• The Journal of Asian Finance, Economics and Business
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• 제7권12호
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• pp.615-626
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• 2020

The purpose of this study is to analyze the determinants of risk factor model for the Jordanian banking stocks from 2006 to 2018. This study employs the Five-factor Fama and French's (2015) methodology and uses the annual returns of all Jordanian banks including 2 Islamic and 13 commercial banks listed on the Amman Stock Exchange (ASE) over a period of 13 years. The results show that the factors of value and profitability have an important role in evaluating the expected return in Jordanian banking stocks. Moreover, the value HML and profitability RMW factors provide the highest cumulative returns among these five factors, while the investment CMA and size SMB factors are still around zero cumulative returns. For the market factor, it provides the least negative cumulative returns. The results showed that the largest correlation is between value and investment factors which means that banks with a high book to market value become banks with a conservative investment strategy. The result of the sub-periods confirmed the value and profitability results. The findings of this study suggest that the five-factor Fama and French model is the choice of building an investment portfolio, especially the factors of value and profitability.

• 유통과학연구
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• 제18권5호
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• pp.5-13
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• 2020

Purpose: The aim of this article is to test the link between growth of loan distribution and Bank Valuation in Vietnam's banking sector. At the same time, the study also compared the differences in the effect of growth of loan to valuation bank in banks of different sizes, ownership rates and bank values. Research design, data and methodology: With panel data estimation techniques along with robust standard error for a sample of the banks listed on Vietnam stock exchange from 2012 to 2019. Results: Growth of loan has a positive impact on Bank Valuation (by Tobin's Q). A closer investigation provides evidence for the differential valuation effect of loan growth depending on different features of banks. Specifically, loan growth is found positively and significantly associated with Bank Valuation in small and non-state-owned banks only. Besides, bank size, deposit, and return on equity are found negatively associated with Tobin's Q, while loan loss provisions exhibit a positive relation with this measure of Bank Valuation. Conclusions: These findings provide contributions to the literature on the existence of the effect of loan growth on Bank Valuation. At the same time, the study also provides practical implications for policy makers in banks and investors.

• The Journal of Asian Finance, Economics and Business
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• 제7권10호
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• pp.119-128
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• 2020

The aim of this paper is to investigate the level of intellectual capital disclosure (ICD) in commercial banks listed on the Indonesian Stock Exchange. This paper also observed the effects of ICD and corporate governance mechanism on market value. This study uses content analysis techniques to measure ICD. The paper provides a novel approach to measure the ICD quality in developing countries using a four-numerical coding system. Secondary data were obtained from the financial statements and annual reports of the banks for the period 2011-2014. The data from 31 banks were analyzed using ordinary least square regression. The study reports that the quality of intellectual capital disclosure in Indonesian commercial banks increase steadily. Narrative disclosure dominates the report of intellectual capital in Indonesian banks. The results indicate that the size of audit committee, frequency of audit committee meeting, and intellectual capital disclosure affect positively the market value. Overall, the results indicate intellectual capital disclosure is associated with the market capitalization; these findings indicate that the ICD is a consideration in a stock investment decision. While regulations in Indonesia regarding intellectual capital reporting are not conclusive yet, the information needs of stakeholders have encouraged companies to expand voluntary disclosure.

• The Journal of Asian Finance, Economics and Business
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• 제8권7호
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• pp.349-356
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• 2021

This study comprehensively investigates whether there is an impact of risk, size, profitability, earnings per share, dividend yield, and book-to-market equity on the stock prices of Jordanian banks listed on the Amman Stock Exchange (ASE) for the period 2006-2018. To mitigate endogeneity concerns and to control for within-bank dynamics, panel data fixed effects estimations are used. This study shows that size (SIZE), profitability (ROA), dividend yield (DY) and book-to-market equity (BE/ME) ratios are statistically significant determinants of stock prices. The risk (RISK) factor measured by volatility of ROA has a positive and significant effect on the stock prices, while earnings per share has minimum influence on the stock prices. The results show that ROA has a significant and positive effect and provides the largest effect among all variables used in this study, while the RISK factor has a positive and significant effect. In contrast, SIZE, DY, and BE/ME have a significant negative effect on stock prices. The paper presented new evidence showing that ROA is a better determinant of stock prices in Jordanian banks, and RISK significantly affects stock prices. The researcher recommends using a factor of profitability represented by ROA which has a significant positive effect on the stock prices in Jordanian banks and applying the ROA variable to other sectors.

• The Journal of Asian Finance, Economics and Business
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• 제9권6호
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• pp.23-32
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• 2022

This paper examines the effects of regulatory capital on a bank's profitability and risk. We employ annual data from Vietnamese commercial banks from 2005 to 2020 and use the dynamic GMM regression method to address the potential endogeneity issue, more suitable for panel data with relatively low time dimensions. Our panel regressions indicate that higher regulatory capital would significantly improve the bank's profitability and lower the bank risks. In particular, a one percent increase in the regulatory capital would significantly increase the bank's return on assets by 1.9%. We further explore the heterogeneous impacts of regulatory capital on the Vietnamese bank's performance across bank characteristics. We find that smaller, non-state-owned and non-listed banks would benefit from stringent regulatory capital requirements. The improvements in bank performance are mainly driven by reductions in the risk premium of the banks, resulting in lower funding costs and higher profitability. These findings are essential since Vietnam, as an emerging market, has only implemented the Basel II reform recently on a stable and fast-growing background rather than as a reaction to the global financial crisis. Thus, our empirical results support stringent regulatory capital in emerging countries to ensure a stable banking sector and boost economic growth.

