Search Results (111)

Bank performance depends not only on capital strength but on the governance environment in which that capital operates. Yet existing studies treat capital buffers and institutional quality as parallel, additive drivers, thereby underexploiting their interaction. This study examines how capital adequacy and governance quality jointly shape bank performance across five Asian banking systems, Hong Kong, South Korea, Taiwan, Malaysia, and Vietnam, using 1628 bank-year observations from 123 deposit-taking institutions between 2010 and 2022. Return on assets, net interest margins, non-performing loans, and loan-to-deposit ratios capture performance. System GMM estimation with Bayesian diagnostics addresses endogeneity and dynamic persistence. Stronger Tier 1 capital reliably enhances profitability while compressing margins, consistent with a resilience–spread trade-off. Governance quality exhibits conditional and non-linear effects, beneficial in mid-capacity systems such as Malaysia and Vietnam, but plateauing or attenuating in mature regimes. Islamic banks demonstrate weaker responsiveness to governance reforms, reflecting contractual distinctiveness that standard prudential frameworks overlook. Post-COVID-19 interventions further attenuate capital’s profitability effect, underscoring the context-dependence of regulatory mechanisms. Integrating the Resource-Based View with Institutional Theory, the study advances a contingent resource-in-context framework in which capital functions as a portable safeguard while governance acts as an institution-dependent multiplier, offering regulators a basis for calibrating capital and governance policy asymmetrically. Full article

This study investigates the relationship between banking sector stability and economic growth in Ethiopia, employing a dynamic panel data approach with the Two-Step System Generalized Method of Moments (GMM). The analysis uses a balanced dataset from 13 Ethiopian commercial banks covering 2014 to 2023, gathered from the World Bank database, the National Bank of Ethiopia, and audited financial statements. Banking sector stability is assessed using indicators such as Z-score, non-performing loan (NPL) ratio, capital adequacy ratio (CAR), liquidity ratio (LR), return on assets (ROA), and loan-to-deposit ratio (LDR), along with key macroeconomic and institutional factors. The results show that banking stability, as indicated by Z-score, liquidity ratios, and profitability, has a positive and significant effect on economic growth, confirming the sector’s role in promoting development. Surprisingly, a positive correlation between NPLs and economic growth suggests unique structural features in the Ethiopian banking system that warrant further investigation. Other variables, such as inflation rates, government expenditure, and gross domestic savings, positively influence economic growth, whereas foreign direct investment is negatively associated with it. The study highlights the importance of enhancing the stability of the banking sector by implementing robust regulatory frameworks, prudent risk management practices, and improved profitability to support sustainable economic development in Ethiopia, while calling for additional research into the unexpected effects of NPLs and FDI amid ongoing financial reforms. Full article

The stability of Indonesia’s banking sector is closely linked to the effectiveness of capital regulations, particularly as a country that aligns its policies with Basel III standards. Ensuring that banks have adequate capital buffers is crucial for mitigating systemic risk. However, the interaction between regulatory requirements and actual banking behavior in developing countries remains poorly understood. This study aims to evaluate the impact of Indonesia’s capital requirement instruments, including the countercyclical capital buffer (CCyB), the capital conservation buffer (CCB), and the capital surcharge, on credit performance and financial stability across various bank categories. Using a quantitative approach, the analysis utilizes panel data from commercial banks, state-owned banks and regional development banks over several periods, using the panel regression method and Difference-in-Differences (DID) to assess how changes in buffer levels affect credit growth, Non-Performing Loans (NPLs), and the Capital Adequacy Ratio (CAR). The results show that capital buffers have a statistically significant effect on lending behavior: a 1% increase in buffer levels is associated with a measurable decrease in credit expansion across several bank groups, while CCBs exhibit a stronger stabilizing effect than CCyBs. Although these instruments do not eliminate financial uncertainty, they contribute to more prudent risk-taking. This study also revealed that the CCyB rate increases when the financial cycle is in an expansionary phase. Conversely, if the economy slows (as during the pandemic), the CCyB rate can be lowered back to 0% to encourage bank intermediation, thus shaping the bank’s responses to regulation. Several implications of implementing a capital buffer in Indonesia include the benefits of resilience and bank behavior during credit expansion. Overall, this study concludes that aligning regulatory frameworks with real-world banking behavior is crucial for enhancing financial stability in developing countries, such as Indonesia. Full article

