The role of technical efficiency, market competition and risk in the banking performance in G20 countries

Abstract

PurposeRecently, the financial sector has faced significant challenges regarding the market competition, its technical efficiency and risk factors around the globe and gain recent researchers' intentions. Thus, the present study aims to examine the impact of technical efficiency, market competition and risk in banking performance in Group of Twenty (G20) countries.Design/methodology/approachData have been obtained from the World Development Indicator from 2008 to 2019. For analysis purpose, random effect model and generalized method of moments (GMMs) have been executed using Stata.FindingsThe results revealed that market competition and banks' capital efficiency have a positive impact on banking performance, while banks' lending efficiency and non-performing loans have a negative association with the banking sector performance of G20 countries. These outcomes provide the guidelines to the regulators that they should formulate the effective policies related to the lending practices and non-performing loans that could improve the banking sector performance worldwide.Research limitations/implicationsThe study has examined only three economic factors like the technical efficiency rate, market competition and risk element, and their influences on banking institutions' operational and economic performance. But the analysis has proved that except these factors, several factors affect banking institutions' operational and economic performance. Thus, future scholars recommend they analyze all the banking sector areas, pick more factors and enlighten their operational and economic performance influences. Moreover, the author of this article has chosen a particular source for collecting data to meet his study's objective. Only a single piece of software has been applied to analyze data; thus, the data collected for this paper may be incomplete, lack accuracy and reliability. Therefore, the future authors are recommended to use multiple sources to collect data and its analysis to ensure the comprehension, completeness and accuracy.Originality/valueLast but not least, this study with the evidences from the banking sector of G20 countries tries to show on the banking management how the risk element matters in the banking sector in an economy. It makes it clear in which areas the banking institutions may be exposed to the risks, and how much sever different kinds of risks may be. Thus, it motivates the management to set a body of persons within the organization to monitor the risks, to try to avoid them and to overcome the problems created by these risks events.

Efisiensi Kinerja Keuangan Sektor Perbankan Indonesia Di Masa Pandemi Covid-19

“…Karena adanya berbagai keutamaan yang dimiliki metode ini diantaranya adalah tidak memerlukan hipotesis kerangka fungsi produksi, karakteristik efisiensi yang dinilai berciri teknis dan tak ekonomis serta hasil nilai efisiensi berciri relatif atau berlaku dalam lingkup sekelompok Unit Kegiatan Ekonomi (UKE) yang diperbandingkan semata (Arrawatia et al, 2015;Li et al, 2021;Sufian, 2011). Kinerja sektor perbankan dan lembaga keuangan lainnya semakin menarik perhatian para peneliti untuk dikaji lebih dalam, terkhusus dalam penilaian efisiensi kinerja keuangan sektor perbankan (Zhao et al, 2021). Beberapa peneliti sebelumnya telah membahas mengenai efisiensi perbankan di berbagai negara, diantaranya Sufian (2011) di Korea, Roy Sementara literatur yang ada tentang efisiensi sektor perbankan di masa pandemi covid-19 saat ini masih terbatas, dikarenakan pandemi covid-19 saat ini masih terjadi dan masih banyaknya penelitian yang berlangsung.…”

“…Dengan menggunakan DEA, informasi efisiensi setiap unit kegiatan ekonomi (UKE) tersedia dan dengan demikian dapat mengidentifikasi perusahaan dengan praktik yang terbaik. Sehingga perusahaan yang teridentifikasi menjadi tolok ukur bagi perusahaan lain yang tidak efisien (Neves et al, 2020;Zhao et al, 2021).…”

A Data-Driven Design of the Optimal Investment Portfolio for the Industry in a two-level Game using the Markowitz Model by Meta-heuristic Algorithms: Economic Analysis of Condition Monitoring System

“…In today's turbulent world, analysis of investment options, techniques of comparison and decisionmaking, and selection out of solutions are based on economic, political, social, and technological conditions governing the society. The progressive industrial development in societies over the past years suggests that economic decision-making has become more difficult and sensitive compared to the past, and it is no longer possible to make decisions on investment in the available investment portfolios relying on traditional methods [1][2][3]. Meanwhile, in the today's challenging world, economic enterprises are also heavily competing with which other, and cannot make proper decisions only using traditional decision-making methods under certainty, risk, and uncertainty conditions in order to cope with both internal and foreign competitors.…”

“…In addition, they act rationally when making decisions, and they make decisions that maximize their desired efficiency. Therefore, [3] propose the utility of investors is a function of the expected efficiency and risk, with these two factors being the major parameters of decisions related to investment.…”

“…The research results showed that the answers of the mean-variance model are consistent with the answers replica analysis and the belief propagation algorithm. [3] developed a mathematical model for the production-the integrated distribution problem with a three-level supply chain including manufacturing factories, distribution centers, and customers for several types of products and in the course of several time periods. In order to consider the uncertainties in real problems, in the problem examined in this research, again some parameters including the costs in the model were converted to uncertain format using the Markowitz model, and eventually the model was solved with probable parameters using genetic algorithm.…”