Banks and Bank Systems

Journal Information
ISSN / EISSN : 1816-7403 / 1991-7074
Published by: LLC CPC Business Perspectives (10.21511)
Total articles ≅ 411
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Abdulnafea Al-Zararee, Nashat Ali Almasria, Qasim Ahmad Alawaqleh
Banks and Bank Systems, Volume 16, pp 229-239; https://doi.org/10.21511/bbs.16(4).2021.19

Abstract:
This study investigated the impact of Working Capital Management (WCM) and Credit Management Policy (CMP) on the Financial Performance (FP) of Jordanian banks (JB). The study data were obtained from 16 Jordanian banks listed on the Amman Stock Exchange (ASE) between 2017 and 2020. The study used panel data to investigate the relationship between the two independent variables, WCM and CMP, and the dependent variable FP; 64 financial reports to Jordanian banks were analyzed to measure this relationship. To test hypotheses, multiple regression was used. The study found a statistically significant relationship between WCM and FP, and the independent variable was able to explain 34.1% of the changes that occur in the dependent variable. In addition, the outcome approved that there is a statistically significant relationship between CMP and FP. Furthermore, CMP explained about 41.8% of changes in the dependent variable. The findings of this study indicate support for the banks’ performance; a bank may need to lengthen client credit terms, prolong the cash transfer cycle, and require a more extended payment period when judging on WCM. Acknowledgment The publication of this research has been supported by the Deanship of Scientific Research and Graduate Studies at Philadelphia University – Jordan.
Banks and Bank Systems, Volume 17, pp 1-12; https://doi.org/10.21511/bbs.17(1).2022.01

Abstract:
This paper examines the macro-economic and bank-specific factors affecting non-performing loans in commercial banks. Using 47 listed commercial banks from six countries, namely 19 banks from Nigeria, 14 banks from Benin, 3 banks from Burkina Faso, 3 banks from Gambia, 3 banks from Guinea, and 5 banks from Liberia for the period 2008 to 2019, fixed and random effect model was used. The Hausman test favored the selection of fixed effect model, and it was found from the estimation that the liquidity ratio, capital adequacy ratio and inflation rate significantly affect non-performing loans. As a result, it is advised that banks depend not only on their ability to achieve the capital adequacy ratio, but also guarantee that loans are thoroughly scrutinized before being issued to beneficiaries. Bank managers should guarantee that banking staff is not simply awarding loans to secure their jobs by accumulating deposits from consumers at the price of the bank’s long-term stake. In addition, the economies of West Africa should keep their inflation rates low so that repayment of loans on time is cheap and realistic. AcknowledgmentI would like to appreciate Fezile Nonjabulo Gcwabaza for love and support throughout this research project.
Mohammad Fawzi Shubita
Banks and Bank Systems, Volume 16, pp 218-228; https://doi.org/10.21511/bbs.16(4).2021.18

Abstract:
The purpose of this study is to investigate the association between bank growth and the retained earnings amount for Jordanian banks between 2010 and 2020. The method to be used is regression models. Bank growth is measured using the change in total assets; income retention is measured by subtracting dividends from earnings per share and by deducting dividend per share from the operating cash flow on the accrual basis and cash basis. In addition, another specification will be used to the association between the growth of a bank’s total assets and income retention using the percentage change in the growth of a bank’s total assets and income retention on the accrual and cash basis. The findings of pooled OLS regression models and random effect models show that there is no relationship between income retention using the accrual basis and the bank total assets growth (Adj-R2 was –005). There is a significant relationship between income retention using the cash basis and the bank growth in total assets (Adj-R2 was 14%). There is no significant association between change in income retention using the cash basis and the bank growth in total assets, and bank size affects the relationship between income retention and bank growth in total assets. Users of financial statements need to be aware of the association between the several variables used in this study to make sound decisions.
Banks and Bank Systems, Volume 16, pp 179-192; https://doi.org/10.21511/bbs.16(4).2021.15

