scholarly journals Revenue diversification and quality of loan portfolio

2020 ◽  
Vol 42 ◽  
pp. 5-19
Author(s):  
Peter Nderitu Githaiga ◽  
◽  
◽  
Keyword(s):  
Banking Sector ◽  
Revenue Diversification ◽  
Loan Portfolio ◽  
Financial Reports ◽  
Nonperforming Loans ◽  
Value Contribution ◽  
Effect Regression ◽  
Financial Soundness ◽  
The Impact

Aim/purpose – This paper aims at examining the impact of revenue diversification on the quality of loan portfolio. The interest has been stimulated by the growing appetite for nontraditional activities among banks due to the declining interest income and rising nonperforming loans. Design/methodology/approach – The study considers a sample of 67 countries and quarterly banking sector financial reports over the period 2016Q1-2018Q4.The data are extracted from the International Monetary Fund Financial Soundness Indicators (FSI) database and are analysed through fixed effect regression as supported by the Hausman test.Findings – The study finds that revenue diversification impairs the quality of the loan portfolio. The findings are attributable to loss of focus, lack of expertise in managing non-lending activities, and possible agency problems. Moreover, the study controls for several banking sector-specific factors that affect the quality of loan portfolio. The re-sults show that credit growth and banking sector performance improve the quality of loan portfolio quality. However, the banking sector capitalisation and cost efficiency lower the loan portfolio rate, but the banking sector size has no significant effect.Research implications/limitations – Based on the findings, the study recommends that practitioners and regulators focus on innovative loans appraisal and monitoring practices instead of diversifying into non-interest generating activities.Originality/value/contribution – Unlike previous studies that focused on the relation-ship between income diversification and bank performance, this study contributes to the literature by examining the relationship between revenue diversification and quality of loan portfolio, thus bringing in a new insight into the bank revenue diversification debate.

scholarly journals THE IMPORTANCE OF THE RETAIL CREDIT PORTFOLIO FOR ECONOMIC GROWTH OF MACEDONIA

2016 ◽  
Vol 11 (1) ◽  
Author(s):  
Evica Delova Jolevska ◽  
Andovski Ilija
Keyword(s):  
Economic Growth ◽  
Banking Sector ◽  
Special Focus ◽  
Loan Portfolio ◽  
Credit Growth ◽  
Retail Credit ◽  
Credit Portfolio ◽  
The Impact ◽  
By Products

The aim of this paper is to evaluate the influence of trends in retail loan portfolio on the consumption and economic growth of Macedonia. The consumption of population is one of the components of GDP, and one of its drivers is the retail credit activity. On macroeconomic level, there is wide consensus among researchers that credit activity and quality of portfolio is driven by GDP movements, unemployment ratio and indebtedness of population. Also, vice verse the activities in retail segment influence on consumption and indirectly on GDP. So these two linkages enhance between and can result in negative spiral. Negative movements in GDP influence on the quality of portfolio and higher NPL ratio. And higher NPL ratio results in further decrease in credit activity and has additional negative impact on GDP. Because of that is important to determine the causes of credit activity in this segment. The retail portfolio in the last 4 years in Macedonian banking sector is growing continuously, opposite of other Balkan countries. That is why is important to analyze the past growth of retail portfolio and to determine possible weaknesses because of its future impact on GDP. One of the most important drivers that determine the future credit growth is the quality of retail credit portfolio in the moment. Another important aspect for the portfolio trend will be the interest rate environment. There is clear empirical evidence that low interest environment triggers greater credit activity and vice versa. Another important aspect of the credit qrowth, is the maturity of the retail credit portfolio as a way to decrease the monthly installments and to accumulate greater risk on longer term. Special focus of this paper will be the trend in retail loan portfolio after 2008, when the banking system of Macedonia felt the impact from financial crisis. The activities that were taken by the banking sector then can be some guidelines for future crisis. The retail credit growth will be analyzed by products in order better to understand bank strategies and reasons that contributed for such a growth. Also, the analyze of NPL ratio by product will give answer whether the quality of portfolio by products was one of the key drivers for credit activity.

scholarly journals Impact of Liquidity on Rural and Community Banks Profitability in The Eastern Region of Ghana

