Banks and Bank Systems

Journal Information
ISSN / EISSN : 1816-7403 / 1991-7074
Published by: LLC CPC Business Perspectives (10.21511)
Total articles ≅ 467
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Bello Hassan, Evans Osabuohien, Folorunso Ayadi, Jeremiah Ejemeyovwi, Victoria Okafor
Published: 19 October 2022
Banks and Bank Systems, Volume 17, pp 25-34; https://doi.org/10.21511/bbs.17(4).2022.03

Abstract:
There is some level of uncertainty as to whether private sector credit interacts with finance sources for growth to significantly influence channeling funds for investible purposes in Nigeria, given the nation’s unique characteristics. This study examines the role of various sources of growth finance on private sector credit in Nigeria. For this purpose, the study utilizes secondary data (1980–2018) sourced from CBN statistical annual reports. The study further employs the ARDL-Bounds Co-integration test to test out the hypothesis after stationarity testing. The study finds that stock market capitalization had a positive and significant influence on private sector credit compared to remittance inflows and gross domestic savings in the long run among the sources of growth finance indicators. Furthermore, remittance inflows reported a positive but statistically insignificant relationship, while gross domestic savings had a negative and insignificant coefficient. The study concludes that only stock market development inflow transmits to the private sector’s credit at 10 percent among the various growth finance sources.
Marwan Alzoubi, Alaa Alkhatib, Ayman Abdalmajeed Alsmadi, Hamad Kasasbeh
Published: 6 October 2022
Banks and Bank Systems, Volume 17, pp 1-11; https://doi.org/10.21511/bbs.17(4).2022.01

Abstract:
This paper analyzes the importance of size and capital for risk-taking incentives of Jordanian banks using panel data of 13 commercial banks for the period 2007–2017. The results reveal that size and capital add to stability, consistent with the economies of scale and scope hypothesis. In developing countries, banks are more conservative and less involved in market-based activities; however, they are interconnected just as in developed countries. The results of the first model and second model reveal that as size increases by 1 percent, risk decreases by 0.11 percent and 0.03 percent, respectively, implying that too-big-to-fail is not present and that moral hazard is not a serious issue. In both models, large size is driven by diversification not by risk-taking incentives. In terms of capital, the results of the first model and second model reveal that as capital increases by 1 percent, risk decreases by 0.48 and 0.12 percent, respectively. The fact that Jordanian banks are overcapitalized indicates that the central bank regulation is not binding. Banks increase their capital adequacy ratios to reduce risk. It is clear that there is economic benefit from increased size. However, the failures of large banks are systemic due to their interconnectedness. Therefore, regulators need to pay special attention to them in accordance with Basel III Accord.
Dirgahayu Lantara, Junaidi Junaidi, Nurhayati Rauf, A. Pawennari, Ratu Noorita Achmad
Published: 6 October 2022
Banks and Bank Systems, Volume 17, pp 12-24; https://doi.org/10.21511/bbs.17(4).2022.02

Abstract:
Banking plays an important role in business and economic growth. However, since a couple decades ago, there have been issues with efficiency and performance. This paper aims to examine Indonesia’s Islamic banking performance through non-parametric production efficiency analysis before and after the COVID-19 pandemic, 2010–2021. This study differentiated between different dimensions of Indonesia’s Islamic banks (IIB) finance and non-finance aspects, as well as investigated the relationships between these dimensions of finance, including assets, deposits, equity, financing, and income, and non-financial variables, namely employees and offices. Non-parametric analysis, with the input-oriented variable constant return to scale (CRS) and returns to scale (VRS) models as a framework, data envelopment analysis (DEA) is used to calculate the IIB of overall, pure, and scale efficiency. However, the resources of technology IIB management are lacking, as well as macroeconomic and environmental effects. This study found that IIB operational needs to enhance investment in technology beyond the office. This means that the number of offices has a smaller impact on enhancing deposits and revenue. Technology investment has a crucial role in enhancing IIB equity, income, and innovation service. As a result, IIB managers and policymakers must improve their efficiency scores in order to increase competition and innovation. Furthermore, IIB needs to increase and spend their assets and experience to enhance technology, which significantly affects efficiency.
Mohammad Sulieman Mohammad Jaradat, Khaled Abdalla Moh’D Al-Tamimi, Samer Fakhri Obeidat, Ashraf Bataineh
Published: 4 October 2022
Banks and Bank Systems, Volume 17, pp 227-236; https://doi.org/10.21511/bbs.17(3).2022.19

