Issue #3 (Volume 15 2020)

Using quarterly data from 2010 to 2019, this paper investigates the impact of listing status on the performance of the National Commercial Bank (NCB), the largest commercial bank in Saudi Arabia, by applying a combination of financial ratios analysis and efficient frontier analysis with a mix of parametric and non-parametric tests. The overall results show that although the NCB performance is superior compared to their counterparts, this superiority has deteriorated after the bank was listed in 2014. This result was captured by the deterioration in the efficiency measures of NCB, indicating the significance of using the efficient frontier analysis as an additional monitoring tool by the Saudi regulators. The financial ratios analysis also shows that even though the NCB profitability has increased, there is an increase in the bank’s overall risk after being listed. Therefore, Saudi regulators should closely monitor their listed banks as these banks are directed toward high-risk assets.

The study aims to test the role of the measures implemented by the Central Bank of Jordan to reduce the effect of financial crisis on the Jordanian banks, using two independent variables (loans and advances rate, overnight deposit window), which are the actions of the Central Bank of Jordan, and four dependent variables (liquidity ratio, ROA ratio, capital adequacy ratio, non-performing loans ratio), which are financial stability indicators for the banks for six years (2005–2011).
To get the study results, these data are measured and analyzed using SPSS (Statistical Package for Social Sciences). It was found that the actions of the Central Bank of Jordan (loans and advances rate, overnight deposit window rate): have a statistically significant impact on the non-performing loans ratio (2005–2011); do not have a statistically significant impact on the capital adequacy ratio (2005–2011); have a statistically significant impact on ROA ratio (2005–2011); do not have a statistically significant impact on the liquidity ratio (2005–2011).

This study investigates the Millennials and Gen Z perception toward Fintech services, their usage intention, and their financial behavior. The study took place in the Palestinian context with a global comparison among these generations. The authors used the questionnaire-based technique to meet the study objective. West Bank respondents were selected for this purpose; the study instrument was distributed through different social media channels. The findings show that reliability/trust and ease of use are the main issues in using a financial service. Millennials are more aware (48%) of Fintech services than Gen Z (38%), which is different from the global view where Gen Z is the highest. The smartphone penetration rate is 100% among both generations, while the financial inclusion ratio in Palestine is around 36.4%; these clear indicators are the main Fintech drivers to promote Fintech services in Palestine, and these are global indicators for Fintech adoption intention. Both generations (84%) intend to use e-wallet services, Millennials (87%) and Gen Z is (70%) prefer using real-time services. Half of the respondents see that Fintech plays a complementary role with banks. The majority see that Fintech services are cheaper than bank services. Wealth management, and robot advisor services, and both generations are looking to acquire them in the long run. The authors revealed that 85% of respondents from both generations trust banks, so it is recommended that banks digitize their financial services to meet the customers’ needs, considering that 90% of respondents see that promotions are a key issue in adopting Fintech services. Promoting e-wallet services by banks is highly recommended due to the massive rivalry with Fintech parties.

Financial conglomerates and bank competition play a significant role in developing efficiency levels and increased risk exposure. This study aims to formulate a conceptual model of the policy’s impact of financial conglomerates and bank competition on bank efficiency and stability risk. This research is conducted using data samples from 90 commercial banks in Indonesia from 2010 to 2017. The empirical analysis is carried out using the dynamic data panel or Generalized Method of Moments (GMM). The study results show that policies of financial conglomerates and competition have a positive effect on banking efficiency. These results support previous empirical studies, where financial conglomeration, in general, can improve banking efficiency. Furthermore, it is found that the interaction between financial conglomerates and competition has a positive effect on banking stability. The implication of this research shows that the potential risks that cause distortion become irrelevant when the banking structure is more competitive. Furthermore, this study recommends the need to build the ideal financial conglomerate institutional structure to strengthen and encourage the role of more competitive banks.

