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1 – 10 of 247Sabri Burak Arzova and Bertac Sakir Sahin
The present study investigates the impact of financial soundness variables on bank performance in emerging countries.
Abstract
Purpose
The present study investigates the impact of financial soundness variables on bank performance in emerging countries.
Design/methodology/approach
This study uses macro-level panel data from 17 countries from 2011 to 2020. The analysis adopts six models. While four models include bank profitability, the dependent variable of the other models is Bank Z Scores. Regulatory Capital to Risk-Weighted Assets, Liquid Assets to Total Assets, Non-Performing Loans to Total Gross Loans and Non-Interest Expenses to Gross Income are proxies of financial soundness variables.
Findings
The authors estimate fixed and random effects models with the Arellano, Froot and Rogers methods. Empirical results show that Non-Performing Loans to Total Gross Loans harm ROA and ROE. Regulatory Capital to Risk-Weighted Assets negatively affects ROE. Non-Interest Expenses to Gross Income on Bank Z Scores have a significant and negative effect. Moreover, Inflation, Foreign Direct Investment and GDP are macroeconomic variables that increase bank profitability.
Originality/value
This study contributes to the literature in different aspects. The first is the model of the study. The authors contribute to the literature regarding the variables used to measure financial soundness. Secondly, emerging countries are samples in the study. A significant part of the studies on financial soundness has focused on developed countries. Finally, the authors analyze the macro-level data. Bank soundness studies mainly investigate country-level variables. Macro-level analysis may provide an advantage in combating global financial crises.
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Muhammad Sualeh Khattak, Qiang Wu, Maqsood Ahmad and Muhammad Anwar
This study explores the mechanism by which intellectual capital (IC) [i.e. human capital (HC), structural capital (SC) and relational capital (RC)] influences small and…
Abstract
Purpose
This study explores the mechanism by which intellectual capital (IC) [i.e. human capital (HC), structural capital (SC) and relational capital (RC)] influences small and medium-sized enterprise (SME) efficiency in the presence of business model innovation (BMI) as a mediator.
Design/methodology/approach
Data collection is conducted through a survey completed by 319 owners and top managers of SMEs operating in the manufacturing sector in three cities in Pakistan. A simple random sampling method is used. A structural equation modeling artificial neural network (SEM-ANN)-based approach is applied to evaluate the role of IC predictors. The mediation results are authenticated using PROCESS.
Findings
The results indicate that HC, SC and RC significantly influence SME efficiency and BMI. Furthermore, BMI fully mediates the relationship between human capital and SME efficiency, while partially mediating the relationship between structural capital and SME efficiency, as well as between SC and SME efficiency.
Originality/value
This study pioneers research into the link between IC and SME efficiency. It contributes to the literature by defining IC as an antecedent of SME efficiency. It further contributes to the literature by defining IC as an antecedent and BMI as an intervening variable of SME efficiency.
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Mehmet Ali Koseoglu, Hasan Evrim Arici, Mehmet Bahri Saydam and Victor Oluwafemi Olorunsola
Environmental, social and governance (ESG) scores are compelling for firm strategy and performance. Thus, this study aims to explore ESG scores’ predictive roles on global firms’…
Abstract
Purpose
Environmental, social and governance (ESG) scores are compelling for firm strategy and performance. Thus, this study aims to explore ESG scores’ predictive roles on global firms’ diversity scores.
Design/methodology/approach
A total of 1,114 global firm-year data from the Thomson Reuters Eikon database was analyzed using machine learning algorithms like rpart, support vector machine, partykit and evtree.
Findings
The results reveal a positive association between diversity, resulting in greater comprehensiveness and relevance. Broadly speaking, the two factors with the most significant values for calculating the overall diversity scores of businesses are ESG scores and social scores. ESG scores and environmental scores are the most effective predictors for the diversity pillar and people development scores. In contrast, community and social scores are the most important predictor factors for the inclusion scores.
Originality/value
The research is particularly pertinent to managers and investors considering ESG issues while making decisions. The results indicate that leaders and practitioners should prioritize ESG elements and diversity problems to enhance performance.
