Purpose: The motivation of this study is to explore the significant determinants of consumers’ creditworthiness which support the development of a credit scoring model as non-performing loans are a ...major problem in lending institutions.Design/Methodology/Approach: Data were collected from four branches of a leading Commercial Bank in the Gampaha District under the convenience sampling technique with 130 personal loan borrowers as the study sample.Findings: The logit model test resulted that age, level of education, and monthly income, are positively influencing the creditworthiness of the borrowers. Increasing the number of dependents and the tenure of the loan have more chances of default. 39% to 56% of the dependent variable was explained by the independent variables in the regression model and the model predicted default correctly by 85.4%.Originality: The study contributes to the existing literature in terms of identifying important predictors for developing a credit-scoring model while helping lenders to assess the creditworthiness of personal loan applicants. Hence the study will assist in taking effectual measures to enhance the quality of the credit approval process and ultimately reduce the losses of lending institutions from bad debt.
Purpose: The aim of this study is to shed a light on risk management in Jordanian commercial banks in accordance with the Basel Accords.
Theoretical framework: The researcher reviewed the relevant ...literature related to risk management
Design/methodology/approach: The descriptive analytical approach was adopted. The questionnaire was used as a data collection tool. The sample consists of all the public administrations in banks and employees in risk management and control. It consists from 120 individuals.
Findings: The results of the study showed that the field of "The application of banking risk management in Jordanian commercial banks in accordance with the Basel Accords" ranges from strong to medium, while the field of "Techniques and principles of banking risk management applied by Jordanian commercial banks" ranges from strong to moderate,
Research, Practical & Social implications: This study allows Jordanian commercial banks to improve their abilities in managing risks based on Basel accords
Originality/value: This study is important because it is one of the few studies that shed a light on Basel Accords along with risk management
With emerging literature on Financial Technology (Fintech) a number of research studies were conducted to analyse and look at the role of fintech services for the growth of several aspects in banking ...industry. But, limited studies attempted to consider an influence of Fintech services delivery improve the client satisfaction around Jordanian Banks. Thus, this study aims at examine how Fintech services provision improve of client satisfaction in Jordan’s Commercial Banks. A survey design that is cross-sectional design; where 600 questionnaires were personally distributed using convenience sampling technique. Statistical conclusions of this investigation showed Payment services, Accessibility to Fintech services (AC), Availability (AV), Transactionary costs (TC) Fintech service security (SS) to have positive significant influence upon Client’s Satisfaction (CS). The findings recommend technology financial facilities suppliers would advance upon this package and let system produce services distribution to attain consumers' satisfaction at every stage. This study provides practitioners with important measures for evaluation of Fintech services effectiveness.
This paper examines whether the development of the financial technology (fintech) industry affects cost efficiency and the technology adopted for China’s banking industry over the period 2003–2017. ...Fintech industry development indices are constructed using fintech enterprise-level data, and these indices measure the development extent of entire fintech industry and four sub-industries including (1) credit, deposit and capital–raising services, (2) payment, clearing and settlement services, (3) investment management services and (4) market support services. The relevant efficiency scores for Chinese banks under different ownership structures are measured by applying the stochastic metafrontier approach. The results show that state-owned commercial banks have the lowest cost efficiency and operate under inferior technology. When considering the influence of fintech development, fintech innovations not only improve the cost efficiency of banks, but also enhance the technology used by banks. This double beneficial effect is more significant in the case of market support service innovations.
The marketplace has seen significant growth in the demand for 'ethical' behavior, and banks are seeking to leverage customers' perception in order to build a sustainable competitive advantage. In ...consequence, the concepts of corporate social responsibility and corporate reputation are of vital concern for academics and managers in terms of their potential impact on customers. This study seeks to contribute to the literature by examining the mediating role of corporate reputation on the relationship between perceived corporate social responsibility (conceptualized as a formative secondorder formative construct) and customer loyalty. The study also takes into consideration the role played by bank type in the mediation effect. To achieve this aim, a study was performed comprising 572 personal surveys in the Basque Country. The results showed that corporate reputation partially mediated the relation between corporate social responsibility and customer loyalty. On the other hand, bank type is shown not to moderate the mediation effect. The results have important implications for practitioners wishing to manage their relations with customers.
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.
•Assess the impact of Fintech innovation on Chinese banks’ performance.•Fintech innovation is measured by both patent data and a development index.•Fintech development reduced banks’ profitability ...and asset quality.•Fintech development also improved banks’ management efficiency.•Fintech capabilities have similar effects on bank performance.
