Theses supervised by Hatice Jenkins
11 theses · Eastern Mediterranean University
The Macroeconomic Determinants of Credit Risk in the Banking Sector of Kyrgyzstan
Credit risk, i.e. the risk of loan default, is a significant risk faced by banks in every country. While banks make loans in order to generate income, by making loans they also face a risk of losing their principal and the interest. As part of their lending business, a small percentage of loan default (non-performing loans) is always expected. However, large volumes of loan defaults can push banks into bankruptcy and can cause financial instability in the banking sector. Therefore, it is important to know the factors affecting the credit risk, i.e. non-performing loans, in the banking sector. Especially in the newly established countries such as Kyrgyzstan, where most of the economic and financial policies are newly introduced and the banking sector is in its infancy, it is vital for the governments to understand the factors that increase the credit risk. This research uses the econometrics analysis to determine the macroeconomic factors that increase the credit risk in the banking sector of Kyrgyzstan. The findings indicate that real GDP growth rate, exchange rate of Som per US Dollar, corruption and the presence of political instability affect the credit risk in Kyrgyzstan. While GDP growth rate is negatively related with the credit risk, the exchange rate, corruption, and political instability are positively related with the same. The findings of this research suggest that in order to reduce the credit risk of banks and promote stability in the banking sector, the policy makers in Kyrgyzstan must promote political stability and economic growth, while the value of the local currency should be stabilized against US dollar. Furthermore the government must take actions to reduce high levels of corruption in the country. Keywords: NPLs, credit risk, banks, corruption, macroeconomy, Kyrgyzstan
Evaluating the Performance of Public, Private and Foreign Banks Operating in Turkey
This study attempts to compare the financial performance of public, private and foreign banks operating in Turkey from 1997 to 2010, as well as conducts a pre and post global financial crisis performance analysis for public, private and foreign banks. The following profitability proxy indicators were used; Return on Assets (ROA), Return on Equity (ROE), Profit per Employee (PPE), Profit per Branch (PPB), Net interest Margin (NIM) and Growth in Net Profit (GINP). For this purpose, data of three public, three private and three foreign commercial banks were used. There were not significant differences of profitability among public, private and foreign banks before and after 2008. However, there is a significant difference in Net interest Margin before and after 2008 global financial crisis which shows that the financial crisis has affected the interest income of banks. On the other hand, other profitability indicators appear to remain unchanged after the global financial crisis. This indicates that banks compensated their decreased interest earnings with an increased income from financial services such as fees, commissions and other income. Keywords: Bank profitability, state banks, private banks, foreign banks, Turkey.
The Impact of Foreign Banks' Operations on Credit Growth of the Banking Sector in Turkey
This study attempts to analyze the impact of foreign banks on the Turkish banking sector. It is generally accepted that foreign banks have a positive effect on the host countries financial sector in terms of increasing credit to the private sector and improving efficiency in the banking sector through competition. These outcomes however, may vary from country to country. This research examines whether the growing existence of foreign banks in Turkey had a significant impact on credit supply to the private sector. The empirical results showed that there is a positive relationship between the foreign banks existence in Turkey and the credit supply to the private sector. Keywords: Foreign banks, banking sector, credit supply, private sector, Turkey.
An Empirical Analysis of SME Finance in Turkey: Identifying the Macroeconomic and Firm Specific Factors Affecting SMEs’ Access to Finance
This thesis provides an empirical analysis of SMEs‘ access to financial services and credit in Turkey. It identifies the macroeconomic factors that affect banks‘ credit supply decisions to SMEs, and the firm-specific factors that determine SMEs‘ demand for bank credit and financial services. The macroeconomic, i.e. the supply-side analysis confirmed the conceptual hypothesis that banks‘ lending to SMEs is fuelled by economic growth and stability, financial market efficiency and banking competition, but hampered by the extent of government borrowing from domestic creditors. The firm-level analysis provided evidence that in recent years, SMEs in Turkey found it easier to access bank loans. Evidently, according to the 2015 WBES survey in Turkey, the rejection rate for bank credit was as low as 7% and only 16% of SMEs had cited access to credit as a major obstacle. Although these statistics are valid for the whole Turkish economy, this research discovered that there are significant regional discrepancies in the usage of credit and non-credit financial services in Turkey. In less developed regions, only a small percentage of SMEs have bank accounts, and use bank credit for financing working capital. Yet, it is also found that in these regions, SMEs mostly rely on bank loans for financing their fixed assets. Regarding to firm specific factors it is found that SMEs‘ size, operating performance as well as business ownership type and managerial competency (e.g. education level, business experience) are significant determinants for the demand for formal financial services in Turkey. Keywords: SME finance, credit supply, credit demand, macroeconomic factors, firm‘s specific factors, OLS & GLMs regression.
