Does E-Business Services Enhance Bank Efficiency in Taiwan?

This study investigates the impact of e-business services on bank efficiency in Taiwan from 2008 to 2019, using the Data Envelopment Analysis (DEA) technique concerning e-business activities as outputs or do not. Comparing two models, these findings show that efficiency scores with e-business output were significantly better than those without e-business outputs, implying that e-business outputs play a crucial role in evaluating bank efficiency. The findings show that e-payment services have brought positive effects to bank efficiency, and that mobile banking services increase the frequency of banking transactions performed by customers, leading to increased bank efficiency.

Impact of the level of bank liquidity on the relationship between concentration and bank efficiency: the case of the WAEMU

In this article, we investigate the impact of bank liquidity level on the relationship between bank concentration and efficiency using a panel dataset of 60 banks across 7 WAEMU countries over the period 2005-2016. Our empirical methodology is based on the 2SLS IV estimator and non-linear analysis. Our results show that the concentration of the banking sector and the bank liquidity are negatively correlated with cost efficiency in the WAEMU. This is consistent with the Quiet Life Hypothesis which established that concentrated market incites suboptimal behaviors damaging to the banking profitability. However, the effects of concentration on cost efficiency are reduced for banks with lower levels of excess liquidity. This result shows that the holding of excess liquidity reinforces the effects of the Quiet Life Hypothesis.

The Impact of Liberalization on Determinants of Bank Efficiency: Evidence from Malaysian Commercial Banks

This paper aims to examine the impact of liberalization in 2009 on the determinants of bank efficiency in Malaysia by employing a two-stage approach within the context of the growing number of foreign commercial banks. Commercial banks can play a vital role in the internationalization and diversification of Malaysia's financial sector. In the initial stage, measuring the efficiency score of 19 commercial banks throughout 2008 to 2019 by using the Data Envelopment Analysis (DEA). Multivariate panel regressions were then used to determine the impact of liberalization on the determinants of bank efficiency in 2009. As a result, domestic commercial banks seem to be more competitive than their foreign counterparts. The findings signify that bank size, market power, capitalization, and liquidity all have a positive impact on technical efficiency. However, credit risk, bank diversification, and inflation all have a negative impact. The control of the effects of liberalization, bank size, capitalization, bank’s market power, and liquidity remain positive. However, bank diversification and inflation flip negative to positive, whereas credit risk becomes less explanatory. The findings will provide bank stakeholders, regulators, investors, and regulators with important insights into the impact of liberalization measures on bank efficiency and its determinants.

A Comprehensive Analysis of the Effects of Capital Regulation and Heterogeneity on Bank Efficiency

This article analyzes the impact of capital regulation on bank efficiency using panel data from 165 commercial banks in China from 2013 to 2019. The results indicate that cost efficiency changes slightly and profit efficiency fluctuates greatly. Under the pressure of capital regulation, the profit efficiency of commercial banks with sufficient capital improves, while profit efficiency of banks with insufficient capital decreases slightly, and the cost efficiency of all commercial banks increases. Based on the heterogeneity analysis of banks, it is found that the cost efficiency and profit efficiency of different types of commercial banks differ significantly in response to capital regulation.

INFLUENCE INCOME DIVERSIFICATION, BANK LIQUIDITY, AND FINANCIAL LAVERAGE ON PROFITABILITY WITH BANK EFFICIENCY, AS INTERVENING VARIABLES IN SHARIA COMMERCIAL BANKS 2015-2019

The purpose of this study was to determine the effect of Income Deverfication, Bank Liquidity, and Financial Laverage on Profitability with Bank Efficiency, as an Intervening variable in Islamic Commercial Banks in 2015-2019. This research uses quantitative research by using regression analysis as data analysis. This study uses secondary data in the form of time series annual data of Islamic commercial banks for the period 2015 to 2019. The required data is then analyzed using the SPSS 22 application tool. The results show that FBI, FDR have a positive and non-significant effect on ROA, DER has a negative and no effect. significant effect on ROA, FBI, FDR positive and not significant effect on ROA, DER negatively and not significant on ROA, BOPO positive and significant effect on ROA.Keywords: Income Deverfication, Bank Liquidity, and Financial Laverage on Profitability with Bank EfficiencyAbstrak Tujuan penelitian ini dilakukan adalah untuk mengetahui pengaruh Pengaruh Income Deverfication, Bank Liquidity, dan Financial Laverage terhadap Profitability dengan Bank Effeciency, sebagai variabel Intervening pada Bank Umum Syariah Tahun 2015-2019. Penelitian ini menggunakan jenis penelitian kuantitatif dengan menggunakan analisis regresi sebagai analisi data. Penelitian ini menggunakan data sekunder berbentuk time series data tahunan bank umum syariah periode 2015 sampai 2019. Data yang diperlukan kemudian dianalisis menggunakan alat bantu aplikasi SPSS 22. Hasil penelitian menunjukan bahwa FBI, FDR berpengaruh positif dan tidak singnifikan terhadap ROA, DER berpengaruh negatif dan tidak singnifikan terhadap ROA, FBI, FDR berpengaruh positif dan tidak singnifikan terhadap BOPO, DER berpengaruh negatif dan tidak singnifikan terhadap BOPO, BOPO berpengaruh positif dan singnifikan terhadap ROA.Kata Kunci: Income Deverfication, Bank Liquidity, dan Financial Laverage terhadap Profitability dengan Bank Effeciency.

