Journal of Risk and Financial Management

Research

21 pages, 650 KiB

Open AccessArticle

Revolutionizing Banking: Neobanks’ Digital Transformation for Enhanced Efficiency

by Riris Shanti, Hermanto Siregar, Nimmi Zulbainarni and Tony

J. Risk Financial Manag. 2024, 17(5), 188; https://doi.org/10.3390/jrfm17050188 - 01 May 2024

Viewed by 411

Changes in customer behaviors after the COVID-19 pandemic have encouraged the transformation of banking systems. Neobanks have emerged as an innovation and entered the banking system to compete with traditional banks by offering new customer experiences. Neobanks transform traditional banking products and services [...] Read more.

Changes in customer behaviors after the COVID-19 pandemic have encouraged the transformation of banking systems. Neobanks have emerged as an innovation and entered the banking system to compete with traditional banks by offering new customer experiences. Neobanks transform traditional banking products and services which are delivered through physical interactions into those delivered via digital channels. This paper analyzes traditional banks that have transformed into neobanks, specifically their efficiency after digital transformation. Efficiency was measured using Stochastic Frontier Analysis (SFA), as it is highly accurate in estimating efficiency scores. This study also used a Pooled Mean Group (PMG) estimation of the Panel ARDL (Autoregressive Distributed Lag), as this approach is useful for analyzing the relationship between variables in panel data, to investigate digital transformation as a determinant of neobanks’ efficiency and examine the existence of short-term and long-term relationships between digital transformation and efficiency. We found that the efficiency of neobanks increases after digital transformation. Furthermore, it can be concluded that digital transformation is a determinant of efficiency and that there is long-term relationship between digital transformation and efficiency. In the short term, digital transformation has a significant negative correlation with efficiency, but in the long term, it has a significant positive relationship; this is because the cost of digital transformation initially decreases the profit efficiency, but afterwards, it increases the efficiency. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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20 pages, 1130 KiB

Open AccessArticle

The Investigation of Preference Attributes of Indonesian Mobile Banking Users to Develop a Strategy for Mobile Banking Adoption

by Toto Edrinal Sebayang, Dedi Budiman Hakim, Toni Bakhtiar and Dikky Indrawan

J. Risk Financial Manag. 2024, 17(3), 109; https://doi.org/10.3390/jrfm17030109 - 07 Mar 2024

Viewed by 1147

Abstract

A new normal has been established as a result of the effects of the COVID-19 pandemic on social behavior, technology, and business. This has a significant effect on how technology is used, such as mobile banking services, which offer more hygienic and secure [...] Read more.

A new normal has been established as a result of the effects of the COVID-19 pandemic on social behavior, technology, and business. This has a significant effect on how technology is used, such as mobile banking services, which offer more hygienic and secure payment alternatives than cash. Mobile banking has been viewed as having the ability to enhance access to unbanked customers in developing economies such as Indonesia, where 100 million people remain unbanked. This study aims to develop strategies using importance-performance analysis (IPA) to improve adoption based on the perceived importance and performance of 1441 mobile banking users during the COVID-19 pandemic. Data were collected using an online questionnaire administered during the period of September 2022 to March 2023 using the mobile banking adoption attributes of Attitude, Perceived Usefulness, Perceived Ease of Use, Compatibility, Subjective Norm, Interpersonal Influence, External Influence, Perceived Behavior Control, facilitating conditions, self-efficacy, firm reputation, trust, disease risk, performance risk, financial risk, privacy risk, time risk, psychological risk, and perceived risk. IPA results were divided into four quadrants: “concentrate here”, “keep up the good work”, “low priority”, and “possible overkill” with a representation that respondents regard as important and well-addressed. The findings show that bank strategists seeking competitive advantage must push innovation efforts to protect users by improving privacy risk and financial risk and enhancing mobile banking security from potential cyberattacks. Digital banks and associated institutions need to educate mobile banking customers on the benefits of security measures for these services, which may improve confidence and trust, and consequently, accelerate mobile banking adoption. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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13 pages, 234 KiB