The life insurance sector plays a critical role in financial system stability but is inherently exposed to extreme market fluctuations due to long-term liabilities and asset–liability mismatches. This study investigates extreme losses in the growth rates of the JSE Life Insurance Price Index (LIPI) using the Generalised Extreme Value Distribution (GEVD) and the Generalised Pareto Distribution (GPD) under the Extreme Value Theory (EVT) framework. Monthly data from January 2000 to October 2023 were transformed into a loss series, and extreme events were captured using quarterly block maxima and a POT threshold at the 95th percentile. Model parameters were estimated through Maximum Likelihood Estimation, and downside risk was assessed using return levels, Value-at-Risk (VaR), and Tail Value-at-Risk (tVaR). The GEVD model produced a negative shape parameter, consistent with a bounded Weibull-type tail, while the GPD indicated a heavy-tailed distribution. Return level estimates show escalating loss magnitudes and widening uncertainty over longer horizons, reflecting the challenges of projecting rare events. Kupiec backtesting confirms the adequacy and reliability of the GEVD-based VaR across all confidence levels, whereas the GPD underestimates risk at lower thresholds. These findings indicate significant tail risk within the South African life insurance equity segment and underscore the importance of EVT-based risk measures for capital planning and regulatory oversight. The study contributes to financial risk modelling in the life insurance sector and offers practical insights for strengthening solvency assessment and enterprise risk management frameworks. Full article

Objective: Village Health Volunteers (VHVs) are vital to Thailand’s primary healthcare, yet many face high risks for non-communicable diseases (NCDs). This preliminary study aimed to implement health empowerment theory-based personalized health promotion for individuals in the NCD-risk group. Methods: The preliminary mixed-methods study implemented a 6-month empowerment-based health promotion program for 21 VHV leaders (mean age 62.43 ± 7.28 years) at risk for NCDs. The intervention integrated laboratory data, behavioral and qualitative focus-group insights, and quantitative anthropometric data obtained via bioelectrical impedance analysis (BIA). Results: Participants’ exercise adequacy significantly improved after the intervention, increasing from 8.3% to 61.9% (p = 0.03). BIA revealed a physiological shift toward improved energy homeostasis, including decreased body weight, reduced visceral fat area, and increased muscle hydration. While biochemical markers did not reach statistical significance, clinically favorable downward trends were observed in median HbA1c (8.0% to 7.3%) and LDL cholesterol (141.8 to 119.0 mg/dL), alongside stable renal and liver function. Qualitative thematic analysis identified four primary domains of impact: sustainability and systemic advocacy, personal transformation, broad competence acquisition, and enhanced social capital. Participants reported a marked increase in self-efficacy, transitioning from inactive beneficiaries to active health advocates. This change was largely driven by mastery experiences, such as visible improvements in body composition and functional health literacy. Conclusions: The empowerment program significantly improved physical activity and body composition while fostering the social capital and health literacy necessary for community leadership, suggesting that personal health mastery is a critical precursor to effective systemic advocacy and long-term sustainability in community-led health programs. Full article