2021 ◽  
Vol 1 (3) ◽  
pp. 129-148
Author(s):  
Osumanu Alhassan ◽  
Oscar Opoku Agyemang Opoku
Keyword(s):  
Secondary Data ◽  
Easy Access ◽  
Eastern Region ◽  
Community Banks ◽  
Loan Portfolio ◽  
Explanatory Variables ◽  
Financial Climate ◽  
Information And Communication ◽  
The Impact

Despite the major role played by rural and community banks in economic development and in the financial climate, their performance over a decade now have not been up to expectations. They continue to experience huge challenges due to innovations in technology as well as globalization which create opportunities for growth. The study was to examine the impact of liquidity on rural and community banks in the Eastern Region of Ghana selected from eleven (11) banks for the period of ten years from 2007 – 2016. The study used panel data and secondary data to collate the ratios from all the selected rural and community banks. A regression model was developed with Return on Asset as the dependent variable accompanied with other six explanatory variables. It was revealed that quality of loan portfolio ratio; capital ratio and loan to total assets had significant and positive relationship with profitability. It was also revealed that shocks in all the liquidity variables had one or other implications on profitability. Finally, based on finding seven, which states that cost to income has negative and significant effect on profitability, the study recommended that management must adopt information and communication technology to reduce cost and easy access to banks’ product in the form of Automated Teller Machine.  

scholarly journals Impact of Information and Communication Technology on Service Quality of Banking Sector: A Comparative Study of Private and Public Sector Banks in Gwalior and Chambal Region

2017 ◽  
Vol 7 (1) ◽  
pp. 20
Author(s):  
Anil Vashisht
Keyword(s):  
Service Quality ◽  
Banking Sector ◽  
Banking Services ◽  
Public Sector Banks ◽  
Effective Implementation ◽  
Private And Public ◽  
Information And Communication ◽  
The Impact ◽  
Adoption Pattern

<div><p><em>This paper studies the impact of IT in the service quality of banking sector. The purpose of the intended research involves determining bank adoption pattern of electronic media, factors constituting drivers and inhibitors for bank adoption, dimensionality of e-banking services quality as affected by IT, and customer adoption of such services. The study has also highlighted the determinants of service quality are directly influenced by IT and to explore what are the enabling and retarding factors for effective implementation and upsurge of IT system in banks.</em></p></div>

scholarly journals The Impact of Inventory Valuation Methods on Corporate Financial Reports.

2016 ◽  
Vol 12 (3) ◽  
pp. 125-134
Author(s):  
A. Bruce Caster ◽  
Wanda K. Causseaux
Keyword(s):  
Learning Outcomes ◽  
Business Students ◽  
Balance Sheet ◽  
Financial Statement ◽  
Financial Indicators ◽  
Hypothetical Case ◽  
Financial Reports ◽  
Income Statement ◽  
The Impact

Business students are generally introduced to LIFO and FIFO in their first accounting course. However, that introduction generally focuses exclusively on computing ending inventory and cost of goods sold.  Students are rarely challenged to compute or analyze the impacts of LIFO and FIFO on the income statement, balance sheet, or cash flow statement.  This paper presents a hypothetical case designed to provide a framework within which students can compute, analyze, and discuss the financial statement impacts and economic impacts of choosing one or the other of these accounting methods.  The questions in this case also address the effects of this choice on financial indicators like liquidity ratios, the impacts of each method on quality of earnings, and the potential impacts of IFRS convergence on companies that are currently using LIFO.One important feature of this case is its adaptability to support a variety of learning outcomes in different courses.  This flexibility results from making the questions posed in the case as independent of each other as possible.  That independence allows a professor to select only the questions that support the learning outcomes for that professor’s specific course.  The teaching notes discuss in detail possible course applications and uses of this case.

scholarly journals Do mergers and acquisitions affect information asymmetry in the banking sector?

