Theses supervised by Nesrin Özataç
20 theses · Eastern Mediterranean University
Determinants of Profitability of Listed Commercial Banks: A Case of China
The method least square panel was adopted to analyze the determinants of profitability of 16 listed commercial banks in China, from 2010 to 2015. As found by the study, the profitability of listed banks is associated not only with the characteristics taken on by banks, but also with how the financial markets are structured. More evidently, the Non-performing loan losses ratio, reserve rate, and equity ratio are negatively correlated with the profitability. Markedly, Herfindal- Hirschman Index, X-Efficiency, Non-interest rate and profitability were positively correlated with each other. The z-score and profitability are not evidently positively correlated. To improve their profitability, China's listed commercial banks are required to facilitate their operation, control operating costs, increase efficiency, and further reduce the NPL ratio.
Examining the Effects of Remittances, Labor Productivity and Trade on Real Effective Exchange Rate: Case of Turkey
Financial and economic development of a country is a crucial matter for every nation. There are various factors and elements that carry a major role in this regard and the literature shows numerous variables that are regarded as vital for this improvement. However, most studies examined countries in regions that are relatively far from the Middle East and Especially, Turkey. Hence, the current research entails a number of influential factors that have been noted to be significant for improving real effective exchange rate of the country, especially in the long-term. It is assumed that changes in Remittances, Labor Productivity, Trade (Openness) could impact on the changes in Real Effective Exchange Rate in the context of Turkey. These factors are remittances, labor productivity, and trade openness. It is important to note that while these factors have been under examination since early ages of research on econometric variables, the literature lacks consensus upon findings, particularly, empirical evidence. Thus, the current research aims to provide a better understanding of underlying effects and linkages among these variables. Data (2000-2017) from central bank of Turkey that was made public is used as well as indicators of OECD. Modern tools and analytical approaches have been undertaken to examine the relationships between the included factors and measures have been derived from the extant literature to ensure the reliability and validity of the results. All hypotheses of the research have been supported through data analysis. It can be said that increased remittances have a positive effect on a country’s real effective exchange rate in long-term. Increased trade openness was found to be negatively associated with REER. This is due to the fact that trade openness leads to increased price of domestic goods for other nations. Labor productivity is positively related with REER as Turkey exhibits high productivity in its labor, which further impacts its economic state in terms of effectiveness of its exchange rate. The findings of this research are aimed to contribute to the literature as well as practical approach towards analyzing and understanding connections among the aforementioned variables. Keywords: Real Effective Exchange Rate, Remittance, Labor Productivity, Trade Openness, Turkey, Economics.
Impact of Credit Management on the Financial Performance of Banks: A Case Study of Canadian Banks
Credit is of a sensitive disposition not to be treated with utmost vigilance in any organization especially in banks which the circumstance is more significant. The aim of this study is to investigate the impact of credit management on the financial performance of banks. Panel data analysis was used to analyze the secondary data collected for 8 Canadian banks over the period of 16 years (2000-2015). In this study, return on assets (ROA) and return on equity (ROE) are used as a measure of banks‟ financial performance whereas non-performing loan ratio (NPLR), loan loss provision ratio (LLPR), loans to deposit ratio (LTDR), loans to asset ratio (LTAR), cost per loan asset ratio (CLAR) and total debt to total asset ratio (TDTAR) were used as proxies for credit risk. It was found that NPLR, LLPR, LTDR and CLAR were all statistically significant and inversely related to banks‟ financial performance (ROA) whereas LTAR was statistically significant and positively related to ROA. On the other hand, NPLR and LLPR were statistically significant and inversely related to ROE, while LTAR was positively related but LTDR, CLAR and TDTAR were all statistically insignificant. On the basis of the findings, it shows credit risk has a negative influence on financial performance of banks thereby saying good credit management is of utmost importance to banks. Therefore, banks need credit to survive and hence adequate attention needs to be paid to credit administration in banks.
Comparison of Profitability Indicators of Commercial Banks: The Case of Jordan and Palestine
Banking system could be determined as one of the major drivers of the economy. Moreover, the banking sector is the most important financial intermediary as a channel of funds from people who have extra money (savers), to those who do not have enough money to carry out a desired activity (borrowers). Thus, indicators which are related with profitability of the banking system needs to be rated. The primary goal of the current study is to compare experimentally and measure the financial performance of conventional banks which are operating in Jordan and Palestine during the period of 2008-2014. Furthermore, in the current study, macroeconomic variables as well as financial ratios within a CAMEL approach. To create a good evaluation in terms of experimentally, most commonly practiced ratios are employed for the present study. Two profitability indicators which are used in the current study are dependent variables. Moreover, data is also monitored for sturdiness of the model and OLS method is utilized through adoption E-views program. Moreover, numerous articles which are related with banking literature were surveyed to shape most appropriate model. According to the result of this study it is shown that the profitability indicators are almost the same for both countries, in other words, can be said that there is no statistical difference between them. Keywords: Banking system, profitability, conventional banks, OLS, CAMEL, Jordan, Palestine.