This study examines whether international food price dynamics provide a reliable signal of undernourishment and human development outcomes relevant to the attainment of SDG 2 (Zero Hunger) by 2030. We apply wavelet coherence analysis to the FAO Food Price Index and the prevalence of undernourishment (SDG Indicator 2.1.1) over 2001–2023, testing statistical significance against an AR(1) red-noise null hypothesis. Hybrid ARIMA–Random Forest models generate probabilistic price forecasts through 2030. Despite strong raw coherence (R² ≈ 0.77), only 7.8% of time–frequency cells achieve statistical significance, indicating that apparent co-movement largely reflects autocorrelation rather than substantive dependence. Where significant coherence emerges, it concentrates at medium-run horizons (3–6 years), consistent with undernourishment as a habitual dietary adequacy measure linked to sustained affordability pressures affecting health, productivity, and human capital formation. Rolling correlation analysis reveals suggestive evidence of a regime change around 2012—from negative to positive correlation—coinciding with a slowdown in progress toward reducing hunger, although the 5-year rolling windows yield only 19 observations, limiting the power of formal structural break tests. Price forecasts exhibit rapidly widening confidence intervals (by ±131 index points by 2030), underscoring fundamental limits to predictability. The annual PoU series comprises only 23 observations, which constrains the estimation of long-run (8–12-year) wavelet cycles; results at those horizons should therefore be interpreted with caution. These findings caution against mechanistic inferences from global price indices to hunger and human development outcomes, redirecting policy emphasis toward domestic transmission channels and nutrition-sensitive safety nets. Full article

This study examines the relationship between banks’ ESG performance and core risk and balance sheet indicators in the Turkish banking sector. Using an unbalanced panel of eight banks listed on Borsa Istanbul over the period 2008–2023, we estimate bank fixed-effects models with one-year-lagged ESG measures and controls and report Driscoll–Kraay standard errors. Two complementary specifications are employed: one based on the composite ESG score and another based on its environmental (E), social (S), and governance (G) pillars. The findings suggest that the composite ESG score is positively associated with non-performing loans and capital adequacy, while its relationship with liquidity risk and net balance sheet position/equity is less stable across specifications. When the ESG pillars are examined separately, substantial heterogeneity emerges across the E, S, and G dimensions. In particular, the environmental score is negatively associated with capital adequacy, whereas the social score is negatively associated with net balance sheet position/equity. Governance-related results appear weaker and more sensitive to specification choice. Overall, the findings indicate that ESG does not operate through a uniform risk channel in banking and should be interpreted as associational rather than causal. The study contributes evidence from an emerging-market banking system and highlights the importance of disaggregated ESG analysis. Full article

This study aims to analyze the impact of environmental, social, and governance (ESG) disclosure quality on banking risk. Data were collected from the 100 largest commercial banks in the Middle East and Africa over ten years and examined using econometric analysis to measure the influence of ESG disclosure quality on banking risks. The findings indicate that both social and environmental disclosures have high predictability, while governance disclosure shows lower predictability. A significant negative relationship exists between the ESG disclosure quality and risk. Governance disclosure, Tier 1 capital, has a strong influence, and capital adequacy has the least. Managerial and practical implications are based on bank compliance, coverage, and debt. Unlike previous studies, this study moves from ESG performance to its disclosure quality and combines the random forest method (machine learning) with dynamic panel analysis (econometrics), bringing innovation and contribution to knowledge (the stakeholder theory) and practice. Full article

In an increasingly volatile global financial environment, strong institutions and sound governance are essential for safeguarding banking stability and mitigating systemic risks in emerging economies. Across the 11 emerging economies examined, weaknesses in institutional quality and inconsistencies in governance frameworks continue to elevate credit risk and undermine financial resilience. This study investigates the effects of institutional quality (IQ) and corporate governance (CGG) on bank stability, drawing on the Financial Stability and Risk Management (FSRM) theory, which highlights robust institutions, effective risk oversight, and sound governance as core determinants of financial system strength. Using dynamic panel data from 2011–2024, the study applies the generalized method of moments (GMM) approach to assess bank performance through non-performing loans (NPLs) and Z-Score as key dependent variables. The model incorporates IQ, CGG, bank-specific characteristics (bank assets, capital adequacy, cost-to-income ratio), and macroeconomic indicators (GDP, inflation, exchange rate, real interest rate) as explanatory factors, addressing endogeneity, unobserved heterogeneity, and persistence in banking outcomes. The results reveal strong persistence in NPLs (lag = 0.965, p < 0.01) and Z-Score (lag = 0.920, p < 0.01), indicating notable path dependence in bank performance. Institutional quality significantly enhances bank stability (Z-Score coefficient = 0.073, p = 0.040), while BA shows a negative but insignificant effect (coefficient = 0.005, p = 0.432), implying that rapid asset growth without prudent risk management may weaken resilience. CGG shows negative but insignificant effects, while macroeconomic factors also appear insignificant, indicating limited short-term impact. Countries with stronger institutions, such as South Korea, display lower NPLs and higher stability, whereas weaker institutional environments like Iran, Pakistan, and Bangladesh face higher credit risk and reduced stability. Overall, the study highlights IQ and prudent balance sheet management as key to stronger bank stability, urging policymakers to reinforce institutional frameworks, tighten regulatory discipline, and ensure controlled asset growth to reduce systemic vulnerabilities. Full article

