Enhancing financial performance and risk management in Kazakhstan’s banking sector
-
Author(s)Perizat BuzaubayevaLink to ORCID Index: https://orcid.org/0000-0003-3726-482X
,
Aigul OrazbayevaLink to ORCID Index: https://orcid.org/0000-0001-9633-1223
,
Gulzhan Alina
,
Zamzagul BaimagambetovaLink to ORCID Index: https://orcid.org/0000-0002-7509-0894
,
Gulzhihan KengesLink to ORCID Index: https://orcid.org/0000-0001-8529-8923
-
DOIhttp://dx.doi.org/10.21511/bbs.19(1).2024.14
-
Article InfoVolume 19 2024, Issue #1, pp. 157-169
- 428 Views
-
123 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study aims to assess the impact of regulatory compliance on the effectiveness of risk management and the financial performance of Kazakhstan’s banking sector. Applying Structural Equation Modeling (SEM), the study examines data from Kazakhstani banking institutions, revealing the direct and mediated impacts of regulatory compliance on financial performance, with risk management efficacy as a key intermediary. The analysis identifies a significant direct relationship between regulatory compliance and risk management efficacy (coefficient: 0.45, p-value: < 0.001), suggesting that compliance efforts substantially bolster risk management capabilities. The impact of risk management efficacy on financial performance is also notable (coefficient: 0.35, p-value: < 0.001), confirming its crucial role in financial success. Additionally, a direct, though less pronounced, influence of regulatory compliance on financial performance is observed (coefficient: 0.20, p-value: 0.004). The model’s explanatory power is reflected in an R-squared value of 0.248, indicating that it accounts for approximately 24.8% of the variability in financial performance. These findings underline the critical role of regulatory adherence and effective risk management in ensuring financial success, offering strategic insights for banking operations in Kazakhstan.
- Keywords
-
JEL Classification (Paper profile tab)G21, G28, C58
-
References59
-
Tables6
-
Figures0
-
- Table 1. Descriptive statistics for study variables
- Table 2. Variance Inflation Factor (VIF) to test for multicollinearity
- Table 3. SEM model parameters and estimates
- Table 4. Fit indices
- Table 5. Regression analysis results
- Table 6. Model fit
-
- Agyei, S. K., Owusu Junior, P., Bossman, A., Asafo-Adjei, E., Asiamah, O., & Adam, A. M. (2022). Spillovers and contagion between BRIC and G7 markets: New evidence from time-frequency analysis. PLoS One, 17(7), e0271088.
- Altman, E. I., Eom, Y. H., & Kim, D. W. (1995). Failure prediction: Evidence from Korea. Journal of International Financial Management and Accounting, 6(3), 230-249.
- Anguelov, D. (2021). Banking ‘development’: the geopolitical–economy of infrastructure financing. Area Development and Policy, 6(3), 271-295.
- Arora, R. U., & Zhang, Q. (2019). Banking in the shadows: A comparative study of China and India. Australian Economic History Review, 59(1), 103-131.
- Baker, A. (2015). Varieties of economic crisis, varieties of ideational change: how and why financial regulation and macroeconomic policy differ. New Political Economy, 20(3), 342-366.
- Baraja, H., & Chaniago, H. (2023). Investigation of Business Capital and Product Innovation in Culinary Business Development: Evidence from a Densely Populated City. Futurity Economics & Law, 3(3), 94-112.
- Batrancea, L. M., & Fetita, A. (2023). Empirical Research Study on the Determinants of Market Indicators for 41 Financial Institutions. Journal of Risk and Financial Management, 16(2), 78.
- Bertayeva, K. J., Onaltayev, D. O., & Zhagyparova, A. O. (2016). Assessing Role of Gold as World’s Reserve Currency in Terms of Uncertainty. Indian Journal of Science and Technology, 9(27), 94591-94591.
- Bezemer, D., Ryan-Collins, J., van Lerven, F., & Zhang, L. (2023). Credit policy and the ‘debt shift’in advanced economies. Socio-Economic Review, 21(1), 437-478.
- Bielialov, T. (2022). Risk management of startups of innovative products. Journal of Risk and Financial Management, 15(5), 202.
- Black, J., & Jacobzone, S. (2009). Tools for regulatory quality and financial sector regulation: a cross-country perspective (OECD Working Papers No. 16). Public Governance.