2020 ◽  
Vol 46 (12) ◽  
pp. 1521-1547
Author(s):  
John S. Howe ◽  
Thibaut G. Morillon
Keyword(s):  
Mergers And Acquisitions ◽  
Information Asymmetry ◽  
Design Methodology ◽  
Banking Sector ◽  
Policy Makers ◽  
Content Type ◽  
Deal Completion ◽  
Asymmetry Measures ◽  
The Impact

PurposeThis paper aims to investigate the consequences of mergers and acquisitions (M&As) on information asymmetry in the banking sector. Specifically, the authors look at whether specific firm or deal characteristic influence information asymmetry levels between insiders and investors, as well as the impact of recent regulation such as the Dodd–Frank Act.Design/methodology/approachThe authors decompose the M&A process into three periods (pre-announcement, negotiation and post-completion period) and document changes in the information asymmetry levels between insiders and investors through the M&A process. The authors capture changes in information asymmetry using six different spread-based information asymmetry measures.FindingsThe authors find evidence that information asymmetry increases following M&A announcement and decreases following deal completion. These findings are more pronounced for acquisitions involving a private target, all-cash deals and for mergers, as opposed to acquisition of assets. We find that overall, successful mergers improve the quality of the information environment, while failed deals degrade it. Additionally, the enactment of Dodd–Frank reduced the magnitude of the changes in information asymmetry during the M&A process. The results are important to regulators, policy makers and investors.Originality/valueTo authors’ knowledge, this is the first study that looks at the effect of bank M&As on information asymmetry as well as the effect of regulations on information asymmetry.

scholarly journals The Impact of the Audit Committees' Properties on the Quality of the Information in the Banking Financial Reports: A Survey on Saudi Commercial Banks

2017 ◽  
Vol 10 (11) ◽  
pp. 175
Author(s):  
Mwafag Rabab’ah ◽  
Omar Al-Sir ◽  
Ali A. Alzoubi
Keyword(s):  
Commercial Banks ◽  
Audit Committee ◽  
Audit Committees ◽  
Financial Reports ◽  
Audit Team ◽  
The Impact

This study aims to identify the impact of the audit committees' properties on the quality of the information of the banking financial reports in the Saudi commercial banks by identifying the effect of identifying tasks and duties, independence, accounting and banking experience and efficiency of the audit committee on achieving the quality of the Saudi banking and financial reports. 110 questionnaires were distributed on the research sample and 105 questionnaires were received and analyzed through ANOVA. Results indicate that the availability of the audit committees' properties affect increasing the quality of the financial reports in the Saudi banking at the level of properties as a whole where the (P) probable value was (0.000 ), which is less than 0.05. It represents the functions and duties of the audit committee, the committee's independence in banks, the availability of the accounting and banking experience for the members of the audit committee and the efficiency of the audit committees at banks. The study recommends more emphasis on the diversity of the experiences of the members of the audit team and thus; the committee can performs its functions in a more efficient and effective way.

scholarly journals THE OVERHEATING OF FIVE EU NEW MEMBER STATES AND CYCLICALITY OF SYSTEMIC RISK IN THE BANKING SECTOR

2009 ◽  
Vol 10 (3) ◽  
pp. 219-232 ◽  
Author(s):  
Mejra Festić ◽  
Sebastijan Repina ◽  
Alenka Kavkler
Keyword(s):  
Economic Activity ◽  
Banking Sector ◽  
Foreign Currency ◽  
Baltic States ◽  
Economic Activities ◽  
Loan Portfolio ◽  
Tradable Sector ◽  
The Baltic ◽  
Productivity Gains

Rapid credit growth has been one of the most pervasive developments in recent years in Central and Eastern Europe. We tested for the significance of macroeconomic and banking sector variables that condition non‐performing loan ratios and the hypothesis of procyclicality between economic activity and improving banking‐sector results in the Baltic States, Bulgaria and Romania. The theory of procyclicality between economic activity and the non‐performing loan ratio was proven. The increased economic activity improved the loan portfolio quality of the banking sector, as indicated by a lower NPL ratio. Due to a high share of loans denominated in a foreign currency and the fact of productivity gains in the tradable sector, the appreciation of the real exchange rate contributed to an improvement in loan portfolio quality. The procyclicality of banking sector performance and high economic activities growth could be a signal of an economy overheating and therefore a slowdown in economic activity is likely to accelerate the growth of the non‐performing loan ratio in the Baltic States, Bulgaria and Romania.

