Issue #3 (Volume 18 2023)

The Quick Response (QR) code payment is a relatively new means of payment in Indonesia. Even though this strategy offers a great deal of use, not many people are familiar with it or use it. In this regard, it is fascinating to look at what makes people use the QR Code payment method. The quantitative study used a five-point Likert scale questionnaire to sample e-money users through social media groups. In addition, structural Equation Modeling (SEM), employee Smart-PLS 3.0, was used to examine the data. The results show that social factors affect how people feel about QR code payments, and facilitating support and performance expectations affect how likely they are to use it. Also, attitudes, a mediator of social impact, can change the effect of support performance expectations on adoption intentions. Because of this, people accepting QR code-based payments take a positive attitude. Also, the facilities and environment affected a positive attitude, expected performance, ease of operation, and social interactions. Based on the results, the recommendation for financial institutions and innovation is that the facility and social environment are critical to the success of financial innovation. So, if more people want to use QR code-based payments, financial institutions need to make it easy for them.

Acknowledgment
The author would like to thank the Rector, Vice-Rector of the University of Muhammadiyah Malang. Furthermore, the author sincerely thanks the University of Muhammadiyah Malang’s Dean of Business and Economics Faculty. A University of Muhammadiyah Malang’s School of Economics and Business member supported finishing this paper.

The primary objective of this study is to investigate the correlation between profitability and the banks market value, while controlling for bank size as indicated by total assets. Two main models are analyzed, namely the benchmark model and the main model, to estimate the impact of high and low profitability on market value. The sample for this study consists of Jordanian banks covering the period from 2010 to 2020. The study results reveal that banks with high profitability exhibit a higher market value compared to those with low profitability, underscoring the crucial role of profitability as a determinant of bank value. Furthermore, the study establishes a link between low and high ROE and market value, indicating that variations in ROE significantly affect market value. Moreover, the study demonstrates a positive link between earnings and market value, emphasizing the significance of bank earnings in influencing market value. Lastly, the study emphasizes the role of bank size in shaping the link between ROE and market value, highlighting the importance of considering bank size when examining the link between profitability and market value.

Acknowledgment
I thank Amman Arab University for funding this research.

Credit risk has gained considerable attention in most countries of the world intending to manage the efficiency of credit portfolios. This study attempts to examine the impact of credit risk management on bank profitability. The local Bank of Palestine provided secondary data over a ten-year period (2010–2020) collected from financial annual reports. The statistical analysis is carried out using the SPSS and E-views software, and the study hypotheses are verified using descriptive statistics, multicollinearity tests, and regression. Palestinian banks’ profitability was evaluated using return on assets, along with bank-specific metrics such as capital adequacy ratio (CAR), loan-to-deposit ratio (LDR), non-performing loans (NPLs), loan loss provision ratio (LLPR), bank size, and bank age, as signs of credit risk management. The study’s findings indicate that there are differences in how credit risk management affects bank profitability in the context of Palestine. CAR NPLs have a positive but insignificant effect on profitability using ROA. The regression found a significant positive effect of LLPR on profitability using ROA. Finally, with respect to LDR as an indicator of credit risk management, the regression found its negative but insignificant effect on profitability using ROA. The results demonstrate how the board’s structure influences the performance of a company, which is regarded important knowledge for decision makers.

This study investigates the impact of the COVID-19 pandemic on the relationship between income diversification and bank stability among Jordanian commercial banks listed on the Amman Stock Exchange (ASE), using a panel Autoregressive Distributed-Lagged Model (panel-ARDL) and quarterly data from 2015 to 2021. The findings demonstrate that during the COVID-19 period, a higher proportion of non-interest income, resulting from income diversification, enhances bank stability. However, considering the entire sample period, the results suggest a potential deterioration in bank stability when banks diversify towards non-interest income, aligning with the negative effect observed in the literature. Additionally, the study identifies factors such as bank size, liquidity, loan loss provisions, cost efficiency, and the deposit ratio, which influence bank stability. These findings hold significant implications for policymakers and banks in developing countries concerned about the impact of income diversification on bank stability. They also offer valuable insights to understanding the dynamics of income diversification and its implications for bank stability in the context of the COVID-19 pandemic.