Abstract:
This paper analyzes the impact of internal factors on the profitability of commercial banks in Jordan in the period of 2009–2019. Bank size, capital adequacy, bank loans, bank and liquidity risk are taken as explanatory variables, with the rate of return on assets as a dependent variable. EViews software was used for regression analysis. This study highlights a significant and positive effect of f-statistics for SGBJ Bank, Kuwait Bank, Capital Bank, ABC Bank, and Arab Bank – 11.34, 5.46, 5.11, 5,14 and 5.62, respectively. This means that internal factors affect their profitability, there is a positive effect of internal factors on the profitability of SGBJ, Kuwait Bank, ABC Bank, and Arab Bank. SGBJ’s R-squared was 88%.This indicates that any change inthe bank’s profitability is 88% due to a change in internal factors, while R-squared of Kuwait Bank, Capital Bank, ABC Bank and Arab Bank was 78%, 77%, 77%, and 77%, respectively, indicating that changes in the banks’ profitability were caused by internal factors. This is due to the bank loan ratio, where SGBJ’s ratio 48.6 and the bank loan rate were 79% of total assets. Kuwait Bank 29.1, so bank loan rate is 56% of total assets, Cairo Bank 36.3, ABC Bank 11.8, and Capital Bank 16.37; f-statistics of Alethad Bank, Invest Bank, Arab Invest Bank, Housing Bank, Ahli Bank, Commercial Bank, Cairo Bank, and Jordan Bank were 0.75, 2.17, 1.61, 2.48, 2.26, 3.25, and 2.72, respectively. This indicates that internal factors do not affect the profitability of these banks.
Paisal Rittigul, Teerasak Jindabot
Published: 3 October 2022
Banks and Bank Systems, Volume 17, pp 213-226; https://doi.org/10.21511/bbs.17(3).2022.18

Abstract:
At present, marketers focus on the phenomenon of changing consumer behavior that influences consumer decision-making. This study aims to analyze the influence of experienced life events (affected by COVID-19), perceived risk, and anxiety on the continuance intention to use online banking in Thailand. The data were attained from 500 customers who had visited commercial banks in Thailand. The data were analyzed through Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM). The findings of the study suggested that both perceived risk and anxiety influenced the continued use of online banking services while experiencing the COVID-19 pandemic. More specifically, anxiety had a direct negative influence on the continuance intention to use online banking services; and the perceived risk had an indirect influence on the Continuance Intention to use online banking services caused by anxiety. From the research results, it is recommended that focus should be on policies and activities that help reduce consumers’ perceived risk and anxiety to motivate more consumers to turn to online banking and eventually into a cashless society with a willingness and sense of safety.
Maria Alberta Oliveira,
Published: 29 September 2022
Banks and Bank Systems, Volume 17, pp 188-200; https://doi.org/10.21511/bbs.17(3).2022.16

Abstract:
Financial stability is a statutory concern of the European Central Bank. Spreads of bank credit default swaps (CDS) indices are a reference for financial stability, but the literature is scarce in this respect. This paper poses the novel research question of which characteristics of investors in these derivatives are implied by the volatility behavior of the returns of financial CDS indices. Daily spread returns for the 5-year maturity iTraxx Europe Financials (subordinated and senior), for the period between June 2004 and March 2015, are used to estimate a GJR-M model with Student t innovations, and two MGARCH models (one with constant and the other with dynamic conditional correlations). The results show that investors in the index referring to subordinated debt are risk averse (risk premium estimate of 0.688) and liable to leverage effects, while investors in the index for senior debt do not have such characteristics. The degrees of freedom of the Student t innovations are estimated to be 4 for both indices, implying that returns have distributions with very fat tails. Population excess kurtosis diverges to infinity. The results show that the conditional correlation between the indices is dynamic. Although correlations vary widely, most of that variation occurs before the Euro Area crisis. It is concluded that the inclusion of both indices in a portfolio would be misadvised for bear markets with distressed financial entities: the correlations are always positive, above 0.75 since 2010. Moreover, both indices prove to be sensitive to the varying surrounding conditions as investors share market sentiments. AcknowledgmentsNECE’s research is funded by national funds through FCT – Fundação para a Ciência e a Tecnologia, I.P., Project UIDB/04630/2020CEBER’s research is funded by national funds through FCT – Fundação para a Ciência e a Tecnologia, I.P., Project UIDB/05037/2020  
Qasim Ahmad Alawaqleh, Mohammad Hamdan, Ahmed Al-Jayousi, Rana Airout
Published: 26 September 2022
Banks and Bank Systems, Volume 17, pp 167-176; https://doi.org/10.21511/bbs.17(3).2022.14

