Pub Date : 2023-05-16DOI: 10.1108/jfrc-01-2023-0013
Yu-Hsien Lu, Yue-Min Kang, Lu-Ming Tseng
Purpose The purpose of this paper is to explore how sales compensation disclosure, salespeople’s perception of corporate social responsibility (CSR) toward customers (i.e. customer-focused CSR), regulatory knowledge and coworkers’ ethical behavior may influence life insurance salespeople’s moral intensity and intentions to engage in misleading sales behaviors. Design/methodology/approach The hypotheses are analyzed using partial least squares (PLS) regression with the data gathered from full-time life insurance salespeople in Taiwan. Findings The main findings indicate that disclosing sales compensations will alter the ethical decision-making process of life insurance salespeople. The findings further point out that customer-focused CSR is an important variable affecting moral intensity and ethical intentions. Originality/value There has not been any research on the effects of compensation disclosure on moral intensity and misleading sales behavior. The literature gap has led to a poor understanding of the relationship between the compensation disclosure policy and ethical sales behavior. Moreover, previous studies indicate that specific factors (such as moral intensity and ethical intention) are directly associated, while the research shows that as long as a regulatory policy (e.g. the policy of compensation disclosure) changes, the correlation between these variables may shift from significant to nonsignificant (or vice versa). The results are interesting enough to warrant more research, and they also show that the direct link between variables mentioned in previous research is not always stable or universal.
{"title":"Disclosing sales compensation and its impacts on misleading sales behaviors: some observations from Taiwan’s life insurance salespeople","authors":"Yu-Hsien Lu, Yue-Min Kang, Lu-Ming Tseng","doi":"10.1108/jfrc-01-2023-0013","DOIUrl":"https://doi.org/10.1108/jfrc-01-2023-0013","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to explore how sales compensation disclosure, salespeople’s perception of corporate social responsibility (CSR) toward customers (i.e. customer-focused CSR), regulatory knowledge and coworkers’ ethical behavior may influence life insurance salespeople’s moral intensity and intentions to engage in misleading sales behaviors.\u0000\u0000\u0000Design/methodology/approach\u0000The hypotheses are analyzed using partial least squares (PLS) regression with the data gathered from full-time life insurance salespeople in Taiwan.\u0000\u0000\u0000Findings\u0000The main findings indicate that disclosing sales compensations will alter the ethical decision-making process of life insurance salespeople. The findings further point out that customer-focused CSR is an important variable affecting moral intensity and ethical intentions.\u0000\u0000\u0000Originality/value\u0000There has not been any research on the effects of compensation disclosure on moral intensity and misleading sales behavior. The literature gap has led to a poor understanding of the relationship between the compensation disclosure policy and ethical sales behavior. Moreover, previous studies indicate that specific factors (such as moral intensity and ethical intention) are directly associated, while the research shows that as long as a regulatory policy (e.g. the policy of compensation disclosure) changes, the correlation between these variables may shift from significant to nonsignificant (or vice versa). The results are interesting enough to warrant more research, and they also show that the direct link between variables mentioned in previous research is not always stable or universal.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48539382","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-05DOI: 10.1108/jfrc-10-2022-0123
Dalano DaSouza, Kareem Martin, Peter Abraham Jr, Godson Davis
Purpose This paper aims to simulate the potential impact of increasing non-performing loans (NPLs) on capital adequacy, interest income and firm value of banks and credit unions in the Eastern Caribbean Currency Union (ECCU) using stress tests. Design/methodology/approach A financial stress testing model was deployed at the levels of individual financial intermediary (FI), sectoral loan portfolio composition, individual member country, and the ECCU collectively, to investigate the impact of NPL shocks on FI stability. Findings The authors find that shocks impact the capital adequacy of banks less than that of credit unions, but that firm value of banks is more susceptible to increases in NPLs. Interest income responses to NPL shocks were linked to credit exposure from the tourism sector, which also reduced capital adequacy more than other economic sectors. Findings show that while the COVID-19 pandemic occasioned some increase in NPLs, the magnitude of impact was significantly mitigated by pro-stability policies including loan repayment moratoria and restructuring, guidance on the distribution of profits and deleveraging by financial institutions leading up to 2020. Originality/value The paper is among the first to use stress testing on the Caribbean in response to the COVID-19 pandemic. Past studies which have used stress test models in the region have not explicitly investigated the impact of credit shocks on risk-weighted assets or interest income as done herein, nor do they include credit unions in the modeling. The results offer novel evaluations as well as implications for FIs in other developing economies, especially those that share a comparable financial and economic architecture.
