30 results on '"macroeconomic"'
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2. Changing dividend payout behavior and predicting dividend policy in emerging markets: Evidence from India
- Author
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Amit Kumar and Pankaj Sinha
- Subjects
data mining ,finance ,forecasting ,India ,lasso ,macroeconomic ,Finance ,HG1-9999 - Abstract
Dividends have become increasingly important for capital market participants to achieve financial goals in the rapidly changing Indian economy. This study aims to simplify the evolving Indian dividend puzzle by analyzing the dividend trends, examining the evolving nature of firm and macroeconomic determinants of dividends, and developing a dividend policy prediction model. Dividend trends of 3,162 non-financial listed Indian firms from 2006–2022 are studied to gain insights about the Indian dividend puzzle. Regularization and logit models are used to explore the nature of impact of important dividend determinants. Data-mining methods are employed to build a robust model for dividend policy prediction. Trend analysis reveals a decline in the quantum of dividends and proportion of dividend-paying firms with approximately 90% of the dividend-payers belonging to the manufacturing and service sector. Further findings suggest that size, age, maturity, profitability, past dividends, earnings, and bank monitoring of firms had a favorable impact on the likelihood of dividend payments. Macroeconomic indicators such as GDP growth rate, repo rate, percentage change in equity issues, listings, gross fixed assets formation also had a positive impact. The annual percentage change in debt issues and new project announcements at the macro level with investment prospects at firm level negatively impacted dividends. Dividend prediction model based on the random forest technique achieved the highest prediction accuracy of 90.77% and 77.31% under binomial and multi-class situations. These findings are expected to help corporate executives, portfolio managers and investors proactively design optimal dividend policies and formulate their investment strategies.
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- 2024
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3. Public debt and macroeconomic stability among sub-Saharan African countries: a system GMM test approach
- Author
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Jerry Ogutu Sumba, Rogers Ochenge, Paul Mugambi, and Collins Muimi Musafiri
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Public debt ,economic growth ,inflation rate ,macroeconomic ,domestic borrowing ,foreign borrowing ,Finance ,HG1-9999 ,Economic theory. Demography ,HB1-3840 - Abstract
AbstractThis study examined the effect of public debt on macroeconomic stability among 45 sub-Saharan African (SSA) countries for the period 2005–2022 using the two-step system Generalized Method of Moments (GMM). The study disaggregated public debt into domestic and foreign borrowing and determined the effect of each on inflation and economic growth. In agreement with recent studies, we found compelling evidence of negative effect of both domestic and foreign borrowing on economic growth and a positive effect on inflation among SSA countries. The empirical results reveal that a unit increase in domestic borrowing reduces economic growth by 0.06 percent and raises inflation by about 0.14 percent, while the same increase in foreign borrowing reduces economic growth by 0.01 percent and increases inflation by 0.05 percent holding other factors constant. These results imply that increase in public debt causes macroeconomic instability, and that domestic borrowing has a relatively larger impact on macroeconomic variables compared to foreign borrowing. The policy implication of the current study is that SSA countries should avoid excessive borrowing by operating a fiscal deficit within individual country threshold limits to contain growth in public debt. The SSA countries should also ensure borrowed funds are channeled into projects that bring revenue and other investment opportunities to amortize the debt stock.
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- 2024
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4. Factors influencing commercial bank profitability in Bangladesh: a panel data approach
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Taslima Akther, Mushfiqur Rahman, and Md. Mufidur Rahman
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Bank ,Macroeconomic ,ROA ,Panel data ,Bangladesh ,Business ,HF5001-6182 ,Finance ,HG1-9999 - Abstract
Abstract This research is one of the few studies that examine the association of bank-specific determinants and macroeconomic factors with profitability in the banking industry of a developing country. This paper evaluates how bank-specific factors and macroeconomic determinants affect the profitability of commercial banks in Bangladesh. This study demonstrates that bank-specific factors and macroeconomic determinants are crucial catalysts in ensuring financial institutions' continuity and stable performance. The paper uses return on assets (ROA) as a proxy of bank profitability. The study also employs a group of explanatory variables, such as bank-specific determinants, which include capital adequacy (CAD), bank branches, asset management, deposit (DEP), and assets quality. The paper also considers gross domestic product, inflation rate (IF), exchange rate (EXR), and stock traded as macroeconomic variables. Pooled, fixed, and random effects models and unit root tests are employed on panel data for 24 commercial banks listed in Dhaka stock exchange from 2014 to 2020. The study results indicate that all bank-specific factors except CAD and DEP affect ROA statistically significantly. The paper also shows that among the macroeconomic determinants, IF has a significant and positive effect on ROA, while EXRTE significantly negatively impacts bank profitability. The findings of this paper are limited to the banking industry in Bangladesh, and it will provide valuable insights for future studies. Graphical abstract
- Published
- 2023
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5. THE IMPACT EXAMINATION OF BANK-SPECIFIC AND MACROECONOMIC ON PROFITABILITY
- Author
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Mutiara Auzi, Ruhadi, and Marwansyah
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bank-specific ,macroeconomic ,fdr ,profitability ,Finance ,HG1-9999 - Abstract
This research aims to examine the impact of bank-specific and macroeconomic factors on profitability (ROA and ROE) in BPRS in Indonesia and the role of FDR as an intervening variable. This research uses analytical techniques Partial Least Square Structural Equation Model (PLS-SEM). The population was obtained from BPRS data recorded by OJK during 2017-2021. The total of sample are 154 BPRS through purposive sampling. The results showed that bank-specific factors through the DER variable did not affect profitability, BOPO negatively affected profitability, and NOM affected profitability. While macroeconomic factors through the GDP-Prov and Unemp variables do not affect profitability. Furthermore, the FDR affects ROA and does not affect ROE. then bank-specific factors through the DER variable have a positive FDR, BOPO negatively affect FDR, and NOM does not affects FDR. Meanwhile, macroeconomic factors through GDP-Prov did not affect FDR and Unemp negatively affected FDR. FDR does not mediate the affect of DER, BOPO, NOM, GDP-Prov and Unemp on profitability. The conclution is in Partially, not all variables affect profitability and there is no mediating role of the FDR variable between bank-specific and macroeconomic factors on profitability.
