Bank consolidation and financial stability in Indonesia

Yusgiantoro, Inka; Soedarmono, Wahyoe; Tarazi, Amine

doi:10.1016/j.inteco.2019.06.002

Cited by 33 publications

(25 citation statements)

References 29 publications

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“…Because bank risk-taking is persistent over time and to deal with endogeneity concerns, we use dynamic panel data estimation techniques. The current values of our dependent variable, bank risk-taking, are likely to depend on their one-year lagged values which can be accounted for by utilizing dynamic panel data estimation techniques Yusgiantoro et al, 2019;Ahamed and Mallick, 2019;Moudud-Ul-Huq, 2019). Dynamic panel data estimation considers the one-year lagged dependent variable as an explanatory variable and further helps to endogenize the rest of the explanatory variables in the model.…”

Section: Methodsmentioning

confidence: 99%

Financial inclusion and bank stability: evidence from Europe

Danışman

Tarazi

2020

The European Journal of Finance

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The Great Recession of 2007-2009 piqued the interest of policymakers worldwide, prompting various initiatives to stabilize the financial system and advance financial inclusion.However, few studies have considered their interconnectedness or whether any synergies or trade-offs exist between them. This paper investigates how financial inclusion affects the stability of the European banking system. The findings indicate that advancements in financial inclusion through more account ownership and digital payments have a stabilizing effect on the banking industry. A deeper investigation shows that such a stabilizing impact is mainly driven by the targeting of disadvantaged adults who are young, undereducated, unemployed, and who live in rural areas. Hence, along with its known benefits to society as a whole, financial inclusion has the additional benefit of improving the stability of the financial system. Such findings call for policy configurations that are specifically designed to achieve financial inclusion for disadvantaged individuals.

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Section: Methodsmentioning

confidence: 99%

Financial inclusion and bank stability: evidence from Europe

Danışman

Tarazi

2020

The European Journal of Finance

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“…Bank profitability is of utmost importance within the current context, and its determinants have been, hence, evaluated and represented in the empirical papers of numerous scholars. Most of the researchers employed both internal and external indicators to determine bank profitability (Abdelaziz et al, 2020; Al-Homaidi et al, 2020; Almaqtari et al, 2019; Jadah et al, 2020; Tabash et al, 2017;Yusgiantoro et al, 2019;Zampara et al, 2017). Ensuing the previous works done in this paper, profitability is taken as an explained variable, whereas internal/bank-specific and external/macroeconomic indicators are employed as explanatory variables.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of Profitability: A Case of Commercial Banks in Pakistan

Farooq

Khan

Siddiqui

et al. 2021

HSSR

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Purpose of the study: This study aims to investigate the impact of bank-specific and macro-economic factors on commercial banks profitability in Pakistan. Methodology: This study uses both internal and external factors as independent variables. Internal factors are inclusive of capital adequacy, operational efficiency, deposit ratio, liquidity, leverage, number of branches, and bank size, while external indicators are pertaining to GDP, rate of inflation, interest rate, and rate of foreign exchange. Return on assets, return on equity, and net interest margin is employed as proxies for measuring profitability. Balanced panel data of 25 commercial banks over a period ranging from 2009 to 2018 is analyzed through descriptive statistics and fixed effects regression model. Main Findings: The empirical findings revealed that among internal factors, capital adequacy ratio, deposit ratio, leverage ratio, liquidity ratio, and bank size significantly affect the return on asset, while in the case of macro-economic factors, inflation rate, exchange rate, and GDP have a significant impact on return on asset. On the other hand, return on equity is significantly affected by deposit ratio, leverage ratio, and operational efficiency, whereas among macro-economic factors, only the inflation rate had a significant effect on return on equity. Furthermore, in the case of net interest margin, among internal factors, capital adequacy ratio, deposit ratio, bank size, and the number of branches have a significant impact on net interest margin, whereas, among macro-economic factors, interest rate, inflation rate, and exchange rate significantly affected net interest margin. Applications of this study: This study has greater importance for government, bank managers, investors, academicians, and scholars. Originality/Novelty: In this study, the number of branches is taken as a novel factor in Pakistan's case and bridges the gap in the banking literature of Pakistan.

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“…Unlike the prior literature (Fu et al, 2014;Santoso et al, 2021;Yusgiantoro, Soedarmono, & Tarazi, 2019), this study contributes to several aspects of the literature. First, prior research used pre-GFC datasets.…”

Section: Introductionmentioning

confidence: 99%

Does Institutional Quality Matter in the Relationship Between Competition and Bank Stability? Evidence from Asia

Muizzuddin

Tandelilin

Hanafi

et al. 2021

JIEB

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Introduction/Main Objectives: This study aims to investigate whether competition impacts bank stability. Furthermore, the study also analyzes the role of institutional quality in a country, such as voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law, and control of corruption, forming the effect of competition on bank stability. Background Problem: Analysis of the relationship between competition and bank stability has been at the center of academic and policy debate. However, the theoretical and empirical research has not concluded whether bank competition leads to more or fewer stable banks. Novelty: We consider institutional quality's role in mitigating the negative impact of competition on bank stability, which has mainly been under-elaborated in prior studies, particularly in using measures from The World Bank’s Worldwide Governance Indicators, which measure how the institutions of each country influence bankers’ and the people's behavior, as part of the cultural system. Research Methods: Using a sample of 427 Asian commercial banks from 2011 to 2019, we employ the generalized method of moments (GMM) estimator and consider loan growth and the cost to income ratio as instrumental variables. Findings/Results: We find robust evidence that competition erodes bank stability. Besides, better institutional quality, especially government effectiveness, regulatory quality, the rule of law, and corruption control in each country are important aspects that promote bank stability and mitigate the negative impact of competition on bank stability. Conclusion: Competition has a negative impact on bank stability. Meanwhile, the quality of institutions can both promote bank stability and mitigate this negative relationship.

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Bank consolidation and financial stability in Indonesia

Cited by 33 publications

References 29 publications

Financial inclusion and bank stability: evidence from Europe

Financial inclusion and bank stability: evidence from Europe

Determinants of Profitability: A Case of Commercial Banks in Pakistan

Does Institutional Quality Matter in the Relationship Between Competition and Bank Stability? Evidence from Asia

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