Abstract:
The paper examines the importance of financial instability for the development of four Norwegian banking crises. The crises are the Post First World War Crisis during the early 1920s, the mid 1920s Monetary Crisis, the Great Depression in the 1930s, and the Scandinavian Banking Crisis of 1987–1993. The paper first offers a description of the financial instability hypothesis applied by Minsky and Kindleberger, and in a recent dynamic financial crisis model. Financial instability is defined as a lack of financial markets and institutions that provide capital and liquidity at a sustainable level under stress. Financial instability basically evolves during times of overheating, overspending and extended credit granting. This is most common during significant booms. The process has devastating effects after markets have turned into a state of negative development.The paper tests the validity of the financial instability hypothesis using a quantitative structural time series model. It reveals upheaval of 10 financial and macroeconomic indicators prior to all the four crises, resulting in a state of economic overheating and asset bubble creation. This is basically explained by huge growth in debts. The overheating caused the following banking crises. Finally, the paper discusses the four crises qualitatively. Again, the conclusion is that a significant increase in money supply and debt caused overheating, asset bubbles, and thereafter, financial and banking crises, which in turn spread to other markets and industries and caused huge slumps in the real economy.
Burhan Günay, Ayten Turan Kurtaran, Sara Faedfar
Banks and Bank Systems, Volume 16, pp 169-178; https://doi.org/10.21511/bbs.16(4).2021.14

Abstract:
Investors make solid decisions when evaluating their investments based on positive indicators the firm may show in the future, rather than based on its past performance. Accordingly, this study aims to investigate the relationship between performance criteria and the most significant value-based criterion; Economic Value Added (EVA). Further, it evaluates the impact of future EVA values on the bank value. Panel Data Analysis and the OLS Regression model are used to estimate the regression equation. The analysis is performed using data of 10 banks on the BIST Banks Index over the period 2011 to 2020. Furthermore, the EVA criterion was converted into standardized EVA(SEVA) by dividing EVA by total assets. The OLS regression analysis results revealed that the model’s explanatory power for the SEVA variable is 71.92%. The three variables that have positive correlation with SEVA are earnings per share (EPS) and TOBINQ rates at the 1% significance level and the price to sales growth rate with a degree of significance at 10%. Regarding the Panel Data Analysis results, while the explanatory power of the SEVA variable is 72.14%, its association with the EPS and TOBINQ criteria was found to be significant at the 1% significance level. The empirical investigations reveal that the model developed using the future SEVA as a proxy for bank value is found to be promising, and it is accepted that the SEVA variable can be used instead of the bank value.
Lucilla Bittucci, , Pina Murè,
Banks and Bank Systems, Volume 16, pp 193-208; https://doi.org/10.21511/bbs.16(4).2021.16

Abstract:
This study investigates the main factors driving the evolution of the securitization of loans to Italian small and medium-sized enterprises (SMEs). The value of securitization increased in last two years, even though it has not been used as collateral for central banks. The disposal of non-performing loans (NPLs) may have been rather triggered by increasing attention of the international institutions to such an issue, within the general purpose of financial stability. The purpose of this paper is to interpret such a phenomenon focusing on Italian banks and restricting the analysis to the case of securitizations backed with loans to small and medium-sized enterprises (SMEs). The interesting result that emerges, supported by econometrically tested empirical evidence, is that given the orientation of international financial institutions, such as the ECB and the EBA, and reacting to incentives coming from the fiscal policy authorities for the public guarantee of loans, banks have been using securitization to reduce the burden on their bad balance sheets due to (NPLs). It was found that the public guarantee had a positive impact on SME securitization, whereas securitization in other sectors has not been affected significantly. Such evidence suggests that, in the absence of a public guarantee, the financial stability target would have been at risk, and the effectiveness of collateral-based policies in the recent past must be improved to enhance access to credit for SMEs.
Zakia Abdelmoneim, Mahmoud Elghazaly
Banks and Bank Systems, Volume 16, pp 149-168; https://doi.org/10.21511/bbs.16(4).2021.13

