Banks and Bank Systems

Journal Information
ISSN / EISSN : 1816-7403 / 1991-7074
Current Publisher: LLC CPC Business Perspectives (10.21511)
Total articles ≅ 346
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Setyo Tri Wahyudi , Rihana Sofie Nabella, Kartika Sari
Banks and Bank Systems, Volume 16, pp 17-26; doi:10.21511/bbs.16(1).2021.02

The banking sector plays a vital role in the economy of each country. Banks are required to operate in a sound, efficient, and reliable manner in order to stimulate economic growth. To achieve that, a basic framework for the Indonesian banking system has been developed, known as the Indonesian Banking Architecture (IBA) aimed at strengthening the structure and enhancing the competitiveness of the banking industry. This study aimed to analyze the level of competition, the ability, and influence of the competition on banks efficiency, so banks can maintain the performance level and provide economic growth. This study used a quantitative approach with a panel regression analysis model. The results have shown that the banking industry in Indonesia tends to be monopolistic. The character of many sellers, differentiated products, sellers freely entering and leaving the market, as well as the presence of advertisement and product quality competitions were examined. Bank competition that leads to a monopolistic market structure stimulated banks to achieve higher profits and put bank projects and financing at high risk. Competition had a negative correlation with bank efficiency because competition encourages banks to focus on profit rather than efficiency, engage in risky financing/projects, and undertake high lending activities. Moreover, four big banks in Indonesia are in the “too big to fail” position. Banking regulators in Indonesia must maintain and produce reliable and stable banks to compete globally. AcknowledgementThe authors would like to thank all those who have contributed to the completion of this article, especially the leadership of the Department of Economics and the Faculty of Economics and Business, Brawijaya University, who provided facilitation for publication in reputable international journals.
Mohannad Abu Daqar, Milan Constantinovits, Samer Arqawi, Ahmad Daragmeh
Banks and Bank Systems, Volume 16, pp 1-16; doi:10.21511/bbs.16(1).2021.01

This study aims to investigate the role of Fintech in predicting the spread of COVID-19 based on consumers’ Fintech perceptions and behavior before and after the outbreak of COVID-19. The study used a questionnaire-based survey distributed in different countries of the world using the LinkedIn platform for this purpose to reach the targeted population. The snowball sampling technique was used. The study targeted consumers with Fintech experience, especially in digital payments services. 507 samples were retrieved. For the analysis, the Structural Equation Modeling (SEM) was used. The study revealed novel results in predicting COVID-19 spread; these three variables (Fintech Behavior before COVID-19, Fintech Behavior after COVID-19, and Fintech Perception after COVID-19) could predict 52.5% of the variance in the dependent variable (COVID-19 Spread) (R² = 0.525, p < 0.05). The findings show that Higher Fintech perception and behavior among Fintech users will help in reducing the spread of COVID-19 by avoiding the use of contact payment methods. Contactless payment methods are the main tools in Fintech that might help in avoiding the probability of COVID-19 spread. Consumers’ Fintech perceptions and behavior are the most influencing factors that could predict the spread of COVID-19 in this study, where digital payments are the main concern. It is recommended that consumers adopt digital payment methods and tools, especially contactless payment methods, to fulfill their financial services. Other researchers are also encouraged to use the same model to predict the spread of this virus in the Fintech context.
Adegbola Olubukola Otekunrin, Tony Ikechukwu Nwanji, Damilola Eluyela, Johnson Kolawole Olowookere, Damilola Gabriel Fagboro
Banks and Bank Systems, Volume 15, pp 221-228; doi:10.21511/bbs.15(4).2020.18

This paper aimed to empirically examine the extent to which capital structure impacts the profitability of Nigerian Deposit Money Banks considering the profitability of eight Nigerian Deposit Money Banks from 2003 to 2018 (16 years). A descriptive research design was adopted for this study, and data were analyzed using regression. The study used secondary data obtained from published annual reports of selected Nigerian Deposit Money Banks on the Nigerian Stock Exchange (NSE) for four years (2003–2018). The study concluded that the indicators used to measure capital structure (debt-equity ratio and leverage ratio) and profitability (returns on equity) had a negative relationship. This means that the use of debts mixed with equity (debt-equity ratio and leverage ratio) in improper proportion as financing methods can negatively affect profitability. Hence, there is a need to identify the optimal mix of capital structure (debts mixed with equity) that maximizes profitability, as well as firm and shareholder value with minimum agency costs as suggested by the trade-off theory and agency theory, respectively. The alternative is to give preference to retained earnings (internal source of finance) as funding source. AcknowledgmentAll researchers and non-researchers that contributed to this paper are highly appreciated.
Edwin Chukwuemeka Idoko, Gerald Nwora Nebo, Stephen Ikechukwu Ukenna
Banks and Bank Systems, Volume 15, pp 204-220; doi:10.21511/bbs.15(4).2020.17