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- 2023
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6. Determinants of non-performing loans in conventional and Islamic banks: Emerging market evidence
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Md. Feroz Khan, Md. Sumon Ali, Md. Naiem Hossain, and Mithun Bairagi
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NPL ,Macroeconomic ,Bank-specific factors ,GMM ,Finance ,HG1-9999 - Abstract
This study examines the determinants of non-performing loans (NPLs) among macroeconomic and bank-specific factors for the Islamic and conventional banking sectors in Bangladesh. We implement a dynamic panel data model with a two-stage system GMM for the period 2010-2021. Among the bank-specific factors, this study finds that return on assets, return on equity, bank size, and inefficiency help to reduce NPLs. In contrast, gross loan growth, leverage, and capital adequacy ratios contribute to increasing NPLs. Among macroeconomic determinants, inflation, and GDP growth have a significant negative impact on NPLs. Moreover, unemployment and exchange rates are also found to be significant determinants of NPLs. At the bank level, growth in gross loans reduces NPLs in Islamic banks, while the opposite is true for conventional banks. Our findings have significant implications for depositors and regulators in making appropriate decisions.
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- 2023
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7. Macroeconomic risks and capital structure adjustment speed: The Chinese evidence.
- Author
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He, Wei and Kyaw, NyoNyo A
- Subjects
CAPITAL structure ,INTEREST rate risk ,BANKING industry ,RISK premiums ,SPEED ,MARKET capitalization - Abstract
Using both integrated and two‐stage dynamic partial adjustment capital structure models, we find evidence that macroeconomic conditions affect Chinese firms' capital structure adjustment speeds towards target leverage. Chinese firms revert towards target leverages faster in high economic growth states than in low economic growth states as measured by bond and stock market capitalization relative to GDP, banking sector development, real interest rate and risk premiums. Overall, firms that are financially unconstrained, of large size, and those with small deviation of actual leverage from target leverage rebalance faster towards the target leverage than the counterparts. The same findings occur during high economic growth states, while variations in adjustment speeds exist among firms with different financial constraints and distance to target leverage during low economic growth states. The firms' leverage adjustment speed depends on the adjustment cost associated with added debt or debt replaced with internal funds or equity. [ABSTRACT FROM AUTHOR]
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- 2023
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8. Deposit mobilization and its determinants: evidence from commercial banks in Ethiopia
- Author
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Nesru Kasim Banke and Mekonnen Kumlachew Yitayaw
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Bank-specific ,Commercial bank ,Deposit mobilization ,Determinants ,Ethiopia ,Macroeconomic ,Business ,HF5001-6182 ,Finance ,HG1-9999 - Abstract
Abstract Deposit mobilization is the most important service and an integral part of banking operations. In Ethiopia, mobilizing savings through intense deposit collection has been regarded as the major task of banking. However, managing deposits is impossible without understanding and controlling the factors that influence them. Thus, this study examined the bank-specific and macroeconomic determinants of deposit mobilization in Ethiopian banking sectors using balanced panel data of 14 commercial banks from 2011 to 2020. Secondary data sources from sampled commercial bank audited financial statements were used to achieve the stated objective. A quantitative approach and explanatory design were employed. The model result demonstrated that loan to deposit ratio, capital adequacy, economic growth, inflation, population growth, and political stability have a negative and statistically significant effect on commercial bank deposit mobilization. On the other hand, the bank's profitability has a positive and statistically significant impact on commercial bank deposit growth. The study suggests that Ethiopian commercial banks need to improve deposit mobilization by paying more attention to internal factors controlled by management, while keeping in mind the influence of the overall economic and political dynamic. This study provides useful insights for bank managers, owners, analysts, policymakers, depositors, and other stakeholders on the deposit growth of commercial banks and its determinants. Meanwhile, academic researchers and students may use the findings and suggestions to conduct a study in the banking area. Unlike the previous studies, the present study examined the effect of population growth and political stability on deposit mobilization and contributes to the limited stock of existing knowledge in the area.