Job satisfaction is an important factor in the success of any organization, and the banking industry is no exception. This study conducted a meta-analysis of 34 empirical studies to identify the key factors that influence job satisfaction among bank employees. The results showed that seven factors were most frequently cited as important: leadership, intrinsic motivation, reward, organizational commitment, work ethic, HRM activities, and working conditions. These factors were all found to have a positive impact on job satisfaction, with leadership having the strongest effect. The meta-analysis also found that the effect sizes of these factors were relatively large, indicating that they have a significant impact on job satisfaction. This suggests that banks can improve job satisfaction among their employees by focusing on these factors. For example, banks can provide employees with strong leadership, offer competitive rewards, and create a positive work environment. By doing so, banks can boost employee morale and productivity, which can lead to improved customer service and financial performance.

The phenomenon of increasing customers of take-over financing from conventional banks to Islamic banks is an interesting trend to study. This research purpose is to investigate the influence of murabahah financing margins, customer religiosity to customer interest and decision making. The method used is a sequential mixed method. The instrument quantitative is a questionnaire, and the qualitative method is an interview. 199 pensioner customers participated in the survey. Internal consistency is measured by Cronbach’s alpha value. The accuracy of the structural equation modeling (SEM) and hypothesis testing was evaluated using AMOS version 23. The research findings indicate, there was a significant influence between customer religiosity on customer interest and customer interest on decision making. Meanwhile, the murabahah financing margin has no significant influence on customer interest and decision making, as well as between customer religiosity and decision making. Murabahah financing margins and customer religiosity have an influence of significance when mediated by the variable of customer interest. In conclusion, Murabahah financing margin, and customer religiosity does not have a direct significant influence on decision making without being mediated by the variable of customer interest. These results indicate that Islamic bank managers can take advantage of this research variable to increase customer interest so that customer decision making also increases. This study has practical implications for conventional banks and sharia banks. Sharia banks are an opportunity to attract customers from conventional banks, while conventional banks are a challenge because their customers have the potential to take over Islamic banks.

Acknowledgments
The authors are grateful to the Rector of the State Islamic Institute of Sultan Amai Gorontalo, and the State Islamic University of Alauddin Makassar for funding this research collaboratively, and to the respondents who have taken the time to fill out the research questionnaire so that research data can be collected.

In the context of the fact that the structure of the Vietnamese banking market has undergone many fluctuations, which has had an impact on banking activities, and the fact that many related studies have been carried out, but the answer is still limited and inconsistent, it is necessary to study the impact of the market structure on banking operations in Vietnam. The paper comprehensively examines the impact of market structure on various aspects of bank performance in Vietnam. The study uses three measures of the structure of the banking industry, namely, the total market share of the largest banks, the squared market share of all banks according to the Herfindahl-Hirshchman index, and the Lerner index on market power (inverse bank competition), to ensure the results are not dependent on any specific measure. The paper applies the two-step system generalized method of moments estimator to conduct regression analysis for a sample of 30 banks from 2007 to 2021. All obtained estimates generally show positive effects on bank performance due to greater market power and higher banking concentration. Concretely, more market power and greater concentration improve bank asset quality, management efficiency, bank profitability, and lending capacity. Overall, the findings of this paper all support the bright side of less competition and more concentration, which is essential to derive policy implications related to supervising competitive environments and stimulating consolidated financial systems.

Acknowledgment
This study is part of Thi Mai Phuong Duong’s PhD dissertation at the Ho Chi Minh University of Banking under the supervision of Van Dan Dang.

Accurate forecasting of consumer loan market behavior gives banks a huge potential to optimize their credit strategies by proactively adapting to external changes. This study aims to analyze and predict consumer loan demand, supply, and profitability in the Ukrainian banking sector. Using a systemic dynamic approach, the interplay of five key factors is considered: central bank policies, GDP fluctuations, changing competitive landscape driven by FinTech companies, investment in government bonds as an alternative to loan granting, and severity of credit risk management.
The developed dynamic model for the bank consumer loan market in Ukraine offers predictive capabilities enhancing decision-making and strategic planning in the banking sector and can be adapted in open small economies. Within the proposed systemic dynamic model, five scenarios were explored. Compared to the base scenario, a 4 p.p. increase in the key policy rate results in UAH 4.7 billion decrease in demand for bank consumer loans and a UAH 0.55 billion reduction in lending profitability based on the year’s results. Fall in GDP by 6 p.p. leads to a decrease in the supply of bank consumer loans by UAH 6.9 billion and a decrease in lending income by UAH 1.3 billion based on the year’s results. Scenario with the decline of FinTech portfolio by 20 p.p. quarterly leads to an increase in demand for bank consumer loans of UAH 8 billion. A 4 p.p. rise in government bond yields leads to a UAH 17 billion reduction in the supply of consumer loans in the same quarter.