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This study presents the impact of Economic Policy Uncertainty (EPU)-induced Trade Supply Chain Vulnerability (TSCV) on the Small and Medium-Sized Enterprises (SMEs) in India by…
Abstract
Purpose
This study presents the impact of Economic Policy Uncertainty (EPU)-induced Trade Supply Chain Vulnerability (TSCV) on the Small and Medium-Sized Enterprises (SMEs) in India by leveraging the World Bank Enterprise Survey data for 2014 and 2022. Applying econometric techniques, it examines firm size’ influence on productivity and trade participation, providing insights for enhancing SME resilience and trade participation amid uncertainty.
Design/methodology/approach
The econometric techniques focus on export participation, along with variables such as total exports, firm size, productivity, and capital intensity. It addresses crucial factors such as the direct import of intermediate goods and foreign ownership. Utilizing the Cobb-Douglas production function, the study estimates Total Factor Productivity, mitigating endogeneity and multicollinearity through a two-stage process. Besides, the study uses a case study of North Indian SMEs engaged in manufacturing activities and their adoption of mitigation strategies to combat unprecedented EPU.
Findings
Results reveal that EPU-induced TSCV reduces exports, impacting employment and firm size. Increased productivity, driven by technological adoption, correlates with improved export performance. The study highlights the negative impact of TSCV on trade participation, particularly for smaller Indian firms. Moreover, SMEs implement cost-based, supplier-based, and inventory-based strategies more than technology-based and risk-based strategies.
Practical implications
Policy recommendations include promoting increased imports and inward foreign direct investment to enhance small firms’ trade integration during economic uncertainty. Tailored support for smaller firms, considering their limited capacity, is crucial. Encouraging small firms to engage in international trade and adopting diverse SC mitigation strategies associated with policy uncertainty are vital considerations.
Originality/value
This study explores the impact of EPU-induced TSCV on Indian SMEs’ trade dynamics, offering nuanced insights for policymakers to enhance SME resilience amid uncertainty. The econometric analysis unveils patterns in export behavior, productivity, and factors influencing trade participation during economic uncertainty.
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Carla Canelas, Felix Meier zu Selhausen and Erik Stam
Female smallholder farmers in low-income countries face barriers to accessing capital and commodity markets. While agricultural cooperatives provide services that contribute to…
Abstract
Purpose
Female smallholder farmers in low-income countries face barriers to accessing capital and commodity markets. While agricultural cooperatives provide services that contribute to the income and productivity of small-scale producers, evidence of cooperatives' social and economic empowerment of female smallholders remains limited. We apply Sen's capability approach to female entrepreneurs' socioeconomic empowerment to examine whether women's participation in a coffee and microfinance cooperative from rural western Uganda benefits their social and economic position within their household. First, we study the relationship between women's cooperative participation and their household coffee sales and savings. Second, we investigate the link between women's cooperative participation and their intra-household decision-making and whether the inclusion of the husband in his wife's cooperative strengthens or lowers women's decision-making power.
Design/methodology/approach
We carry out a case study of a hybrid coffee and microfinance cooperative that promotes social innovation through the integration and empowerment of female smallholders in rural Uganda. Using a cross-sectional survey of 411 married female cooperative members from 26 randomly selected self-help groups of Bukonzo Joint Cooperative and 196 female non-members from the identical area, employing propensity score matching, this paper investigates the benefits of women's participation in a coffee and microfinance cooperative in the Rwenzori Mountains of western Uganda. We present and discuss the results of our case study within an extensive literature on the role of institutions in collective action for women's empowerment.
Findings
Our findings provide new empirical evidence on female smallholders' participation in mixed cooperatives. Our results indicate that women's participation in microfinance-producer cooperatives appears to be a conditional blessing: even though membership is linked to increased women's intra-household decision-making and raised household savings and income from coffee sales, a wife with a husband in the same cooperative self-help group is associated with diminished women's household decision-making power.
Research limitations/implications
The focus of this study is on female coffee smallholders in an agricultural cooperative in rural western Uganda. In particular, we focus on a case study of one major coffee cooperative. Our cross-sectional survey does not allow us to infer causal interpretations. Also, the survey does not include variables that allow us to measure other dimensions of women's empowerment beyond decision-making over household expenditures and women's financial performance related to savings and income from coffee cultivation.
