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.
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
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.
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.
•The inefficiency of China’s domestic financial market hinders the export activity of Chinese private companies.•The development of city commercial banks (CCBs) across China has reduced the ...underperformance of domestic private exporters•This is the result of both an increased number of destination countries and a reduction in price.•CCBs help to reduce the systematic disadvantage of domestic private companies compared to foreign companies in export markets.•But they do not seem to be able to put an end to the systematic bias in lending to the public sector.
We show that the development of city commercial banks (CCBs) across China has alleviated the constraints from China’s domestic financial-market inefficiency on the export activity of domestic private firms. Considering the export behavior of 260 cities between 1997 and 2012, we confirm the well-established under-performance of domestic private firms in financially more vulnerable sectors compared to foreign affiliates in China. We show that a greater number of CCB branches raises domestic private-firm exports disproportionately more in financially-dependent sectors, which is in line with improved financing conditions for these companies. This improvement in export performance appears to result from both an increase in the number of destination countries and a decline in prices. CCB development is moreover associated with a reduction in the systematic disadvantage of domestic private firms relative to foreign-owned firms in export markets resulting from their greater financial exclusion. We, however, also find that private-firm export performance has deteriorated relative to that of state-owned firms, casting doubt on the ability of CCBs to end the systematic bias of lending in favor of the state sector.
The purpose of this research is to find out the probable causes of private bank’s being bailout; on the other hand, it tries to restrain banks to be bailout in proximate future. This research ...notifies banks about the major issues which they should preferably avoid running their business successfully. The banks are already at the brink of almost facing difficulties relating to operations. A sample of 15 Bangladeshi commercial banks is randomly selected for this quantitative study. The data on the variables are taken from the secondary sources and the financial years ending 2015 to 2018 are considered. The information is analyzed with descriptive statistics, correlation, and regression analysis. The study revealed that the possibility of bailout has a significant association with the size of the bank, the political affiliation of their chairperson and their board size. The loan variable is negatively correlated with the bailout. The amount of loan provided is similar among the banks but the small size banks are suggested to become careful of this amount and provide at a reasonable amount. This study indicates the financial and non-financial variables’ effect on bailout. Corporate governance of a bank highly influences the performance of a bank, and the financial stability as well. After a financial turmoil in the world economy, banks could fall in disharmony in their regular operations, which could figment them to be bailout.
This study aimed at identifying the impact of strategic intelligence on strategic orientation in Jordanian commercial banks. The population of the study consisted of all thirteen Jordanian commercial ...banks. The study sample included all of the study population (a comprehensive survey). The unit of sampling and analysis totaled (870) respondents and was comprised of the following job titles: general manager, deputy general manager, department manager and branch manager in the targeted banks. In order to achieve the objectives of this study, quantitative methods (descriptive and analytical methods) were used and a questionnaire was designed to collect the required data from the respondents to test the study hypotheses using Partial Least Squares-Structural Equation Modeling (PLS-SEM). The findings of the analysis indicated that strategic intelligence has a statistically significant impact on strategic orientation in Jordanian commercial banks. Also, the findings revealed that the levels of strategic intelligence and strategic orientation in Jordanian commercial banks were high. Based on the findings, the study concluded the necessity of promoting the adoption of a high level of strategic intelligence in the targeted banks because of its significant influence on the strategic orientation of these banks
The purpose of this study was to show how financial technology tools can be used to reinforce financial inclusion indicators on the profitability indicators of a Jordanian commercial bank listed on ...the Amman stock exchange. Between 2010 and 2020, a quantitative and qualitative panel data set was used. The study population is represented by all the banks listed on the Amman stock exchange (n = 16). The study found that financial technology through its multitools changed the structure of the overall financial services, besides the diversity and style of financial services for the commercial banks' clients, thus reinforcing and increasing the availability for a wider social group that did not have access to that service. Further, it was found that there is a significant effect of the financial technology tools to reinforce the financial inclusion indicators over the studies' profitability indicators that include return on assets, return on equity, and earnings per share (JD). It is recommended to adopt effective and modern financial and technological strategies that provide marginalized social groups and small and medium enterprises reasonable access to the financial services and products that meet their needs, including transactions, payments, savings, credit, and insurance. Thus, getting the added value of the data and investing it to increase the financial inclusion indicators improves the profitability indicators and income for commercial banks. Keywords: Financial Technology, Profitability, Financial Inclusion, Commercial Banks.
As economic entities become increasingly interconnected, a shock in a financial network can provoke significant cascading failures throughout the system. To study the systemic risk of financial ...systems, we create a bi-partite banking network model composed of banks and bank assets and propose a cascading failure model to describe the risk propagation process during crises. We empirically test the model with 2007 US commercial banks balance sheet data and compare the model prediction of the failed banks with the real failed banks after 2007. We find that our model efficiently identifies a significant portion of the actual failed banks reported by Federal Deposit Insurance Corporation. The results suggest that this model could be useful for systemic risk stress testing for financial systems. The model also identifies that commercial rather than residential real estate assets are major culprits for the failure of over 350 US commercial banks during 2008-2011.
PDF