Liquidity risk is a significant financial threat that must be handled carefully. Underestimation or mismanagement of liquidity risk may lead to severe financial losses or even bank failures. Therefore, timely and adequately estimating liquidity risk and examining factors that affect liquidity risk are essential. On that account, this paper aims to examine the determinants of liquidity risk for Indian commercial banks from 2013 to 2022. For this purpose, the study has employed a panel data regression model with pooled OLS, fixed effect, and random effect methods and has considered bank-specific and macroeconomic variables. The findings show that liquidity risk is affected by both bank-specific variables and macroeconomic variables. Bank-specific variables, such as bank age, have a negative impact on liquidity risk at the 1 percent significance using pooled OLS, FE, and RE models. In contrast, bank size and bank capitalization positively impacted liquidity risk. However, the operational efficiency of banks was found to have no significant impact on liquidity risk using both the liquid asset to total assets ratio and the loan to deposit ratio. In addition, the results show that macroeconomic variables such as GDP and inflation have a positive impact on liquidity risk. The study’s findings are expected to assist various stakeholders in making appropriate policies, decisions and managing their liquidity risk.

This study aims to explore the intention of non-Muslims to become Islamic bank customers using an extended theory of planned behavior with Islamic Bank knowledge as a moderating variable. The partial least square structural equation modelling technique was employed for data and hypothesis testing. Using a probability sampling method, this analysis involved 200 non-Muslim Christians as the majority of respondents, representing the majority of non-Muslims in Indonesia. The results of this study show that attitude (ß = 5.390, p = 0.000), subjective norm (ß = 5.488, p = 0.000), and perceived behavioral control (ß = 2.104, p = 0.036) have a positive relationship with intention. Surprisingly, the relationship between Islamic Bank knowledge and intention is indirect, which is mediated through attitude. In addition, the Islamic Bank knowledge amplifies the relation between perceived behavioral control and intention. This study confirmed that Islamic Bank knowledge plays an important role in increasing intention. Thus, Islamic banks should consider educating more non-Muslims about what an Islamic bank is.

Islamic banking has existed in Indonesia since 1992. The performance of Islamic banking is interesting for further analysis. This study aims to analyze the impact of good corporate governance (GCG) implementation and bank characteristics on the performance of Islamic banking in Indonesia before the COVID-19 pandemic. Profitability is a measure of banking performance and is proxied by return on assets (ROA) and return on equity (ROE). The research sample consists of Islamic commercial banks that published financial and annual reports between 2011 and 2019. The data collection method used is documentation. Multiple regression analysis was used for data analysis. The results indicate that the implementation of GCG has no significant impact on performance (probability values of 0.425 and 0.420 on ROA and ROE with coefficients of 0.016 and 0.019). The P-value of the non-performing loans (NPF) variable is < 0.001 on ROA and ROE, which means that NPF has a significant negative impact on ROA and ROE. Third-party funds only have a significant impact on ROE with a p-value of 0.046. Meanwhile, the size of a bank has not been shown to have a significant impact on the performance of Islamic banking in Indonesia. Efforts to maintain NPF are critical for banks to achieve good performance (profitability). NPF demonstrates the risk of nonpayment of Islamic bank financing.

Acknowledgment
We gratefully acknowledge the research funding provided by LPPM Universitas Negeri Semarang (contract number: 19.8.3/UN37/PPK.3.1/2022).