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- 2022
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9. Macroeconomic policy and profit rate of a company: A dynamic panel estimation and comparative analysis from Indonesia
- Author
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Hadi Ismanto, Silviana Pebruary, and Dewi Nur Maulidiyah
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government policy ,infrastructure ,investment ,macroeconomic ,profit rate ,value of firms ,Finance ,HG1-9999 - Abstract
Macroeconomic policy (fiscal and monetary) dynamics are interesting to analyze, especially considering corporate performance. This paper aims to determine the effect of macroeconomic policy on the company’s profit rate. Effectiveness of tax revenue (ETAX), realization of tax revenue (RTAX), Bank of Indonesian rate (BIRT), investment growth (INVG), realization of investments (RINV), infrastructure fund allocation rate (INFR), and realization of infrastructure funds (RINF) are macroeconomic policy variables. This study uses a sample of 256 companies listed on the Indonesia Stock Exchange (IDX) in 2005–2019. This paper employs such methods as GMM, using Wald-test and Sargan’s test. GMM estimator result shows that the instrument of infrastructure fund realization policy (RINF), investment growth (INVG), and investment realization (RINV) affect the company’s profit rate (PROF). Therefore, companies need to pay attention to the government development plans, investment growth, and investment realization, which can improve company performance. The result, government’s development for the 2005–2009 and 2015–2019 periods shows a significant difference in companies’ ability to generate profits. AcknowledgmentsWe would like to thank the Department of Management, Faculty of Economics and Business, Universitas Islam Nahdlatul Ulama Jepara (Unisnu), and the Institute of Research and Community Services (LPPM) Unisnu Jepara Indonesia, which has supported this study.
- Published
- 2022
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10. Asymmetric volatility and macroeconomic factors on Indonesian government bond returns
- Author
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Debbie Megasari, Hermanto Siregar, and Ferry Syarifuddin
- Subjects
Asymmetric volatility ,Bond return ,EGARCH ,Indonesian government bond ,Macroeconomic ,Finance ,HG1-9999 - Abstract
Macroeconomic are important variables influencing volatility in the bond market. Some of the challenges faced such as default risk, liquidity risk, interest rate risk, inflation risk, and exchange rate risk. This study is aimed at examining asymmetric volatility using the EGARCH model and at estimating macroeconomic variables which influence the return of Indonesian Government bonds. The asymmetric volatility can be measured by determining the best order value of the EGARCH model. Based on the findings of the study, EGARCH (2.1) is the best model for assessing volatility in short-term SUN returns, EGARCH (3.1) for medium-term SUN and EGARCH (2.3) for the long term. The asymmetric volatility pertains in the returns of short, medium and long-term government bonds. In addition, the negative information has a greater impact than positive information in the short, medium and long term. The deposit rate and return of the Composite Stock Price Index have a significant positive effect on short, medium and long term bond returns. The effective federal funds rate or FED interest rate has a significant positive effect on the return of short and long-term SUN bonds while in the medium term it has no effect. Exchange rates have a significant negative effect on short, medium and long term bond returns.
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- 2019
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11. About Macroeconomic Purpose of the Strategic Development of Effective Balanced Macroeconomic Systems
- Author
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S. Vladimirov
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efficiency ,macroeconomic ,quality ,a policy ,taxes ,Social Sciences ,Finance ,HG1-9999 ,Law ,Economic theory. Demography ,HB1-3840 - Abstract
The purpose of this article is a theoretical substantiation of the possibility of DOS reaches the maximum possible public efficiencies of government spending, investments and taxes in perfect condition coordination bath open economic system. The proposed model can always bring in the ideal case («zero-loss” public effectively scope of public expenditure and investment) to the maximum possible rate of economic growth, that allows you to substantiate the main directions of the relevant macroeconomic (fiscal, tax and budget) policy.
- Published
- 2019
12. Determinants of Bank Efficiency during Financial Restructuring Period: Indonesian Case
- Author
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Felisitas Defung
- Subjects
Bank Size ,Bootstrap ,Data Envelopment Analysis ,Macroeconomic ,Finance ,HG1-9999 - Abstract
The banking sector in Indonesia had been through many challenges aftermath the 1997 Asian financial crisis. The restructuring programs aimed to strengthen and improve the performance of the banking system. Empirical researches around the world, however, present various result with regard to the effect of the policy on bank efficiency. We investigated the determinants of the relative efficiency of the Indonesian banking industry. Using panel data of 101 Indonesian commercial banks, this study employs a non-parametric frontier method, Data Envelopment Analysis (DEA), to measure the efficiency score. In the second stage, the Tobit regression model used to analyze the factors that potentially determine the variation of the efficiency score. The finding indicated the bank was technically inefficient particularly during financial restructuring. The improvement was evident toward the end of the period. Bank size, macroeconomic factors, and three bank groups were strongly associated with bank efficiency level. There was no strong evidence that merger, which typically the form of restructuring policy output, positively associated with bank efficiency.