Field salespersons’ disengagement in deposit money banks (DMB) in Sub-Saharan Africa (SSA) has maintained an upward trajectory. Failures in sales target delivery mostly take the blame. Despite the obvious implications of non-target delivery for DMBs’ financial health, there is under-reportage culminating in little understanding regarding those factors that predict field salespersons’ performance from typical SSA settings. This paper bridges the gap by empirically examining antecedents of field salespersons’ sales target performance in DMBs in Nigeria that is alarmingly competitive and significantly characterized by physical-cash-transactions. Also, it examines the mediating effect of organizational commitment regarding identified antecedents on FS sales target performance in DMBs. A sample of 334 field salespersons from 17 DMBs in Southeastern Nigeria was surveyed using a self-administered questionnaire. The data collected were analyzed using a structural equation modeling approach with the aid of Analysis of Moment Structures (AMOS) 25.0 software concerning hypothesized paths in the research model. Reliability, convergence and discriminant validity were checked. Significant and positive relations regarding motivation, aptitude, and job satisfaction were confirmed; nevertheless, role perceptions and work environment show a negative and significant effect on sales target actualization. Skill-set shows no statistical support. Organizational commitment as a mediator shows a complementary partial mediation effect on determinants and sales target performance. Understanding both economic and human-inclined variables is crucial to improving the performance of field salespersons. Theoretical implications and directions for further research were proposed. AcknowledgmentThe authors express their deep gratitude to Prof. A. D. Nkamnebe of the Department of Marketing, Nnamdi Azikiwe University, Nigeria, for reviewing the manuscript and suggestions for improving the quality of the paper.
Doan Van Dinh
Banks and Bank Systems, Volume 15, pp 193-203; doi:10.21511/bbs.15(4).2020.16

Inflation and lending rates are two important macroeconomic indicators as they affect economic growth. The correlation between the inflation rate and the lending rate in Vietnam and China is analyzed to determine whether the lending rate causes inflation or not. An ordinary least square model (OLS) and a unit root test are applied to check the correlation and cointegration related to the inflation and lending rates to avoid spurious regression. The research time series data were collected from 1996 to 2017. The correlation of Vietnam’s variables is 56%, the correlation of China’s variables is 55%, which is a close correlation. The empirical cointegration test results for Vietnam and China are suitable for two research models. The relationship between these two indicators influences each other. In the short term, inflation stimulates economic growth through loose monetary policy through the lending rate. However, in the long term, if the money supply increases continuously, inflation will slow economic growth and increase bad debt. The empirical results are to make accurate forecasts and determine monetary policy for micro-managers who set the goal of sustainable economic growth and have a strategy for economic development in the short and long term.
Zulfikar Zulfikar, Andy Dwi Bayu Bawono, Mujiyati Mujiyati, Sri Wahyuni
Banks and Bank Systems, Volume 15, pp 179-192; doi:10.21511/bbs.15(4).2020.15

This paper aims to study Islamic banking (IB) regulations related to the influence of the Sharia corporate governance (SCG) mechanism on financial reporting timeliness (FRTL) in Indonesia. The unbalanced panel data obtained empirically during a period that ranges from 2016 to 2019 includes observations from 54 Islamic commercial banks (ICb), 82 Sharia business unit (SBu) banks and 82 conventional banks (CB). Panel regression model is used in this study to adjust the unbalanced panel data obtained. The findings indicate that the variation of FRTL for IBs (represented by ICb) is determined by Sharia corporate governance (SCG) mechanisms. Further findings relate to a comparative study of variations in FRTL between ICb, SBu, and CBs. Although there are different determinants between ICb (SCG) and CBs (CG), there is no difference in FRTL variation between the two. Meanwhile, between ICb and SBu, whose regulations have the same determinant, there are differences between the two FRTL variations. The novelty of this paper is that, firstly, SCG is constructed on the basis of the IBs regulation to determine FRTL, and secondly, the variationі in FRTL between the IBs and CBs groups are compared.
Galina Gospodarchuk, Nataliya Amosova
Banks and Bank Systems, Volume 15, pp 164-178; doi:10.21511/bbs.15(4).2020.14