Abstract:
This paper aims to measure the relationship between Corporate Social Responsibility (CSR), Corporate Governance (CG), and profitability in listed Egyptian banks. COVID-19 is expected to affect this relationship if the year 2020 is taken. Profitability is measured by earnings per share (EPS), return on equity (ROE), and return on assets (ROA). CSR is measured as a dummy variable and CG is measured by the chief executive officer (CEO) duality. There are three control variables, such as the Islamic variable, which classifies a bank into Islamic or conventional, bank age, and bank size. The paper uses multiple regression and logistic regression models. The final sample is 12 banks consisting of 9 conventional banks and 3 Islamic banks (IBS). The results show no impact of profitability on CSR. The results prove a significant positive impact of profitability on CG; there is a significant negative relationship between CEO duality and EPS at a 0.05 level. CSR has a significant impact on CG at a 0.001 level. The results show a clear impact of COVID-19 on the impact of CSR on profitability only when measured by ROA at 0.001 in the period 2014–2019.
Hai Ninh Nguyen
Banks and Bank Systems, Volume 16, pp 137-148; https://doi.org/10.21511/bbs.16(4).2021.12

Abstract:
Social isolation is a globally accepted policy of governments worldwide to halt the rapid spread of coronavirus in the community. As a result, all banks must be closed, and bank officers must work from home through the Internet instead of at their offices. Hence, stressors and conflicts wreak havoc on bank officers’ mental health and work productivity. This study focused on determining the influence of burnout and inter-role conflicts on the working performance of bankers who have got children. An online structured questionnaire was utilized to survey 326 bankers throughout the nation. The PLS-SEM and Smart PLS were adopted to analyze and test hypotheses. The findings corroborated the harmful effects of burnout and inter-role conflicts on the job performance of bankers who have got children. Three variables were determined to positively affect burnout, such as occupational stress, parenting stress, and inter-role conflicts, whereas the role ambiguity and role overload sparked the inter-role conflicts of bankers. This study recommended four practical suggestions for both bankers and banks’ policymakers, including: achieving work-family balance is a challenging task; the need to implement more robust organizational support policies to remove the burden and job-stressors; the administrative workload should be reduced and cut off; and bankers individually should get familiar with saying “No” to the unimportant and taking care of themselves during pandemic isolation.
Vimal Pant, Nidhi Srivastava, TejinderPal Singh, Prachi Pathak
Banks and Bank Systems, Volume 16, pp 125-136; https://doi.org/10.21511/bbs.16(4).2021.11

Abstract:
Education financing is a key retail banking product for most commercial banks and a lifeline for large numbers of students seeking professional courses. This study aimed to identify the impediments in the successful delivery of this loan product in India, where it is marketed majorly by public sector banks under a common scheme devised by the government. The study adopted a qualitative approach to probe behavioral issues related to the credit appraisal process, which is the most suitable approach for unstructured exploratory design. Since credit managers in banks work with applicants for education loans, their insight becomes essential to understanding the issues plaguing with the smooth implementation and delivery of this scheme. Thus, ten public sector bank managers working in different geographical locations were selected using a homogeneity purposive sampling technique. The study collected 41 responses, which were then divided into 4 major categories. The responses were simultaneously transcribed manually to ensure that data remained close to the original verbatim of the participant. All transcribed interviews were imported into ATLAS.ti 8 Software for analysis. The 4 observational categories lead to a broad understanding that product accessibility, operational hurdles, scheme features and limitations in bad loan recovery are key bottlenecks in managing education loans. These responses had over 80% commonality on key issues of product feature and cost. It was concluded that education financing can perform better by improving access, rationalizing interest rates and liberalizing repayment terms. These findings can be used as input for tweaking the product for better performance.
Banks and Bank Systems, Volume 16, pp 114-124; https://doi.org/10.21511/bbs.16(4).2021.10

Abstract:
The purpose of this paper is to explore electronic payments, which are considered one of the most important tools in financial technology. Hence, electronic payments play a great role in enhancing the financial performance of the Bank of Palestine. The study uses three dependent variables such as return on assets (ROA), return on equity (ROE) and earnings per share (EPS). The study methodology employs a descriptive and analytical approach to investigate the bank’s data during the period of 2010–2019. Hence, the findings show that electronic payment methods have an important impact on the bank’s financial performance, through the return on assets and equity indicators, which helps to reduce costs and thus increase profits. However, there is no statistically significant effect on the earnings per share. What is more, the Bank of Palestine uses a wide variety of electronic payment methods. Thus, the study suggests the necessity to increase the effectiveness of the information security from fraud risks, in addition to activating supervisory and regulatory authorities (such as the Palestinian Monetary Authority), to strengthen the application of electronic payment tools. Acknowledgment Special thanks to Palestine Technical University Kadoorie for their valuable and continuous support.
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