The Role of Net Interest Margin in Improving Banks’ Asset Structure and Assessing the Stability and Efficiency of their Operations

Saksonova, Svetlana

doi:10.1016/j.sbspro.2014.09.017

Cited by 45 publications

(36 citation statements)

References 15 publications

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“…This suggests that bank margins are a more powerful indicator of growing vulnerabilities in the banking sector. In line with the argument of Saksonova (2014), we also opine that the ROA and ROE are more traditional measures of performance, which have recently been criticised on the grounds that these measures are subject to the influence of bank managers who are able to use their discretion over the accruals items such as depreciations and allowances, which results in high or low income being reported, depending on the incentives, and hence influencing the ROA or ROE reported ratios.…”

Section: Bank Marginssupporting

confidence: 65%

“…It would be argued that diversification of income is a good sign, but it is important to underscore that Islamic banks' main operation is premised on investment and providing financing and accepting deposits of customers. Moreover, Saksonova (2014) contended that banks' margins concisely summarise the effectiveness of banks' interest-bearing assets. The larger the net interest margin, Efficiency, Asset Quality and Stability of the Banking Sector in Malaysia the more successfully does the bank manage its interest-bearing assets.…”

Section: Bank Marginsmentioning

confidence: 99%

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Efficiency, Asset Quality and Stability of the Banking Sector in Malaysia

Ariff

Shawtari

2019

MJES

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Malaysia practices a dual banking system, where conventional banks coexist with Islamic banks. While conventional banks are well established, Islamic banks are growing rapidly. Since Islamic banks consist of two types, namely stand-alone or wholesome Islamic banks and Islamic subsidiaries of conventional banks, it would be revealing to examine if Islamic subsidiaries of conventional banks differ from standalone Islamic banks in terms of efficiency, stability and assets quality. A few studies in the literature that examine the issue have focused on comparisons between Islamic banks and conventional banks, with no consideration given to the differentiation between the two categories of Islamic banks. In this paper, we attempt to examine the differences among the players in the banking sector in Malaysia. This paper extends the traditional analysis of conventional versus Islamic banks to comparisons between stand-alone Islamic banks and Islamic subsidiaries of conventional banks. Using dynamic panel data "generalized methods of moments" (GMM), the study reports that there are differences among different types of banks, viz. conventional banks, Islamic subsidiaries of conventional parents, and stand-alone Islamic banks. It shows that Islamic subsidiaries of conventional banks perform better than stand-alone Islamic banks as well as their own conventional parents. Furthermore, the results show that Islamic subsidiaries are more stable in term of their financing income compared to the rest of the banks, while the stand-alone banks have lower asset quality in comparison with both Islamic subsidiaries and their parents.

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Section: Bank Marginssupporting

confidence: 65%

Section: Bank Marginsmentioning

confidence: 99%

Efficiency, Asset Quality and Stability of the Banking Sector in Malaysia

Ariff

Shawtari

2019

MJES

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“…Saksonova (2014) argued that net interest margin was the most appropriate criterion for the evaluation of the effectiveness of banks. He further said that it was superior to the return on the asset as it measured how effectively a bank manages its interest-bearing asset.…”

Section: Objective Of the Studymentioning

confidence: 99%

Relationship between Liquidity Risk and Net Interest Margin of Conventional Banks in Bangladesh

2016

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Net interest margin (NIM) of a bank depends on several firm-specific factors. The aim of the study was to determine the effect of liquidity risk on the profitability indicating variable NIM of the conventional banks in Bangladesh. Seven banks were analyzed using the annual reports of the banks for the period of 2011 to 2015. Researchers applied descriptive statistics, correlation, and regression analysis to find out the results. The findings of the study provided evidence that cash to asset (CA) ratio had a negative relationship with NIM but a loan to asset (LA) ratio had a positive effect on the NIM. There was also a significant positive relationship between NIM and loan to deposit (LD) ratio. From the regression analysis it was clear that the LD, CA, and LA were able to explain the changes of NIM of the banks. JEL Classifications: G 21

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“…However, it does succinctly summarize the effectiveness of banks' interest-bearing assets. (Saksonova, 2014). NIM's formula is:…”

Section: Earning (Pro Itability)mentioning

confidence: 99%

Banking Health Assessment of Commercial Banks in Indonesia Using RGEC Methods: A Comparative Study

Daryanto

Utami

Rakhmawati

2019

IJBS

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The study aims to analyze and compare the banking health assessment of commercial banks in Indonesia using RGEC methods. RGEC methods are included Risk Proile, Good Corporate Governance, Earnings, and Capital (RGEC). This study used descriptive with quantitative approach. The variables in this study includes Risk Proile using ratio of Non-Performing Loans (NPL) and Loan to Deposit Ratio (LDR), Good Corporate Governance (GCG) using Composite Rating GCG, Earnings using ratios of Return on Assets (ROA), Net Interest Margin (NIM), and Capital using Capital Adequacy Ratio (CAR). The data were collected from audited inancial report of two commercial banks in Indonesia which are PTBank UOB Indonesia and PTBank KEB Hana Indonesia for the period 2013 to 2017. The result showed that the inancial health level of PT Bank UOB Indonesia and PT Bank KEB Hana Indonesia was quite healthy. It indicates that the ability of the corporate's performance results had achieved very well.

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The Role of Net Interest Margin in Improving Banks’ Asset Structure and Assessing the Stability and Efficiency of their Operations

Cited by 45 publications

References 15 publications

Efficiency, Asset Quality and Stability of the Banking Sector in Malaysia

Efficiency, Asset Quality and Stability of the Banking Sector in Malaysia

Relationship between Liquidity Risk and Net Interest Margin of Conventional Banks in Bangladesh

Banking Health Assessment of Commercial Banks in Indonesia Using RGEC Methods: A Comparative Study

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