Does bank governance affect risk and efficiency? Evidence from Islamic banks in GCC countries

Purpose The motivation of the study is to shed further light on the question of whether the governance structure of Islamic banks (IBs) has an impact on the efficiency and risk of Islamic banks operating in the Gulf Cooperation Council (GCC) after the global financial crisis and during the period 2010–2018. This study aims to examine the extent of governance structure on the efficiency and risk of IBs as the effect of the financial crisis has been less on IBs. In addition, the authors are interested in the GCC region as it represents the hub of Islamic finance. Design/methodology/approach In this study, the authors examine how the banking governance structure affects the risk-taking and performance of IBs in the GCC countries between 2010 and 2018. The authors construct a banking governance index (CGI) composed of sub-indices for the board structure, risk management, transparency and disclosure, audit committee, Sharia supervisory board and investment account holders. Unlike the majority of previous studies, bank performance is measured with technical efficiency scores using a data envelopment analysis and the authors use a comprehensive CGI. Findings The results show that IBs in GCC countries adhere to 54% of the attributes covered in the CGI. The authors also note a lack of disclosure regarding the investment account holders and the audit committee. As well, the results indicate that bank governance is positively associated with risk-taking and bank efficiency. Banking risk is influenced by the Sharia board and risk management while bank efficiency is affected by the characteristics of the board structure and investment account holders. Originality/value To the best of the authors’ knowledge, this is the first study that has developed a comprehensive governance index for IBs in GCC countries that includes a wide range of governance dimensions. The study contributes to the literature on governance in the banking sector by simultaneously examining its impact on the risk-taking and efficiency of IBs and recognizes the dynamic relation between these three variables for IB.

How Does Bank Diversification Affect Efficiency? Insights of the Central Europe

This study empirically aims to investigate the influence of diversification on cost efficiency in the context of 10 Central European countries’ (such as Hungary, Poland, Germany, Slovakia, Slovenia, Romania, Croatia, Serbia, Czech Republic and Switzerland) banks from 2011 to 2017 and employs two-stage least squares (2SLS) estimator as a methodological approach. It uses cost efficiency (EFF) and diversification (asset and income) as the main explanatory variables. Our baseline results show that asset and income diversification have a negative and significant effect on bank efficiency. Leverage (LEV) and the growth of gross domestic product (GDP) do not influence bank efficiency. From the bank control and macro-economic level variables, it is found that one-year lagged cost efficiency (EFFLAG), assets diversification (AD), income diversification (ID), assets growth (AG), return on assets (ROA), return on equity (ROE), net interest margin (NIM) and rate of inflation (INFR) have a significantly negative relationship with the bank efficiency in the Central European countries. More importantly, both ID and AD tend decreasing the efficiency in the region.

Efficiency, Profitability and Stability of Nepalese Commercial Banks

Efficiency, profitability and stability become an area of emergent concern in the literature and the practice. This paper attempts to examine the efficiency, profitability and stability of the Nepalese commercial banks and shows the importance of banking activities rather than simply profit achieved. Descriptive and causal-comparative research designs are used and data are collected from the financial reports of respective banks and NRB reports during the period of 2011/12 to 2019/20 of 27 commercial banks with 243 observations. Descriptive statistics have been used to present quantitative data in a manageable form and the relationship between dependent and independent variables are examined using correlation, simple and multiple regression analysis. It is found a negative and significant relationship between bank efficiency and profitability; a positive and significant relationship between bank efficiency and stability. Perhaps, this paper may be the first attempt to examine the determinants of efficiency, profitability and stability of Nepalese commercial banks. It is expected this study will bring new insight into the banking field and would provide a framework and guidelines for future study in Nepalese financial sectors.

MSME lending and bank efficiency: Evidence from Indonesia

Banks prefer to lend to bigger clients for a variety of reasons, including transaction costs and risk considerations. Due to this phenomenon, the Central Bank of Indonesia issued a regulation that requires banks to channel a minimum proportion of their credit portfolio to micro, small, and medium enterprises (MSMEs). Nevertheless, the impact of channeling funds to MSMEs remains a subject of controversy, in part depending on the dimensions and metrics used. This study examines how MSME lending affects the efficiency of banks in Indonesia, a country where MSMEs constitute more than 99% of business entities. Using a total of 175 panel data observations of banks in Indonesia from 2014–2018, banks’ cost efficiency is first estimated using a stochastic frontier approach (SFA). Panel data regression is used to examine the impact of MSME lending on efficiency. The result of this study shows a significant and positive impact of the proportion of MSME lending on bank efficiency, which indicates that requiring banks to channel funds to MSMEs does not only potentially support economic development, but also is beneficial from the business perspective in the Indonesian context. AcknowledgmentThe research was also made possible with the support of PUTI Grant by Universitas Indonesia No. NKB-2036/UN2.RST/HKP.05.00/2020.