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- 2018
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13. Macroeconomic determinants of mutual funds performance in Ghana
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Adjei Gyamfi Gyimah, Bismark Addai, and George Kwasi Asamoah
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macroeconomic ,mutual fund ,financial performance ,autoregressive distributed lag (ardl) ,pooled mean group (pmg) ,Finance ,HG1-9999 ,Economic theory. Demography ,HB1-3840 - Abstract
This study examines the impact of key macroeconomic variables on mutual funds’ financial performance in Ghana. We employ the Pooled Mean Group (PMG) estimation of the Autoregressive Distributed Lag (ARDL) model to analyze the macroeconomic determinants of mutual funds in Ghana for the period 2007–2016. The study documents homogenous long-run significant positive impacts of exchange rate, inflation, T-Bill, GDP growth on mutual funds’ financial performance, and a homogeneous long-run negative significant impact of monetary policy rate on the financial performance of mutual funds. The study also establishes heterogeneous short-run respective significant negative and positive impacts of T-Bill and monetary policy on mutual fund’s financial performance. Unlike many previous studies that used stock data to estimate mutual funds’ performance, accounting data is used in this study. Second, we incorporate monetary policy rate in our study variables since most of the prior studies ignored that variable. Finally, the outcome of our study contributes to existing knowledge on the short-run and long-run effects of macroeconomic variables on the financial performance of mutual funds from the perspectives of a developing country.
- Published
- 2021
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14. Firm-specific, industry-specific and macroeconomic determinants of commercial banks’ lending in Ethiopia: Panel data approach
- Author
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Mekonnen Yitayaw
- Subjects
bank lending ,bank-specific ,commercial bank ,determinants ,ethiopia ,industry-specific ,macroeconomic ,panel data approach ,Finance ,HG1-9999 ,Economic theory. Demography ,HB1-3840 - Abstract
Lending is the primary role in commercial banks’ daily banking activities and is described as the heart of a commercial banks’ banking business. On the other hand, it is also one of the greatest sources of risk to the safety and soundness of financial institutions. There is little empirical evidence on bank lending behavior in emerging markets like Ethiopia. However, the existing studies have a difference in the identification of which factors have a strong impact and on the direction of those impacts if any on Ethiopian commercial banks’ lending. Thus, this study investigated the bank-specific, industry-specific and macroeconomic determinants of commercial banks’ lending in Ethiopia using balanced panel data of 15 commercial banks from 2011 to 2019. To realize the stated objective quantitative approach and explanatory design were employed using secondary data sources from the audited financial statement of sampled commercial banks. The model result of the study indicated that bank-specific factors such as; volumes of deposit, capital adequacy, and bank size have a positive and statistically significant effect on bank lending. Industry-specific factors such as; cash reserve requirement, bank concentration, and average lending rate have a negative and statistically significant effect on bank lending. Likewise, one of the macro-economic variables gross domestic products has a negative and statistically significant effect on bank lending. The study suggested that commercial banks in Ethiopia have to manage their lending by giving more attention to the internal factors, which the management has control over in line with the banking industry rules and regulations recalling the influence of the general economic dynamic. I believe that this study is of interest to bankers, analysts, regulators, policymakers, and investors since it provides useful insight on the determinants of commercial banks’ lending and an understanding of how bank intermediation roles may respond to internal as well as external rules, regulations, and general economic dynamics, and it will contribute to the scarce empirical evidence.
- Published
- 2021
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15. Ownership, bank size, capitalization and bank performance: Evidence from India
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Neeraj Gupta and Jitendra Mahakud
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bank-specific ,bank size ,macroeconomic ,nim ,private sector banks ,public sector banks ,fixed effect ,gmm ,Finance ,HG1-9999 ,Economic theory. Demography ,HB1-3840 - Abstract
This study focuses on assessing the role of various bank-specific, industry-specific and macroeconomic determinants in Indian commercial banks performance. Performance of the Indian banks has been measured by Return on Assets (ROA), Return on Equity (ROE) and Net Interest Margin (NIM) and Pre-provision profit ratio. The study analyses impact of various bank-specific factors like bank size, capital ratio, risk, cost to income ratio, funding cost, revenue diversification, labour productivity and bank age on bank performance. It also tries to assess the relationship between various bank-specific and industry-specific variables like bank concentration, inflation rate and GDP growth rate with bank performance. Fixed effects estimation model and Generalized Method of Moments (GMM) have been used on a panel data of 19 years for 64 commercial banks of India. The findings reveal that private sector banks are more profitable than the public sector banks. Additionally, the results of the study show that bank size, non-performing loan ratio and revenue diversification are the major determinants of the commercial banks performance in India. Furthermore, the results reveal that during the crisis period the impact of bank size, bank age, labour productivity and revenue diversification on the performance of the Indian banks is robust. The higher non-government stake leads to the enhanced performance of the commercial banks in India. The higher capital adequacy leads to the increase in the performance of the banks. The larger banks are less profitable. The results provide better insights about the determinants of Indian banks profitability.
- Published
- 2020
- Full Text
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16. Perbandingan Pengelolaan Risiko Kredit Perbankan Syariah dan Perbankan Konvensional
- Author
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Muhammad Iqbal
- Subjects
Credit Risk ,Banking Performance ,Macroeconomic ,Autoregressive ,Distributed Lag ,Finance ,HG1-9999 - Abstract
This study aims to identify factors that can be used as indicators in reducing the incidence of credit risk in sharia banking and conventional banking. The variables that become observations include banking performance in each group and macroeconomic performance. The banking performance variables include credit risk itself as measured by problem financing, growth in financing, growth in third party funds, and banking size. While macroeconomic variables include national income,interest rates, and inflation. Auto regressive and distributed lag methods are used to identify which variables can be used as indicators. The results showed that all identified factors can be an indicator in the process of credit risk control both in sharia banking and conventional banking. Only credit growth in conventional banking alone can not be used as an indicator of credit risk control.