- Bushman, I. (2021). The development of the intellectual economy of the future: trends, challenges of the future. Futurity Economics & Law, 1(3), 33-42.
- Cevikcan, G., & Tas, O. (2022). Risk-Oriented Efficiency Assessment within the Level of Capitalization for Financial Institutions: Evidence from Turkish Securities Firms. International Journal of Financial Studies, 10(4), 110.
- Chi Cui, C., Lewis, B. R., & Park, W. (2003). Service quality measurement in the banking sector in South Korea. International Journal of Bank Marketing, 21(4), 191-201.
- Delgadillo, J., Moreea, O., Outhwaite-Luke, H., Dace, T., Nicholls, B., Ramseyer, G., & Dale, V. (2014). Confidence in the face of risk: the Risk Assessment and Management Self-Efficacy Study (RAMSES). The Psychiatric Bulletin, 38(2), 58-65.
- Delice, G., & Karadaş, H. A. (2022). Structure and stability of the Kazakhstan banking system. Karamanoğlu Mehmetbey Üniversitesi Sosyal Ve Ekonomik Araştırmalar Dergisi, 24(42), 387-414.
- Dharmayanti, N., Ismail, T., Hanifah, I. A., & Taqi, M. (2023). Exploring sustainability management control system and eco-innovation matter sustainable financial performance: The role of supply chain management and digital adaptability in Indonesian context. Journal of Open Innovation: Technology, Market, and Complexity, 9(3), 100119.
- Dutra, T. M., Teixeira, J. C., & Dias, J. C. (2023). Banking Regulation and Banks’ Risk-taking Behavior: The Role of Investors’ Protection. The Quarterly Review of Economics and Finance, 90, 124-148.
- Hanif, T., & Haque, F. (2022). Do family ownership and control influence bank performance and risk-taking? A cross-country analysis of emerging economies. International Journal of Governance and Financial Intermediation, 1(3), 167-192.
- Hwang, H., Sarstedt, M., Cheah, J. H., & Ringle, C. M. (2020). A concept analysis of methodological research on composite-based structural equation modeling: bridging PLSPM and GSCA. Behaviormetrika, 47, 219-241.
- Jones, E., & Knaack, P. (2019). Global financial regulation: Shortcomings and reform options. Global Policy, 10(2), 193-206.
- Juul Andersen, T. (2009). Effective risk management outcomes: exploring effects of innovation and capital structure. Journal of Strategy and Management, 2(4), 352-379.
- Kalyuzhnova, Y. (2011). The National Fund of the Republic of Kazakhstan (NFRK): From accumulation to stress-test to global future. Energy Policy, 39(10), 6650-6657.
- Karabayev, E. B., Sembiyeva, L. M., Zeinelgabdin, A. B., Beisenova, L. Z., & Pankou, D. A. (2021). The role of external public audit in ensuring the financial stability of the budgets of developing countries. Public Policy and Administration, 20(1), 108-117.
- Kazbekova, K., Adambekova, A., Baimukhanova, S., Kenges, G., & Bokhaev, D. (2020). Bank risk management in the conditions of financial system instability. Entrepreneurship and Sustainability Issues, 7(4), 3269-3285.
- Kerimkulova, D., Nazekova, M., Sovetbekova, A., Muravskyi, O., & Krasovska, G. (2021). Assessment of the impact of bank lending on business entities’ performance using structural equation modeling. Banks and Bank Systems, 16(2), 68-77.
- Kerymkulova, D. D., Zholamanova, M. T., & Larionova, I. V. (2022). Trends in ensuring financial stability of the banking sector of Kazakhstan. Economic Series of the Bulletin of the Eurasian National University, 2, 198-208.
- Khan, H. Z., Bose, S., & Johns, R. (2020). Regulatory influences on CSR practices within banks in an emerging economy: do banks merely comply? Critical Perspectives on Accounting, 71, 102096.
- Khan, R. U., Saienko, V., & Tolchieva, H. (2021). Dependence of the company’s reputation and the quality of customer relations. Economic Studies Journal, 2, 159-176.
- Kumar, A. (2021). Analysis of the Principle of Subsidiarity as a Principle of EU Law: Future Perspectives. Futurity Economics & Law, 1(4), 18-27.