Effect of Global Financial Crisis on Nigerian Economy and the Financial Sector
This research aims to study the effect of 2008- 2010 global financial crisis on Nigerian economy and on its financial sector. Secondary data was obtained from the World Bank, the Central Bank of Nigeria and the IMF World Economic Outlook. The economic indicators examined in this research are: unemployment rate, inflation rate, interest rate, non-performing loans, foreign direct investment, foreign exchange reserve, real GDP growth rate, and exchange rate. The regression analysis was conducted to examine the effect of unemployment caused by the global financial crisis on the country’s real GDP growth rate. Descriptive statistics including the mean, median and standard deviation was also used to analyze the data. Trend analysis was further used to analyze the trend of these indicators over the years. The findings of this research indicated that the inflation rate and banks’ non-performing loans have increased during the global financial crises, however they both moved back to their original levels during the post-crises period. On the other hand the negative effect of the global financial crises on unemployment, foreign direct investment and economic growth remained unchanged even after the post-crises period. Also the dependence of Nigerian economy on its petroleum exports makes its economic growth highly sensitive to the petroleum prices. As the petroleum prices fell during the post-crises period the economic growth of Nigeria was negatively affected. Keywords: Global financial crisis, Nigerian economy, Non-performing Loans, Foreign Direct Investment, Foreign Exchange Reserve, Gross Domestic Product, Exchange rates, Inflation rate, Interest rate, Oil prices, Trend analysis.
Financial, Economic, and Stakeholder Analysis of Milk Processing Plant in Ethiopia
Milk is one of the main sources of income for many pastoralists around the world. The Somali Region in Ethiopia is famous for its high density of livestock, implying that is has a significant potential for milk production. The perishable nature of the milk and the absence of the milk processing facilities are two of the main factors that reduce this region’s ability to utilise the opportunity of milk production, which imposes significant economic losses on the community as a whole. This study assesses the financial and economic feasibility of the milk processing plant in Ethiopia region, Jijiga city, and analyses alternatives for the implementation of the milk processing plant using the integrated method of investment appraisal. Distributive analysis is also used to estimate the allocation of benefits to the government of Ethiopia, the pastoralists and traders supplying milk to the plant, the labour that is employed by the facility, the Jijiga city community and lastly the private entrepreneur. Sensitivity analysis is used to assess potential risk factors facing the facility. The results of the analysis showed that the financial net present value of the project is positively promising that the benefits would be greater than its costs. The implementation of such an intervention significantly increases the annual income of the pastoralists and decreases the risks of investment for the private sector. It also will increase the demand for the pasteurization of milk and decrease the amount of raw milk available for the locals which is extremely dubious in that area. The economic analysis reveals that the economic net present value is also positive and not only reduces the risk for the private entrepreneur and stakeholders but will be also benefit the economy of Ethiopia. The project is proposed with the motive to develop and promote the Ethiopian agricultural business by leading it to a market oriented level. An improvement in the lifestyle of the locals is expected to follow, as a result of the creation of more job opportunities, improvement of nutrition, and the development of the dairy system of that region. Several stakeholders such as the suppliers of the milk, milk traders, the private entrepreneur, employees, the community, and the government will benefit from the implementation of the project. Keywords: Investment Appraisal, financial analysis, economic analysis, stakeholder analysis, milk processing plant, camel’s milk, cow’s milk, dairy, Ethiopia
The Impact of Liquidity Risk and Credit Risk on the Capital Adequacy Ratios of USA Banks before and after the 2008 Financial Crises
The importance of capital adequacy of banks in USA became prominent following the 2008 financial crises. The main objective of this study is to identify the determinants of Capital Adequacy Ratios (CAR) of banks in USA and the role played by both liquidity and credit risk during the crises. This study used the financial information of 30 selected banks over the period of 2004-2011. The panel data analysis and fixed effect model were carried out. The results of the study suggested that both credit risk and liquidity risk ratios have positive and statistically significant impact on CAR of banks in USA.
