Issue #1 (Volume 12 2017)

This research aims to identify the main monetary policy tools in Jordan, then, to estimate their effect on price and output level. A time series data covering the period between 1993 and 2013 were utilized to estimate the targeted models using two-step regression. Firstly, the authors measured the impact of indirect policy tools on money supply and, secondly, they determined the impact of money supply on price and output levels.
Results show that open market operations of the Central Bank of Jordan through issuance of certificates of deposit, especially at the beginning of 1993 and the repurchase agreements have been effective in influencing the money supply in Jordan. Unfortunately, this policy was not able to control the real or nominal output level even though it has an effect on the price level.

Keywords: monetary policy, open market operations, required reserve ratio, discount rate, price and output.
JEL Classification: E31, E42, E52, E58

Knowledge in the economic and banking history of the United States, of the last one hundred years or thereabouts, is necessary in any discussions of even current economic and political policies. This article looks at major economic events in the last century, with some attention also given to surrounding political forces of these events. In 1933, President Franklin Roosevelt, with strong bipartisan support in Congress, was able to pass the Glass-Stegall Act, after taking office in the Great Depression. Politicians in the United States during the approximately twenty-five years prior to the bursting of the housing bubble in 2007 have both used legislation to remove regulations and also made sure that inadequate government personnel were available to audit financial institutions. An important part of confidence is a faith in government regulatory agencies that monitor financial institutions. Lax monetary and regulatory policies can create a real estate bubble. This happened in the most recent economic disaster, the Great Recession. Sometimes the Federal Reserve has pursued reasonable monetary policy and other times inappropriate decreases or increases in the money supply have created havoc in the national economy.

Keywords: banking, Federal Reserve Bank System, financial crisis, Great Depression, Great Recession, Taylor rule for central banks.
JEL Classification: G21, E5, G01, N11, N12

A well governed institution is expected to use its resources optimally and, thus, perform more efficiently and contribute positively to economic development of a nation. However, often, it can be seen that poor management of the stakeholders leads to less than optimal strategic directions for an institution. Due to recent global financial crisis and rising issues of the Bangladeshi banking sector, corporate governance is one of the factors that have gained considerable attention. Recent drive of the governance issues of the banking sector of Bangladesh is expected to bring positive change in the financial sector and, hence, it is crucial to assess whether complying with governance codes leads to desired outcome or not. Specifically, the main purpose of this study is to examine the relationship between performances of commercial banks with corporate governance factor along with some internal and macroeconomic variables. Thus, the listed commercial banks in the Dhaka Stock Exchange (DSE) of Bangladesh were considered for the study. Subsequently, considering data availability of the time period (2011-2014), 29 listed commercial banks in the DSE have been considered and, hence, Ordinary Least Squared (OLS) regression models were used through Eviews 8.0 for analyzing the data. Though the study shows a positive relation between corporate governance and performances of banks, the statistical insignificance of the relation raises concern regarding various issues of corporate governance in the financial sector of Bangladesh.

Keywords: corporate governance, financial institutions, performances of commercial banks.
JEL Classification: G21, G30, G38, G39, O16

The banking industry plays a significant role in both the financial system and economy as a whole. By 2012, the US banking system owned US $14.45 trillion in assets. However, the importance of the banking system stretches beyond its mere size. Numerous studies have indicated that the health of this sector has significant effects on overall economic activity, as well as the size and persistence of economic cycles. For the purposes of this paper, the researchers measured the correlation between current legislation, risk-taking, market value, and reputation. This was performed by calcula-ting Z-scores to determine bank risk-taking. The Z-scores were correlated to market value to determine its impact. Reputable firm behavior was used to determine the correlation between market value and reputation. The statistical package for Social Sciences was used to perform ANOVA analysis of share value and Z-scores. A literature review was conducted to determine the reputational impact. It was determined that current legislation might have a desired result on risk-taking, that risk-taking might not have an impact on market value, and that reputation might have an impact on market value.

Keywords: reputation, banking industry, financial system, economic activity, Z-scores, legislation, risk-taking.
JEL Classification: C21, G18, G21, G32, G38, K23

The aim of this paper is to investigate service quality as perceived by younger customers of retail banks in a developing country. The objectives include identifying customers’ levels of satisfaction and loyalty to their banks and to identify the levels of service quality associated with such satisfaction and loyalty.
The instrument used to collect data via a survey of retail bank customers was an adaptation of the SERVQUAL questionnaire. A total of 448 students were surveyed, using a mix of systematic and quota sampling, with data being collected on university campuses. Data were analyzed using descriptive statistical techniques.
The main conclusions were that most young customers are reasonably satisfied with, and loyal to, their banks. There was little difference, on all the service quality constructs, between the different banks, and between expectations and perceptions of service quality. However, there was no evidence of any bank providing a service that delighted their customers or exceeded their expectations and so all banks are at risk from a competitor who adopts strategies to meet these goals.
The study has contributed to knowledge by focusing on attitudes to service quality of young bank customers in a developing country, an aspect that has been under-researched.