scholarly journals The Impact of The Quality of Financial Statements on Local Revenue Using Examination Opinion Results as Moderating Variable

2017 ◽  
Vol 6 (1) ◽  
pp. 122-133
Author(s):  
Arik Susbiyani
Keyword(s):  
Local Governments ◽  
Financial Statements ◽  
City Governments ◽  
Financial Reports ◽  
Financial Report ◽  
Local Revenue ◽  
Positive Effects ◽  
The Impact ◽  
The Relationship

This study aimed to examine the influence of the financial statements on local revenue by using the results of the examination opinion as moderating variable. The study used Legitimacy Theory to explain and analyze the relationship between variables. The population in the study was all the districts and cities in Indonesia totaling 497 county and city governments. The sampling method used in the study was judgment sampling. Samples that met the criteria of the study were 116 local governments. The analytical tool used in this research was the analysis of MRA (Moderated Regression Analysis). The results showed that the effects of the partial test of the quality of financial reports to local revenues were not significant positive effects. While the partial test results stating the influence of audit opinion on local revenue having positive effects were not significant. Other results showed that the interaction between the results of the examination opinion to the quality of financial statements was insignificant on the quality of financial statements. In other words, the results of the examination opinions moderated (strengthened) the relationship between quality of financial report on local revenue of district and city governments in Indonesia.

scholarly journals Pengaruh Implementasi Sistem Informasi Manajemen Daerah Terhadap Kualitas Laporan Keuangan pada Satuan Kerja Pemerintah Daerah Kabupaten Nias Selatan

2019 ◽  
Vol 10 (2) ◽  
pp. 96-109
Author(s):  
Patricia Diana ◽  
Chermian Eforis ◽  
Maria Stefani Osesoga
Keyword(s):  
Local Government ◽  
Internal Control ◽  
Financial Statements ◽  
Primary Data ◽  
Survey Method ◽  
Financial Reports ◽  
Financial Report ◽  
Report Quality ◽  
The Impact

The purpose of this study was to examine the impact of the implementation of Sistem Informasi Manajemen Daerah (SIMDA) toward financial report quality of local government in Nias Selatan. The Indonesian government has encouraged each region to implement Sistem Informasi Manajemen Daerah (SIMDA). SIMDA is an e-government system developed by the Deputi Pengawasan Bidang Penyelenggaraan Keuangan Daerah in order to improve internal control in regional reporting, including local government financial reports. The study was conducted using a survey method to provide the questionnaries to Kepala Sub Bagian Keuangan, Kepala Sub Bagian Program, and Bendahara in 63 Satuan Kerja Perangkat Daerah (SKPD) Nias Selatan. The data used in this study was primary data. There were 154 questionnaries distributed for this research, but only 140 questionnaries returned and used in this research. Data processing using SPSS 24 application with simple regression method.    The result of this study was implementation of Sistem Informasi Manajemen Daerah (SIMDA) has significant impact toward financial report quality of local government in Nias Selatan.   Keywords        : financial report quality, local government financial statements, SIMDA

scholarly journals Banks in the Context of “New Normality” and the Need to Restructure Business Processes

2018 ◽  
Vol 11 (3) ◽  
pp. 38-45
Author(s):  
A. E. Ushanov
Keyword(s):  
Life Cycle ◽  
Business Models ◽  
Business Processes ◽  
Banking Sector ◽  
Bank Loan ◽  
Loan Portfolio ◽  
Application Procedure ◽  
Official Data ◽  
Financial Result

The reduction by the Bank of Russia of the key rate as a tool for quantitative monetary easing leads to stagnation in the banking sector profitability. The purpose of the research was to disclose the importance of the mainstreaming factors of the banking profits formation. It is shown that the reasons that led to the financial result in 2017 had an unstable, temporary nature. It is revealed that the effect of the bank margin reduction under the “new normality” conditions can be overcome only by increased lending. In the situation when the real quality of a bank loan portfolio does not correspond to official data the introduction of risk-oriented business models into practice is essential for the growth of corporate lending. A progressive model of the loan life cycle is described. It is concluded that banks should use the model more extensively in providing loans to corporate borrowers in order to reduce risks, accelerate the loan application procedure and improve the profitability and competitiveness of credit institutions.

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