From innovation to stability: Evaluating the ripple influence of digital payment systems and capital adequacy ratio on a bank’s Z-score
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Author(s)Jamileh Ali MustafaLink to ORCID Index: https://orcid.org/0009-0002-0974-3460
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DOIhttp://dx.doi.org/10.21511/bbs.19(3).2024.07
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Article InfoVolume 19 2024, Issue #3, pp. 67-79
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This study investigated the influence of digital payment systems on banks’ stability by exploring their effect on the Z-score of the Jordanian banking sector during the period from 2004 until 2022. It specifically focused on liquidity risks generated from e-payment transactions and how sufficient capital adequacy ratios enhance banking sector stability over both short-term and long-term periods by standing against sudden volatilities yielded from large amounts of transactions executed through digital payment systems. To achieve this objective, the study utilizes time series dual regression analyses of vector autoregression and vector error correction models on E-views 12 to cover the time variation influences of digital payment on the banking sector Z-score. The regression results indicate varied effects between the benefits and risks of digital payment systems on a bank’s Z-score that influence the immediate sector’s stability, indicating that while digital payment systems can initially hold liquidity risks, leading to short-term instability; the strategic implementation of robust capital adequacy ratio stands as a protective buffer by fostering long-term banking sector resilience. The results also suggest future predictions and insights for financial sector legislators and regulators emphasizing the need for monitoring strategies that stimulate continuous innovations in the digital payment infrastructure while constantly ensuring the stability and resilience of the banking sector. Thus, prudent liquidity management and the reinforcement of capital buffers are encouraged to pilot the dual challenges and opportunities that appeared at the stages of the digital payment process, ultimately guiding the sector toward continuous growth and sustainability.
Acknowledgment
The author is grateful to the Middle East University, Amman, Jordan for the financial support granted to cover the publication fee of this research.
- Keywords
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JEL Classification (Paper profile tab)G21, G23, E42
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References63
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Tables7
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Figures2
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- Figure 1. Evolution of profitability indicators in the banking sector (2000–2022)
- Figure 2. ADF test result
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- Table 1. Research metrics
- Table 2. Summary statistics
- Table 3. Correlation matrix
- Table 4. ADF test results
- Table 5. Engle-Granger two-step method results
- Table 6. VAR regression analysis results
- Table 7. VECM regression analysis results
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Waste management policy and employment: the case of France
Environmental Economics Volume 9, 2018 Issue #1 pp. 38-46 Views: 2280 Downloads: 284 TO CITE АНОТАЦІЯThis paper examines whether a causal relationship exists between waste tonnage and employment when the waste collection is entrusted to a private operator in France (i.e. waste management policy by delegation of service). The empirical investigation is based on weekly data for four waste streams for the period from January 2015 to June 2017. Using nonstationary time series techniques including cointegration, VECM (Vector Error Correction Model) and long-run causality test of Toda and Yamamoto (1995) within a bivariate framework, the results demonstrate potential causal negative relationship between waste tonnage and employment. For three waste streams (i.e. household waste, outdoor garbage waste and miscellaneous waste), the results suggest that waste management practices that aim at entrusting the collection and treatment to a private operator (i.e. waste management by delegation of service) are not economically beneficial to society, because this policy does not favor environmental jobs creation. The paper calls for the adoption of other waste management practices to preserve employment in the waste collection sector.
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The determinants of liquidity risk of commercial banks in Vietnam
Tu T. T. Tran ,
Yen T. Nguyen ,
Thuy T.H. Nguyen ,
Long Tran
doi: http://dx.doi.org/10.21511/bbs.14(1).2019.09
Banks and Bank Systems Volume 14, 2019 Issue #1 pp. 94-110 Views: 1900 Downloads: 1178 TO CITE АНОТАЦІЯThis research identifies factors that explain the liquidity of commercial banks in the Vietnam banking system from 2010 to 2015. Using the OLS regression method for analysis, it was found that:
- the interbank market helps commercial banks improve their liquidity;
- the larger the loan size, the higher the liquidity risk;
- good credit risk management has a positive impact on liquidity risk management; and
- long-term interest rate is negatively related to the liquidity of commercial banks.
The research also makes recommendations on liquidity risk management policies to banks and policy-makers from the Government and the State Bank of Vietnam.
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The effectiveness of exchange rate channel in Azerbaijan: an empirical analysis
Shahriyar Mukhtarov , Serhat Yüksel 
,
Elvsevar Ibadov ,
Hamid Hamidov
doi: http://dx.doi.org/10.21511/bbs.14(1).2019.10
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