Capital Structure: Target Adjustment Model and a Mediation Moderation Model with Capital Structure as Mediator
This study consists of two models. Model one is conducted to check if there is a target adjustment toward optimal capital structure, in the context of Turkish firm listed on the stock market, over the period 2003-2014. Model 2 captures the interaction between firm size, profitability, market value and capital structure using the moderation mediation model. The results of model 1 have shown that there is a partial adjustment of the capital structure to reach target levels. The results of model 2 have shown that profitably affects market value through two paths. The first one is direct while the other is indirect mediated by capital structure. All paths had significant firm size moderation effect. The magnitude of the direct was notably higher than indirect path. Keywords: capital structure, mediation moderation, Turkish firms, profitability
The Relationship between Money, Inflation, Banking Sector Development and Economic Growth: Case Study of the Republic of Turkey
This research applied the four steps test model to investigate the relationship between money (M2), inflation (ICP) and banking sector development (DC) on economic growth (GDP) using Turkey as a case study. The annual data from 1960-2014 was extracted from the World Bank Development Indicator and used for the purpose of this empirical analysis. The unit root test of ADF and PP show that all of the variables are integrated order of I(1). The Johansen co-integration test shows that there exist cointegration between the variables and the vector error correction test show that there is along-run and short-run relationship between the variables. The Granger causality test indicates that there is a bi-directional relationship between economic growth (GDP) and money (M2), a unit directional relationship from banking sector development (DC) to economic growth (GDP) and a unidirectional relationship from inflation (ICP) to banking sector development (DC). However, we found no relationship between inflation (ICP) and economic growth (GDP).
Customer Satisfaction in Banking Sector: The Case of North Cyprus
Modern business world is very much competitive and the success in the competition completed mainly through giving satisfaction to the eventual customer. In service concerned industry, it is not easy to set a standard rule to satisfy consumer. Customer satisfaction offers for organizations to improve relationships with their customers so allowing the companies to achieve their objectives for long term success. To achieve a customer satisfaction, company should have better service quality, because service quality and customer satisfaction have positive relations. Also there is another relationship between satisfied customer and customer loyalty. This study considers the current pattern of customer satisfaction in the North Cyprus banking industry. A questionnaire survey was administered to 255 bank customers in North Cyprus. Software SPSS 22.0 was used to analyze the data gathered from the survey. The results demonstrate that the most important factor for customer satisfaction is the wide availability of bank branches, and the factor most associated with customer dissatisfaction is the high prices of products and services. The study further gives suggestions for policymaking and possible areas for future research.
Credit Risk Determinants of North Cyprus Banking Sector
This study is aimed at examining the determinants of credit risk of North Cyprus Banking sector. This study uses the sample of seven banks for ten years period from 2005 to 2014. The variables used in this study are credit risk (proxies by ratio of nonperforming loans to total loans) as the dependent variable and return on equity, liquidity ratio, credit growth, market power, and exchange rate are used as independent variables. Our findings shows that exchange rate have positive significant impact on North Cyprus credit risk while return on equity has negative significant impact on North Cyprus credit risk. Keywords: Credit risk, North Cyprus, banking sector, non-performing loans.
