Fintech credit, bank regulations and bank performance: a cross-country analysis

PurposeThis study is the first to investigate whether fintech credit influences bank performance, considering the moderating impact of bank regulations.Design/methodology/approachThis study uses an aggregate dataset of 73 countries from 2013 to 2018 to examine the nexus between fintech credit, bank regulations and bank performance. For robustness tests, the authors introduce different proxies of fintech credit, perform sub-sample analysis and substitute control variables, as well as conduct their empirical strategy to tackle potential endogeneity issue.FindingsThe authors document some significant findings. First, the authors’ evidence implies that fintech credit tends to reduce bank profitability, while improving bank risk-related performance. This suggests that as fintech grows, it competes with banks and takes some share of profits, but it also benefits banks in terms of stability. Second, stricter regulations contribute positively to bank stability. Third, the authors argue that the impact of fintech credit on bank performance may depend on the degree of banking regulation, and find that fintech credit would impose a more positive influence on bank stability as more stringent banking regulation is present.Originality/valueThis study is the first to investigate whether fintech credit influences bank performance, considering the moderating impact of bank regulations. The findings imply that fintech credit tends to be more beneficial when bank regulations become stricter. Therefore, they bring relevant implications to the regulators, as well as bank and fintech managers with regard to the potential cooperation.

Do bank regulations matter for financial stability? Evidence from a developing economy

Purpose This paper aims to establish the effect of bank regulations on financial stability in Kenya. Specifically, the study seeks to uncover the effect of micro and macro prudential regulations on financial stability and their trade-offs or complementarities. Design/methodology/approach Using annual time series data over the period 1990–2017, the study uses structural equation model (SEM) estimation technique. This solves the problem of approximating measurement errors, using both latent constructs and indicator constructs. Findings Study findings reveal that macro and micro prudential regulations are significant drivers of financial stability. Further, prudential regulations are more effective when they complement each other. Research limitations/implications This study centers on how bank regulations affect financial stability. Future research could be carried out on the effect of Non-Bank Financial Institutions regulations on financial system stability. Practical implications Complementing macro and micro prudential regulation is more effective and efficient in ensuring stability of the financial system other than letting the two policy objectives operate independently. Social implications Regulatory authorities should introduce prudential regulations that would encourage innovations in the banking sector. This ensures easy deposit mobilization that enhances financial inclusion. Prudential regulations that ensure financial stability will be effective when low income earners are included in the financial system. Originality/value To the best of the authors’ knowledge, this study is the first to investigate the role of banking regulations on financial stability. This study is also pioneering in the use of SEM estimation technique, in examining how prudential regulations affect financial stability. Previous cross-country studies have focused on macro prudential regulations ignoring the importance of micro prudential regulations.

Bank Audit Regulations and Reporting Quality

This study examines whether bank audit regulations impact bank reporting quality. Using a multi-country panel of publicly traded banks, we find that regulations targeting auditor qualifications and independence improve bank reporting quality. In contrast, regulations that impose greater supervisory oversight of external auditors have little or even an adverse effect on bank reporting quality. Cross-sectional analysis further shows that the effects of bank audit regulations are concentrated among banks where supervisory regime is less independent. Our results hold after controlling for bank regulations pertinent to financial reporting and disclosure, the adoption of international financial reporting standards and time-varying country-level institutional characteristics. Overall, our findings suggest that audit regulations matter and their impact on bank reporting quality is sensitive to the type of audit regulation.

Penerapan Akad Mudharabah Pada Produk Tabungan di PT. Bank Syariah Mandiri KC Prabumulih

Sharia banking is currently on the rise and has become a reference for people to invest their funds for various needs. For this reason, various sharia banking products must be able to be understood by the public, one of which is the application of the mudharabah contract to savings products. This article discusses the application of the Mudharabah contract to savings products at PT. Bank Syariah Mandiri KC. Prabumulih. This article uses qualitative research by collecting data through direct interviews with stakeholders at Bank Syariah Mandiri Prabumulih Branch. The results of this study are the implementation of the contract used in planning savings is the mudharabah muthlaqah contract, which is a form of cooperation between shahibul maal (fund owner), namely the customer and mudharib (fund manager), namely the bank, where the owner of the fund (shahibul maal) does not impose limits on the mudharib in determine the type of business, time and area of business as long as it does not conflict with sharia principles and is in accordance with bank regulations.

Factors Influencing Bankers’ Intention to Adopt Green Finance in Pakistan

The purpose of this study is to investigate factors that influence bankers’ intention to adopt green banking in Pakistan. Green banking refers to providing environment-friendly banking services and financial products through environment-friendly banking operations and infrastructure. It can be referred to as sustainable lending and depository products and bank’s services through sustainable banking operations and infrastructure. The data for this study was collected from 250 respondents through a structured questionnaire. Data analysis was performed using the partial least squares (PLS) approach. The study’s findings indicate that Policy Guidelines, Attitude towards usage, Central Bank Regulations, and Management commitment and support influence bankers’ intention to adopt green banking in Pakistan. This research will help the State bank of Pakistan and the bank’s senior management to identify the key factors influencing the adoption of green banking in Pakistan.

Retrospectives: Regulating Banks versus Managing Liquidity: Jeremy Bentham and Henry Thornton in 1802

At nearly the same moment, Jeremy Bentham and Henry Thornton adopted diametrically opposed approaches to stabilizing the financial system. Henry Thornton eloquently defended the Bank of England’s actions as the lender of last resort and saw its discretionary management of liquidity as the key stabilizer of the credit system. In contrast, Jeremy Bentham advocated the imposition of strict bank regulations and examinations, without which, he predicted, Britain would soon experience a systemic crisis—which he called “universal bankruptcy.” There are strong parallels but also dramatic differences with our recent attempts to reduce systemic risk within financial systems. The Basel III bank regulatory framework effectively intertwines Bentham’s and Thornton’s diametrically opposed approaches to stabilizing banks. Yet Bentham’s and Thornton’s concerns regarding the stability of the wider financial system remain alive today due to financial innovation and the politics of responding to financial crises.

Implementasi Akad Ijarah Muntahiya Bi Al-Tamlik (IMBT) Perspektif Fatwa DSN-MUI Nomor 27 Tahun 2002 & Hukum Islam

The Ijarah Muntahiya bi al-Tamlik (IMBT) contract is a lease agreement that ends with the transfer of property rights by means of sale and purchase (grant) at the end of the lease period. In the perspective of Islamic law, the IMBT contract is in accordance with the principles, pillars, and some terms of the contract. Unfulfilled contract conditions, namely the requirement for legal certainty. Meanwhile, in the perspective of the DSN-MUI Fatwa Number 27/2002 and Islamic Law, the IMBT agreement is an anonymous agreement that arises from the existence of the principle of freedom of contract. The IMBT contract is in accordance with the terms and elements of the agreement. IMBT legal consequences are rights and obligations. This scientific paper will examine the normative and applicable aspects of law. Legal norms that are included in the realm of unwritten law in the context of laws and regulations in Indonesia concerning Sharia Economics are DSN-MUI fatwas, especially regarding IMBT which has been perceived as a national law, (Law Number 21 of 2008, concerning Islamic Banking), Bank Regulations Indonesia (BI), the Financial Services Authority (OJK) and Sharia Financial Institutions (KLS) as an effort to apply the law in an applicative manner.