- Laycock, M. (2014). Risk management at the top: a guide to risk and its governance in financial institutions. John Wiley & Sons.
- Li, L., & McMurray, A. (2022). Internal Factors: Organizational Culture and Governance. In Corporate Fraud Across the Globe (pp. 233-254). Singapore: Springer Nature Singapore.
- Lin, L. (2019). Regulating fintech: The case of Singapore (NUS Law Working Paper No. 2019/028). National University of Singapore.
- Mateev, M., Sahyouni, A., & Tariq, M. U. (2023). Bank regulation, ownership and risk-taking behavior in the MENA region: policy implications for banks in emerging economies. Review of Managerial Science, 17(1), 287-338.
- Mints, A. (2019). Analysis of the stability factors of Ukrainian banks during the 2014–2017 systemic crisis using the Kohonen self-organizing neural networks. Banks and Bank Systems, 14(3), 86.
- Momot, T., & Кoliada, I. (2017). Compliance control for ensuring the financial security of banking institutions: state, problems, prospects. Innovative Technologies and Scientific Solutions for Industries, 2(2), 124-131.
- Nguyen, T. P. T., & Nghiem, S. H. (2020). The effects of competition on efficiency: The Vietnamese banking industry experience. The Singapore Economic Review, 65(06), 1507-1536.
- Nier, E. W. (2009). Financial stability frameworks and the role of central banks: Lessons from the crisis (IMF Working Papers No. WP/09/70).
- Nurgaliyeva, A., Ismailova, D., & Sarybayeva, I. (2022). Regarding the prospects for the introduction of the budgeting system of international financial organizations of the future. Futurity Economics & Law, 2(3), 38-47.
- Oyewo, B. (2022). Enterprise risk management and sustainability of banks performance. Journal of Accounting in Emerging Economies, 12(2), 318-344.
- Padoa-Schioppa, T. (2003). Central banks and financial stability: exploring the land in between. The Transformation of the European Financial System, 25, 269-310.
- Pande, D., & Taeihagh, A. (2023). Navigating the governance challenges of disruptive technologies: insights from regulation of autonomous systems in Singapore. Journal of Economic Policy Reform, 26(3), 298-319.
- Rahat, B., & Nguyen, P. (2023). Does ESG performance impact credit portfolios? Evidence from lending to mineral resource firms in emerging markets. Resources Policy, 85, 104052.
- Riadinska, V. O., Samsin, I. L., Kovalko, N. M., Andrushchenko, H. S., & Soldatenko, O. V. (2022). Credit Activity Legal Regulation of Commercial Banks. Review of Economics and Finance, 20(1), 385-392.
- Safiullah, M., & Paramati, S. R. (2022). The impact of FinTech firms on bank financial stability. Electronic Commerce Research, 1-23.
- Sagatbekovich, K. K., & Nurmakhanova, M. (2023). Bank industry business modeling in economies of transition. SN Business & Economics, 3(11), 190.
- Salina, A. P., Zhang, X., & Hassan, O. A. (2021). An assessment of the financial soundness of the Kazakh banks. Asian Journal of Accounting Research, 6(1), 23-37.
- Salnikova, O., Rodchenko, L., Bielialov, T., Skrypnyk, M., Ivanchenkova, L., & Slobodianiuk, O. (2019). Matrix approach to risk management in the national security system, highlighting the criteria for choosing the optimal strategy for decision making. International Journal of Engineering and Advanced Technology, 8(5), 2407-2411.
- Shah, S. S., & Amin, Y. (2023). Monetary and Fiscal Policy Ineffectiveness in Pakistan: A Modern Monetary Theory (MMT) Approach.
- Shah, S. S., & Shah, S. A. H. (2023a). Trust as a determinant of Social Welfare in the Digital Economy. SSRN.
- Shah, S. S., & Shah, T. (2023b). Responsible consumption choices and individual values: an algebraic interactive approach. Mind & Society, 22, 1-32.
- Sheedy, E., & Canestrari-Soh, D. S. (2023). Does executive accountability enhance risk management and risk culture? Accounting & Finance, 63(4), 4093-4124.