The Impact of the Banking Sector Development on Agricultural Development: The Case of Cameroon
Despite the toughness of the competition, Cameroonian agricultural products have succeeded to stand out against the rival products by their quality. Financial investors want to be sure that the agricultural products will generate sufficient funds over years to cover up their debt services and their operating expenses. Therefore, the main question we need to answer is: how the valorization and expansion of the banking sector can positively impact agriculture in Cameroon? The main objective of our study is to highlight the positive effects of the banking sector on agriculture in Cameroon. The main hypothesis is that the development of banking sector influences the development of agriculture in Cameroon. Our analysis will be done using two types of time series data, namely agriculture value added, and domestic credit to private sector. After analysis, our two variables are stationary at first level under ADF and PP. Johansen test concludes that there is a long run relationship amongst the variables. After running the lag length structure, outputs disclose that our optimal results will be reached on lag4. After running VECM test, results show a short and long run relationships between our two variables. And finally, the Granger causality test enables us to conclude that there is a bidirectional relationship amongst the variables. Keywords: Agriculture value added, Domestic credits, Cameroon
The Effect of Commercial Bank Lending on the Economic Development of Turkey
This thesis aims at highlighting the considerable contribution financial development has in terms of economic growth in Turkey from the year 1960 to 2016 with the use of annual time series data extracted from the World Bank Development Indicators (2018) and the Banks Association of Turkey (2018). The results of the co-integration tests indicate that there is a long-run equilibrium relationship between domestic credit, total loans, liquid assets, average profitability and economic growth in Turkey. Furthermore, VECM portrays that there is a positive long-run relationship exists between domestic credit, average profitability, and GDP. Also a negative long-run relationship between total loans and GDP. On the other hand, the results of Granger causality show a causal relationship running from domestic credit to economic growth in Turkey but there is no indication of a causal trend of economic growth to credit. A bi-directional relationship is also captured between total loans and average profitability of the Turkish banks LNTL ↔ LNPROFT.
Effects of technological innovations on Bank's financial perforance in industrialized countries
In this study, we analyzed the impact of electronic banking services on the profitability performance of the banks. This effect is explained in relation to ROE and ROA as a measure of banks profitability ratio in 8 industrialized countries from the period 2009 to 2013, by dynamic panel data method. In this case, LLC, IMP and PP tests are done to investigate the order of integration of the variables and the Hausmann specification test carried out to select the best model for our regression analysis. It is found that all the variables are stationary at levels with intercept and trend and Fixed Effect Model revealed as most appropriate for the regression analysis. The findings of the study indicated that overall of electronic banking systems have a significant positive effect on the bank’s benefit execution measures ROA and ROE respectively. Other results were found with an inverse relationship due to diversity in the different countries at the level of development, poor technological innovation frameworks as well as the socio cultural ideology of the customers. Keywords: Banks Performance, Return on Asset, Return on Equity, Profitability, Electronic Banking, Panel data analysis
Financial Performance of Islamic Banks vs. Conventional Banks: The Case of UAE
Unquestionably, banks have a significant impact on every country’s economy. The good performance of a bank is one of the main factors that lead to the country’s economic stability. In this study, the financial performance of the two banking systems; the Islamic and the conventional banking systems in the United Arab Emirates, is being studied. The study’s prior objective is the comparison of the profitability ratio of banks and their Return on Assets (ROA) and Return on Equity (ROE). 4 Islamic banks and 7 Conventional banks in the UAE were chosen so that both the Islamic and Conventional banking systems would be compared and examined. The data used in this study were taken from the Banks’s yearly financial reports through the years 2005-2014. E-views software was applied to see what type of banking sector performed better over this period. Consequently, we cannot say that one banking system performed better than the other one since the independent variables affect the profitability of both banking sector negatively. Keywords: Islamic Banking, Conventional Banking, Profitability.
The Interaction of Fiscal Policy and Monetary Policy on the Stock Market Performance in Nigeri
The stock market is an important aspect of an economy, which helps contribute to the growth of such an economy. This market is affected by a lot of factors such as the fiscal policy and monetary policy, to enhance its growth, these policies are the key focus of this study. These policies have various macroeconomics variables attributed to them. These macroeconomic variables are broad money, interest rate, inflation rate, GDP, and government expenditure, which are used in this study. This study is an update to the few studies done on the interaction of the fiscal policy and monetary policy on the Nigerian stock market and also checked the causality of fiscal policy, monetary policy, and the stock market. The study made use of econometrics to run a regression model, consisting of a dependent variable and independent variables. Using a time series data, from the period of 1981 to 2018. The result of the ARDL bounds test used, indicates that all the macroeconomic variables proxy to both Fiscal and Monetary policy are all significant and indicating a long run relationship toward the stock market performance in Nigeria. Whereas, the ARDL model shows the broad money, inflation rate, and real interest rate imposing a negative relationship on the stock market, while GDP and government expenditure are both positive towards the stock market in the long run. Thus in the short run, broad money and GDP insert a positive effect on the stock market, and real interest rate, government expenditure, and inflation rate impose a negative impact on the stock market performance in Nigeria. Keywords: Fiscal Policy, Monetary Policy, Stock Marke
Financial Performance of UAE Banking Sector: Domestic vs. Foreign Banks
UAE (United Arab Emirate) is considered as a hub of profit in banking industry nowadays. A number of banks include foreign, public and domestic banks are enjoying fruitful business in the UAE because of its rapidly growth trading, oil and business industries. There is no doubt that UAE known as the hub of increasing banking sector, therefore, we aim to evaluate the performance of domestic and foreign banks of UAE specifically. The major aim is to find out which sector is more effective and earning more based on bank specific factors that include: return on assets, return on equity, liquidity ratio, management efficiency, capital adequacy and asset management. Six foreign and domestic banks of the UAE have been taken into account for the period of 2008 to 2014. Trend and correlation analysis have been performed to get more authentic results. Previous studies have been used to support end results of our study. The findings proved that foreign banks are performing a way better than domestic banks in the UAE.