The recent crisis of non-performing loans in the banking system has hit the Vietnamese economy hard. The GDP has been fallen down, while the bad debt ratio in the banking system has risen dramatically to 17.2 percent, and it takes more time to restore the economy and banking system. This research aims to define aspects that impact non-performing commercial bank loans in Vietnam. It covers the period of 2008–2017 using 200 identified banks of Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange, and applies methods based on the regression of pooled ordinary least squares, fixed and random effects models, in particular, generalized least squares to confirm the stability of the regression model. The results show that non-performing loans this year will positively affect those in the next year. In addition, a raise in bank performance and credit growth also leads to the reduction in non-performing loans from banks. Regarding macroeconomic factors, higher interest rates would have a major and beneficial influence on failed loans in terms of macroeconomic dynamics, and, therefore, little effect on economic activity and inflation. Therefore, Vietnamese banking system should reduce the systematic risk and improve monitoring processes, drawing on the experience of global banks with extensive experience in risk management.

Banks are expected to operate within acceptable standards of governance for consistent profitable operations. They run heavily on customer deposits, which is confidence-driven. Since the quality of governance is critical to winning and retaining customer confidence and patronage, the imperative for good governance practices in banks cannot be overemphasized. This research paper explores the nexus between governance practices and bank profitability in Nigeria. It adopts the size of bank board and directors’ stake as proxies for corporate governance, with return on assets and return on equity as representations for financial performance. The research incorporates firm size as a controlled variable. The estimation technique of the Generalized Method of Moments was employed. Evidence from the research reveals that board size, directors’ equity, and firm size substantially affect Nigerian banks’ financial performance. Besides, the study shows a robust effect of lagged return on equity on the current level of performance. Therefore, the study asserts that governance in business entities strongly affects their financial performance and recommends maintaining optimum board size to minimize boardroom conflicts. It further prescribes that the requirement for substantial equity stake by directors of banking institutions be sustained, as it secures commitment to governance practices that support profitability.

Acknowledgment
The authors acknowledge the support of Covenant University towards the publication of this paper.

According to an inclusive growth framework, the top objectives of the economic policy shift from increasing incomes themselves to well-being. While banking sector development has conventionally been considered a growth factor, there is no clear understanding of its impact on inclusive growth. This article explores how the banking sector’s qualitative development, measured in dimensions of the services availability, lending supply, stability, and reliability of banking activity, relates to inclusive growth. To define the relations between banking system development and inclusive growth, the panel regression was employed for a sample of 46 economies selected based on the prescribed principles of sources reputability, methodology consistency, limits in data blanks, and differentiated into groups according to the World Bank’s classification.
The regressions’ assessment and involved tests show evidence of the quality of constructed models and present the following results. The banking availability, approximated with the number of automated teller machines, fosters inclusive growth regarding all groups of countries. In contrast, the increase in the number of commercial banking branches has inverse relations between high-income and upper-middle-income countries, and direct for lower-middle-income countries. The bank credit expansion negatively influences the inclusive growth for high income and lower-middle-income countries. The banking sector stability approximated with bank capital to assets ratio matters in terms of inclusive growth for high-income countries only, while this indicator for upper middle and lower middle economies is statistically insignificant.

SMEs are the main drivers of economic development. As the debt crisis and coronavirus crisis show, despite their importance, they are extremely sensitive to economic downturns. Therefore, SMEs need to be supported through various tools. The paper is aimed at evaluating the SMEs’ bank and governmental support in the northern and southern EU countries in two crisis periods and assessing the financial state of SMEs on the eve of coronacrisis using micro-level data.
It was proved that bank loans and credit lines remain the main sources of SMEs’ financing. After the debt crisis, banks are becoming more loyal to SMEs.
It was proved that SMEs from the northern EU countries suffered less from the previous crisis and therefore started their recovery earlier than the southern ones in terms of profitability, liquidity and debt burden. In addition, it was shown that both groups on the eve of the new turbulence period were in better financial state compared to the previous debt crisis.
The southern EU countries suffered more from both crises. At the same time, due to effective governmental support and bank loyalty, their SMEs entered the coronacrisis at the same level of financial stability as the northern ones. Since the new support measures are concentrated primarily in the banking sector through loan guarantee schemes and reduced interest rates, it is essential to provide debt financing to high-quality borrowers and avoid the debt crisis in southern counties.

