Bank lending channel and banking sector efficiency: panel data of Egypt

Shokr, Mohamed Aseel; Al-Gasaymeh, Anwar

doi:10.1108/ijoem-08-2017-0289

Cited by 17 publications

(14 citation statements)

References 73 publications

(120 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Conversely, the indirect effect of the global financial crisis is important, as the crisis increases the cost of borrowing. These results are consistent with findings on bank lending channel as indicated by Bernanke and Blinder (1988), Ehrmann et al (2002), Kandrac (2012), Abdul Karim et al (2011) and Shokr and Al-Gasaymeh (2018).…”

Section: Discussionsupporting

confidence: 93%

Real interest rate, income and bank loans: panel evidence from Egypt

Shokr

2019

JFEP

Self Cite

View full text Add to dashboard Cite

Purpose This paper aims to examine the effectiveness of monetary policy on bank loans in Egypt using generalized method of moments (GMM) model. Also, it investigates the impact of bank level variables, namely, total assets, liquidity, capital and income on bank loans. It develops the equation of loans, which is introduced by Ehrmann et al. (2002) using bank level variables such as income and the interaction between income and interest rate. Design/methodology/approach This paper examines the impact of monetary policy shocks on bank loans in Egypt by applying the GMM technique and panel data from 1996 to 2014. Findings The results reveal that real interest rate has a significant impact on bank loans, which indicates that the bank lending channel is effective in Egypt. Furthermore, the bank level variables, namely, banks’ size, liquidity and income have significant effects on bank loans in Egypt, which sustains the heterogeneous effect of monetary policy on bank loans. Therefore, the Central Bank of Egypt (CBE) can adjust interest rate to influence the bank loans and total demand. Research limitations/implications It does not examine the effect of monetary policy on small and large banks in Egypt. Practical implications The policy implications from this paper indicate that the monetary authority in Egypt should adjust interest rate to stabilize the bank loan supply. By stabilizing the bank loans, the monetary authority is able to stabilize investment, consumption and total demand. Social implications The relevance of bank lending channel indicates that the role of commercial banks is very important in transmitting monetary policy shocks to the real sector. Originality/value It is important for the CBE, banks and people because it shows the effectiveness of bank lending channel and the effect of global financial crisis on the Egyptian economy.

show abstract

Section: Discussionsupporting

confidence: 93%

Real interest rate, income and bank loans: panel evidence from Egypt

Shokr

2019

JFEP

Self Cite

View full text Add to dashboard Cite

show abstract

“…panel data has small number of time periods (T) and large number of individuals (N) which is the case in the present study (Shokr and Al-Gasaymeh, 2018). There are two GMM estimation methods, namely difference GMM and system GMM.…”

Section: Drivers Of Ict Investments In Food Sectormentioning

confidence: 94%

“…Further, there are two forms of system GMM such as one-step system GMM and two-step system GMM. The present study uses two-step system GMM since it is considered to be better than one-step system GMM in determining coefficients with lower bias and standard error (Shokr and Al-Gasaymeh, 2018). Further, the application of GMM method requires the validity of the instruments.…”

Section: Drivers Of Ict Investments In Food Sectormentioning

confidence: 99%

Drivers of ICT investments in bakery and sugar confectionery processed food sub-sector in India

Bhat

2020

JADEE

View full text Add to dashboard Cite

PurposeInformation and communication technology (ICT) is a general-purpose technology, which plays an important role in improving the efficiency of a business firm. Nowadays, investment on ICT has become necessary for every business firm in different sectors of the economy. However, firms need to be very cautious while investing on a particular ICT, which is suitable for their businesses. Thus, it becomes necessary for the firm to understand its internal organizational characteristics to invest better on ICT. Therefore, the objective of the present study is to understand the organizational factors, which influence investment on ICT at the firm level.Design/methodology/approachThe technology–organization–environment (TOE) framework is adopted to understand the organizational factors which influence a firm's ICT investment. The sample for the study is the firms belonging to bakery and sugar confectionery sector, which is one of the important sub-sectors of processed food industry in India. The data for analysis is extracted from a secondary source, namely the Prowess Database. The study uses two-step system GMM, a method of generalized method of moment (GMM), to identify the organizational determinants of ICT investment at the firm level.FindingsThe study finds that previous-year investment on ICT has a significant impact on firms' present-year investment on ICT. The result of the econometric method also shows that firms which are larger, labour-intensive and highly liquidated are the ones investing more on ICT in the present study.Research limitations/implicationsAs mentioned, the study examines the ICT investment determinants of firms belonging to one of the important sub-sectors of processed food industry of the Indian economy. However, the result of the study is not to be generalized since it is related only to a specific industry. Further, the data used in the study is limited by secondary sources and therefore, requires data from primary sources for in-depth investigation of ICT investment determinants at the firm level.Originality/valueThis paper bridges a research gap by examining the determinants of ICT investment of one of the important industry sectors in particular to developing countries. The paper contributes to the growing research on information technology adoption by using factors within the TOE framework to explain a processed food firm's investment on ICT.