{"title":"COVID-19 and financial institution stability: stress testing the Eastern Caribbean currency union","authors":"Dalano DaSouza, Kareem Martin, Peter Abraham Jr, Godson Davis","doi":"10.1108/jfrc-10-2022-0123","DOIUrl":"https://doi.org/10.1108/jfrc-10-2022-0123","url":null,"abstract":"\u0000Purpose\u0000This paper aims to simulate the potential impact of increasing non-performing loans (NPLs) on capital adequacy, interest income and firm value of banks and credit unions in the Eastern Caribbean Currency Union (ECCU) using stress tests.\u0000\u0000\u0000Design/methodology/approach\u0000A financial stress testing model was deployed at the levels of individual financial intermediary (FI), sectoral loan portfolio composition, individual member country, and the ECCU collectively, to investigate the impact of NPL shocks on FI stability.\u0000\u0000\u0000Findings\u0000The authors find that shocks impact the capital adequacy of banks less than that of credit unions, but that firm value of banks is more susceptible to increases in NPLs. Interest income responses to NPL shocks were linked to credit exposure from the tourism sector, which also reduced capital adequacy more than other economic sectors. Findings show that while the COVID-19 pandemic occasioned some increase in NPLs, the magnitude of impact was significantly mitigated by pro-stability policies including loan repayment moratoria and restructuring, guidance on the distribution of profits and deleveraging by financial institutions leading up to 2020.\u0000\u0000\u0000Originality/value\u0000The paper is among the first to use stress testing on the Caribbean in response to the COVID-19 pandemic. Past studies which have used stress test models in the region have not explicitly investigated the impact of credit shocks on risk-weighted assets or interest income as done herein, nor do they include credit unions in the modeling. The results offer novel evaluations as well as implications for FIs in other developing economies, especially those that share a comparable financial and economic architecture.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44391931","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-02DOI: 10.1108/jfrc-12-2022-0146
M. Feridun
Purpose The EU prudential regime for investment firms comprising the Directive (EU) 2019/2034 (IFD) and Regulation (EU) 2019/2033 (IFR) introduces a fit-for-purpose capital framework for investment firms. The capital impact on the practice of investment management can be material depending on firms’ specific business models and risk profiles, which may require them to take strategic decisions with respect to the services they provide. Despite the importance of this issue for the practice of investment management, there exists no study among the existing studies that focuses on this issue. This study aims to fill this gap in the literature. Design/methodology/approach This paper reviews the calibration approaches the European Banking Authority (EBA) has used by exploring the deficiencies of the regime with respect to the calibration of categorization thresholds and coefficients that are used by the EBA to calculate regulatory capital requirements. Findings This paper sets out that the choice of the relevant percentile for setting the firm categorization thresholds was not based on any theoretical rule. It also discusses that the calibration of the K-factors was subjective and lacked consistency. In addition, it criticizes the sample that the EBA used for business model coverage on the grounds that it was unbalanced, resulting in certain K-factors driving the overall capital impact. Research limitations/implications Further research is needed on the calibration of thresholds as this will remain a crucial factor for the effectiveness of the new regime. In particular, a more data-driven and transparent approach would be necessary to ensure the accuracy and consistency of the thresholds. Practical implications This paper leads to the policy implication that, despite its merits that overweigh its shortcomings, potential market competition and financial stability issues that may stem from inconsistencies and a general lack of objectivity in certain aspects of the regime should not be underestimated by the EU policy makers. Originality/value The present paper contributes to the existing knowledge primarily by reviewing the EBA’s calibration approaches with respect to the K-factor coefficients and firm categorization thresholds, concluding that lack of objectivity and precision in the relevant methodologies could distort capital allocation decisions in the practice of investment management.