A dominant strand of literature advances a positive association between corporate governance quality and investor confidence. However, the corporate life cycle may influence the relationship. Therefore, this study investigated the moderating role of the corporate life cycle in the association between corporate governance quality and investor confidence in the Nigerian banking industry. Corporate governance quality was proxied using a composite measure of board characteristics comprising board size, board meeting, independence, and board gender diversity, while investor confidence was proxied using the price-earnings ratio. Secondary data were obtained from the audited annual financial statements of 12 banks from 2006 to 2021. The study adopted a pooled regression model based on the results of Hausman, and the Breusch and Pagan Lagrangian multiplier test. The results showed that corporate governance quality positively and significantly impacted investor confidence at the introduction (coef = .318, p = 0.017) and decline (coef = 383, p = 0.011) phases of the life cycle. Banks at the introduction and decline phases of the life cycle were characterized by a narrow resource base, low profitability, and higher risky investments sufficient to attract investor confidence. The study concludes that corporate governance quality enhanced investor confidence at the introduction and decline phases of the banks’ life cycle.

When choosing a country as a trading partner, an important role is played by the speed, convenience, and reliability of banking services (this is primarily determined by the level of digitalization of banking activities), and the general level of economic growth of this country. The article analyzes the relationship between the efficiency of the banking system and the country’s economic growth under digitalization using the example of Azerbaijan and its key trading partners. Calculations were made using data for 2010–2021 based on World Bank, IMF, and UN statistics. Principal component analysis was used to identify the most relevant indicators that describe the stability of the banking system, the level of economic development of the country, and the level of digitalization; the method of structural modeling was used to identify functional relationships between the constructed synthetic generalizing indicators. Calculations showed that the development of the banking system is much more (almost seven times) influenced by the level of digitalization in the country than the level of economic growth (coefficients for synthetic generalizing indicators formed in the process of structural modeling are 0.29 and 0.04). Modeling proved that the focus of reforms aimed at increasing the level of digitalization in the country should be an increase in the number of electronic accounts, electronic payments, the share of the population using the Internet, growth of R&D expenditures, and innovation index.

The high pays received by executives has gained global attention. This study examines the impact of executive compensation on the performance of Jordanian banks, an area that has not been explored much. The study uses empirical methods for data collection and analysis. Dependent variables include Return on Equity (ROE) and Tobin’s Q performance, while total compensation incentives is the main independent variable. Control variables include bank size, bank age, leverage, and female executives. Through balanced panel data analysis comprising 196 bank-year observations, this quantitative research paper applies Ordinary Least Squares (OLS), fixed-effect, and Generalized Method of Moment (GMM) methods. These methods accurately establish the compensation-performance relationship in the banking sector from 2009 to 2022. The coefficient of determination (R2) for the ROE model: 51.63%, Tobin-Q model: 39.33%. These robust models support the main finding that executive compensation is significantly and positively correlated with operating and market-based performance indicators. Results validate the agency hypothesis, indicating that executives are rewarded for bank performance indicators. Consequently, a one-unit increase in executive compensation leads to a rise of 22.8 cents in ROE and 29.51 cents in Tobin-Q. Additionally, bank size, age, leverage, and female executives positively impact bank performance indicators. A modification of BSIZE, BAGE, LEV, and FEMALE by one-unit results in a proportional adjustment of 26.1 cents, 16.6 cents, 2.07 cents, and 48.6 cents, respectively, in ROE. Additionally, a one-unit alteration in BSIZE, BAGE, LEV, and FEMALE corresponds to variations of 77.6 cents, 56.42 cents, 34.39 cents, and 48.8 cents, in Tobin-Q, all in the same direction.

The determinants of financial development in developing and emerging economies are examined in this article. The long-term relationships between banking sector development, financial integration, trade openness, and economic growth are explored using FMOLS-DOLS panel estimations spanning from 1980 to 2021. The critical significance of economic growth, trade openness, and financial liberalization as fundamental drivers of banking system progress is underscored by the results. To investigate this relationship, two specifications are introduced to measure banking sector development: private credits (specification 1) and the ME ratio (specification 2), which is defined as the ratio of M3 to GDP. In the context of specification 1, quantitative outcomes reveal that a 1% increase in economic growth results in a substantial rise of 0.207% in banking sector development according to FMOLS, and 0.972% according to DOLS. Similarly, a 1% increase in trade openness has a noteworthy positive impact of 0.019% on banking development. Furthermore, the results indicate that financial liberalization contributes positively to banking sector development, with an effect of 0.002%. In the context of specification 2, the impact of economic growth is more pronounced, with a significant increase of 0.3187% (FMOLS) and 0.852% (DOLS). However, trade openness (TRADE_OP) manifests a negative impact of –0.392% (FMOLS) and a positive impact of 0.0162% (DOLS). In conclusion, the critical importance of economic growth, trade openness, and financial liberalization in the development of the banking sector in developing and emerging economies is underscored by the empirical evidence. Prudent economic and financial policies, along with strengthened regulation and supervision, are recommended to foster sustainable and resilient financial development in these contexts.