The development of globalization creates a need for diagnosis of financial stability at the global level. This study aims to analyze the financial stability of the global banking system and identify threats to stability at the level of geographic regions and countries. The study uses the methods of a structured system, comparative and cluster analysis. The empirical study is based on World Bank data for 126 countries for the period 1998–2017. One of the key results of the study is the development of quantitative indicators of the financial stability of the world banking system. These indicators differ from the existing ones due to the predictive nature of the former. The study also proposes criteria of qualitative assessment of the level of financial stability of the world banking system and its individual elements in the form of regional and national banking systems. In addition, appropriate algorithms were developed to calculate the proposed indicators and criteria. The results helped to form clusters of countries in terms of the level of their banking system stability, compile maps of financial stability risks at the global level, and identify countries that are sources of potential threats to financial stability. The empirical part of the study confirms the practical applicability of the proposed analytical tools. The study shows that in 2017, the banking system of Asian countries moved to the high-risk zone. Potential threats to the financial stability of the global banking system come from the European and Asian banking systems, as well as from the Australian banking system. AcknowledgmentThe study was funded by the RFBR according to the research project No 18 010 00232 “A methodology of multilevel system of diagnostics and regulation of financial stability” year 2018–2020.
Olesia Lebid, Oleksandr Veits
Banks and Bank Systems, Volume 15, pp 150-163; doi:10.21511/bbs.15(4).2020.13

The paper focuses on the theoretical justification and theoretical foundations of using statistical criteria for identifying money laundering risk as a tool to prevent and counteract the legalization of bank clients’ proceeds. The hypothesis is that the coefficient of variation can be appropriately used as an identifier for money laundering risk. To prove this hypothesis, a special methodology was used: generalization, grouping, statistical analysis of time series, and correlation analysis – to identify and analyze the hidden signs of the customer income legalization in the financial activities of a bank; mathematical statistics and scaling – to determine the quantitative values of risk levels for the use of bank services for legalizing customer income. The analysis of financial activities of 32 Ukrainian banks aimed at identifying money-laundering risks showed that banks in which the National Bank of Ukraine revealed suspicious transactions with money-laundering features (16 operating banks) had much higher coefficients of variation in the volume of cash flows, in cash flows for on-demand accounts of economic entities, in cash flows of on-demand accounts for individuals, compared with banks in which violations of legislation in the field of financial monitoring were revealed (eight banks), and with banks where violations were not found (eight banks). This proves that sudden changes in customer transaction volume can be a sign of money laundering risk. AcknowledgmentState grant for fundamental scientific research “Risk-oriented approach in countering money laundering, terrorist financing and proliferation of weapons of mass destruction” (state registration number 0118U000058).
Banks and Bank Systems, Volume 15, pp 137-149; doi:10.21511/bbs.15(4).2020.12

In this paper, an analysis of the prediction of bank stability in the United States from 1990 to 2017 is carried out, using bank solvency, delinquency and an ad hoc bank stability indicator as variables to measure said stability. Different machine learning assembly models have been used in the study, a random forest is developed because it is the most accurate of all those tested. Another novel element of the work is the use of partial dependency graphs (PDP) and individual conditional expectation curves (ICES) to interpret the results that allow observing for specific values how the banking variables vary, when the macro-financial variables vary.It is concluded that the most determining variables to predict bank solvency in the United States are interest rates, specifically the mortgage rate and the 5 and 10-year interest rates of treasury bonds, reducing solvency as these rates increase. For delinquency, the most important variable is the unemployment rate in the forecast. The financial stability index is made up of the normalized difference between the two factors obtained, one for solvency and the other for delinquency. The index prediction concludes that stability worsens as BBB corporate yield increases.
Rania Itani, Muhammad Azeem, Nawazish Mirza
Banks and Bank Systems, Volume 15, pp 121-136; doi:10.21511/bbs.15(4).2020.11

The purpose of this study is to examine the potential of Lebanese banks to address the economic challenges posed by COVID-19. These banks faced the disturbances of the 2011 Arab Spring, and these two crises have resulted in similar economic conditions, leading to an assessment of how Lebanese banks are dealing with the pandemic-led challenges. Exploratory analysis revealed the common features in the two events, and confirmatory analysis examined the hypotheses underlying a theoretical framework. Triangulation of qualitative and quantitative data helped to scrutinize the two events. Content analysis of data collected from semi-structured interviews with seven senior banking professionals confirms that the Lebanese banking sector’s experience gained during the Arab Spring is a valuable asset for bankers, the Banque du Liban (BDL), and the government, which can be used to anticipate and deal with the COVID-driven economic crisis. The study finds three key moderating factors: trust deficit, inherited characteristics of the economy, and fiscal and monetary policy. Most of these conditions are permanent in nature and require long-term planning. As this research was conducted before the catastrophe caused by the August 2020 Beirut explosion, no aspects of the financial consequences to the Lebanese banking sector and economy resulting from this immerse shock are included.
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