{"title":"Calibration issues under the EU capital regime for investment firms","authors":"M. Feridun","doi":"10.1108/jfrc-12-2022-0146","DOIUrl":"https://doi.org/10.1108/jfrc-12-2022-0146","url":null,"abstract":"\u0000Purpose\u0000The EU prudential regime for investment firms comprising the Directive (EU) 2019/2034 (IFD) and Regulation (EU) 2019/2033 (IFR) introduces a fit-for-purpose capital framework for investment firms. The capital impact on the practice of investment management can be material depending on firms’ specific business models and risk profiles, which may require them to take strategic decisions with respect to the services they provide. Despite the importance of this issue for the practice of investment management, there exists no study among the existing studies that focuses on this issue. This study aims to fill this gap in the literature.\u0000\u0000\u0000Design/methodology/approach\u0000This paper reviews the calibration approaches the European Banking Authority (EBA) has used by exploring the deficiencies of the regime with respect to the calibration of categorization thresholds and coefficients that are used by the EBA to calculate regulatory capital requirements.\u0000\u0000\u0000Findings\u0000This paper sets out that the choice of the relevant percentile for setting the firm categorization thresholds was not based on any theoretical rule. It also discusses that the calibration of the K-factors was subjective and lacked consistency. In addition, it criticizes the sample that the EBA used for business model coverage on the grounds that it was unbalanced, resulting in certain K-factors driving the overall capital impact.\u0000\u0000\u0000Research limitations/implications\u0000Further research is needed on the calibration of thresholds as this will remain a crucial factor for the effectiveness of the new regime. In particular, a more data-driven and transparent approach would be necessary to ensure the accuracy and consistency of the thresholds.\u0000\u0000\u0000Practical implications\u0000This paper leads to the policy implication that, despite its merits that overweigh its shortcomings, potential market competition and financial stability issues that may stem from inconsistencies and a general lack of objectivity in certain aspects of the regime should not be underestimated by the EU policy makers.\u0000\u0000\u0000Originality/value\u0000The present paper contributes to the existing knowledge primarily by reviewing the EBA’s calibration approaches with respect to the K-factor coefficients and firm categorization thresholds, concluding that lack of objectivity and precision in the relevant methodologies could distort capital allocation decisions in the practice of investment management.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-05-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49131514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-28DOI: 10.1108/jfrc-01-2023-0003
Simplice Asongu
Purpose This study aims to assess how corporate telecommunication (telecom) policies follow telecom sector regulation in mobile money innovation for financial inclusion in developing countries. Design/methodology/approach Telecom policies are understood in terms of mobile subscriptions, mobile connectivity coverage and mobile connectivity performance, whereas mobile money innovations represent mobile money accounts, the mobile used to send money and the mobile used to receive money. The empirical evidence is based on Tobit regressions. Findings Telecom sector regulation positively influences mobile money innovations. From net influences, mobile subscriptions and connectivity policies moderate telecom sector regulation to positively influence mobile money innovations, exclusively within the remit of mobile money accounts because the corresponding net influences on the mobile used to send money and the mobile used to receive money are negative. The interactive influences are consistently negative, and hence, thresholds for complementary policies are provided to maintain the positive influence of telecom sector regulation on mobile money innovations. Originality/value This study has complemented the extant literature by assessing how corporate telecommunication policies follow telecommunication sector regulation in mobile money innovations for financial inclusion.