Abstract:
This study investigated the impact of IFRS on the relationship between risk management and financial disclosure in Jordanian banks in light of the Covid-19 pandemic. The study data were collected from Jordanian banks’ financial reports with the help of panel data to measure IFRS and risk management. The study depended on daily data, at a rate of (256) trading days from March 3, 2020 until April 29, 2021. Also, the study used questionnaires to measure financial disclosure in addition to interviews with eight Jordanian bank managers. Multiple regression was used to test hypotheses. The study found a positive statistically significant relationship between risk management and financial disclosure. The relationship was portrayed by a coefficient of 0.315. The result also showed the moderating role of IFRS in such a relationship, the effect reached 0.696. The conclusions have implications for both theory and practice. In fact, the findings elucidated the connection between risk management, IFRS, and financial disclosure. Finally, Jordanian banks should focus on IFRS and risk management, enhanced management, and employee skills as recommendations in this study. Thus, Jordanian banks pay particular attention to IFRS and risk management in order to achieve profitability through financial disclosure. AcknowledgmentThe publication of this research has been supported by the Deanship of Scientific Research and Graduate Studies at Philadelphia University – Jordan.
Hamzah Ritchi, Gina Andriani, Reza Zulkarnaen, Akmal Zaidaan
Published: 19 September 2022
Banks and Bank Systems, Volume 17, pp 116-128; https://doi.org/10.21511/bbs.17(3).2022.10

Abstract:
Notwithstanding the perceived global potentiality, how big data enhances decision-making quality prompts an intriguing inquiry, especially in an increasingly competitive banking environment in developing economies. Building on an industry data-driven framework, this study strives to understand the state of implementing big data in the Indonesian banking sector. A deductively organized descriptive method employing in-depth interviews was conducted with subject matter experts representing Indonesian banking-related areas. The result and the following analysis show the modest status of big data implementation across three major banks and two complementary companies, as indicated by many elements of the framework phases that were found during the early adoption stage. This denotes a steady buy-in across banking business processes as particularly reflected in the framework’s four phases – continuing push to meet the variety aspect (intelligence), structured data architecture domination (design), limited choice of performance indicator for big data value (choice), and customer–corporate vision decoupling (implementation). While Indonesian banks have evidently initiated the big data implementation, further improvement remains imperative for the decision-making process. Accordingly, big data should be tightly coupled with a strong data-driven vision that drives decision-making across intra-firm actors. Handling data omnipresence shall be viewed as the embodiment of a data-driven vision.
Volodymyr Mishchenko, , , Svitlana Mishchenko
Published: 19 September 2022
Banks and Bank Systems, Volume 17, pp 142-157; https://doi.org/10.21511/bbs.17(3).2022.12

Abstract:
The extensive use of electronic and mobile money causes additional risks, which complicates the work of electronic money issuers (EMIs) and the functioning of payment systems. The paper aims to investigate operational risk management in the process of using electronic and mobile money. A classification of operational risk types was carried out and the forms of their manifestation in payment systems using electronic and mobile money were characterized. The list of key risk indicators has been compiled to assess the operational risk factors of payment systems using mobile and electronic money; a classification of costs (losses) as a result of the implementation of operational risk events is proposed, dividing them into direct and indirect. Based on the statistics of the International Monetary Fund and the National Bank of Ukraine, the use of electronic and mobile money in certain countries of the world is analyzed. The results on the intensity of electronic money use are presented, and the value of the electronic money multiplier in Ukraine is calculated. To improve operational sustainability of EMIs, a general scheme for organizing the operational risk management process in payment systems using electronic and mobile money is presented. Particular attention is paid to the regulatory and supervisory measures aimed at supporting the operational sustainability of EMIs and payment systems under their control. The issues discussed in this paper are relevant for the debate directed at the implementation of balanced approaches to operational risk management in the process of using electronic and mobile money in developing and emerging economies.
Published: 12 September 2022
Banks and Bank Systems, Volume 17, pp 89-101; https://doi.org/10.21511/bbs.17(3).2022.08

Abstract:
Shariah supervisory boards are a key feature of shariah governance (SG), providing additional monitoring and oversight. A suitable SG mechanism enhances risk mitigation and improves Islamic bank (IB) performance without violating shariah principles. This study examines the impact of the shariah supervisory board (SSB), maqasid shariah, and risk-taking on Islamic bank performance globally. Quantitative research design with a Dynamic panel regression approach is used with a two-step generalized method of moments (GMM) with data from the Bankscope database for 2014–2018. The findings of this study show that characteristics of SSB and risk-taking have a significant impact on IB performance. This study proves that higher SSB characteristics in terms of size, expertise, level of education, cross-membership and reputation encourage the better performance of Islamic banks. Higher risk-taking illustrates that Islamic banks are more efficient, resulting in better financial performance. Compliance with maqasid sharia indicates that sharia banks comply with Islamic laws so that the resulting performance meets financial aspects and sharia principles. SSB functions as a monitor for Islamic banks so that they operate according to sharia principles, which are reflected in the maqasid sharia elements. Therefore, a higher quality SSB and a higher maqasid shariah index score positively affect the financial performance of IBs.
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