Open AccessArticle

Did Emotional Intelligence Traits Mitigate COVID-19 Uncertainty Effects on Financial Institutions’ Board Decision-Making Process?

by Jessica Hall, Gregory Jones, Claire Beattie and John Sands

J. Risk Financial Manag. 2024, 17(3), 106; https://doi.org/10.3390/jrfm17030106 - 06 Mar 2024

Viewed by 996

Abstract

This study uses a qualitative research mixed methods design to explore the Coronavirus pandemic’s uncertainty effect on mature board governance practices and a board decision processes framework within 16 large Australian financial services entities. Findings provide support for two effects. Firstly, the Coronavirus [...] Read more.

This study uses a qualitative research mixed methods design to explore the Coronavirus pandemic’s uncertainty effect on mature board governance practices and a board decision processes framework within 16 large Australian financial services entities. Findings provide support for two effects. Firstly, the Coronavirus pandemic had led to a hesitation effect on the board members on-going journey of developing a conscious sense of ‘self’ and awareness. Secondly, the skills and diversity of personalities of directors comprising the board has a positive impact on the effectiveness and success of strategic decisions. The ongoing ambiguity impact of the Coronavirus pandemic on effective board decision-making processes was investigated. The board members expressed confidence in the Australian financial services sector’s ability to overcome the global Coronavirus pandemic’s temporary uncertainty impact on board decision processes frameworks. Future research may extend the focus to senior executives’ or owners’ EI personality traits to investigate the relationship between such individual’s or teams’ traits and ongoing effective board decision-making processes during uncertainty in either developing or developed countries or a cross-cultural study. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

14 pages, 3334 KiB

Open AccessArticle

COVID-19 Pandemic and Indices Volatility: Evidence from GARCH Models

by Rajesh Mamilla, Chinnadurai Kathiravan, Aidin Salamzadeh, Léo-Paul Dana and Mohamed Elheddad

J. Risk Financial Manag. 2023, 16(10), 447; https://doi.org/10.3390/jrfm16100447 - 17 Oct 2023

Viewed by 1640

Abstract

This study examines the impact of volatility on the returns of nine National Stock Exchange (NSE) indices before, during, and after the COVID-19 pandemic. The study employed generalized autoregressive conditional heteroskedasticity (GARCH) modelling to analyse investor risk and the impact of volatility on [...] Read more.

This study examines the impact of volatility on the returns of nine National Stock Exchange (NSE) indices before, during, and after the COVID-19 pandemic. The study employed generalized autoregressive conditional heteroskedasticity (GARCH) modelling to analyse investor risk and the impact of volatility on returns. The study makes several contributions to the existing literature. First, it uses advanced volatility forecasting models, such as ARCH and GARCH, to improve volatility estimates and anticipate future volatility. Second, it enhances the analysis of index return volatility. The study found that the COVID-19 period outperformed the pre-COVID-19 and overall periods. Since the Nifty Realty Index is the most volatile, Nifty Bank, Metal, and Information Technology (IT) investors reaped greater returns during COVID-19 than before. The study provides a comprehensive review of the volatility and risk of nine NSE indices. Volatility forecasting techniques can help investors to understand index volatility and mitigate risk while navigating these dynamic indices. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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17 pages, 319 KiB

Open AccessArticle

Does Financial Technology Adoption Influence Bank’s Financial Performance: The Case of Jordan

by Thair A. Kaddumi, Hafez Baker, Mahmoud Daoud Nassar and Qais A-Kilani

J. Risk Financial Manag. 2023, 16(9), 413; https://doi.org/10.3390/jrfm16090413 - 18 Sep 2023

Viewed by 2530

Abstract

This research will examine the impact of the adoption of financial technology on conventional banks’ financial performances. The research will place emphasis on the listed commercial banks at Amman Stock Exchange—ASE, using financial data for the period 2012–2020. The main study tool was [...] Read more.

