Current Issue : October-December Volume : 2022 Issue Number : 4 Articles : 5 Articles
Banking is an institution that maintains financial system stability, but on the other hand, banking is a business institution that is inherently risky in getting a return on its business. This paper analyzes the impact of degree of competitiveness, bank size, and revenue concentration on bank stability on the Indonesian stock exchange during the period 2011-2020. The Lerner Index is used as an inverse proxy for degree of competitiveness, the natural logarithm is used as a proxy for bank size, and the Herfindahl Hirschman Index is used as a proxy for revenue concentration, while the Z-Index and NPL ratio are used as proxies for bank stability. The results show that degree of competitiveness has a negative relationship with stability. The power squared of the Lerner Index is also used to capture the possible non-linear relationship between degree of competitiveness and stability and shows positive results indicating the relationship between degree of competitiveness, and stability is non-linear. Bank size has a negative effect on stability. Revenue concentration shows no relationship with stability....
There has been a dramatic shift in financial intermediation in the last 10 - 15 years from traditional banks to shadow banks (non-depository institutions that rely on originate-to-distribute lending model). We link this rise to an emerging literature that shows that certain and uncertain utility functions are different with a disproportionate preference for certainty. We show that such a preference plays a role in diverting lending away from the traditional banking model to the shadow banking model. Furthermore, a low interest-rate environment emerges as the key contributing factor in the dramatic rise of shadow banking....
The objective of this paper is to study the relationship between financial development and economic growth conditional on the institutional environment in the Southern African Development Community (SADC) countries over the period 2000-2020. To achieve this objective, we used the Aggregate Group Mean (AGM) estimator. Our results indicate that financial development is not homogeneous across the subregion, so it contributes significantly to economic growth in SADC countries when the institutional environment is of good quality. This empirical evidence explains the differences in economic growth across SADC countries and recommends good quality institutions for finance to positively impact growth in the subregion....
Due to increasing digitalization, the German banking sector is undergoing a massive period of change. This threatening challenge is massively influenced by demographic change, supervision and regulation, the low-interest phase and technological progress. In the last twenty years, mergers of regional banks, staff reduction measures and the closure of their traditional bank branches have been the order of the day. Banks in Germany are therefore forced to deal with the introduction of omni-channel concepts. The aim of the research is to make a statement on the extent to which the two distribution channels “bank advisor” and “traditional bank branch” will still play an active role for regional banks in Germany in the future. The results of standardized interviews with bank experts (N = 43) in Germany form the core of this study. This paper summarizes the findings of the quantitative research descriptively. Furthermore, the article critically examines the academic discussion on the digital transformation of banks in Germany, especially savings and cooperative banks. This article is structured as follows: Introduction, Literature Review, Methodology, Results and Discussion, Conclusions, Limits and Directions for further Research. The results of this article can be useful for researchers and bank practitioners to identify and utilize the strategic change potential under omni-channel aspects due to the digital transformation....
Nowadays it is increasingly important to enhance the efficiency and robustness of the allocation in a financial instruments’ portfolio, especially, in the occurrence of an increased market volatility. In this paper, a market volatility-robust (i.e. counter cyclical) investment portfolio formulation procedure under the modified Markowitz’s framework with the use of sampling methods and genetic algorithms is established. In essence, the developed model relies on many input samples of rates of return that are further implemented in evolution simulations based on the survival-of-the-fittest principle in order to overcome the risk of obtaining sub optimal investment proportions. It is demonstrated that a similar portfolio composition approach, in comparison to Newton’s optimisation, produces more diverse allocations and allows for a more efficient mitigation of increased market volatility reverberations. For those reasons, the presented research contributes to existing allocation techniques and directly addresses the task of minimizing the adverse implications of market risk, what further allows for a rational investment decision-making and, importantly, holds capacity for further development....
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