banking and low transaction costs might provide motivation for small-scale income earners to adopt mainstream formal banking.
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