- Published
- 2017
17. An empirical analysis of macroeconomic and bank-specific factors affecting liquidity of Indian banks
- Author
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Anamika Singh and Anil Kumar Sharma
- Subjects
Banks liquidity ,Bank specific ,Macroeconomic ,Fixed and random effect ,Business ,HF5001-6182 ,Finance ,HG1-9999 - Abstract
This paper investigates bank-specific and macroeconomic factors that determine the liquidity of Indian banks. To explore the association, we perform OLS, fixed effect and random effect estimates on a data set of 59 banks from 2000 to 2013. Studied bank-specific factors include bank size, profitability, cost of funding, capital adequacy and deposits. GDP, inflation and unemployment are the macroeconomic factors considered. We also perform liquidity trend analysis of Indian banks based on ownership. Findings reveal that bank ownership affects liquidity of banks. Based on panel data analysis, we suggest that bank-specific (except cost of funding) and macroeconomic (except unemployment) factors significantly affect bank liquidity. These include bank size, deposits, profitability, capital adequacy, GDP and inflation. Further, bank size and GDP were found to have a negative effect on bank liquidity. On the other hand, deposits, profitability, capital adequacy and inflation showed a positive effect on bank liquidity. Cost of funding and unemployment showed an insignificant effect on bank liquidity. Our paper highlights new facts for enhanced understanding of liquidity in emerging economies like India.
- Published
- 2016
- Full Text
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18. Banking crises and financial instability: Empirical and historical lessons
- Author
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Ola Honningdal Grytten
- Subjects
Marketing ,monetary expansion ,Organizational Behavior and Human Resource Management ,financial crises ,economic history ,HG1501-3550 ,Management of Technology and Innovation ,financial instability hypothesis ,Law ,macroeconomic ,Finance ,Banking - Abstract
The paper examines the importance of financial instability for the development of four Norwegian banking crises. The crises are the Post First World War Crisis during the early 1920s, the mid 1920s Monetary Crisis, the Great Depression in the 1930s, and the Scandinavian Banking Crisis of 1987–1993. The paper first offers a description of the financial instability hypothesis applied by Minsky and Kindleberger, and in a recent dynamic financial crisis model. Financial instability is defined as a lack of financial markets and institutions that provide capital and liquidity at a sustainable level under stress. Financial instability basically evolves during times of overheating, overspending and extended credit granting. This is most common during significant booms. The process has devastating effects after markets have turned into a state of negative development.The paper tests the validity of the financial instability hypothesis using a quantitative structural time series model. It reveals upheaval of 10 financial and macroeconomic indicators prior to all the four crises, resulting in a state of economic overheating and asset bubble creation. This is basically explained by huge growth in debts. The overheating caused the following banking crises. Finally, the paper discusses the four crises qualitatively. Again, the conclusion is that a significant increase in money supply and debt caused overheating, asset bubbles, and thereafter, financial and banking crises, which in turn spread to other markets and industries and caused huge slumps in the real economy.
- Published
- 2021
19. Bank-Specific and Macroeconomic Determinants of Profitability: A Revisit of Pakistani Banking Sector under Dynamic Panel Data Approach
- Author
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Habib-ur Rahman, Muhammad Waqas Yousaf, and Nageena Tabassum
- Subjects
bank profitability ,capital adequacy ,return on assets ,return on equity ,macroeconomic ,dynamic panel ,Finance ,HG1-9999 - Abstract
This study aims to examine the effect of the bank-specific and macroeconomic determinants of profitability for the banking sector of Pakistan. To incorporate the issues of endogeneity, unobserved heterogeneity, and profit persistence, we apply a generalised method of moments (GMM) technique under the Arellano–Bond framework to a panel of Pakistani banks that covers the period 2003–2017. The results of a dynamic panel data approach reveal that capital adequacy accelerates the profitability of the banking sector in Pakistan. Capital adequacy helps the financial system to absorb any negative shock by reducing the number of bank failures and losses. Conversely, our empirical investigation reveals that the liquidity ratio, business mix indicators, interest rates, and industrial production deteriorates the bank profitability. Liquidity risks enhance the probability of default risks and transmit into the unpaid loans and hence the lower return. Our empirical evidence further reveals that Pakistani banks are not getting any benefit of the economies of scale in terms of financial performance.
