Objective: The study examined the relationship between liquidity risk and the profitability of Nigeria's listed deposit money banks in Nigeria over a 16 years period from 2008 to 2023. Method: ...Panel data on cash reserve ratio, liquidity ratio, loan to deposit ratio, and return on equity were collected from the annual reports and financial statements of the five systemic banks listed on Nigerian Exchange Group from 2008-2023. Ordinary least square regression analysis, panel unit root test, Hausman test were used in analysing the data. Results: The study found a significant positive relationship between the cash reserve ratio, loan to deposit ratio and profitability of Nigerian deposit money banks. But liquidity ratio has a negative but insignificant relationship with profitability of deposit money banks in Nigeria. Conclusion: Based on the findings, the research recommends that the Central Bank of Nigeria (CBN) must act quickly to lower cash reserve ratios in order to help Nigeria's deposits banks operate more effectively. Banks should engage competent and qualified personnel in order to ensure that right decision are adopted with regard to the optimal level of liquidity and the loan-to-deposit ratio should be fully utilized by banks to support sales initiatives.
The best indicator of the measure of the health of the banking industry in a country is its volume of Non-Performing Assets (NPAs). The increasing number of NPAs in commercial banks is a major ...concern in India. The best solution to reduce the volume of NPAs depends on good management of recovery mechanisms. The present context of research focuses on the recovery mechanism of NPAs with three important legal measures. Most of the cases are being negotiated and monitored through Lok Adalats in order to reduce the burden of those assets which cease to generate revenue. In addition to this, there is Debt Recovery Tribunals mechanism (DRTs), which focuses on diminishing the balance of NPAs. However, the third measure includes Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act), which allows banks to curb NPAs. The entire study is based on secondary data and SPSS is used to analyze the data. The study revealed that there is a statistically significant difference between the number of cases referred to the recovery mechanisms and the amount recovered through various recovery channels.
•We test for convergence in profitability across Islamic and commercial banks.•Beta, sigma, and log-t tests suggest profitability convergence—especially after 2006.•Convergence is not observed for ...all operating ratios.•Hence, Islamic and commercial banks retain some operational differences.
This study examines whether the Global Financial Crisis (GFC) has led to a convergence in performance between Islamic and commercial banks in the Middle East, Africa, and Southeast Asia (MENASA) region in recent years. Using the largest sample to date for 1996–2014, we find that Islamic banks (IBs) initially weathered the onslaught of the GFC better than commercial banks (CBs) in 2007–2008. Then, as the crisis spread to the real economy in 2009, profitability declined substantially for IBs relative to CBs. Beta and sigma convergence tests suggest convergence toward the mean for all banks and all financial ratios. The speed of convergence is generally slower for Islamic banks but the difference has declined in the aftermath of the GFC. The recently developed more robust Phillips and Sul (2007a) log-t test for convergence shows little convergence over the whole sample period, but for the years 2010–2014, all banks appear to be converging toward similar levels of profitability as measured by ROA and ROE. The log-t test shows convergence in profitability across all banks (IBs and CBs) in the post-crisis period. However, it does not show convergence across all asset composition and risk measure—meaning that IBs and CBs still operate differently even if they are moving toward similar profitability results. Club convergence results indicate a lack of convergence over the whole sample, but quite strong convergence across all banks post-crisis. However, some clusters, such as the Southeast Asia region does not display convergence in profitability ratios—suggesting that the GFC has differentially impacted various countries and regions.
Purpose: The purpose of this study was to assess the impact of computerized accounting information systems (CAIS) on reducing financial risks within Jordanian commercial banks listed on the Amman ...Stock Exchange. This involved examining the components, characteristics, and benefits of CAIS in this context. Methods: The study employed a questionnaire-based approach to gather information, distributing 75 questionnaires among financial managers and internal auditors within Jordanian commercial banks. A total of 64 questionnaires were retrieved and analyzed to draw conclusions. Results and Discussion: The analysis revealed a significant impact of various variables related to computerized information systems in mitigating financial risks within the sampled banks. This finding underscores the importance of CAIS in enhancing risk management practices within the banking sector. Notably, the study highlights the necessity of corporate governance implementation and the preparation of specialized reports to enhance financial risk disclosure processes. Implications of the Research: The findings of this research have several implications for both academia and practice. Firstly, they emphasize the crucial role of CAIS in reducing financial risks within commercial banks. Secondly, they underscore the importance of implementing robust corporate governance mechanisms to strengthen risk management frameworks. Additionally, the study suggests the need for further research to explore the impact of accounting information systems on different types of risks and their consequent effects on financial performance. Originality/Value: This study contributes to the existing literature by providing insights into the specific context of Jordanian commercial banks and their utilization of CAIS for managing financial risks. By identifying the components, characteristics, and benefits of CAIS in this setting, the research adds valuable knowledge to the field of accounting and finance. Moreover, its recommendations for enhanced corporate governance practices and specialized reporting can inform practical strategies for risk management in banking institutions.