This research will examine the impact of the adoption of financial technology on conventional banks’ financial performances. The research will place emphasis on the listed commercial banks at Amman Stock Exchange—ASE, using financial data for the period 2012–2020. The main study tool was a questionnaire that focuses on three main dimensions: financial inclusion—(FI), alternative payment methods—(APMs) and automation—(Auto). A total of 115 questionnaires were distributed to all commercial banks listed at Amman Stock Exchange—ASE. Multivariate regression analysis was employed to test the impact of the FinTech dimension as a proxy for independent variables on Jordanian commercial bank’s financial performance as a proxy for dependent variables. Based on the analysis results, the study concludes that all three FinTech dimensions: FI, APMs and Auto. reflected a positive significant impact on Jordanian commercial bank’s financial performance indicators (total deposit, total loans and net profit margin). Therefore, banks in general should invest more and more into financial technology tools and applications, in order to recruit potential clients and retain their current clients, to be able to sustain under fierce competition within the banking sector. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

25 pages, 766 KiB

Open AccessArticle

The Impact of Multi-Layer Corporate Governance on Banks’ Performance under the GFC and the COVID-19: A Cross-Country Panel Analysis Approach

by Oumniya Amrani and Amal Najab

J. Risk Financial Manag. 2023, 16(1), 15; https://doi.org/10.3390/jrfm16010015 - 27 Dec 2022

Cited by 2 | Viewed by 3224

Abstract

This paper examines the impact of multi-layer corporate governance (MCG) on banks’ performance under the global financial crisis (GFC) and COVID-19. Using a random and fixed effects method, we regressed the impact of MCG variables on return on assets (ROA), return on equity [...] Read more.

This paper examines the impact of multi-layer corporate governance (MCG) on banks’ performance under the global financial crisis (GFC) and COVID-19. Using a random and fixed effects method, we regressed the impact of MCG variables on return on assets (ROA), return on equity (ROE), and non-performing loans (NPL) of a panel data of 44 conventional banks (CBs) and 40 Islamic banks (IBs), across 17 countries, and over the period from 2006 to 2020. The results show that board of directors (BoD)’ structure has no association with CBs performance whereas the chief executive officer (CEO) duality is strongly negatively impacting CBs performance, especially during the GFC. In addition, supervision framework proxies have a strong positive influence on CBs performance, especially in the period after the GFC. Furthermore, cross-membership and the size of the Shariah board (SB) have a significant negative influence on IBs’ performance, but SB qualification has a positive non-significant impact overall—with the exception of NPLs, which had a positive significant impact during the GFC. The supervision position has a favorable impact on IBs performance except during crises. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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18 pages, 1113 KiB

Open AccessArticle

Impact of COVID-19, Political, and Financial Events on the Performance of Commercial Banking Sector

by Ghulam Ghouse, Muhammad Ishaq Bhatti and Muhammad Hassam Shahid

J. Risk Financial Manag. 2022, 15(4), 186; https://doi.org/10.3390/jrfm15040186 - 18 Apr 2022

Cited by 7 | Viewed by 4327

Abstract

This paper employs a structural empirical model to gauge the possible effects of COVID-19, political and financial events on the returns and volatility of commercial banks. It observes that insured and run-prone uninsured depositors choose between differentiated commercial banks, which appears to be [...] Read more.

This paper employs a structural empirical model to gauge the possible effects of COVID-19, political and financial events on the returns and volatility of commercial banks. It observes that insured and run-prone uninsured depositors choose between differentiated commercial banks, which appears to be significantly impacted from the present pandemic, especially for the case of Pakistan’s commercial banking sector. The estimated volatility series for commercial banks is measured through the GARCH model, which explains the current financial and political distress for the case of shocks from COVID-19. We calibrate by Impulse Indicator Saturation (IIS) to detect the structural breaks formed by these events in the returns and volatility series of commercial banks. It is observed that the calibrated model possesses almost all financial events that have had a prominent impact on the returns and volatility series whereas two out of eighteen political events are unimpacted. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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24 pages, 1468 KiB