- Published
- 2020
- Full Text
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20. Bank-specific and macro-economic determinants of profitability of Indian commercial banks: A panel data approach
- Author
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Eissa A. Al-Homaidi, Mosab I. Tabash, Najib H. S. Farhan, and Faozi A. Almaqtari
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bank-specific ,macroeconomic ,nim ,profitability ,panel data ,gmm ,india ,Finance ,HG1-9999 ,Economic theory. Demography ,HB1-3840 - Abstract
This study aims at finding out the determinants of Indian commercial banks profitability. Profitability of Indian banks is measured by three important variables namely, Return on Assets (ROA), Return on Equity (ROE) and Net Interest Margin (NIM). The study also uses a set of independent variables such as bank-specific factors which include bank size, assets quality, capital adequacy, liquidity, operating efficiency, deposits, leverage, assets management and the number of branches. Pooled, fixed and random effects models and Generalized Method of Moments (GMM) are built on panel data of 10 years for more than 60 commercial banks of India. The study also takes into account Gross Domestic Product (GDP), inflation rate, interest rate and exchange rate as macroeconomic determinants. The results of the study show that all bank-specific factors, except the number of branches, exhibited significant impacts on profitability as measured by NIM. The findings also show that all macroeconomic determinants used in the study are found to be significant with negative impacts on Indian commercial banks profitability. Furthermore, the results show that bank size, number of branches, assets management ratio and leverage ratio are highly significant variables of profitability in the context of Indian commercial banks as measured by ROA. The results give a better insight into the Indian banking sector and the determinants of its profitability
- Published
- 2018
- Full Text
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21. Which is more important in terms of Profitability of Islamic banks: Bank Specific factors or Macroeconomic factors? An Empirical Study on Malaysian Islamic Banks
- Author
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Mohammad Ashraful Ferdous Chowdhury
- Subjects
macroeconomic ,determinants ,islamic banks ,roa ,efficiency ratios ,equity finance ,credit risk ,liquidity risk ,inflation ,gross savings on national income ,Islam ,BP1-253 ,Finance ,HG1-9999 - Abstract
Studies of Islamic banks’ profitability are an important tool towards improving performance, evaluating bank operations and determining management plan to help in increasing the chance for the banks to survive in competitive markets. The present study seeks to fill a demanding gap in the literature by providing new empirical evidence on the factors that influence the profitability of the Islamic banking sector in Malaysia. The research thus conducts a comparative analysis of the determinants of the profitability of Islamic banks operating in Malaysia. The Pooled Ordinary Least Square method is employed using annual data from the period 2007 to 2013 on 11 Islamic banks in Malaysia. In order to evaluate the financial performance of these Islamic banks the profitability are measured using the Return on Assets (ROA) indicator. The empirical findings of study reveals that endogenous factors such as the efficiency ratios (overhead costs) is negatively and statistically significant to the profitability of the Islamic bank’s performance, while equity financing is positive and statistically significant to the profitability of Islamic banks. The Credit risks and Liquidity risks factors are insignificant on the performance of the Islamic banks. On the other hand, exogenous factors such as inflation have a positive and statistically significant impact on the return on assets whereas savings on gross national income has a statistically significant and negative impact on the performance of Islamic banks.
- Published
- 2015
- Full Text
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22. An Empirical Analysis on the Dhaka Stock Exchange (DSE) Financial Crisis
- Author
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Sarod Khandaker
- Subjects
dse ,financial crisis ,stock price ,co-movement behavior ,macroeconomic ,Business ,HF5001-6182 ,Finance ,HG1-9999 - Abstract
This paper examined the Dhaka Stock Exchange (DSE) financial crisis in 1997 and also analyzed stock price co-movement behavior of the DSE from 1996 to 2004.The study found evidence that the DSE stocks were more volatile in the South-Asian region during the sample period, and its financial crisis was influenced by several macroeconomic factors such as high corruption rate, poor information disclosure policy, and abolishment of the lock in system. The study also captured stock price co-movement behaviors of the South-Asian stock markets and compared findings with the DSE. There is no evidence of a statistically significant correlation of coefficient between these stock markets during the sample period suggesting that the DSE financial crisis was not influenced by the regional factors.
- Published
- 2012
23. Financial Crises and Stock Market Indices: Markov Switching Approach
- Author
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David Chen and Biqing Huang
- Subjects
financial crises ,stock market indices ,macroeconomic ,ols ,gdp ,klci ,djia ,Business ,HF5001-6182 ,Finance ,HG1-9999 - Abstract
This paper investigates the effects of macroeconomic variables on stock indices of three nations from a financial crisis viewpoint. Both the OLS and the Markov regime switching approaches are applied on real GDP, the interest rate, aggregate money supply, exchange rate, and unemployment rate for Thailand, Malaysia, and the U.S. from 1997 to 2010. The Markov approach yields improved regression results, more than the deterministic OLS dummy variable approach. Findings from the Markov approach suggest that the Malaysian KLCI index responded most significantly to all crisis-related macro-dummies except GDP. The Thailand SET index correlated significantly only with interest rate and money supply. In the U.S. the interest rate crisis-related dummy exerts no statistically significant effect on the DJIA index.
- Published
- 2012
24. Economic Effects of Conflict: Political Science Data in Empirical Growth Models
- Author
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Daria Sevastianova and Solomon Polachek
- Subjects
economic effects ,political science data ,macroeconomic ,conflict ,mids ,Business ,HF5001-6182 ,Finance ,HG1-9999 - Abstract
Empirical macroeconomic literature is ambiguous on the effect of intra- and interstate conflict on the economy. This paper investigates the impact of international and civil wars as well as low-intensity conflict on the income level, using the World Development Indicators (2008) data published by the World Bank, as well as the Correlates of War data on civil and international wars and militarized interstate disputes (MIDs). The sample consists of 90 countries for the period of 1970 to 2005. This study also checks the sensitivity of results to the use of least squares vs. fixed effects estimation. The findings are further examined for country groups based on the criteria of wealth, polity, and region. Civil wars are found to be most detrimental to poor nations’ economies. War casualties provide a stronger measure of the negative effects of conflict on GDP per capita than conflict incidence. The effect of full-fledged war is to decrease income per capita by as much as 2 percent, while low-intensity conflict may raise the income level by .26 percent.
