• The Journal of Asian Finance, Economics and Business
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• 제8권3호
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• pp.517-525
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• 2021

The study investigates the behavior of Asian banks in response to the subprime mortgage crisis and examines how countries that have experimented with a mix of conventional and Islamic banking managed their balance sheet during that period. The study carries out an independent mean t-test comparing the difference of leverage of 464 conventional commercial Asian banks pre- and post-crisis from the largest twenty-five Asian economies based on GDP (2007). The analysis uses 10-year unbalanced panel data of conventional banks and employs the generalized least squares estimation using a dummy variable event window method to capture the response of Asian banks. The study finds evidence of a structural change in the capital structure of Asian commercial banks in response to the financial crisis. Findings suggest that conventional banks increased their capital position more in countries that have both Islamic and conventional banking than those countries without Islamic banking services. By having Islamic banking in their product portfolio, countries can exert market discipline on conventional banks. The study identifies a significant role of global macroeconomic shocks on banks liability structure decision-making. Evidence shows that this increase in capital positioning by banks was a permanent rather than a temporary response.

• East Asian Economic Review
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• 제21권1호
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• pp.29-58
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• 2017

The third pillar of the Basel II highlights the role of market discipline in easing the existing pressure on traditional monitoring measures like capital requirement and government supervision. This study test the effectiveness of market discipline in inducing prudential risk management practices among the East Asian banks over the 1995 to 2005 period. Market discipline is measured using information disclosure and interbank deposit holdings. We find that only the latter is an effective market discipline tool. However, the former becomes effective when market concentration is higher. We find that government owned, foreign owned and recapilatised banks are subject to market disciplining when disclosure in taken account but the opposite is true when interbank deposits is taken into account. Finally, we find that banks that disclose more risk related information hold more capital against their non-performing loan. The implications of the findings are discussed.

• The Journal of Asian Finance, Economics and Business
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• 제10권1호
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• pp.123-132
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• 2023

This study seeks to determine if the efficiency of bank human resources, as played by human capital, impacts the performance and diversification of banks. This study uses secondary data from data obtained from 385 commercial banks in 33 countries in Asia during the 2010-2020 period with the diversification analysis method. We use the Z-score to measure the amount of standard deviation that must be from earnings (ROAA). We examined it using the Tobit regression technique. According to the regression estimation results, human capital has a significant role in the performance and effective diversification of Asian banks. The human capital efficiency coefficient (HCE) is significantly negative with the cost-to-income ratio (CTIR) and significantly positive with Profitability, Financial Stability, and cost efficiency score. The level of efficiency of human resources has an effective role in increasing human capital which has an impact on bank diversification and performance. The development of human resources in a human capital framework plays an important role in the diversification and improvement of bank performance. Human capital has a significant role in the performance and effective diversification of Asian banks. The level of efficiency of human resources has an effective role in increasing human capital which has an impact on bank diversification and performance.

• The Journal of Asian Finance, Economics and Business
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• 제8권8호
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• pp.325-334
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• 2021

The study investigates the effectiveness of the macroprudential policy on credit growth in Vietnam. The authors use the logic of the transmission mechanism of macroprudential policy on credit growth. Research variables include economic growth, inflation, interest rate, and quarterly bank-level data from 28 commercial banks in Vietnam during 2011-2018. The results reveal that: (i) GDP growth had a positive impact on credit growth of small banks but had no impact on large banks, (ii) Domestic Systemically Important Banks (D-SIBs) and small banks respond differently to macroprudential measures of imposing different credit growth targets for different bank groups, (iii) Restrictions on foreign currency loans are found to be effective in curbing credit growth for the full sample and small banks, (iv) Inflation and economic cycle have significantly impacted credit growth at bank-level in Vietnam and (v) Interestingly, a significant positive relationship between interest rates and credit growth is found for the full sample and D-SIBs in Vietnam. The findings suggest that a stable macroeconomic environment should be good conditions for financial stability, and monetary authority should pay more attention to small banks' behaviors than D-SIBs behavior, toward such "administration" tools since small banks tend to prefer "breaking the rules" to make profits.

• The Journal of Asian Finance, Economics and Business
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• 제7권4호
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• pp.133-143
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• 2020

The paper investigates the factors affecting the profitability of commercial banks in Asian developing countries, including Vietnam, Malaysia and Thailand. We use panel data of four entities; ten banks in Vietnam, eight banks in Malaysia, nine banks in Thailand and all 27 commercial banks from the period 2012 to 2016. Particularly, Return on Asset, Return on Equity and TOBINQ are defined as profitability indicators, which are impacted by three main types of independent variables, namely bank-specifics, which include CAR, NPL, Cost to income, Liquidity ratio and Bank size, industry-specific variable-concentration HHI and macroeconomic-specific variables, which consist of GDP growth and Inflation. Using panel data regressions, the paper identifies several similarities and differences among empirical results on the models of four entities, each of three countries and the overall sample. The most outstanding similarity is that all entities record the significantly negative relationship between operational risk and banking profitability. Likewise, the significantly negative influence of bank size to profitability is found on models of Vietnam and Thailand and no significant effect on the model of Malaysia. Meanwhile, the most controversial result comes up with the negative relationship between CAR and profitability indicators as well as the positive association between credit risk and banking profitability.