• 유통과학연구
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• 제20권6호
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• pp.43-56
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• 2022

Purpose: This study aims to investigate the impact of investing into technology development on banking performance in an emerging country. Research design, data and methodology: Based on the data of 12 commercial banks listed in Vietnam from 2011 to 2019 and performing multivariable regression analyses as well as conducting a variety of robustness tests, we carry out the empirical investigation to discover this impact. Results: Our empirical evidence shows that these spending help to improve significantly performance of banks. Particularly, the technology expenditures have positive effect on the net interest margin and the non-interest income in which the level of influence on the latter is relatively remarkable in comparison with the former. At the same time, the result does not support the view that increasingly spending on technology may lead banks to face the risk of instability. Conclusions: Overall, our empirical analysis indicates that increasing investment into distribution information and communication technologies will help to enhance business strategies of banks and thus we advocate the bright side of technology development and digitalization in banking sector. We believe that the research is useful for both managers, regulators and policy makers in Vietnam as well as in countries having similar financial structure.

• The Journal of Asian Finance, Economics and Business
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• 제9권5호
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• pp.355-363
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• 2022

The debt maturity structure has a significant impact on a company's financial situation. Any debt maturity structure decisions substantially impact investment decisions due to changes in capital cost and dividend decisions due to cash flow consequences. This study used the system generalized method of moment (Sys-GMM) to investigate the debt maturity structure of real estate companies listed on the Ho Chi Minh Stock Exchange (HOSE) in the duration from 2008 to 20019. It found that the firm size, liquidity, and tangible assets affected the decision on debt maturity structure. The tangible asset had the most significant impact on the possibility for companies to access long-term loans. This finding revealed that the majority of the real estate companies listed on HOSE borrowed money from banks. Such decisions are most likely affected by the collateral. Another finding of the study is that financial institutions had a major impact on loan maturity structure, whereas the effects of the financial market were negligible. Besides, the real estate companies listed on HOSE seemed not to pay attention to changes in inflation, economic growth, and institutional qualities when deciding on the debt maturity structure.

• The Journal of Asian Finance, Economics and Business
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• 제8권3호
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• pp.1083-1094
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• 2021

This paper explores the effect of IFRS on the financial performance of Iraqi commercial banks. It also investigates the value significance of financial performance statements using the Ohlson model, which has been used for the stock value relevance test in a number of studies. Using a sample of 66 listed banks on the Iraq Stock Exchange over three years of IFRS pre-adoption (2011-2013) and three years of IFRS post-adoption (2016-2018), we find financial performance components EPS and BVS value relevant to the stock returns. The findings also indicate that the implementation of IFRS has a major positive effect on the value relevance of the BVS, while the adoption of IFRS does not have a significant impact on the value relevance of the EPS reported by Iraqi banks. Our results indicate that the market value of the bank rises dramatically with enhanced financial performance reporting. In addition, the implementation of IFRS has a major effect on the financial performance measures and the value relevance of financial reporting in the Iraqi banking sector. This paper adds to previous value relevance literature and IFRS by throwing light on the banking sector in a developing country that has recently moved from applying local accounting standards to IFRS.

• The Journal of Asian Finance, Economics and Business
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• 제7권10호
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• pp.675-685
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• 2020

The main purpose of this study is to investigate the potential effect of ownership concentration on the relationship between board composition and bank performance. The study employs a sample of Saudi banks listed on Saudi stock exchange (TADAUWL) over the period from 2011 to 2018. To test the study hypotheses and control for endogeneity issues, the Ordinary Least Square (OLS) and the Two-Stage Least Squares (2SLS) techniques are used. The empirical results reveal a significant negative moderating effect of ownership concentration on the association between board composition and bank performance, which confirms the study argument and supports hypotheses. The results indicate that board composition in terms of independent board members, executive board members, and non-executive board members in banks with higher ownership concentration have a weaker positive influence on bank performance. For control variables, the results are almost consistent with theoretical perspectives and previous empirical evidence. The results of this study have important implications for regulatory authorities, companies, and market participants in Saudi Arabia and countries with high concentrated ownership to understand how ownership concentration could affect corporate governance and firm performance and to identify appropriate actions to protect board composition from the influence of ownership concentration.

• The Journal of Asian Finance, Economics and Business
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• 제8권2호
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• pp.317-328
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• 2021

This study examines the impact of bank competition and efficiency in the financial stability of the banking sector in Bangladesh. The study used the Lerner index and the Boone indicator to represent the bank competition, while the non-performing loan (NPL) and Z-score are used to represent financial stability. The secondary data were collected from the annual reports of 28 DSE listed commercial banks of Bangladesh over the period from 2011 to 2018. Using a dynamic panel GMM model, the study found the Lerner index is significantly negatively related with Z-score, which means that higher bank competition results in higher bank stability. It is also seen that higher cost efficiency results in higher bank stability. The Lerner index has negative, but insignificant impact on NPL. Similarly, using the Boone indicator, this study found that lower competition increases NPL. In terms of the Z-score, the Boone indicator found that 1 unit of increment results in decrease of the Z-score by 6.15 units. The study suggests that, as more competition results in more financial soundness, the banking industry competition should be ensured by policymakers or regulators. Banks could enhance financial stability by cost control to achieve cost efficiency as well as by improving loan-to-asset ratio.