- Published
- 2010
25. Macroeconomic determinants of mutual funds performance in Ghana
- Author
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Bismark Addai, Adjei Gyamfi Gyimah, and George Kwasi Asamoah
- Subjects
Distributed lag ,Economics and Econometrics ,autoregressive distributed lag (ardl) ,pooled mean group (pmg) ,HB1-3840 ,G2 ,financial performance ,G1 ,0502 economics and business ,ddc:330 ,Econometrics ,Economics ,Economic theory. Demography ,050207 economics ,Mutual fund ,Estimation ,050208 finance ,Financial performance ,business.industry ,mutual fund ,05 social sciences ,Macroeconomic ,Pooled Mean Group (PMG) ,macroeconomic ,Pooled variance ,Autoregressive model ,Autoregressive Distributed Lag (ARDL) ,HG1-9999 ,Key (cryptography) ,E44 ,business ,Finance - Abstract
This study examines the impact of key macroeconomic variables on mutual funds' financial performance in Ghana. We employ the Pooled Mean Group (PMG) estimation of the Autoregressive Distributed Lag (ARDL) model to analyze the macroeconomic determinants of mutual funds in Ghana for the period 2007-2016. The study documents homogenous long-run significant positive impacts of exchange rate, inflation, T-Bill, GDP growth on mutual funds' financial performance, and a homogeneous long-run negative significant impact of monetary policy rate on the financial performance of mutual funds. The study also establishes heterogeneous short-run respective significant negative and positive impacts of T-Bill and monetary policy on mutual fund's financial performance. Unlike many previous studies that used stock data to estimate mutual funds' performance, accounting data is used in this study. Second, we incorporate monetary policy rate in our study variables since most of the prior studies ignored that variable. Finally, the outcome of our study contributes to existing knowledge on the short-run and long-run effects of macroeconomic variables on the financial performance of mutual funds from the perspectives of a developing country.
- Published
- 2021
26. Ownership, bank size, capitalization and bank performance: Evidence from India
- Author
-
Jitendra Mahakud and Neeraj Gupta
- Subjects
Economics and Econometrics ,050208 finance ,05 social sciences ,private sector banks ,bank size ,Financial system ,Fixed effects model ,nim ,NIM ,macroeconomic ,bank-specific ,HB1-3840 ,0502 economics and business ,HG1-9999 ,ddc:330 ,public sector banks ,Economic theory. Demography ,Business ,GMM ,050207 economics ,gmm ,Capitalization ,fixed effect ,Finance - Abstract
This study focuses on assessing the role of various bank-specific, industry-specific and macroeconomic determinants in Indian commercial banks performance. Performance of the Indian banks has been measured by Return on Assets (ROA), Return on Equity (ROE) and Net Interest Margin (NIM) and Pre-provision profit ratio. The study analyses impact of various bank-specific factors like bank size, capital ratio, risk, cost to income ratio, funding cost, revenue diversification, labour productivity and bank age on bank performance. It also tries to assess the relationship between various bank-specific and industry-specific variables like bank concentration, inflation rate and GDP growth rate with bank performance. Fixed effects estimation model and Generalized Method of Moments (GMM) have been used on a panel data of 19 years for 64 commercial banks of India. The findings reveal that private sector banks are more profitable than the public sector banks. Additionally, the results of the study show that bank size, non-performing loan ratio and revenue diversification are the major determinants of the commercial banks performance in India. Furthermore, the results reveal that during the crisis period the impact of bank size, bank age, labour productivity and revenue diversification on the performance of the Indian banks is robust. The higher non-government stake leads to the enhanced performance of the commercial banks in India. The higher capital adequacy leads to the increase in the performance of the banks. The larger banks are less profitable. The results provide better insights about the determinants of Indian banks profitability.
- Published
- 2020
27. Bank-Specific and Macroeconomic Determinants of Profitability: A Revisit of Pakistani Banking Sector under Dynamic Panel Data Approach
- Author
-
Muhammad Waqas Yousaf, Nageena Tabassum, and Habib Ur Rahman
- Subjects
L02 ,banking sector ,Industrial production ,media_common.quotation_subject ,Monetary economics ,dynamic panel ,Return on equity ,lcsh:Finance ,lcsh:HG1-9999 ,0502 economics and business ,ddc:330 ,Economics ,Pakistan ,050207 economics ,media_common ,050208 finance ,05 social sciences ,L2 ,return on assets ,macroeconomic ,Interest rate ,Market liquidity ,capital adequacy ,Capital adequacy ratio ,Probability of default ,return on equity ,JEL Classification: C23 ,bank profitability ,G21 ,Profitability index ,Finance ,C23 ,Panel data - Abstract
This study aims to examine the effect of the bank-specific and macroeconomic determinants of profitability for the banking sector of Pakistan. To incorporate the issues of endogeneity, unobserved heterogeneity, and profit persistence, we apply a generalised method of moments (GMM) technique under the Arellano&ndash, Bond framework to a panel of Pakistani banks that covers the period 2003&ndash, 2017. The results of a dynamic panel data approach reveal that capital adequacy accelerates the profitability of the banking sector in Pakistan. Capital adequacy helps the financial system to absorb any negative shock by reducing the number of bank failures and losses. Conversely, our empirical investigation reveals that the liquidity ratio, business mix indicators, interest rates, and industrial production deteriorates the bank profitability. Liquidity risks enhance the probability of default risks and transmit into the unpaid loans and hence the lower return. Our empirical evidence further reveals that Pakistani banks are not getting any benefit of the economies of scale in terms of financial performance.