- Silva, J. R., Silva, A. F. D., & Chan, B. L. (2019). Enterprise risk management and firm value: Evidence from Brazil. Emerging Markets Finance and Trade, 55(3), 687-703.
- Starr, S. F., Engvall, J., & Cornell, S. E. (2016). Kazakhstan 2041: The next twenty-five years. Central Asia-Caucasus Institute, Paul H. Nitze School of Advanced International Studies.
- Sysoyeva, L., Bielova, I., Ryabushka, L., & Demikhov, O. (2021). Determinants of management of central bank to provide the economic growth: An application of structural equation modeling. Studies of Applied Economics, 39(5).
- Tillema, S., Trapp, R., & van Veen-Dirks, P. (2022). Business Partnering in Risk Management: A Resilience Perspective on Management Accountants’ Responses to a Role Change. Contemporary Accounting Research, 39(3), 2058-2089.
- Toniolo, G., & White, E. N. (2015). The evolution of the financial stability mandate: From its origins to the present day (Working Paper No. 20844). National Bureau of Economic Research.
- Wali, K., van Paridon, K., & Darwish, B. K. (2023). Strengthening banking sector governance: challenges and solutions. Future Business Journal, 9(1), 95.
- Zouari-Hadiji, R. (2023). Financial innovation characteristics and banking performance: The mediating effect of risk management. International Journal of Finance & Economics, 28(2), 1214-1227.
-
The risk management practices in the manufacturing SMEs in Cape Town
Problems and Perspectives in Management Volume 15, 2017 Issue #2 (cont. 2) pp. 386-403 Views: 3364 Downloads: 531 TO CITE АНОТАЦІЯRisk management is one of the prominent issues which are pivotal to the success of a business and may adversely affect profitability if not properly practised. Therefore, the main objective of this paper was to determine risk management practices in manufacturing SMEs in Cape Town. The research conducted was quantitative in nature and constituted the collection of data from 74 SME leaders, all of whom had to adhere to a list of strict delineation criteria. All data collected were thoroughly analyzed through means of descriptive statistics. From the findings made, it is clear that SMEs in the manufacturing sector do in fact understand risk management initiatives applicable to ‘manage’ their respective businesses towards sustainability, but not to a large extent. It was found that respondents are unaware of the elements which make risk management effective, which ultimately aids to the development of problems for SMEs. All employees, managers and owners must coordinate their efforts together to identify and manage organizational risks within their ambit to obtain total risk coverage, as well as provide assurance that these risks are effectively managed from a coordinated approach. Further studies may be carried out to identify measures that can be taken to improve the effectiveness of risk management practices in SMEs.
-
Industrial development in Saudi Arabia: disparity in growth and development
Anis Ali
doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
Problems and Perspectives in Management Volume 18, 2020 Issue #2 pp. 23-35 Views: 2956 Downloads: 1004 TO CITE АНОТАЦІЯIndustrial development in any nation plays a vital role in the strengthening of the economy and employs human resources as per specifications and directly towards the mainstream of the nation. In Saudi Arabia, there was rapid industrialization for four decades. Some manufacturing industries performed well, while some internal and external business environment factors influenced the others’ performance. The study focuses on historical development, as well as recent trends of well-performing and poor-performing industries of Saudi Arabia. Small manufacturing industries in Saudi Arabia are underdeveloped and need more attention to attain sustainable and progressive growth rate in the form of the number of establishments to enjoy the potential. Manufacture of tobacco, computer, electronics and optics, pharmaceuticals and transport equipment are the deprived and underdeveloped industries of the manufacturing sector. There should be some easy credit schemes for the development of deprived or underdeveloped manufacturing industries. To attain sustainable growth and development of the manufacturing sector, a positive attitude of the government towards underdeveloped manufacturing industries, favorable labor laws, and entrepreneurial awareness, technical and financial assistance are necessary. The growth and development of the manufacturing sector of Saudi Arabia will be helpful in the attainment of goals of Vision 2030.
-
Why banks should consider ESG risk factors in bank lending?
Sarwar Uddin Ahmed ,
Samiul Parvez Ahmed ,
Ikramul Hasan
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
Banks and Bank Systems Volume 13, 2018 Issue #3 pp. 71-80 Views: 2794 Downloads: 1124 TO CITE АНОТАЦІЯWhy banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.