show abstract

“…For example, the Z-risk index is used to investigate the lending structure of Malaysia (Rahman et al, 2009). Houston et al (2010), Beck et al (2010), Demirgüç-Kunt and Detragiache (2011), Qusima et al (2014 and Aseel and Al-Gasaymeh (2018) have used insolvency risk to study financial stability and integrity in different nations. Bertay et al (2013) calculated a Z-score using the average return on assets value, the equity-to-assets ratio and the standard deviation of the return on assets for a 20-year sample period.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Improved capital banks, ceteris paribus, will have a better chance of survival and better performance. In general, when the risk index of Z is high, this will give an index with a lower risk of insolvency (Al- Gasaymeh, 2018;Aseel and Al-Gasaymeh, 2018;Boyd and Graham, 1986;Boyd et al, 1993). After estimating the six types of risk metrics, we then analyze our research design based on equation ( 1) using an unbalanced regression estimate of the generalized least squares panel with annual data.…”

Section: Z-risk Indexmentioning

confidence: 99%

Measuring risk exposure in the banking sectors: evidence from Gulf Cooperation countries

Al-Gasaymeh

Kaddumi

Qasaimeh

2021

JFEP

View full text Add to dashboard Cite

Purpose Using capital asset pricing model (CAPM) and the Z-risk index based on weekly data, this study aims to estimate yearly unsystematic, total, three systematic and insolvency risks in the Gulf Cooperation Council (GCC) countries for the period 2010–2018. The findings of CAPM show positive systematic market risk exposure in all GCC countries for all years, which support the contribution of stock markets to bank prices and returns. The mixed signs of systematic interest rate and exchange rate risks in GCC countries provide hedging opportunities, diversification strategies and regional cooperation, which help risk managers to hedge and stabilize their portfolios against interest rate and exchange rate fluctuations. Therefore, it is necessary that managers and policymakers develop a monitoring system on factors affecting bank insolvency risks to avoid bankruptcies and insolvencies. Design/methodology/approach This study uses the three-factor CAPM and Z-risk index to measure six types of risks. The CAPM uses market information to estimate the sensitivity of banks to the fluctuations of equity markets, debt markets and foreign exchange markets. Sharpe (1964), Lintner (1965) and Treynor (1965) developed a single-factor CAPM and the coefficient of the model was called systematic market risk. The single-factor CAPM highlights stock markets as the only non-diversifiable source of systematic risks, whereas Stone (1974) and Jorion (1990) highlighted interest rate and exchange rate fluctuations as the other types of non-diversifiable systematic risks. The following functional form in equation (1) estimates five types of risks using CAPM. Findings The findings of CAPM show positive systematic market risk exposure in all GCC countries for all years, which support the contribution of stock markets to bank prices and returns based on CAPM theory. The mixed signs of systematic interest rate and exchange rate risks in GCC countries support hedging opportunities and diversification strategies which may help risk managers to hedge and stabilize their portfolios against the fluctuations of interest rate and exchange rate. Although, this policy may decrease the profits of banking sectors but at the same time it would stabilize the portfolios and prevent bankruptcies and big losses because of the fluctuations of interest rate. Moreover, a bank has a better chance to have more liquidity position during financial crises because of the diversifications into different regional markets. Research limitations/implications Therefore, this study contributes to the existing literature by using risk measurement by a three-factor CAPM and the Z-risk index as discussed further in methodology. Originality/value It is necessary that managers and policymakers develop a monitoring system on factors affecting bank insolvency risks to avoid bankruptcies and insolvencies.

show abstract

Bank lending channel and banking sector efficiency: panel data of Egypt

Cited by 17 publications

References 73 publications

Real interest rate, income and bank loans: panel evidence from Egypt

Real interest rate, income and bank loans: panel evidence from Egypt

Drivers of ICT investments in bakery and sugar confectionery processed food sub-sector in India

Measuring risk exposure in the banking sectors: evidence from Gulf Cooperation countries

Contact Info

Product

Resources

About