- Published
- 2020
28. Analisis Kondisi Makroekonomi Terhadap Tingkat Pembiayaan Bermasalah Bank Umum Syariah di Indonesia (Periode Januari 2009-Desember 2015 dengan model ECM)
- Author
-
Yudhistira Ardana and Rita Irviani
- Subjects
Inflation ,Finance ,lcsh:HB71-74 ,business.industry ,media_common.quotation_subject ,Financial risk ,lcsh:Economics as a science ,Financial system ,Islam ,Macroeconomic ,lcsh:HD72-88 ,lcsh:Economic growth, development, planning ,Interest rate ,Error correction model ,Non-Performing Financing ,Exchange rate ,Islamic Bank ,Economics ,Aggregate data ,business ,Islamic banking ,media_common - Abstract
The role of banks as financial institutions have never escaped from the credit or financing problems. For Islamic banks, the large amount of funding given to the growing risk of consequences to be borne by the banks concerned. On the other hand, the macroeconomic shocks also have an impact on the financial risk borne by Islamic banking. The purpose of this research is to empirically analyze the effect of macroeconomic conditions (interest rate, GDP, exchange rate, and inflation) on the Non-Performing Ratio (NPF) of Islamic banking in Indonesia in the period January 2009 to December 2015. The data analysis used in this study is Error Correction Model (ECM) of the aggregate data shariah banking in Indonesia.
- Published
- 2017
29. With good reputation size does not matter: issue frequency and the determinants of debt maturity
- Author
-
Nikolas Rokkanen
- Subjects
Economics and Econometrics ,corporate debt maturity ,credit risk ,debt seniority ,subordination ,macroeconomic ,reputation ,Debt-to-GDP ratio ,Recourse debt ,Economics ,Bond credit rating ,Financial system ,Debt ratio ,Internal debt ,Debt levels and flows ,External debt ,Finance ,Debt service ratio - Abstract
This article examines empirically the effect firm reputation has on the determinants of debt maturity. Utilizing data from European primary bond market between 1999 and 2005, I find that reputation is a determinant of the maturity of newly issued debt, where firms of high or low reputation issue short-term debt and firms of mediocre reputation issue long-term debt. Thus, reputation appears to mimic a nonmonotonic relationship between credit quality and maturity. The annualized coupon payments are shown to be a significant factor in determining the debt maturity and reveal a monotonously increasing relationship between credit quality and debt maturity once controlled for. Finally, I show that issuers lacking a credit rating have an implied credit quality positioned between Investment Grade (IG) and Speculative Grade (SG) debt.
- Published
- 2010
30. Bank-specific and macro-economic determinants of profitability of Indian commercial banks: A panel data approach
- Author
-
Faozi A. Almaqtari, Mosab I. Tabash, Eissa A. Al-Homaidi, and Najib H.S. Farhan
- Subjects
Economics and Econometrics ,India ,Financial system ,nim ,panel data ,lcsh:Finance ,lcsh:HG1-9999 ,0502 economics and business ,ddc:330 ,profitability ,GMM ,050207 economics ,Macro ,050208 finance ,Return on assets ,lcsh:Economic theory. Demography ,05 social sciences ,india ,macroeconomic ,bank-specific ,lcsh:HB1-3840 ,Profitability index ,Business ,gmm ,Finance ,Panel data - Abstract
This study aims at finding out the determinants of Indian commercial banks profitability. Profitability of Indian banks is measured by three important variables namely, Return on Assets (ROA), Return on Equity (ROE) and Net Interest Margin (NIM). The study also uses a set of independent variables such as bank-specific factors which include bank size, assets quality, capital adequacy, liquidity, operating efficiency, deposits, leverage, assets management and the number of branches. Pooled, fixed and random effects models and Generalized Method of Moments (GMM) are built on panel data of 10 years for more than 60 commercial banks of India. The study also takes into account Gross Domestic Product (GDP), inflation rate, interest rate and exchange rate as macroeconomic determinants. The results of the study show that all bank-specific factors, except the number of branches, exhibited significant impacts on profitability as measured by NIM. The findings also show that all macroeconomic determinants used in the study are found to be significant with negative impacts on Indian commercial banks profitability. Furthermore, the results show that bank size, number of branches, assets management ratio and leverage ratio are highly significant variables of profitability in the context of Indian commercial banks as measured by ROA. The results give a better insight into the Indian banking sector and the determinants of its profitability
- Published
- 2018
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