This study aims to analyze the comparison of the resilience of Islamic and conventional banking in the Association of Southeast Asian Nations (ASEAN) during the COVID-19 pandemic. Comparison of banking resilience was proxied by the Capital Adequacy Ratio (CAR) and Loan-to-Deposit Ratio (LDR) factors, Return on Assets (ROA) and Non-Performing Loans (NPL) with the Multiple Discriminant Analysis test. In this case, the emphasis is placed on the patterns by which Islamic and conventional banking in ASEAN weathered the recent financial crisis during the COVID-19 pandemic. The explanatory and quantitative analysis also used a purposive sample strategy and SPSS to obtain and analyze data from 120-unit analyses of Islamic and conventional banks, respectively. From 2020 to 2021, traditional banks in the ASEAN region, especially in Indonesia, Malaysia, and Brunei Darussalam, were emphasized. Moreover, some data were prioritized regarding the Comparison of Resilience of Sharia and Conventional Banking in ASEAN after the COVID-19 pandemic. The results showed that conventional and Islamic banks had different resilience due to the influence of Capital Adequacy Ratio (CAR) and Loan-to-Deposit Ratio (LDR) factors, but there was no significant difference in the Return on Assets (ROA) and Non-Performing Loans (NPL). Based on the accuracy of the average prediction of 80%, conventional and Islamic bank groups had classification values of 48% and 88%, respectively. This indicated that Islamic financial institutions were more successful than conventional groups in implementing banking resilience.

This paper aims to study the impact of both bank performance and economic growth on bank profitability in 8 middle-income countries from the Middle East and North Africa (MENA) region and MINT countries using the Generalized Method of Moments (GMM) model. Bank profitability is measured by return on assets (ROA) and return on equity (ROE), net interest margin (NIM) is measured by CAMEL model, and economic growth is measured by gross domestic product (GDP) growth. The sample period ranges from 2000 to 2020, and data are extracted from the World Bank financial indicators and database. This paper is supported by the financial intermediation theory. By comparing both MINT and MENA regions, the results show that in the MINT region, ROA is affected most by both asset management and capital adequacy ratio (CAR), while NIM is affected by asset management, liquidity, and management. Regarding the MENA region, ROA and NIM are affected by CAR only. No relationship was found between ROE and any of the CAMEL determinants in both regions. The results show superior performance for MINT than MENA; strong and active capital, increment in assets, credits, and deposits, and enhancement in bank profitability that is reflected in economic growth progress. Both MENA and MINT regions’ profitability (ROA and ROE) is affected by GDP, so their economies are restructuring very well and their banking industries are expected to grow rapidly.

Local and global financial crises are caused by a wide range of geopolitical, macro-financial, and socio-economic determinants. The purpose of this study is to assess the role of central bank independence in preventing financial crises and mitigating their consequences. Two hypotheses were tested. A measure of the banking regulator independence is the CWN index of the central bank independence. The hypotheses were tested on data from 53 countries suffering from financial crises over the last 40 years (the sample includes both developed and developing countries from different continents). The tools of nonlinear logit regression (modeling the probability of loss of financial stability due to a financial crisis, considering different levels of the banking regulator independence) and panel regression with random effects (modeling the influence of the banking regulator independence on banking activities during crisis periods) were used for calculations. The study did not confirm that a high level of central bank independence is a necessary condition for preventing the occurrence of financial crises in the national economy. On the contrary, the likelihood of financial instability was found to be higher in countries with more independent central banks. Thus, during crisis periods, an increase in the CWN index by 1 ensures an increase in the regulatory capital adequacy parameter by an average of 0.28%, a decrease in return on assets by 0.59%, and an increase in the share of non-performing loans by 1.69%.