{"title":"Telecommunications regulation, mobile money innovations and financial inclusion","authors":"Simplice Asongu","doi":"10.1108/jfrc-01-2023-0003","DOIUrl":"https://doi.org/10.1108/jfrc-01-2023-0003","url":null,"abstract":"Purpose This study aims to assess how corporate telecommunication (telecom) policies follow telecom sector regulation in mobile money innovation for financial inclusion in developing countries. Design/methodology/approach Telecom policies are understood in terms of mobile subscriptions, mobile connectivity coverage and mobile connectivity performance, whereas mobile money innovations represent mobile money accounts, the mobile used to send money and the mobile used to receive money. The empirical evidence is based on Tobit regressions. Findings Telecom sector regulation positively influences mobile money innovations. From net influences, mobile subscriptions and connectivity policies moderate telecom sector regulation to positively influence mobile money innovations, exclusively within the remit of mobile money accounts because the corresponding net influences on the mobile used to send money and the mobile used to receive money are negative. The interactive influences are consistently negative, and hence, thresholds for complementary policies are provided to maintain the positive influence of telecom sector regulation on mobile money innovations. Originality/value This study has complemented the extant literature by assessing how corporate telecommunication policies follow telecommunication sector regulation in mobile money innovations for financial inclusion.","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":"108 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135912462","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-05DOI: 10.1108/jfrc-06-2022-0078
Asa Malmstrom Rognes, M. Larsson
Purpose The purpose of this study is to examine whether regulations can prevent financial crises based on the case of Sweden in the 20th century. The evolution of banking regulation relies heavily on learning across borders as well as responding to recent and remembered crises. Sweden went from being an open economy with a highly protected national banking system with several banking crises under the Classical regime, through the Statist regime with no crises followed by abrupt liberalisation in the 1980s as the country changed to a more market-based regime. This study examines the regulatory responses to crises in each of these periods to assess how, and whether, an often backward-looking regulatory framework can address forward-looking risks. Design/methodology/approach This study is a qualitative study using a historical method. The authors use archival material, official publications and statistical data as well as secondary literature to succinctly analyse crises and regulatory responses in different regulatory regimes in the 20th century. The theoretical framework builds on three macro- and microeconomic policy regimes, the Classical, the Statist and the Market regime. Findings The authors find that regulations can play a decisive role in alleviating a banking crisis, but the relationship between regulations and economic development is complex, and regulations alone cannot prevent a crisis. Originality/value To the best of the authors’ knowledge, this is the first longitudinal study of banking regulations in Sweden and how these change in response to crises with the aim of improving the role of banks in financial intermediation and financial stability. This study contributes to a body of literature on financial crises with a long-term perspective and an assessment of regulations as a policy response.
{"title":"Can regulations prevent financial crises? Uses of the past in the evolution of regulatory reforms in Sweden","authors":"Asa Malmstrom Rognes, M. Larsson","doi":"10.1108/jfrc-06-2022-0078","DOIUrl":"https://doi.org/10.1108/jfrc-06-2022-0078","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine whether regulations can prevent financial crises based on the case of Sweden in the 20th century. The evolution of banking regulation relies heavily on learning across borders as well as responding to recent and remembered crises. Sweden went from being an open economy with a highly protected national banking system with several banking crises under the Classical regime, through the Statist regime with no crises followed by abrupt liberalisation in the 1980s as the country changed to a more market-based regime. This study examines the regulatory responses to crises in each of these periods to assess how, and whether, an often backward-looking regulatory framework can address forward-looking risks.\u0000\u0000\u0000Design/methodology/approach\u0000This study is a qualitative study using a historical method. The authors use archival material, official publications and statistical data as well as secondary literature to succinctly analyse crises and regulatory responses in different regulatory regimes in the 20th century. The theoretical framework builds on three macro- and microeconomic policy regimes, the Classical, the Statist and the Market regime.\u0000\u0000\u0000Findings\u0000The authors find that regulations can play a decisive role in alleviating a banking crisis, but the relationship between regulations and economic development is complex, and regulations alone cannot prevent a crisis.\u0000\u0000\u0000Originality/value\u0000To the best of the authors’ knowledge, this is the first longitudinal study of banking regulations in Sweden and how these change in response to crises with the aim of improving the role of banks in financial intermediation and financial stability. This study contributes to a body of literature on financial crises with a long-term perspective and an assessment of regulations as a policy response.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43892852","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-03-08DOI: 10.1108/jfrc-09-2022-0115
A. K. Alosaimi, Mishari M. Alfraih
Purpose The purpose of this paper is to explore and evaluate the main segments of existing empirical literature related to Sovereign Wealth Funds (SWFs) and provide a thorough investigation of their research questions, theoretical frameworks, data selections and research methodologies. Design/methodology/approach The literature on SWFs has been split into three main streams: qualitative studies with theoretical contributions aiming to conceptualize the phenomenon of SWFs; normative assessments of the optimal asset allocations of SWFs; and empirical works that aim to investigate different perspectives of SWFs. The paper attempts to review the state of existing literature relating to these areas by answering specific questions. Findings Despite their significant size and potential impact, the literature on SWFs seems to be still in its infancy. The paper collects insights from previous literature, addresses its difficulties and challenges. Research limitations/implications The characteristics of the previous empirical literature and the challenges facing this line of research offer an insightful thought for the future research works in this topic. Originality/value The paper offers a thorough assessment of the existing empirical research on SWFs and shade some light on the techniques and procedures used.
