Banks and Bank Systems

Journal Information
ISSN / EISSN : 18167403 / 19917074
Current Publisher: LLC CPC Business Perspectives (10.21511)
Total articles ≅ 269
Current Coverage
SCOPUS
DOAJ
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Latest articles in this journal

Myra V. De Leon
Banks and Bank Systems, Volume 15, pp 21-29; doi:10.21511/bbs.15(1).2020.03

Abstract:This study investigates the effect of credit risk and macroeconomic factors on profitability of 20 ASEAN banks, particularly from Indonesia, Malaysia, Thailand and Philippines, covering the period of 2012 to 2017. The unbalanced panel data were tested for heteroscedasticity and normality. A fixed effects model and a random effects model were utilized followed by simple ordinary least squares (OLS) regression. The obtained results show that credit risk and GDP growth negatively affect Return on Equity (ROE) at 5% level of significance. The inflation rate increases ROE by 0.323%. In terms of influence, inflation has the highest impact on ROE followed by GDP growth and credit risk. Credit risk and GDP growth negatively affect Return on Assets (ROA) at 5% level of significance. ROA was also influenced by an increase in inflation rate. Therefore, this study will help banks and bank managers, depositors, investors, policy makers and governments to identify factors affecting bank profitability.
Mahesh Kumar, Sanjay Gupta
Banks and Bank Systems, Volume 15, pp 11-20; doi:10.21511/bbs.15(1).2020.02

Abstract:When choosing online financial transactions, security is a paramount concern of users. Three categories of banks in India, namely public, private and foreign banks, have a completely different focus on technology and capabilities. The study aims at investigating e-banking users’ perception with regard to online risk for public, private and foreign banks. Online risk perception for the abovementioned banks was assessed on three major risk parameters, i.e. security aspect, privacy aspect, and trust; using a multiple-criteria decision-making tool, called the Analytical Hierarchy Process (AHP). The outcomes indicate that security risk is paramount among various aspects of perceived risk, followed by privacy and trust concern. Moreover, public sector banks are perceived to be the safest in this aspect. Public sector banks are also considered to be benign in terms of privacy and trust. Given the general user’s perception of risk generated by all the three risk parameters taken together, public sector banks are perceived to be the most secure, followed by private and foreign banks. The findings of this study have various implications for both research and practice. Private and foreign banks in India may adopt appropriate marketing strategies to achieve a favorable perception. Various studies have been conducted earlier on these factors and their interrelationship, but limited research has been carried out to demonstrate the importance of each of these factors in relation to the other as perceived by the user. Moreover, the study quantifies factors in order of their importance.
Hasan Mukhibad, Ahmad Nurkhin, Abdul Rohman
Banks and Bank Systems, Volume 15, pp 1-10; doi:10.21511/bbs.15(1).2020.01

Abstract:The disclosure of risk by Islamic banks is very important, as this openness of information is emphasized in Islamic teachings. The purpose of this article is to provide empirical evidence regarding the influence of the number of members of the Sharia Supervisory Board (SSB) and their cross membership, the debt and the Syirkah fund ratio (investment accounts), the composition of the board of commissioners, the number of audit committee members, and the amount of assets on risk disclosure by Indonesian Islamic banks. The study uses content analysis techniques to measure risk disclosure by Islamic banks. The analysis uses panel data regression with observations for the period of 2010–2017. Based on the Fixed Effect Model, the study found out that the number of SSB members, the cross memberships of SSB, the ratio of independent commissioners to the number of audit committees do not influence risk disclosure. The leverage to investment account ratio does not influence risk disclosure. Also, the results of this study demonstrate that only the amount of assets influences risk disclosure.
Adeyemi A. Ogundipe, Joys Alabi, Abiola Asaleye, Oluwatomisin Ogundipe
Banks and Bank Systems, Volume 14, pp 206-218; doi:10.21511/bbs.14(4).2019.19

Abstract:This study contributes to the literature on inflation dynamics by examining whether internal or external factors drive inflationary pressure in Nigeria. Using the annual time series data from 1981 to 2017 and applying Johansen cointegration analysis, the vector error correction mechanism and the impulse response function, the study reveals some compelling evidence to suggest that external forces are responsible for inflationary pressure in Nigeria. The results, amongst others, reveal that: external drivers – exchange rate, imported inflation and openness – induce a positive and direct relation to inflation. This is because a percentage change in these variables results in an increase in inflation of 0.49%, 0.47% and 4.28%, respectively, on average, ceteris paribus; the internal drivers – government expenditures, net food exports and lending interest rate – dampen inflation by 0.48%, 1.70% and 0.02%, respectively, on average, ceteris paribus; there is evidence of cointegration indicating that 57.48% of short-run errors will be corrected in the long run; imported inflation contributes to a deviation of about 33% deviation in the first five periods and accounts for cumulative average of over 100% deviation in inflation. Policy implications are discussed.
Sayel Ramadhan, Mohammad Selim, Ahmad SaHwan
Banks and Bank Systems, Volume 14, pp 192-205; doi:10.21511/bbs.14(4).2019.18

Abstract:The main purpose of this study is to identify the variables that influence the financial performance of both types of banks, Islamic and conventional, and compare their financial performance over the period of 2003–2016. Banks listed on the Bahrain Bourse as of December 31, 2016 were used in the study, with a total of seven banks, of which three are Islamic and four are conventional. To make an appropriate comparative study, financial ratio analysis is used. Multiple regression and paired sample t-test are used to analyze the data. Return on assets (ROA) and return on equity (ROE) are considered as the basis for measuring financial performance and are set as dependent variables. The analysis of the results shows that conventional banks perform better than Islamic banks in terms of profitability. The results also show that ROA is significantly related to risk, cost of intermediation and efficiency ratios, while ROE is highly influenced by risk ratios only. Moreover, it was found out that the relationship between asset size and the performance of banks is insignificant, while the relationship between the number of branches and both ROA and ROE is significant.
Igor Chugunov, Mykola Pasichnyi, Anton Nepytaliuk
Banks and Bank Systems, Volume 14, pp 153-165; doi:10.21511/bbs.14(4).2019.15