The Banking Sector Determinants Role on Economic Development: Evidence from Jordan
The thesis investigates the effect of bank related variables on the growth of gross domestic products of Jordan, namely bank size represented by the logarithmic form of total assets of banks, bank deposits represented by the percentage of bank deposits to total assets of the bank, non-performing loans represented by nonperforming loans to the total loans of the bank, and liquidity represented by the percentage of cash and balances in bank to total assets. The analysis was carried out by analyzing a panel consisting of 7 banks using annual data from 2008 to 2015. Different econometric techniques were used including correlation analysis, unit root test, redundant fixed effect analysis, regression analysis under fixed effect model, and granger causality. Results suggest that there are four main determinants of the gross domestic products of Jordan which are bank size, bank deposits, bank credit, and non-performing loans. Banks’ board of directors should aim at increasing the size of the bank to increase bank credits, deposits and increase the gross domestic products of the country. Government officials should facilitate the strengthening of the banking sector by imposing rules in favor of banks by providing subsidies and tax deductions. Bank management should encourage individuals and companies to take loans in order to improve their businesses which will lead to more economic growth. Keywords: Non-performing loans, gross domestic products, fixed effects, Granger causality.
The Impact of Political Instability on Risk-Taking in the Banking Sector: International Evidence Using a Dynamic Panel Data Model (System-GMM)
This dissertation contributes to the existing literature by investigating the impact of political instability risk on risk-taking in the banking sector which is the first attempt for this nexus to the best of our knowledge. The use of country-specific data from 75 countries from 1996 to 2015 and the application of the Dynamic Panel Data Model (System-GMM) showed that political instability risk significantly increases risktaking in the banking sector. In addition, corruption levels and government ineffectiveness are the most important channels of political instability that affect the banking sector risk. The results also strongly support the "too big to fail" hypothesis. Finally, the robustness results confirm the conclusions derived from the baseline System-GMM model. Keywords: Political Instability, Risk, Banking, Corruption, System-GMM.
A Comparative Study of Profitability Indicators of Commercial Banks in Turkey and the UAE
The role of banks in boosting economic growth is undeniably. Central Banks are principal to the process of development, through financing, monitoring, and coordinating. Thus, evaluating the performance of banks or using profitability indicators of the banking system is of great significance to decide whether or not the contribution of the banking system to economic growth is considerably positive or declining and therefore requires reform. The present study is a comparison of the financial performance of seven commercial banks which have the biggest size of asset in Turkey and seven commercial banks which have the biggest size of asset in UAE for the period of 2004-2010, using ROA, ROE, and Growth in Net Income. The empirical study involves the implementation of ‘Trend Analysis’ with regression and correlation analysis to achieve its objectives. ÖZ Bankaların ekonomik büyümeyi artırmadaki rolü inkar edilemez. Merkez bankaları finansman, denetim ve koordinasyonla gelişme sürecine büyük katkı sağlamaktadır. Bu nedenle bankaların performansını veya karlılık belirleyicilerini analiz etmek, ekonomik gelişmeye nasıl etki edeceğini göstermekte ve gerekli reformların belirlenmesine yardımcı olmaktadır. Bu çalışma Türkiye'de faaliyet gösteren varlıkları bakımından en büyük yedi banka ile Birleşik Arap Emirliklerinde faaliyet gösteren varlıkları bakımından en büyük yedi bankanın 2004-2010 yılları arasında finansal performanslarını, varlıklar üzerinden karlılık oranı, özsermaye üzerinden karlılık oranı ve net gelir büyümesini göz önünde bulundurarak karşılaştırmaktadır. Bu amaç doğrultusunda çalışmada trend analizi ile birlikte korelasyon ve regresyon analizi uygulanmıştır.