Practical implications
Our empirical results indicate that female smallholders' cooperative membership is associated with higher incomes and coffee sales. However, husband co-participation in their wives' cooperative group diminishes wives' decision-making, which suggests that including husbands and other family members in the same cooperative group may not be perceived as an attractive route to empowerment for female smallholders. For these reasons, an intervention that encourages the cooperation of both spouses and that is sensitive to context-specific gender inequalities, may be more successful at stimulating social change toward household gender equality than interventions that focus on women's autonomous spheres only.
Originality/value
While the literature thus far has focused on microfinance's potential for women's empowerment, evidence on agricultural cooperatives' affecting women's social and economic position is limited. First, our findings provide novel empirical evidence on the empowering effects of women's participation in a self-help group-based coffee cooperative in rural Uganda. Second, our data allows us to explore the role of husbands' participation in their wives' cooperative and SGH. We embed our hypotheses and empirical results in a rich discussion of female entrepreneurship, microfinance and cooperative literature.
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Chanchal Dey and Ulrike Fasbender
The purpose of this study is to understand the link between psychological ownership and organizational innovation in family businesses. The research also explored the mediating…
Abstract
Purpose
The purpose of this study is to understand the link between psychological ownership and organizational innovation in family businesses. The research also explored the mediating effect of knowledge transfer alongside the moderating role of governance practices.
Design/methodology/approach
A total of 116 family businesses across India took part in the study. Data were collected with the help of a structured questionnaire supplied to the seniormost family member of each firm. The data were analyzed by using the moderated mediation model analysis in R.
Findings
The findings indicate that psychological ownership is a key driver of organizational innovation in family businesses. The transfer of knowledge mediates the relationship between psychological ownership and organizational innovation. Moreover, governance practices of the businesses moderate the association between psychological ownership and knowledge transfer, and its downstream consequences on organizational innovation.
Originality/value
While previous research has explored various aspects of nurturing innovation, the present study explores the effect of psychological ownership in the context of family businesses in India. This study also gives insights into how knowledge transfer and governance practices work together to influence innovation in these businesses.
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Sabeen Hussain Bhatti, Beata Gavurova, Adeel Ahmed, Maria Rosaria Marcone and Gabriele Santoro
Remote working has brought forward many challenges for employees as the phenomenon is still new for most employees across the globe. Some of these challenges may be addressed by…
Abstract
Purpose
Remote working has brought forward many challenges for employees as the phenomenon is still new for most employees across the globe. Some of these challenges may be addressed by the recent adoption of digital technologies by organizations. In this vein, our study explores the impact of digital platform capability on the creativity of employees through the mediating mechanism of explicit and tacit knowledge sharing.
Design/methodology/approach
The data were gathered from higher education institutes (HEIs) in a developing country, Pakistan which recently saw a major disruption during the Covid-19 pandemic. The proposed hypotheses were tested through Structural Equational Modeling (SEM) and the results confirmed our hypotheses.
Findings
The findings confirmed that the digital platform capabilities impact both tacit and explicit knowledge sharing among these remote employees. Likewise, the results also supported the mediating role of both explicit and tacit knowledge sharing on the creativity of these remote workers.
Originality/value
Our results are significant as they confirm the impact of digitalization on remote workers’ creativity predisposition. We thus advance the academic debate on the problems of knowledge sharing in remote working. We prove that digital capabilities outweigh the challenges created due to new forms of work driven by the pandemic. It further highlights the important areas to focus on while planning human resource policies in the new normal.
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Rim Zouari-Hadiji and Wafa Mroua
This study aims to examine the effect of audit quality (auditor expertise and discretionary accruals) on financial communication quality and to distinguish the moderating role of…
Abstract
Purpose
This study aims to examine the effect of audit quality (auditor expertise and discretionary accruals) on financial communication quality and to distinguish the moderating role of corporate governance mechanisms (board size, CEO duality, board gender diversity and block ownership) on this relationship.
Design/methodology/approach
Linear regression is used to analyze the annual reports of 150 nonfinancial firms that belong to the CAC All-tradable index for the period 2015–2023.
Findings
The empirical results show that auditor expertise has a positive and significant effect on financial communication quality. Furthermore, board size reinforces the negative effect of discretionary accruals on financial communication quality. However, CEO duality and block ownership attenuate the positive effect of auditor expertise on the dependent variable.