{"title":"Investment strategies of sovereign wealth funds: the potential and challenges of empirical research","authors":"A. K. Alosaimi, Mishari M. Alfraih","doi":"10.1108/jfrc-09-2022-0115","DOIUrl":"https://doi.org/10.1108/jfrc-09-2022-0115","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to explore and evaluate the main segments of existing empirical literature related to Sovereign Wealth Funds (SWFs) and provide a thorough investigation of their research questions, theoretical frameworks, data selections and research methodologies.\u0000\u0000\u0000Design/methodology/approach\u0000The literature on SWFs has been split into three main streams: qualitative studies with theoretical contributions aiming to conceptualize the phenomenon of SWFs; normative assessments of the optimal asset allocations of SWFs; and empirical works that aim to investigate different perspectives of SWFs. The paper attempts to review the state of existing literature relating to these areas by answering specific questions.\u0000\u0000\u0000Findings\u0000Despite their significant size and potential impact, the literature on SWFs seems to be still in its infancy. The paper collects insights from previous literature, addresses its difficulties and challenges.\u0000\u0000\u0000Research limitations/implications\u0000The characteristics of the previous empirical literature and the challenges facing this line of research offer an insightful thought for the future research works in this topic.\u0000\u0000\u0000Originality/value\u0000The paper offers a thorough assessment of the existing empirical research on SWFs and shade some light on the techniques and procedures used.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43562354","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-02-08DOI: 10.1108/jfrc-08-2022-0093
Peterson K. Ozili, Sok Heng Lay, Aamir Aijaz Syed
Purpose Empirical research on the relationship between financial inclusion and economic growth has neglected the influence of religion or secularism. This study aims to investigate the effect of financial inclusion on economic growth in religious and secular countries. Design/methodology/approach The financial inclusion indicators are the number of automated teller machines (ATMs)per 100,000 adults and the number of bank branches per 100,000 adults. These two indicators are the accessibility dimension of financial inclusion based on physical points of service. The two-stage least square (2SLS) regression method was used to analyze the effect of financial inclusion on real gross domestic product (GDP) per capita growth and real GDP growth in religious and secular countries. Findings Bank branch contraction significantly increases economic growth in secular countries. Bank branch expansion combined with greater internet usage increases economic growth in secular countries while high ATM supply combined with greater internet usage decreases economic growth in secular countries. This study also finds that bank branch expansion, in the midst of a widening poverty gap, significantly increases economic growth in religious countries, implying that financial inclusion through bank branch expansion is effective in promoting economic growth in poor religious countries. It was also found that internet usage is a strong determinant of economic growth in secular countries. Originality/value Few studies in the literature examined the effect of financial inclusion on economic growth. But the literature has not examined how financial inclusion affects economic growth in religious and secular countries.