This research examines the impact of financial technology innovation on Chinese banks' performance, using both patent data and FinTech development index, by applying a generalized method of moments model to resolve potential endogeneity. While the results show that FinTech innovation reduces banks' profitability and asset quality in the aggregate, a finding more pronounced for large state-owned commercial banks, it improves banks' capital adequacy and management efficiency, though to a smaller degree for policy banks and state-owned commercial banks. Moreover, banks' own specific FinTech capabilities, measured by patent applications and claims, have similar effects on bank performance. The implications are that when facing the development of FinTech, banks should focus more on the rising capabilities of FinTech technology than its difficulties and what the competition is doing. Small banks can particularly achieve business process reengineering and innovation more reliably by actively cooperating with FinTech companies.
Artificial intelligence (AI) is receiving increasing attention in business and society. In banking, the first applications of AI were successful; however, AI is mainly applied in investment banking ...and backend services without customer contact. AI in commercial banking with its focus on customer interaction has received little attention so far. Introducing AI in commercial banking could change business processes and interactions with customers, which could create research opportunities for behavioral finance. Based on this research gap, we conducted a structured literature review to identify applications of AI in commercial banks and the challenges of implementing AI. Our findings suggest that by using AI, commercial banks can reduce losses in lending, increase security in processing payments, automate compliance-related work, and improve customer targeting. Researchers worry about realizing technological advantages; the embedding of AI in business processes; ensuring user acceptance through transparency; privacy; and suitable documentation. Finally, we propose a research agenda for behavioral finance.
Abundant literature infers the negative incidence of financial liberalization in the banking sector. As interest rate marketization is a reality in China, we empirically investigate the determinants ...of commercial banks’ financial performance using 10 listed Chinese commercial banks for 1999 to 2019. Our findings suggest that net interest margin (NIM), non-performing loans (NPL), and asset size (LnAsset) are the key drivers of profitability in Chinese banks. Interestingly, for the sample of city banks observed, we find that bank performance is strongly driven by sound management of the assets and the retail interest margins. On the opposite, the joint-stock banks’ strong diversification leads to lower reliance on net interest margins. Our results also suggest that joint-stock banks’ asset size puts strong pressure on their overall performance and exert a diminishing return effect as their assets’ critical size generates proportional administrative expenses that hinder profitability.
This study assesses the role of Information and Communication Technologies (ICT) in poverty & inequality reduction by fostering financial inclusion, using panel dataset of sixty-two countries between ...2001 and 2012. It mainly focuses on two different dimensions of financial inclusion e.g., inclusion by commercial banks and by microfinance institutions (MFIs). As the formal financial institutions deal with wealthy and well-off clients, whereas the MFIs claim to be the bankers of poor. A large number of poor people are still un-banked in low income countries; however, research in development finance suggests that accessible and timely finance has the potential to bring poor out of poverty. The importance of MFIs in providing credit and other financial services at the doorstep of financially excluded households is globally acknowledged. Thus, it is inevitable to investigate the determinants of (MFIs)/financial inclusion particularly in developing countries. In the first step of data analysis, we find positive association of ICT diffusion with financial inclusion and a negative relationship with poverty & inequality. Furthermore, the results of the study indicate poverty reducing effects of financial inclusion measured either way. It was also observed that the ICT dimensions when used as instruments for financial inclusion accelerate economic growth and reduce poverty & inequality. Therefore, policies to promote information and communication infrastructure could stimulate financial inclusion by promoting digital finance. Moreover, better collaboration between ICT and financial sector will likely to advance digital financial inclusion that could help to bridge the financial infrastructure gap.
•This paper examines the role of Information and Communication Technologies (ICT) in poverty reduction by fostering financial inclusion, using panel dataset of 61 countries from 2001 through 2012.•We analyze two different dimensions of financial inclusion i.e, inclusion by commercial banks and by microfinance institutions (MFIs).•We utilize five dimensions of ICT namely, mobile phones, fixed lines, internet, personal computers and price of 3-min local mobile call.•Present study firstly, investigates the impact of financial inclusion by MFIs on poverty and inequality, secondly, the impact of formal financial inclusion is examined.•Most notably, it also explores how ICTs boost financial inclusion and help poverty reduction.•We observe, ICT dimensions when used as instruments for financial inclusion, accelerate economic growth and reduce poverty and inequality.
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