Abstract:The article assessed the treatment effects of targeting inflation regime on the real output and consumer inflation persistence in both advanced and emerging market economies. An empirical analysis is based on data from 35 OECD and 40 emerging countries and covers inflation and non-inflation targets over the period 1990–2017. The results showed that inflation targeting (henceforth – IT) had no significant impact on the GDP per capita growth rate but slightly reduced the output volatility. This study founded out that full-fledged IT had the effect of slowing down consumer inflation and reducing its volatility. Moreover, in the OECD countries, the monetary framework had certain advantages during the Great Recession. The authors argued that in order to maintain price stability in emerging economies, a high level of central bank independence and accountability is required.
Mohammad Saiful Islam, Foysal Hasan, Mashiur Rahman, Md. Azizul Baten
Banks and Bank Systems, Volume 14, pp 166-182; doi:10.21511/bbs.14(4).2019.16

Abstract:The study aims to develop several models for instigating full-fledged electronic money and to study prospects and challenges in the digitization process in the context of South Asian countries such as Bangladesh. Besides, the economic effect of full digitization of currency was analyzed considering its impact on vital economic indicators. Regression analysis, factor analysis and structural equation modeling were used to analyze data. The study suggests some models within the existing financial framework to support the process of instigating and implementing full-fledged electronic money in Bangladesh. The research defines a full-fledged e-money mechanism as a consumption-driven, production-oriented, creditworthy, cost-effective, prompt, technologically based inclusive payment system, as a prospect of full-fledged e-money. Besides, the requirement of an advanced technological infrastructure having secured and user-friendly software with high-speed internet services is identified as a major challenge to full-fledged e-money. The study also found out that a revolutionary change in GDP growth rate and inflation rate will occur through this mechanism.
Darwanto, Anis Chariri
Banks and Bank Systems, Volume 14, pp 183-191; doi:10.21511/bbs.14(4).2019.17

Abstract:This study aims to investigate the impact of Good Corporate Governance (GCG) on the financial performance of sharia banking. GCG is measured by the Board of Commissioners Performance, the Board of Commissioners Composition, the Number of Audit Committees, the Board of Directors, and the Sharia Supervisory Board Performance, whereas financial performance is proxied by Return on Assets, financing risk (Non-Performing Financing), and capital (Capital Adequacy Ratio). Sharia commercial banks registered by Bank Indonesia made the sample of this study. Annual reports and GCG reports of sharia commercial banks from 2014 to 2017 are used as a data source. The study uses a panel data regression approach to analyze the data; some interesting results have been obtained. The Sharia board positively affected financial performance of Islamic banks in terms of return on assets and capital adequacy ratio, and negatively as to non-performing financing. Similarly, the board of directors had a significant impact on the financial performance of Islamic banks in the same direction as the sharia supervisory board in terms of the three components. Meanwhile, the board of commissioners had a significant and positive impact only on the return on assets of Islamic banks in Indonesia.
Ahmad Nurkhin, Agus Wahyudin, Hasan Mukhibad, Fachrurrozie, Satsya Yoga Baswara
Banks and Bank Systems, Volume 14, pp 143-152; doi:10.21511/bbs.14(4).2019.14

Abstract:This paper aims to examine the determinants of Islamic Governance Disclosure (IGD) in Islamic banks in Indonesia. The research method used is a quantitative approach involving Islamic commercial banks in Indonesia, where their annual reports can be accessed during the 2011–2018 observation period. The data collection methods used are analysis of documentation and content analysis. Content analysis was used to calculate the IGD index. Path analysis with WarpPLS software was used to analyze data. The results show that the number of members of the Sharia supervisory board had a negative and significant effect on IGD, while leverage, size, and age can influence the IGD positively and significantly. In addition, institutional ownership has a negative and significant effect on IGD. Profitability and composition of the independent board of commissioners do not significantly affect the IGD.
Usama Adnan Fendi, Asem Tahtamouni, Yaser Jalghoum, Suleiman Mohammad
Banks and Bank Systems, Volume 14, pp 133-142; doi:10.21511/bbs.14(4).2019.13

Abstract:Bitcoin is an online communication system that facilitates the use of virtual currency, including electronic payments. This paper aims at analyzing the behavior of Bitcoin returns as a proposal for future currencies while making a comparison between Bitcoin and other conventional currencies. This paper uses quantitative approach to analyze the time series of Bitcoin and that of other conventional currencies during the period 2010–2018. It uses 1) a descriptive statistics for the weekly returns for Bitcoin which includes the mean, standard deviation, maximum value, minimum value, skewness, kurtosis, and Jarque-Bera normal distribution test statistics, and 2) duration dependence test on Bitcoin weekly returns by extracting the weekly returns for the Bitcoin that behave in irregular way of the general Bitcoin return level through autocorrelation regression, and taking the residuals for this regression as a time series for irregular returns.This paper has confirmed no empirical evidence for the existence of a speculative bubble in the Bitcoin values and returns. In addressing the question of whether Bitcoin can act as a reliable substitute for conventional currencies, the returns based analysis shows a huge difference between the behavior of Bitcoin returns from conventional currency returns when comparing both aspects of level and stability. The paper concluded that bitcoin is more an investment than a currency. This paper represents a significant contribution in the path of financial economics and financial risk management, and represents a contribution to the stability of the financial system around the world and mitigating financial crises.