Securitization has been used as a tool for bank funding, liquidity, risk management, and performance for over two decades. However, securitization activities were negatively affected by the recent financial crises, which led to stricter regulations of banks’ off-balance-sheet activities. This study examined the possible impacts of the Basel IV capital requirements on securitization activities and the performance of commercial banks in South Africa if implemented. The study used aggregated financial data of selected South African commercial banks to create a sample representative projection as if the selected banks had implemented the Basel IV capital requirements between 2002 and 2018. The simulated data were analyzed and compared to Basel III data using panel data analysis under certain assumptions, while other conditions held constant. The results revealed that the implementation of the Basel IV capital requirements will have a significant positive impact on securitization activities of commercial banks in South Africa. However, higher capital requirements of Basel IV may have no significant impact on performance of securitizing banks but it can protect banks from securitization exposure.

Sharia Supervisory Board (SSB) plays an important role in implementing Islamic law in Islamic banks, including fraud prevention. This ungodly act, also known as haram, is highly forbidden in Islam, as evidenced in the holy book of Al Qur’an. Therefore, this study was conducted to provide evidence on the role of SSB attributes (number of members, expertise, cross-membership, educational level, attendance of meeting, tenure) in preventing fraud. This study used 11 Islamic banks in Indonesia as research samples that were observed during 2014–2018. Data were analyzed using the ordinary least squares (OLS) method. The research findings from this study showed that the number of members, cross-membership, education level, attendance of meetings, and SSB tenure were not proven to reduce fraud. SSB’s expertise in accounting/finance had a negative influence on financial statement fraud. The implication of the study is that SSB’s expertise helps banks to effectively carry out their duties, namely detecting financial statement fraud. SSB acts as an independent control mechanism that states that all bank activities are in line with Islamic law and also avoid financial statement fraud.

The lessons from the 2008 global financial crisis show that excessive risk taking and governance failures contribute to the failure of several banks. As a result, the relationship between corporate governance mechanisms and risk taking has been the subject of many studies. However, extant studies report inconclusive results. Therefore, this study aims to investigate the relationship between CEO power and bank risk in the UAE using data over the period of 2015–2018 and a sample of 19 UAE banks. The study uses a Pearson pairwise correlation to analyze the relationship between CEO power and bank risk. In addition, a two-tailed t-test is used to examine the differences between conventional and Islamic banks in terms of CEO power and risk-taking. The results of the study show that CEO power measured using CEO duality and CEO tenure reduces risk. Furthermore, the paper indicates that larger boards and higher CEO ownership tend to increase risk. The study also reports that conventional banks have higher return variability, larger boards and powerful CEOs than Islamic banks. However, Islamic banks tend to have higher non-performing finances than conventional banks. The study provides important insights on the relationship between CEO power and bank risk and concurs with earlier studies. The findings can be of interest to policy makers and can be used as input data for the development of corporate governance mechanisms. Shareholders can also use the survey results as input when appointing a CEO for their banks.

The study identifies the features of the USD/UAH exchange rate dynamics for the period from January 2014 to May 2020. The main purpose of the empirical analysis is to determine the current trend of the USD/UAH exchange rate (is it random or permanent), indicate the presence of seasonality in foreign exchange rate dynamics and evaluate its sensitivity to external shocks. Three hypotheses are tested using several methods of time series analysis (autocorrelation analysis, ADF, Phillips-Perron and Granger tests), including a trend-season model using a time series of one variable (ARMA), a multifactor VAR-model, impulse functions. The results show that, the movement of the hryvnia exchange rate against the US dollar is a stochastic process. Its trend has a random component and tends to change sharply over time. Moreover, exchange rate fluctuations are seasonal. It depreciates in the first and second quarters, and strengthens in the third and fourth. Some macroeconomic indicators cause a positive or negative reaction of the USD/UAH exchange rate. This indicates that today the Ukrainian foreign exchange market is relatively efficient, but stable, since its reaction to external shocks is short-term, insignificant and tends to fade out. Although the findings are controversial, they support the generally accepted view that the exchange rate formation is a multifactorial process that depends on several macroeconomic factors. However, high volatility and random walk specification indicate that it is almost impossible to predict its future value at this time.

