Issue #3 (Volume 11 2016)

The article presents a model for achieving the allocative efficiency of credit resources in Ukraine’s banking system. The research involves establishing a set of criteria for assessing a borrower’s creditworthiness and analyzing them by means of the discriminant analysis, Helwig’s methods, cluster analysis, the dendrite method, and principal component analysis; the methods are, then, contrasted. This is followed by designing an optimal credit portfolio of the banking system and comparing it with actual credit portfolios with the help of similarity metrics.

Keywords: banking system, borrower’s creditworthiness, credit portfolio, statistical methods, similarity metrics.
JEL Classification: G22, E51, C14, C18, C61

The purpose of the cross-sectional study was to determine the leadership practices in a retail bank in South Africa. A self-administered anonymous questionnaire was used to collect the data, using an online survey tool (QuestionPro). A total of 60 managers completed the questionnaire. Results showed that there was a significant relationship between leadership practices and leadership style in the organization. Transformational, transactional and laissez-faire leadership styles were the important predictors, which influenced the leadership practices of the managerial bank employees. Therefore, managers should adopt different leadership behavior, depending on several other situational factors that come to hand.

Keywords: leadership practices, retail banking, manager, factor, South Africa.
JEL Classification: G20, G21, M10, M12, L21

The purpose of this research is to analyze the influence of Capital Adequacy Ratio (CAR) Third Party Funds (TPF), Non Performing Financing (NPF), Financing to Deposit Ratio (FDR), Operation Cost Operating Income (OCOI), Net Operating Margin (NOM), Gross Domestic Product (GDP), inflation and Return on Asset (ROA) as a proxy of Islamic bank’s profitability in Indonesia during 2011-2014 periods. The population of study was Sharia banking (BS) in Indonesia. Time series data from Indonesian Banking Statistics 2011-2014 were used as the primary data. Multiple linear regression was applied as method of analysis. The result shows that CAR, NPF, FDR and NOM did not affect profitability, while TPF, OCOI had negative effect on profitability. Meanwhile, GDP and inflation variable had significant effect with positive direction.

Keywords: Sharia bank, ROA, TPF, NPF and inflation.
JEL Classification: G21, E31

This paper analyzes the performance of Islamic banks operating in Pakistan according to their financial results of the year 2015. CAMELS rating model is applied in this research. This model is based on certain financial ratios which are excerpt from values in the financial statements of banks. The authors conduct the research under the umbrella of quantitative paradigm. The authors found that 2 of the Islamic banks are showing satisfactory results, while others are on fair position. There is a need to develop financial markets for treasury operations for these banks. Results help in development of growth strategy for Islamic banks in Pakistan, as well as they might be useful to create a fair snapshot for regulators to develop growth strategy for this stream of banking.

Keywords: Islamic banking, performance, growth analysis, CAMELS.
JEL Classification: G02, G21, G32

Internet has enabled businesses to offer their merchandise through web-based applications, of which recent phenomenon includes online social networks (OSNs). This paper studies the influence of OSNs through the lens of perceived trust (PT), social norm (SN), user satisfaction (US) and perceived behavioral control (PBC) to find out how these influence participants of OSNs continuance buying intention. A model of IS continuance intention of web-based application was developed to test the above factors. The results show that trust in OSN is based mainly on the degree of the social relations that users have with their vendors, because they are members on the network, on top of their experiences of web service use. US was influenced by PBC, while US also influenced SN and PT with PT exhibiting a strong relationship with SN.

Keywords: continuance intention, OSN, participants, purchasing.
JEL Classification: Z13, G21, M10, M31, D11, D12

The study has been triggered by the increase in information breaches in financial organizations worldwide. Such organizations may have policies and procedures, strategies and systems in place in order to mitigate the risk of information breaches, but data breaches are still on the rise. The objectives of this study are to explore the shortfalls of information security on a South African financial institution and further investigate whether business processes are responsive to organization’s needs. This study employed both quantitative and qualitative research methods. Questionnaires were sent to staff level employees, and semi-structured in-depth interviews were conducted with senior management at the organization. The study revealed that employees require training on information management and that there are major training deficiencies for training officers to conduct beneficial information management training at the organization. Information security program that include business risk analysis were not implemented, which results in inadequate information management planning and decisions. A standardized or uniform house rule policy was not consistently implemented across the organization, which resulted in certain areas not protecting information. The qualitative findings revealed that the external cleaning company could obtain access to customer information, if customer data are left lying around. Furthermore, there is major misalignment between policy setters and employees in this organization. The findings allow senior managers to construct projects and program with their teams to improve the state of information management in the organization which spans across the people aspect, technology systems and general information management processes. Furthermore, external companies should start signing Non-Disclosure Agreements - which is not being done currently as this opens the door for data fraud. The organization has information management and security policies in place, but the study concluded that employees do not understand these policies and should receive specialized training to ensure understanding and, ultimately, have employees following these information security policies.

