The Endogeneity Quagmire Empirical Evidence from Telecommunication Industry of Pakistan

Purpose: The current research aims to analyze the particular quagmire of endogeneity by considering panel data with the renowned challenge of limited periods. Design/Methodology/Approach: More specifically, the empirical methodology is applied to a novel sector of Telecommunications in Pakistan by analyzing the possible relationship between Operational Risk and a Telecommunication company’s financial performance. The efficacy of the results is further tested by additional tests of GMM. Operational risk in the study is proxied with three variables. Performance is measured in terms of Returns with respect to Equity holders and Total Assets. From the point of view of management, Asset utilization is also used as a proxy for financial performance. Findings: Results show a presence of a significant and a negative relationship between operational risk and management performance and returns, thereby emphasizing the importance of operational risk management for enhanced performance in light of the theory of performance frontiers introduced by Schmenner and Swink in 1998. Implications/Originality/Value: The results suggest that the focus on operational risk management should be revitalized if the firms seek improved performance and a sustainable competitive advantage.

The analysis of drivers of operational risks in Nigerian commercial banks

Despite the institutionalization of operational risk management in banks and the strict supervision of bank regulators, operational risk events are still on the increase. It is becoming evident to banks that there is a need to identify the drivers of this risk and nib it at the root to reduce the probability of recurrence. Hence, this study examined the drivers of operational risks in Nigerian commercial banks and the extent to which each driver contributes to operational risk. To achieve the study’s objectives, primary data were collected from the Operational Risk Management Desks of six (6) sampled commercial banks and analyzed using SPSS and Microsoft Excel. The result showed that Internal processes, IT systems and Quality of Risk Officers are determinants of operational losses in banks. The internal process was however indicated as having the most impact. The study concluded that Internal Process is the major driver of operational risk in Nigerian Commercial banks. The researcher, therefore, recommends that bank management must have defined procedures for core activities and prioritize regular review of their critical processes to reduce operational risk events and the associated costs.

Operational Risk Management and Customer Complaints in Omani Banks

The aim of this research is to analyze the relationship between operational risk management and customer complaints in Omani banks. Initially, the current research carried out a quantitative approach on the concepts which connect the variables of the current research, where the data have been collected via a survey on commercial banks in Oman. The findings demonstrate that the operational risk management has a negative and significant link with customer complaints due to there is a proper manner in dealing with risks. On the other hand, the findings revealed that there is a negative impact on absence to deal with risks facing Omani banks. Also, it has been noted that in the event of an increase in operational risk management, customers' complaints are decreased. The current research has added a value and notable contribution lies in its elucidation for the importance of the impact of operational risk management on customer complaints in Omani banks

Impact of Ownership Structure and Firm Size on the Operational Risk Management of Islamic Banks in Pakistan

This study investigates the impact of ownership structure and firm size on the operational risk management (ORM) in the context of Islamic banks in Pakistan. ORM is the excess capital acquired after subtracting actual capital from minimum capital required for handling operational risk. While, the bank size is measured as deposit plus advances or log of total assets. The Basic Indicator Approach (BIA), and Standardize Approach (STA) is used to measure the minimum capital required for managing operational risk. A panel data set of 19 Islamic banks listed on the Pakistan Stock Exchange (PSX) is analyzed over the period from 2012 to 2016.Three important observations are provided by the results; first increase in the size of the Islamic banks tend to lower the surplus capital maintain by banks for managing operational risk. Second, a significant positive relationship is reported between excess capitals required for managing operational risk and public owned Islamic banks. Third, the results are reported as robust as all three regression model provided similar results.