Research limitations/implications
Our research covers three areas of research, i.e. audit quality, corporate governance and financial communication research. It presents the moderator role of some governance mechanisms on the relation between audit and financial communication quality. Furthermore, it aims to identify best practices in the governance system that attempt to facilitate and improve the positive impact of audit quality on the quality of financial communication, which increases stakeholder confidence in the firm. We caution readers from generalizing the findings of this study, as our study is based on a well-developed sample. Also, it is limited only to annual reports to measure the financial communication index without looking at other information transmission channels.
Originality/value
This study investigates the moderating role of internal governance mechanisms in the relationship between audit quality and financial communication quality in the French context.
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Ayman Issa, Ahmad Sahyouni and Miroslav Mateev
This paper aims to examine how the diversity of educational levels within bank boards influences the efficiency and stability of banks operating in the Middle East and North…
Abstract
Purpose
This paper aims to examine how the diversity of educational levels within bank boards influences the efficiency and stability of banks operating in the Middle East and North Africa (MENA) region. Unlike previous studies, this analysis also investigates the role of board gender diversity in moderating the relationship between board educational level diversity and bank efficiency and financial stability in MENA.
Design/methodology/approach
In this study, a sample of 77 banks in the MENA region spanning the years 2011 to 2018 is used. The relationship between the presence of highly educated directors on the board, bank efficiency and stability is assessed using the ordinary least squares method. Additionally, the authors use the Generalized Method of Moments technique to correct endogeneity problem.
Findings
This study establishes a positive association between the presence of directors with advanced educational backgrounds on bank boards and bank efficiency and stability. Furthermore, the inclusion of women on the board strengthens this relationship.
Practical implications
These findings have important implications for policymakers and regulators in the MENA region, suggesting that promoting diversity policies that encourage the participation of highly educated directors on bank boards can contribute to enhanced efficiency and financial stability. Policymakers may also consider implementing quotas or guidelines to improve gender diversity in board appointments, thereby fostering bank performance in the region.
Originality/value
This study stands out for its innovation and distinctiveness, as it delves into the connection between board educational level diversity and bank efficiency in the MENA region. Notably, it surpasses previous research by investigating the moderating role of board gender diversity, thus offering valuable insights into the complex interplay between these two facets of board diversity. This contribution enriches the existing literature by providing novel perspectives on board composition dynamics and its influence on bank efficiency and stability.
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Md Tariqul Islam, Shrabani Saha and Mahfuzur Rahman
The empirical study aims to examine the impact of board diversity with respect to gender and nationality on firm performance in an emerging economy. This research further splits…
Abstract
Purpose
The empirical study aims to examine the impact of board diversity with respect to gender and nationality on firm performance in an emerging economy. This research further splits the sample into family and non-family domains and investigates the diversity–performance nexus in isolation.
Design/methodology/approach
The sample consists of 183 listed companies in Bangladesh over the period 2007 to 2017. This study employed the generalised method of moments (GMM) technique to address the possible endogeneity issue in the governance–performance connection. To underscore the strength of diversity, three distinctive assessment measures were used: percentage representation of females and foreign directors, the Blau index and the Shannon index.
Findings
The results for the full sample models reveal that board heterogeneity regarding both female and foreign directors positively and significantly influences firm performance as measured by return on assets (ROA). Further to this, female directors in family-owned businesses have a positive association with profitability, whereas foreign nationals demonstrate a significant positive association with performance in non-family firms. Additionally, at least three women directors are needed to make a positive difference in profitability; however, a sole director with foreign nationality is capable of demonstrating a similar impact on performance.
Practical implications
The findings are significant for policymakers and organisations that advocate diversity on corporate boards of directors, and the minimum number of diverse board members needs to be considered depending on the identity to bring about a significant change in organisational outcome. Therefore, the findings of this study may be applied to other emerging economies with similar institutional characteristics.
Originality/value
This study reinforces the existing stock of knowledge on the impact of board diversity on the profitability of firms, especially in the context of an emerging economy – Bangladesh. Irrespective of the given backdrop, this study finds that both gender and nationality diversity in the case of Bangladesh is found to have a positive and significant effect on financial performance with respect to all the diversity metrics, i.e. the proportionate number of female and foreign directors on the boards, the Blau index and the Shannon index.
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