Analysis of the Savings Trends in Palestine
Palestine economy had suffered from a series of oppressions and wars, which affected the Palestinians’ decision to invest or save. It is important to understand the impact of these uncertainties on financial savings in Palestine. Therefore, financial savings trends in Palestine need to be investigated. The goal of this study is to analyze the macroeconomic and institutional factors that may have an effect on financial savings in Palestine for the period 2001-2013. Hence, the financial savings trend in Palestine is analyzed in two major parts under two different sets of variables. The first part includes the macroeconomic variables which mainly are GDP growth, public debt, unemployment rate, inflation rate and foreign aid. The second part includes bank specific factors which are deposits interest rates, number of banks and branches, banks services and savings products. Due to constraints on data availability this research mainly uses trend analysis to identify the possible relationships between variables. As expected, the findings indicate that the wars, public debt and unemployment rate have a negative impact on savings behavior in Palestine, whereas GDP growth and international aid have positive affect on financial savings. In terms of bank specific factors it is found that interest rates do not play any role in attracting savings as they are artificially kept below the inflation rate. Furthermore, it is observed that depositors prefer to keep majority of their savings in the checking accounts that do not bear any interest. This indicates that savers value instant access to their savings more than interest earnings given the uncertainties caused by war. Keywords: Palestine, trend analysis, financial savings, macroeconomic factors, banks specific factors.
The Sensitivity of Borsa Istanbul Banks Index Growth to Exchange Rates, Oil and Gold Price Changes
In recent years, due to a number or financial and political crises the Turkish economy has been marked with an increasing economic instability. Oil, Gold and the Turkish Lira to dollar exchange rate have exhibited increasing volatility as well in these years. Since banks are considered key actors for every economy, in this thesis, the sensitivity of the Turkish Lira to dollar exchange rate, global oil and gold prices are examined relative to the Turkish banks index growth (BISTBANKS). To investigate this relationship, the method of Ordinary Least Square estimation is used. Weekly data for the BISTBANKS Index, USD/TRY, oil and gold prices are used in this analysis over the period of 2016-2018. The empirical results obtained from this research demonstrate that the Turkish Lira to the dollar exchange rate and oil have significant effect on BISTBANKS Index growth, while the influence of gold is insignificant. This study suggests to shareholders of Turkish banks to sell their shares when USD/TRY increases and buy when it decreases. In addition, in case of world boom economy, investors may invest in Turkish banks when global oil price inclines and vice versa. Keywords: exchange rate, oil, gold, BISTBANKS index.
Small and Medium Size Enterprises in Nigeria: Problems and Prospects
The role of small and medium enterprises (SMEs) in economic development is undebatable. Therefore, identifying SMEs’ problems and finding solutions for these problems are vital for economic development and growth in Nigeria. With a 173.6 million of population, Nigeria is a highly populated low income country where a significant portion of it’s population is currently facing poverty. This is partly due to the inability of SMEs in creating jobs and employment in Nigeria. This thesis investigates the primary problems of SMEs in Nigeria through a survey study of SMEs in two major cities. The survey findings indicated that several reasons attributed to the limited contribution of SMEs to employment and economic growth. The most important of these problems are identified as the infrastructural weaknesses, limited access to finance, and the uncertainties in the economy are the most important problems of SMEs in Africa. Keywords: SMEs, economic development, poverty, Nijeria, access to fınance, weak infrastructure.
An Analysis of the Internal Audit and Internal Control Systems of Banks in TRNC
This research investigates the internal audit and internal control systems of banks in TRNC. Internal audit is one of the most important units of a bank. It includes checking and assessing overall accuracy and consistency of banks’ operations. During the last three decades the bank management and operations of banks have evolved due to financial liberalization, globalization and technological innovation which also increased operational risks. Banks are required to develop their internal control systems to protect themselves against increasing operational risks. Basel introduced a framework on internal audit in 2012. The Basel criteria on internal audit became the most commonly used world standard in the banking sector. This research was conducted in two phases. First I compared the banking law of TRNC with the Turkish standards and Basel standards on internal auditing to find out whether the banking law of TRNC was in line with Turkey or Basel standards. Second, I developed a structured questionnaire and surveyed the majority of banks in TRNC in order to establish facts on how the internal audit and control systems work in the banking sector of TRNC. The findings indicated that there are major weaknesses in the existing auditing and control systems of banks in TRNC. Keywords: Internal auditing, internal control, TRNC, Basel, Turkey.