{"title":"Impact of financial inclusion on economic growth in secular and religious countries","authors":"Peterson K. Ozili, Sok Heng Lay, Aamir Aijaz Syed","doi":"10.1108/jfrc-08-2022-0093","DOIUrl":"https://doi.org/10.1108/jfrc-08-2022-0093","url":null,"abstract":"Purpose Empirical research on the relationship between financial inclusion and economic growth has neglected the influence of religion or secularism. This study aims to investigate the effect of financial inclusion on economic growth in religious and secular countries. Design/methodology/approach The financial inclusion indicators are the number of automated teller machines (ATMs)per 100,000 adults and the number of bank branches per 100,000 adults. These two indicators are the accessibility dimension of financial inclusion based on physical points of service. The two-stage least square (2SLS) regression method was used to analyze the effect of financial inclusion on real gross domestic product (GDP) per capita growth and real GDP growth in religious and secular countries. Findings Bank branch contraction significantly increases economic growth in secular countries. Bank branch expansion combined with greater internet usage increases economic growth in secular countries while high ATM supply combined with greater internet usage decreases economic growth in secular countries. This study also finds that bank branch expansion, in the midst of a widening poverty gap, significantly increases economic growth in religious countries, implying that financial inclusion through bank branch expansion is effective in promoting economic growth in poor religious countries. It was also found that internet usage is a strong determinant of economic growth in secular countries. Originality/value Few studies in the literature examined the effect of financial inclusion on economic growth. But the literature has not examined how financial inclusion affects economic growth in religious and secular countries.","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":"520 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136175189","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-02-03DOI: 10.1108/jfrc-06-2022-0075
Dimitrios Karakostas, Ioannis Tsakalos, Athanasios P. Fassas
Purpose The supervisory stress test evaluates the capital adequacy and profit-generation capacity of systemic banking institutions under baseline and adverse macroeconomic scenarios. This study aims to assess the financial and informational role of European stress tests and substantiate the impact of their disclosures by examining the EU-wide 2018 stress test vis-à-vis the EU-wide 2021 stress test in terms of how and to what extent the stock prices of the stress-tested banks have been affected. Design/methodology/approach This study applies standard event study methodologies to evaluate the reactions of market participants during the EU-wide 2018 and 2021 stress test exercises. We examine several “large” events in both the exercises for a selected sample of European banks. Findings The results of our event study analysis show that the EU-wide 2018 and 2021 stress tests come subsequent to considerable abnormal price movements. The announcement of stress test results triggered tangible investor reactions, indicating the informational value of stress tests in reducing bank opacity. This supervisory “toolkit” is considered extremely important, as it provides meaningful insights to the supervisors of the banking institutions and the market stakeholders by improving the transparency of the financial sector, allowing them to segregate banks more effectively. Originality/value This study constitutes one of the earliest attempts to shed light on the financial and information role of the European supervisory stress tests by comparing the EU-wide 2018 and the EU-wide 2021 stress test exercises. Moreover, it provides concrete empirical evidence and qualitative analysis to explore certain aspects of the European and US stress tests.
{"title":"Assessing the financial and informational role of supervisory stress tests: EU-wide 2018 stress test vis-à-vis EU-wide 2021 stress test","authors":"Dimitrios Karakostas, Ioannis Tsakalos, Athanasios P. Fassas","doi":"10.1108/jfrc-06-2022-0075","DOIUrl":"https://doi.org/10.1108/jfrc-06-2022-0075","url":null,"abstract":"\u0000Purpose\u0000The supervisory stress test evaluates the capital adequacy and profit-generation capacity of systemic banking institutions under baseline and adverse macroeconomic scenarios. This study aims to assess the financial and informational role of European stress tests and substantiate the impact of their disclosures by examining the EU-wide 2018 stress test vis-à-vis the EU-wide 2021 stress test in terms of how and to what extent the stock prices of the stress-tested banks have been affected.\u0000\u0000\u0000Design/methodology/approach\u0000This study applies standard event study methodologies to evaluate the reactions of market participants during the EU-wide 2018 and 2021 stress test exercises. We examine several “large” events in both the exercises for a selected sample of European banks.\u0000\u0000\u0000Findings\u0000The results of our event study analysis show that the EU-wide 2018 and 2021 stress tests come subsequent to considerable abnormal price movements. The announcement of stress test results triggered tangible investor reactions, indicating the informational value of stress tests in reducing bank opacity. This supervisory “toolkit” is considered extremely important, as it provides meaningful insights to the supervisors of the banking institutions and the market stakeholders by improving the transparency of the financial sector, allowing them to segregate banks more effectively.\u0000\u0000\u0000Originality/value\u0000This study constitutes one of the earliest attempts to shed light on the financial and information role of the European supervisory stress tests by comparing the EU-wide 2018 and the EU-wide 2021 stress test exercises. Moreover, it provides concrete empirical evidence and qualitative analysis to explore certain aspects of the European and US stress tests.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":"54 4","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41283695","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-27DOI: 10.1108/jfrc-03-2022-0040