Acknowledgment
The material was prepared within the framework of the scientific research Modeling and Forecasting the Behavior of Financial Markets as an Information Base for Ensuring Financial Stability and Security of the State, No. 0117U003936 (supervisor Alex Plastun).

This study aims to examine the effect of monetary and financial variables on share prices of Jordanian commercial banks for the period 2001–2018. The monetary variables used in the research include broad money supply, the interest rate on time deposits and inflation, while financial variables include both the deficit of the general budget and government expenditures, and the general government domestic debt. A multiple linear regression equation is designed using E-Views program to test this effect. The study shows that there is a significant positive effect of broad money supply, whereas a negative effect of the general budget deficit and a positive effect of the domestic debt on share prices of commercial banks in Jordan for the specified period. In contrast, there is no effect of both inflation and the interest rate on time deposits and government expenditures on the price of shares of Jordanian commercial banks. The study recommends taking into account the relationship between the variables mentioned in the prices of shares of commercial banks when setting monetary and financial policies by the central bank and the government to determine the extent to which these variables reflect share prices of Jordanian commercial banks. Overall, the regression model reached R2 = 0.63, and this means that 63% of the change in the share prices of Jordanian commercial banks is due to changes in the independent variables included in the model.

The purpose of the study is to measure behavioral, attitudinal and other brand loyalty antecedents, and to develop an operating model for measuring and managing brand loyalty of commercial banks clients. A random sample of 500 members of the South African Commercial Institute, who are also commercial banks’ clients, received a 5-point Likert scale questionnaire to be completed online via Twitter and Facebook. About 196 people completed the questionnaire. The data possess construct validity and reliability (α ≥ 0.70). The results show that seven of the 12 original antecedents are banking related, namely five Attitudinal antecedents (r2 = 0.557) and two Other antecedents (r2 = 0.442). Behavioral antecedents were not important to bank clients. All the antecedents have factor loadings above 0.60, and there is a significant positive correlation between Attitude and the Other antecedents (r = 0.75; p ≤ 0.01). This means that the model is useful for managers in managing brand loyalty at their banks. It is also of value to researchers and academia looking to conduct further research on how to measure and manage brand loyalty. However, a caution is that the data originated from South African banks’ clients. Country-specific influences can cause different brand loyalty preferences among international banks’ clients.

Acknowledgment
I wish to acknowledge Mr. Sarel Salim for his contribution to administering the data collection for the original research on brand loyalty in banking (see also Salim and Bisschoff, 2014 in the reference list).

The functioning of the country’s banking system is the basis for ensuring its economic development and stability. The state of the banking system often causes financial crises; therefore, ensuring its stable work is one of the main tasks of monetary policy. Meanwhile, it is important to find approaches to a comprehensive assessment and forecasting of the stability of the banking system that would allow obtaining adequate results.
Based on a sample of data generated for the period from 2008 to the 1st quarter of 2020 with a quarterly breakdown, an integrated stability index of Ukraine’s banking system was estimated. The analysis was based on 23 variables that characterize certain aspects of the functioning of the Ukrainian banking system.
Using the principal component analysis, five factors have been identified that have the greatest impact on ensuring the stability of the banking system. They were used to form an integrated index based on the application of the Mamdani fuzzy logic method. The results obtained adequately reflected the state of stability of the banking system for the analyzed period, which coincided in time with the crisis phenomena occurring in the Ukrainian banking system. The obtained value of the integrated index characterizes the stability of Ukraine’s banking system at the average level, since it depends not only on the internal state of the system, but also on the influence of external factors, both national and international.