Open AccessArticle

Sovereign Exposures of European Banks: It Is Not All Doom

by Martien Lamers, Thomas Present and Rudi Vander Vennet

J. Risk Financial Manag. 2022, 15(2), 69; https://doi.org/10.3390/jrfm15020069 - 03 Feb 2022

Cited by 4 | Viewed by 2220

Abstract

We investigate whether sovereign bond holdings of European banks are determined by a risk–return trade-off. Using data between 2011 and 2018 for 75 European banks, we confirm that banks exhibited risk-taking behavior during the sovereign debt crisis, e.g., due to moral suasion. In [...] Read more.

We investigate whether sovereign bond holdings of European banks are determined by a risk–return trade-off. Using data between 2011 and 2018 for 75 European banks, we confirm that banks exhibited risk-taking behavior during the sovereign debt crisis, e.g., due to moral suasion. In the period 2015–2018, however, banks’ investments in sovereign bonds are characterized by sound risk–return considerations, suggesting a lessening of the doom loop. This result is mainly driven by banks in the core European countries, as banks in the GIPS countries do not exhibit such behavior, nor do they avoid riskier bonds following the sovereign debt crisis. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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22 pages, 2541 KiB

Open AccessArticle

Designing a Roadmap for Human Resource Management in the Banking 4.0

by Iwa Kuchciak and Izabela Warwas

J. Risk Financial Manag. 2021, 14(12), 615; https://doi.org/10.3390/jrfm14120615 - 18 Dec 2021

Cited by 6 | Viewed by 5775

Abstract

The banking sector has been going through a rapid transformation due to digitalization, regulatory requirements, customer expectations, and demographic trends. The purpose of this paper is to provide an advanced overview of the practical applications of human resource management (HRM) in Banking 4.0. [...] Read more.

The banking sector has been going through a rapid transformation due to digitalization, regulatory requirements, customer expectations, and demographic trends. The purpose of this paper is to provide an advanced overview of the practical applications of human resource management (HRM) in Banking 4.0. This study used quantitative and qualitative methods to present the results of good practice form inventory and a Delphi study. The results of a European study show that human resource management practices such as reskilling, upskilling, and redeployment are a solution to mitigate challenges in the Banking 4.0 era. The HRM roadmap for banks will be a major guide to ensure effective workforce management. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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16 pages, 471 KiB

Open AccessArticle

Financial Stability of European Insurance Companies during the COVID-19 Pandemic

by Karolina Puławska

J. Risk Financial Manag. 2021, 14(6), 266; https://doi.org/10.3390/jrfm14060266 - 12 Jun 2021

Cited by 23 | Viewed by 7224

Abstract

The European Insurance and Occupational Pensions Authority suggests that as the coronavirus disease 2019 (COVID-19) pandemic has caused significant disruption to the economy, businesses, and people’s lives, national supervisory authorities should mitigate the pandemic’s impact on the European insurance sector. The functioning of [...] Read more.

The European Insurance and Occupational Pensions Authority suggests that as the coronavirus disease 2019 (COVID-19) pandemic has caused significant disruption to the economy, businesses, and people’s lives, national supervisory authorities should mitigate the pandemic’s impact on the European insurance sector. The functioning of insurance companies is in danger as they must balance a drastic increase in the number of claims with their capital and solvency stability. In this study, we evaluate the effects of the COVID-19 pandemic on insurance companies using European insurance companies’ financial statement data from 2010 to 2020. The results unambiguously demonstrate that the pandemic has negatively affected the functioning of the insurance sector. In particular, the return on assets decreased in German and Italian insurance companies during the pandemic. Furthermore, the solvency ratio decreased in the Belgian, French, and German insurance sectors. Conversely, the Polish insurance sector was unaffected. Moreover, we did not find any effects on the Z-score ratio in our sample. Lastly, the value of receivables owed to Belgian insurance companies increased. Based on this evidence, we argue that European legislators should discuss how to manage the probable financial problems of insurance companies during the COVID-19 pandemic. Full article

(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)

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