Fredrik Hartwig, Emil Hansson, Linnea Nielsen, Patrik Sörqvist
Purpose The purpose of this study is to examine the relationship between auditing/non-auditing and accounting timeliness among Swedish private firms. Design/methodology/approach This paper uses regression analysis to test the relationship between auditing and two measurements of timeliness; lead time and late filing. The sample consists of Swedish private firms. Findings This paper finds that audited firms, when compared with unaudited firms, are significantly less timely. Moreover, greater profitability was associated with more timeliness but only for audited firms. The results of this paper also show that firms being audited by a big 4 auditor are significantly timelier than firms being audited by a non-big 4 auditor. Practical implications The findings in this paper suggests that one aspect of accounting quality, timeliness, does not seem to benefit from auditing in a Swedish context. There is a debate about whether the threshold levels in Sweden should be raised so that more firms voluntarily can opt out of audit. Those opposing a raised threshold level claim that auditing has positive effects on accounting quality and consequently that a raised level would have adverse effects. The findings in this paper do not support such a claim. Originality/value Little is known about timeliness in private firms compared to public firms and this paper fills that void. Contrary to prior research, findings show that unaudited firms in a Swedish regulatory setting actually are timelier than their audited counterparts. This questions one of the (presumed) benefits of auditing and should stimulate more research on this issue.
{"title":"The relation between auditing and accounting timeliness in Swedish private firms","authors":"Fredrik Hartwig, Emil Hansson, Linnea Nielsen, Patrik Sörqvist","doi":"10.1108/jfrc-03-2022-0040","DOIUrl":"https://doi.org/10.1108/jfrc-03-2022-0040","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine the relationship between auditing/non-auditing and accounting timeliness among Swedish private firms.\u0000\u0000\u0000Design/methodology/approach\u0000This paper uses regression analysis to test the relationship between auditing and two measurements of timeliness; lead time and late filing. The sample consists of Swedish private firms.\u0000\u0000\u0000Findings\u0000This paper finds that audited firms, when compared with unaudited firms, are significantly less timely. Moreover, greater profitability was associated with more timeliness but only for audited firms. The results of this paper also show that firms being audited by a big 4 auditor are significantly timelier than firms being audited by a non-big 4 auditor.\u0000\u0000\u0000Practical implications\u0000The findings in this paper suggests that one aspect of accounting quality, timeliness, does not seem to benefit from auditing in a Swedish context. There is a debate about whether the threshold levels in Sweden should be raised so that more firms voluntarily can opt out of audit. Those opposing a raised threshold level claim that auditing has positive effects on accounting quality and consequently that a raised level would have adverse effects. The findings in this paper do not support such a claim.\u0000\u0000\u0000Originality/value\u0000Little is known about timeliness in private firms compared to public firms and this paper fills that void. Contrary to prior research, findings show that unaudited firms in a Swedish regulatory setting actually are timelier than their audited counterparts. This questions one of the (presumed) benefits of auditing and should stimulate more research on this issue.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48995188","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-26DOI: 10.1108/jfrc-02-2022-0023
I. Alley, Halima Hassan, A. Wali, Fauziyah Suleiman
Purpose This paper provides evidence that the banking sector reforms of 2004 and 2009 enhanced prudential performance of the banking industry and financial system stability in Nigeria. Design/methodology/approach This study uses regression analysis with regime shift to confirm results from tests of two means and variances model to examine the effectiveness of banking sector reforms in Nigeria. Findings Evidence from the regression model agrees with findings from the test of means model (not controlling for trend effects) that capital to assets ratio rose while non-performing loan ratio declined after the reforms, and that capital to earning assets ratio rose when trend effects were accounted for. Both the regression model and the tests of means model controlling for trend effects show that return on asset, return on equity and return on earning assets ratios declined after the reforms. Research limitations/implications This paper evaluated the effectiveness