Evaluating Profitability and Efficiency of the Banks in Palestine
Nowadays, the role of banks in economics is undeniable. All the financial activities are depending on them because they help to develop the economy quickly, so the profitability measurements of the banking system should be investigated. The goal of this study is to find the profitability measurements for 7 commercial Palestinian banks and the researcher will do that on an analysis of bank for the period 2007-2013. The Palestinian banks profitability will be done by evaluating two main parts of ratios; the first one is the bank specific ratios which are capital adequacy ratio, liquidity ratio, management efficiency ratio, and the last one is the asset quality ratio. In addition, the second part is macroeconomic determinants (inflation and interest rate). In this research, panel data is used to evaluate the relationship between the variables. The study followed the previous studies such as the case of Turkey (Alper and Anbar, 2011) that investigated the profitability to measure the bank-specific performance for 10 commercial banks for the period of 2002-2010 and they came out that there is a positive relationship between the interest rate and profitability and this result agrees with the statistical analysis for of this study’s case.The study concluded that the macroeconomic factors have more impact to the profitability of the banks in Palestine when compared to the bank specific determinants that exist because of the special structure of each bank, so for that the researcher concluded the study by suggesting some solutions to the problems faced in this study.
Ticari Bankalarda Tahsili Gecikmiş Alacak Sorunu: KKTC Örneği
ÖZ: ÇalıĢmada Kuzey Kıbrıs’daki ticari bankalarının tahsili gecikmiĢ alacaklar sorununa yönelik panel veri analizi yöntemi kullanılarak araĢtırılması amaçlanmıĢtır. AraĢtırma, 2008-2016 yılları arasındaki dönemi kapsamaktadır. ÇalıĢmada bağımlı değiĢken olarak Tahsili gecikmiĢ alacaklar (TGA), bağımsız değiĢken olarak ise sırası ile; banka büyüklüğü, sermaye oranı, aktif karlılık, mevduat krediye dönüĢüm oranı , likidite ve etkinlik oranlarıdır. ÇalıĢmanın analiz sonuçlarıyorumlandığı zaman ortaya çıkan tabloda Kuzey Kıbrıs Türk Cumhıriyeti ticari bankaların tahsili gecikmiĢ alacakları arttık sonra, aktif karlılık, sermaye yeterlilik oranı, likidite oranı, etkinlik rasyo oranında negatif yönde bir duĢüĢgörülmektedir. Buna paralel olarak mevduatın krediye dönüĢüm oranı rasyosu incelendiğinde, tahili gecikmiĢ alacaklar ile mevduatın krediye dönüĢüm oranı arasında pozitif yönlü ve paralel bir iliĢki olduğu gözlenmektedir. Bulgulara göre, aktif karlılığın (ROA)’ ın Kuzey Kıbrıstaki bankaların kredi risk etkenlerini belirleme de büyük bir etkisi olduğu gözlemlenmiĢtir, diğer bir yandan likidite oranı (LQDT), ve kredi büyümesi, Kuzey Kıbrıs bankalarının kredi riskini belirleme belirgin bir etkisi gözlemlenmemiĢtir.Bulgularımız temel alındığında, Kuzey Kıbrıstaki bankaların kredi riskini önceden görebilmeleri ve kolaylıkla önüne geçebilmeleri için borç portfolyolarının iyi durumda olduğundan emin olmaları önerilmektedir. Ġkinci olarak ise, bankalar kredi müĢterilerinin karakteristik özelliklerini ve müĢterinin kredi ödeyebilme kalitesini çok iyi gözlemlemelidirler. Üçüncü olarak, bankalar borç alan kiĢilere, alınan borcun akıllıca kullanılması için danıĢmanlık hizmeti sağlayabilirler.
The Effect of Bank-Specific and Macro-Economic Variables on Bank Profitability: Case of USA.
The main aim of this thesis is to determine the effect of both bank-specific and macro-economic variables on the profitability of the US banking sector. In order to accomplish this, ROA and ROE were considered as profitability indicators while bank size, liquidity, capital adequacy, assets quality, interest rate, inflation rate and gross domestic product where considered as independent variables. This study uses fifteen US banks ranked according to total assets from 2001 to 2015. During the period for this study, US encountered a devastating financial crisis that affected the whole financial sector. In order to capture the effect of this crisis, I introduced a dummy variable for the crisis period from 2007 to 2010. When the regression analysis was done considering ROA as the dependent variable, bank size and assets quality were negative and significant. Interest rate and GDP growth were positive and significant while inflation, capital adequacy and liquidity where insignificant. Using ROE as dependent variable, capital adequacy became significant and the other results remained the same. Keywords: Bank Profitability, USA, Liquidity, Capital Adequacy, Financial Crises