This paper examines the determinants of disclosure in Pakistani commercial banks. Disclosure ensures transparency and safeguards the rights of stakeholders. The code of corporate governance for ...corporate sector in Pakistan was introduced in 2002 and was revised in 2012 along with State Bank of Pakistan (SBP) Prudential Regulations make it compulsory for commercial banks to disclose all the required information to various stakeholders. This study uses annual data for the period 2003 to 2015.Corporate disclosure index (CDI) has been used as dependent variable, whereas firm size, return on assets, auditor reputation, board composition, board size, listing age, block holders ownership, institutional ownership and risk taking have been used as independent variables. The results report over all, a satisfactory level of corporate disclosure for commercial banks in Pakistan. Risk taking and block holder ownership predicting negative relationship with corporate disclosure, while board composition, board size, return on assets, auditor reputation, institutional ownership, firm size and listing age predicting positive impact on the corporate disclosure practices of commercial banks in Pakistan. The results are expected to help policy makers to reshape their policies by encompassing the approaches that facilitate the risk management of banks in Pakistan. The study will also help researchers in strengthening their level of understanding of these relationships. Replica
The current study examines the determinants of profitability of Indian commercial banks. The analysis is conducted over a period of 10 years in which the Indian banking sector has gone under ...different changes such as demonetization and issues related to banking sector sustainability and banking sector frauds. The analysis is based on balanced panel data over a period ranging from 2008 to 2017 for 69 commercial Indian banks. Profitability of Indian banks is measured by two proxies, namely, return on assets (ROA) and return on equity (ROE), whereas bank size, assets quality, capital adequacy, liquidity, operating efficiency, deposits, leverage, assets management, and the number of branches are used as bank‐specific factors. Further, a set of macroeconomic determinants such as gross domestic product, inflation rate, interest rate, exchange rate, financial crisis, and demonetization are used as independent variables.
Stationary test along with pooled, fixed, random effect models and panel correction standard error are used in this study. The results revealed that bank size, the number of branches, assets management ratio, operational efficiency, and leverage ratio are the most important bank‐specific determinants that affect the profitability of Indian commercial banks as measured by ROA. Furthermore, among the bank‐specific determinants, the results revealed that bank size, assets management ratio, assets quality ratio, and liquidity ratio are found to have a significant positive impact on ROE. With regard to the macroeconomic determinants, the results revealed that the inflation rate, exchange rate, the interest rate, and demonization are found to have a significant impact on ROA. However, in the case of ROE, the results show that all macroeconomic determinants except demonization have a significant impact on the bank's profitability as measured by ROE.
Banks’exposure to large-scale asset purchases, as measured by the relative prevalence of mortgage-backed securities on their books, affects lending following unconventional monetary policy shocks. ...Using a difference-in-differences identification strategy, this paper finds strong effects of the first and third round of quantitative easing (QE1 and QE3) on credit. Highly affected commercial banks increase lending by 2% to 3% relative to their counterparts. QE2 had no significant impact, consistent with its exclusive focus on Treasuries sparsely held by banks. Overall, banks respond heterogeneously, and the type of asset being targeted is central to QE.
The sustainable development of society has gradually been the world’s attention at all levels. At the 75th session of the UN General Assembly, the Chinese government said it would aim to peak carbon ...dioxide emissions by 2030 and achieve carbon neutrality by 2060. All levels of government in China are also responding to the call, and how to promote green and sustainable development has become China’s top priority to achieve high-quality double reduction goals. As a banking-led prosperous economy, how to implement the Environmental, Social, and Corporate Governance (ESG) concept in the banking industry has become the most important to achieve the double reduction goal of quality and quantity in China. In recent years, the CBRC and the People’s Bank of China (PBC) have issued much guidance on transforming the banking industry through ESG. Considering that the number of A-share listed bank companies in China, especially the number of local banks (urban commercial banks and rural commercial banks), has increased in recent years, it is also considered that the existing research focuses on the relationship between ESG management and bank performance, and there is little analysis on bank risk. Based on the annual data of China’s A-share listed banks from 2018 to 2022, this paper uses regression analysis to explore the relationship between the implementation of ESG and bank risk-taking.
This study proposes a two-stage data envelopment analysis model based on the meta-frontier boundary and intermediate output goal setting. Comparing to the traditional models, the proposed model is ...able not only to consider technology heterogeneity of decision making units, but also to target the intermediate output. The proposed model was applied to an analysis of 28 Chinese commercial banks (CCBs). Empirical analysis has obtained some valuable research results. First, the efficiency of the CCBs’ deposit sub-system is not very high, especially in terms of the deposit efficiency of city commercial banks (CBs). Second, in the deposit sub-system, the efficiency gap among state-owned commercial banks (SBs) is higher than the joint stock commercial banks (JBs) and the CBs. Third, in the loan sub-system, the efficiency gap among SBs and CBs is higher than that in the JBs. Fourth, the deposits of more than half of CCBs are not on the frontier of efficiency, showing that the financial resource allocation of CCBs is severely ineffective. Finally, this study divides CCBs into four categories and provides specific recommendations to improve performance and deposit target setting.
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