Keywords: data breach, information management, business processes, information legislation.
JEL Classification: G2

This paper, based on econometric techniques, has done a study to improve the predictions of the stress test, concerning the estimation of impairment losses. The main results obtained are: 1) the impact of the explanatory variables on the impairment loss is different at stages of growth, compared to times of recession; 2) there is a certain inertia of the dependent variable, but this inertia is different in intensity, and even the sign in the growth stages concerning the stages of recession; 3) of the explanatory variables, nominal GDP and equity are those that have a greater impact on the impairment loss; 4) finally, the two dummy variables that assess the impact of adjustment to market value of assets in the process of mergers and acquisitions that occurred in 2010, and regulatory changes implemented in 2012, have been statistically significant and with the expected signs.

Keywords: econometric techniques, financial crisis, financial markets, risks.
JEL Classification: G21, G32, G17

The purpose of this article is to examine the efficiency of the Tanzania stock market. The study attempts to answer whether the Tanzania stock market is weak-form efficient. The study applies a battery of tests: the serial correlation test, unit root tests, runs test and the variance ratio test using daily and weekly data with a sample spanning from November 2006 to August 2015 for the Dar es Salaam Stock Exchange (DSE) all share index and from January 2009 to August 2015 for the DSE share index. Overall, the results of the market efficiency are mixed. The serial correlation test, unit root test and the runs test do not support weak-form efficiency, while the more robust variance ratio test supports weak-form efficiency for the DSE. The main contribution of the study is that the market efficiency of the Tanzania stock market has increased over the sample period.

Keywords: adaptive market hypothesis, efficiency market hypothesis, serial correlations test, unit root test, runs test, variance ratio test, Dar es Salaam Stock Exchange.
JEL Classification: G14, G15

This paper used the Credit Risk Disclosure Measurement Tool (CRDMT) constructed on the basis of six main areas, namely, banks own description of credit risk (i.e., as it applies to the banks operations), banks strategy of reducing credit risk exposure (i.e., objectives of credit management), banks approach to credit modelling or the internal rating system, banks approach and the manner in which they assess their exposure to credit risk, banks credit risk mitigation strategies employed (i.e., collateral and other credit enhancements), and banks approach to the valuation of pledged collateral and other credit enhancements to assess the information disclosed on the risk and capital management reports of the top-5 South African banks.
Results demonstrated that the top-5 South African banks were fairly in line with the main six credit risk areas that would result in an informative risk and capital management report, as proposed by the CRMDT. It was observed that there were, however, pockets of information that could be improved to enhance these risk and capital management reports, particularly the credit risk information made available to public. These areas included the information relating to banks credit risk mitigation strategies employed and banks strategy of reducing credit risk exposure, as well as the information relating to banks approach to the valuation of pledged collateral and other credit enhancements. These areas were noted for their partial or non-disclosure of information.

Keywords: banks, credit risk, Credit Risk Disclosure Measurement Tool (CRDMT), disclosure analysis and risk and capital reports.
JEL Classification: G21, G32

The constructs of servant leadership (SL) and emotional intelligence (EI) have gained considerable interest in the discipline of managerial leadership, both within academic discourse and in the human capital management and development arena. However, empirical evidence showed the need for further research on both constructs using the mixed methods approach. The purpose of this research was to explore the role of an integrated servant leadership and emotional intelligence leadership skills program in enhancing leadership performance in Zimbabwe’s commercial banking sector. A mixed methods research triangulation concurrent design was adopted for the research study conducted from 2014 to 2015. A survey questionnaire was used to collect quantitative data from 211 middle, senior and executive managerial staff in the commercial banking sector. SPSS version 22.0 was used to analyze the quantitative data. Qualitative data were collected from a purposive sample of eight senior to executive managers using a structured interview guide and multimedia recording equipment. The qualitative data were analyzed using NVIVO version 10 software package to create themes. The findings showed that servant leadership and emotional intelligence characteristics complement each other and both constructs can be integrated into a managerial leadership program used to develop leadership soft skills or competencies. The findings also showed that both SL and EI skills had a positive influence in enhancing the managers’ effectiveness in undertaking leadership responsibilities and on leadership qualitative performance measures such as articulating vision and strategy, building and sustaining productive organizational culture, development and retention of talent, enhancing employee engagement, improving stakeholder relationship management, retaining bank customers, promotion of diversity, value creation and community involvement. The study led to the development of an integrated SL and EI soft skills leadership program and model which, if implemented, could lead to leadership skills development and performance enhancement.

Keywords: leadership, competencies, servant leadership and emotional intelligence.
JEL Classification: E58, G21, M12

This paper examines the presence of cointegration between South African gold mining index and USD/ZAR exchange rate. The results show that gold index and USD/ZAR exchange rate series are both I(1) and are cointegrated. The Granger causality test shows a two-way directional causality between gold index and USD/ZAR exchange rate for the period 9 June 2005-9 June 2015. By accounting for possible structural breaks, the Zivot-Andrews unit root test suggests two different breaking points in the data. By using the breaking dates to divide the dataset into 3 sub-periods, the results show that gold index and USD/ZAR exchange rate series are not cointegrated. The Granger causality test shows no causality between the two variables. This finding suggests that gold mining index does not play a key role in explaining the trends in the exchange rate and likewise exchange rate does not affect gold mining index.

Keywords: USD/ZAR exchange rate, gold mining index, unit root tests, breaking points, cointegration.
JEL Classification: F3, F4, F63, O47