The formation and functioning of the country’s financial system depend on many factors, both endogenous and exogenous. The economic system of a country, as a higher-order system in relation to the financial one, underlies the development of the financial system model. The existing model of the financial system becomes significant in the context of its impact on economic processes in the country. The main purpose of the empirical analysis is to confirm the thesis about the signs of the bank-centricity of the Ukrainian financial market. The share of assets of financial intermediaries in GDP is determined, which indicates a significant decrease in the share of assets of all financial intermediaries in Ukraine. Analysis of the loan-to-deposit ratio in the banking system of Ukraine shows that the deposit base was far smaller than the size of loans throughout the analyzed period. Analysis of non-performing loans by economic sectors shows that the largest share of NPLs is formed in the corporate sector of the economy. Analysis of the structure of banks’ assets, taking into account their owners, shows that at the end of the analyzed period the share of state-owned banks’ assets increased significantly. Thus, having analyzed the functioning of the banking system of Ukraine, one can conclude about the bank-centric nature of Ukraine’s financial system.

The distribution of funds becomes the identity and function of banks. By performing this function well, the banks can get profit to survive. One of the considered factors affecting this channeling function is the issuance of government bonds to finance the state budget, which may be harmful to this bank channeling function. Therefore, to prove this situation, it is necessary to check a causal relationship between the government bond value and the bank intermediary function through this study, adding bank size and loans as a control variable.
This study utilizes the banks listed on the capital market of Indonesia as the population. Furthermore, the Slovin formula and a simple random sampling method are employed to determine the number of banks to be the samples and take them. Also, the regression model with pooled data and the t-statistic test are used to estimate its coefficients and examine the proposed hypotheses, respectively.
Overall, this study demonstrates that the government bond value positively affects the bank intermediary function. This indicates that the crowding-out does not exist. By this evidence, the government does not need to worry because this debt does not disturb the bank function to deliver the credit to society. Likewise, bank size and bad loans have a positive impact on this function. Thus, banks must be able to diversify risks among their assets and restructure bad loans when performing this function.

Bank capital is one of the protective and necessary parameters for better performance in any banking system. This may explain why the industry in Nigeria has been constantly recapitalized for sectorial enhancement. Given the various bank capital reforms the sectors have undergone and a number of interventions, the question arose: How adequate is capital? The study used descriptive statistics and Levene’s test for equality of variance, as well as an independent sample t-test to look at the (10) ten various performance parameters for both pre- and post- recapitalization periods. From the results of the analysis, most of the performance parameters did not improve after post-recapitalization. This answers the question posed by the study that capital is not adequate in the Nigerian banking sector. Therefore, there is a need to inject more bank capital into the Nigerian banking sector if this sector must have a greater impact and respond to the challenges of the Nigerian economy for sustainable growth and development.

The main purpose of this study is to investigate the relationship between financial stability and banking soundness in Jordan. For this purpose, the study mainly uses the FMOLS approach in addition to other analysis techniques and tools. The outcomes of the descriptive analysis show that the Jordanian financial system seems stable, and the indicators of banking soundness signal a steady and solid banking sector. The cointegration tests indicate that the considered variables have a long-term equilibrium relationship; the variables move together in the long term. The empirical results reveal that the majority of the banking soundness indicators have a positive impact on financial stability. This asserts that a sound banking sector plays a vital role in maintaining a stable financial system. However, the findings also indicate that a steady interest rate policy is one of the significant requirements for sustaining the stability of financial systems. Moreover, the response of financial stability with respect to economic growth changes is found to be positive and relatively high. On the fact of the importance of the topic under study, since financial stability is one of the major concerns of the authority bodies, the empirical findings can have very important policy implications for decision-makers.