This study examines the drivers of net interest margin (NIM) in developing economies, with a particular emphasis on Ethiopian commercial banks. It adopts an explanatory research design, analyzing quantitative data from the audited financial statements of 13 banks over 13 years (2012–2024), totaling 169 observations. Both Driscoll–Kraay fixed- and random-effects standard errors were computed in RStudio (version 4.5). The primary analysis relied on Driscoll–Kraay random regression outcomes, though fixed regression results were included for robustness checks. Findings indicate that the loan-to-deposit ratio, bank size, capital adequacy, and foreign direct investment (FDI) inflows have a significant positive impact on NIM, underscoring their role in enhancing profitability and stability. Conversely, inflation significantly reduces margins, while no substantial effects were observed for operational efficiency or GDP. These insights suggest that Ethiopian banks should focus on asset growth, maintaining strong capital reserves, increasing the loan-to-deposit ratio, and attracting FDI. Policymakers are encouraged to stabilize inflation and create a conducive environment to FDI to support sectoral growth. Future research could investigate operational efficiency alongside industry-specific indexes, such as the Herfindahl–Hirschman index for loans, assets, and income, to better understand variations in NIM. Full article

This paper develops a comprehensive macro stress-testing (MST) framework to evaluate the resilience of Saudi Arabia’s financial sector against systemic risk over the period 2010–2025. The approach integrates macro financial linkages, credit risk modeling, and scenario analysis to simulate the impact of severe but plausible shocks on capital adequacy ratios (CAR) and capital shortfalls. Using Saudi macroeconomic data, the study demonstrates that GDP growth and oil price fluctuations are dominant drivers of systemic risk, while inflation and unemployment exert significant but secondary effects. Under severe adverse conditions, the banking sector’s aggregate CAR declines to 9.6%, requiring an estimated capital injection of 3.7% of GDP. The findings underscore the strength of Saudi Arabia’s financial buffers, while emphasizing the importance of dynamic capital buffer calibration, sectoral diversification, and cross-border macroprudential coordination within the GCC. Policy recommendations are provided to enhance stress-testing governance and fiscal and financial alignment. The findings highlight the importance of dynamic counter-cyclical capital buffers, sectoral diversification, liquidity resilience, and enhanced fiscal–financial coordination. Policy recommendations are provided to guide SAMA and the Financial Stability Council in capital planning, stress-test governance, and macroprudential policy design. Full article

This study formulates and verifies a network-based evaluation methodology for appraising the sustainable competitiveness of community enterprises. Based on Social Capital Theory, the Resource-Based View (RBV), and Network Theory, the model defines high-quality networks as structural relational circumstances that facilitate resource sharing and knowledge sharing, serving as mediating mechanisms that improve competitive outcomes. A quantitative study approach was utilized, gathering survey data from 451 representatives of community enterprises around Thailand, and Structural Equation Modeling (SEM) was applied to assess both measurement features and structural relationships. The model demonstrates satisfactory internal reliability, convergent validity, and discriminant validity, affirming measurement adequacy. Empirical evidence indicates that high-quality networks are positively correlated with sustainable competitiveness, both directly and indirectly, with 49.2% of the overall effect conveyed through resource and knowledge exchange, emphasizing the practical value of network-based processes. The suggested model offers practical utility for policymakers and development agencies in search of evidence-based instruments to enhance competitiveness, network capacity, and long-term resilience in community enterprises. The cross-sectional methodology and lack of contextual control variables restrict causal inference and external generalizability, highlighting the necessity for longitudinal or quasi-experimental expansions. By emphasizing model creation and empirical validation, this study develops a systematic and reproducible methodological framework for assessment. Full article