of banking sector reforms in Nigeria using models that avoid weaknesses that besieged many previous studies. It however used data covering 1983–2020 period, due to data availability. A larger scope of data may improve the results, and future research may re-examine this theme as more data become available. Furthermore, banking stability issues could be examined using specialised techniques such as the generalised autoregressive conditional heteroscedasticity model and related family. Practical implications These results suggest that the reforms led to improvement in the sector’s resilience (risks-absorbing capacity) and asset quality, and that profitability had not been the primary focus of the reforms. Social implications The authors recommend that regulatory and supervisory authorities in Nigeria continue to implement and improve on banking sector reforms for a more resilient and functional banking system. As a contribution to social research, this study shows that studies on policy evaluation should be located within appropriate theoretical framework: the theory of change. It shows that an appropriate use of attribution analysis and contribution analysis within this theoretical framework engenders robust analysis and results. Otherwise, the analytical findings would be erroneous and policy advice misguided. Originality/value The statistical significance of our findings establishes that the banking sector reforms in Nigeria have been effective in promoting financial system stability in Nigeria. By deploying both the test of means with and without trend effects (an attribution analysis) and the multivariate regression analysis with regulatory shift (a contribution analysis), and relying more on the later for its superiority, this study contributes to the body of knowledge in that, it not only determined the true effects of banking sector reforms in Nigeria for appropriate policy guidance but also demonstrated that, in research, an inappropriate methodology produces results that m
{"title":"Banking sector reforms in Nigeria: an empirical appraisal","authors":"I. Alley, Halima Hassan, A. Wali, Fauziyah Suleiman","doi":"10.1108/jfrc-02-2022-0023","DOIUrl":"https://doi.org/10.1108/jfrc-02-2022-0023","url":null,"abstract":"\u0000Purpose\u0000This paper provides evidence that the banking sector reforms of 2004 and 2009 enhanced prudential performance of the banking industry and financial system stability in Nigeria.\u0000\u0000\u0000Design/methodology/approach\u0000This study uses regression analysis with regime shift to confirm results from tests of two means and variances model to examine the effectiveness of banking sector reforms in Nigeria.\u0000\u0000\u0000Findings\u0000Evidence from the regression model agrees with findings from the test of means model (not controlling for trend effects) that capital to assets ratio rose while non-performing loan ratio declined after the reforms, and that capital to earning assets ratio rose when trend effects were accounted for. Both the regression model and the tests of means model controlling for trend effects show that return on asset, return on equity and return on earning assets ratios declined after the reforms.\u0000\u0000\u0000Research limitations/implications\u0000This paper evaluated the effectiveness of banking sector reforms in Nigeria using models that avoid weaknesses that besieged many previous studies. It however used data covering 1983–2020 period, due to data availability. A larger scope of data may improve the results, and future research may re-examine this theme as more data become available. Furthermore, banking stability issues could be examined using specialised techniques such as the generalised autoregressive conditional heteroscedasticity model and related family.\u0000\u0000\u0000Practical implications\u0000These results suggest that the reforms led to improvement in the sector’s resilience (risks-absorbing capacity) and asset quality, and that profitability had not been the primary focus of the reforms.\u0000\u0000\u0000Social implications\u0000The authors recommend that regulatory and supervisory authorities in Nigeria continue to implement and improve on banking sector reforms for a more resilient and functional banking system. As a contribution to social research, this study shows that studies on policy evaluation should be located within appropriate theoretical framework: the theory of change. It shows that an appropriate use of attribution analysis and contribution analysis within this theoretical framework engenders robust analysis and results. Otherwise, the analytical findings would be erroneous and policy advice misguided.\u0000\u0000\u0000Originality/value\u0000The statistical significance of our findings establishes that the banking sector reforms in Nigeria have been effective in promoting financial system stability in Nigeria. By deploying both the test of means with and without trend effects (an attribution analysis) and the multivariate regression analysis with regulatory shift (a contribution analysis), and relying more on the later for its superiority, this study contributes to the body of knowledge in that, it not only determined the true effects of banking sector reforms in Nigeria for appropriate policy guidance but also demonstrated that, in research, an inappropriate methodology produces results that m","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-01-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46226943","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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