• Asian Journal of Business Environment
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• 제5권2호
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• pp.5-13
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• 2015

Purpose - This paper aims to study the main selection criteria for Islamic banks in Indonesia, and to compare them with those for conventional banks. Research Design, Data, and Methodology - This study employs an exploratory approach and a natural experimental design with Factor Analysis and two independent sample tests as statistical analysis methods. A total of 363 questionnaires were distributed to three groups of bank customers-customers of Islamic and conventional banks individually, and those of both banks together (121 respondents in each group). Results - The research shows that service appears to be the most important factor in selecting Islamic banks, in addition to other emotional and rational factors. However, this service cannot be expressed as the Islamic banks' advantage compared to conventional banks, because the latter's customers also perceived service as the most important factor. The parametric mean of importance of service for both Islamic and conventional banks' customers is insignificantly different. Conclusion - Customers of both conventional and Islamic banks have a similar degree of importance for convenience, price, and service.

• The Journal of Asian Finance, Economics and Business
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• 제8권1호
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• pp.741-750
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• 2021

The research aims to analyze the level of efficiency by grouping banks during the period 2017 - 2018 into category 1 and category 2 banks and then dividing them as Regional Development Banks (BPD) and Non-BPD Conventional Commercial Banks (BUK) within each category. The research objects are banks within the categories BPD and BUK comprised 18 BPDs and 35 BUKs. The research methodology uses 3 stages, first, using Data Envelopment Analysis (DEA) we measure the level of bank efficiency; second, using the Tobit regression model we evaluate the effect of financial performance on DEA efficiency, and third, using the Mann-Whitney test we determine whether there is a difference in the efficiency of category 1 and 2 banks. The results showed that there was a decrease in the efficiency of category 1 and 2 banks but on average, the efficiency of category 1 banks is higher than category 2 banks. The estimation results of the Tobit regression model show that only the ROA variable affects the efficiency level of category 1 banks, while category 2 banks are influenced by NPL and ROA variables. In the Mann-Whitney test, it was proven that there were differences in efficiency between BUK and BPD in category 1 and 2 banks.

• The Journal of Asian Finance, Economics and Business
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• 제7권12호
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• pp.85-93
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• 2020

This study aimed to explore the impact of macroeconomic (Real GDP growth (GDPG), Inflation rate (INF)) and bank -specific variables (profitability (ROA), capital adequacy (CADEQ), non-performing loans (NPL), deposit growth (DEPG)) on the liquidity (lIQ) of 13 listed Jordanian commercial banks for the period 2011-2018. Panel data analysis, Pooled least square, fixed effects model and random effects model, Lagrange multiplier test, and Hausman test were used. The random effects model output shows that, macroeconomic variables have a significant impact on Jordanian commercial banks liquidity since inflation has a positive impact while GDPG has a negative impact on banks (LIQ). On the other hand among the bank-specific variables capital adequacy and deposit growth have a positive significant impact on banks (LIQ), while (NPL) and (SIZE) have a negative significant impact on Jordanian commercial banks liquidity. But ROA has a negative insignificant impact on (LIQ). The findings of the study suggest that commercial banks departments need to pay attention to the economic and internal variables of banks in order to maintain acceptable levels of liquidity.

• The Journal of Asian Finance, Economics and Business
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• 제8권4호
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• pp.239-247
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• 2021

Conventional banks are often considered more efficient than Islamic banks because they have been operating for decades, but Islamic banks have shown rapid development recently. Therefore, this study mainly aims to compare the level of efficiency of conventional banks and Islamic banks and which ones have the best level of efficiency. This study employs panel data using Stochastic Frontier Analysis (SFA) as the data analysis technique. The data used is annual data from 13 conventional banks and 13 Islamic banks in Indonesia during the 2014-2019 period. The result shows no significant difference in the efficiency of conventional banks and Islamic banks. This result is presumably influenced by the small size of the bank and the total number of banks used in the study. The data used in the study is limited to the period from 2014 to 2019. The variables utilized are also limited to the availability of financial report data which is publicly published. This study provides additional empirical evidence regarding conventional banks' and Islamic banks' efficiency in Indonesian banking by using the latest data. While theoretically, Islamic banks are expected to be more efficient than conventional banks, this study did not find any strong support for the case in Indonesia during the observation period.

• The Journal of Asian Finance, Economics and Business
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• 제7권11호
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• pp.669-677
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• 2020

The study aims to compare the effects of employing investment deposits (joint and specified investment deposits) in Islamic banks, and investment deposits (term deposits and deposits with notification) at conventional banks, on shareholders' profitability, represented by the earnings per share (EPS), in light of operational profits as a controlling variable. Data related to the study variables was collected from the annual financial reports published by the study sample banks, during the period (2009-2018). The study relies on multiple regression to test the hypotheses of the study. The high adjusted R² to explain the change in EPS for Islamic banks model as compared to conventional banks, is a result of the high difference between investment deposits (specified and joint) at Jordanian Islamic banks and investment deposits (term deposits and deposits with notification) at Jordanian conventional banks. The study found that it is important for the managements of Islamic banks to adopt a uniform method to combine speculative funds, in order to develop and improve shareholders' profitability. The study recommended Islamic banks to follow practical, methodological and transparent approaches to calculate the rates of Murabaha profit margins between shareholders and depositors, while also taking into consideration some of the issues which could be harmful for the competition between Islamic and conventional banks.