This study investigates the interplay between asset quality, financial ratios, and market valuation in Indian commercial banks over a twelve-year period (2014–2025). Using a hybrid approach combining Structural Equation Modeling, correlation analysis, and trend evaluation, the research examines whether Non-Performing Assets (NPAs) influence market capitalization directly or through Return on Equity (ROE) as an intermediary. The findings reveal that NPAs exert a significant negative impact on both ROE and market value, while Net Interest Margin (NIM) emerges as a strong positive determinant of valuation. Conversely, Capital Adequacy Ratio (CAR), though vital for regulatory compliance, shows no direct effect on market prices. Mediation analysis challenges conventional assumptions, indicating that profitability alone does not fully explain valuation dynamics. These insights underscore the need for integrated strategies addressing asset quality and operational efficiency, offering practical implications for policymakers, investors, and bank management in strengthening resilience and optimizing shareholder value. Full article

This paper develops a quantitative framework for climate–financial risk measurement that combines a spatially explicit jump–diffusion asset–loss model with prudentially aligned risk metrics. The approach connects regional physical hazards and transition variables derived from climate-consistent pathways to asset returns and credit parameters through the use of climate-adjusted volatilities and jump intensities. Fat tails and geographic heterogeneity are captured by it, which conventional diffusion-based or purely narrative stress tests fail to reflect. The framework delivers portfolio-level Spatial Climate Value-at-Risk (SCVaR) and Expected Shortfall (ES) across scenario–horizon matrices and incorporates an explicit robustness layer (block bootstrap confidence intervals, unconditional/conditional coverage backtests, and structural-stability tests). All ES measures are understood as Conditional Expected Shortfall (CES), i.e., tail expectations evaluated conditional on climate stress scenarios. Applications to bank loan books, pension portfolios, and sovereign exposures show how climate shocks reprice assets, alter default and recovery dynamics, and amplify tail losses in a region- and sector-dependent manner. The resulting, statistically validated outputs are designed to be decision-useful for Internal Capital Adequacy Assessment Process (ICAAP) and Pillar 2: climate-adjusted capital buffers, scenario-based stress calibration, and disclosure bridges that complement alignment metrics such as the Green Asset Ratio (GAR). Overall, the framework operationalises a move from exposure tallies to forward-looking, risk-sensitive, and auditable measures suitable for supervisory dialogue and internal risk appetite. Full article

As a cornerstone of the modern financial safety net, the Lender of Last Resort (LOLR) is essential in mitigating liquidity crises and containing financial contagion. However, during periods of economic stability, risk-taking incentives in the banking sector may undermine its effectiveness. Using quarterly panel data from 55 countries over the period 2010–2023, this study employs a two-way fixed effects model to assess the impact of LOLR support on systemic financial risk and its transmission mechanisms. We find that LOLR support significantly increases systemic risk during stable economic periods. Mechanism analysis indicates that this effect is channeled through the erosion of bank asset liquidity, expansion of financial leverage, and deterioration in asset quality. Moreover, the adverse impact is more pronounced in emerging economies, bank-dominated financial systems, countries with low capital adequacy ratios, underdeveloped regulatory frameworks, and lower levels of digital technology adoption. This study provides cross-country evidence on the potential negative consequences of central bank rescue functions during calm periods and offers important policy insights for optimizing the LOLR framework and building a more resilient financial safety net. Full article