Keywords: service quality, retail banking, expectations, perceptions, customer satisfaction, loyalty, SERVQUAL, South Africa.
JEL Classification: G21, L84, M31

Using Technique for Order Performance by Similarity to Ideal Solutions (TOPSIS) approach for the data from 2011 to 2015, the authors investigate the financial performance of 16 different financial institutions in Oman that include nine commercial banks, three specialized banks, two investment companies, and two finance companies. They find that the one investment company, Dhofar International Development and Investment Holding Co., was more efficient in 2015 and 2011. Moreover, Oman Housing Bank was more efficient in 2013 and 2014, while Ahli Bank was more efficient in the year 2012. In contrast, Bank Muscat that has the largest total assets was ranked number 16 for the years 2013, 2014 and 2015. As a result of Spearman’s Rho (Rank-Order) Correlation, all ranked results are related to other years. If a bank is at placement in level, it can be affected by year before or year after. But Oman banks’ correlations shows that there are 2 different periods as effecting one year to the other.

Keywords: financial institutions performance, TOPSIS, emerging markets, efficiency, decision making criteria.
JEL Classification: G21, G23, L25

A stable, transparent financial system inspires confidence among investors and supports the overall economic growth. Inflexible regulation tends to slow down economic progress, making countries less attractive to investors.
Economies with bank-oriented financial systems tend to be less attractive to investors, so their long-term goal is to demonstrate flexibility through liberalization, attracting new investors and ensuring survival in highly competitive and unforgiving global conditions. Liberalization success is even more essential for developing countries and their efforts to open the borders for capital flows and attract new investments. While financial liberalization affects all sectors of the economy and directly influences growth, it does not guaranty it. The removal of financial restrictions could affect capital distribution, increase volatility, create challenges for banks, etc. To support the liberalization efforts, it is very important to understand the nature of banking business, criticality of transparent and effective regulatory framework, as well as the expectations of potential investors.
The main goal of this paper is to discuss the process of financial liberalization in developing countries and motivate the policy makers to consider available lessons when creating their balanced approach to financial (de)regulation processes towards financial development and integration in the global financial landscape.

Keywords: financial liberalization, financial regulation, economic development, developing countries.
JEL Classification: G18, G21, G28

The present study focuses on the need for banking sector to be more reactive when facing globalization that could bring impact on banking industries complexity. Based on empirical studies, there is a need to analyze non performing loan determinants comprehensively using macroeconomic and bank-specific factors to make a good condition on bank, because combining macroeconomic and bank-specific variable as NPL determinants has made a big improvement to analyze NPL. The object of present study is 20 Banks listed in Indonesia Stock Exchange (IDX) between q12005-q42014. Using dynamic panel data GMM-system method shows that the previous period of NPL (non performing loan), change of PDB (Gross Domestic Product) and inflation rate have a significantly negative impact on NPL. However, BOPO (Operations Expenses to Operations Income) and ROE (Return on Equity) has a significantly positve relationship to NPL. On the other hand, this research does not find any significance on BI rate (interest rate), solvency ratio, and size to NPL. From the result, it can be concluded that combining macroeconomic and bank-specific variable could be an alternative method to analyze NPL determinants on bank.

Keywords: nonperforming loans, banks, credit risk, globalization, dynamic panel data, banking industries.
JEL Classification: G21, E44, E51, E5, F60

Banks play a crucial role in promoting online businesses. Even though e-shoppers have the option of cash-on-delivery, which seems to be secure and trustworthy, still there is an urge for the e-payment schemes, which can only be provided through banks. Banks act as strong and trustworthy intermediaries in the online transactions and they provide a bold opening in the online business. At present, banks have e-payment systems like Internet banking, electronic fund transfers (NEFT/RTGS), plastic money (credit card & debit card) and mobile banking. These systems provide payment to online transactions like online purchases of products, mobile recharges, hotel booking, ticket booking, etc. by considering all types of security measures. For the real working of these e-services, the need of apt infrastructures is an inevitable feature.
This paper examines the efficient utilization of mobile banking by the bank customers who have all the infrastructures for availing the same. The results showed that the majority of the sample customers selected for the study owned a mobile but only few of them use a mobile as their mode of access to banks. They also revealed that the people were comparatively well aware of mobile banking, but its usage level was very low. The mostly used e-settlement with mobile banking was for mobile top-up by urban area customers and rural area customers and there was no significant difference between the urban area and rural area customers regarding the utilization of mobile banking.

Keywords: virtual banking, mobile banking, online business, inter-bank mobile payment system (IMPS).
JEL Classification: L86, L81

Exchange rates are expected to adjust according to the stance of monetary policies, which are in normal times differences in interest rates set by the central banks. This interest rate parity does, however, no longer hold if central banks approach the zero lower bound on interest rates and switch to measures of quantitative easing. Therefore, the author estimates exchange rate changes based on the different stance of the monetary base, which is an indicator of differing monetary policies in the countries. The results reveal that indeed exchange rates movements in the Dollar-Euro-Rate can be explained by differences in the monetary base, since the zero lower bound has become binding. However, the influence depends crucially on whether the monetary base is increased or decreased and whether the other central bank is also expanding or reducing its balance sheet at the same time.

Keywords: monetary base, exchange rate, Fed, ECB.
JEL Classification: E52, E58, F42