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The purpose of this study is to investigate the effect of internal and external variables on the profitability of conventional banks operating on developing and underdeveloped countries, the Organization of Islamic Cooperation (OIC) states.

In this paper, the author uses ordinary least squares fixed-effects model on an unbalanced panel data set of all conventional banks operating in OIC countries (52 countries included from 57) over the period 1989-2008, 686 banks.

The results suggest that equity, foreign ownership, off-balance sheet (OBS) activities, real gross domestic product growth, real interest rate and concentration foster banks’ profitability. In addition, the results showed that the banking sector development and loans will increase banks’ profitability in the long run in the countries of the studies. In contrast, the study reported that deposits lower profitability. The study also revealed that GDP per capita, market capitalization and banks size have no impact on profitability.

The findings of this study have considerable policy implications. First, policymakers need to regulate nontraditional activities to avoid any financial crisis because banks in OIC countries are heavily engaged in nontraditional activities to boost its profit. Second, policymakers are advised to improve the deposit insurance system to insure the stability of the financial system as well as improving banks’ profitability. Third, policymakers need to improve the efficiency of the stock market, maintain small banking system and encourage foreign investments in the banking system.

The paper adds to the literature on the commercial bank’s profitability determinants. In particular, such study has not been conducted on OIC countries, and the study included all mainstream banks and incorporated the effect of deposit insurance system so far. Also, pure sample of conventional banks used as many conventional banks in OIC countries have Islamic windows or offer Islamic products. In addition, this study investigated the effect of OBS activities on net interest margin (NIM) because the studies that explored this interrelationship are limited especially for developing and under developed countries. The results showed that OBS activities contributed significantly and positively to return on assets and NIM. Moreover, this paper used a pure sample of conventional banks to avoid any biasness; see data section. Moreover, this study gives an idea about the economic situation and financial conditions of OIC countries during the period of the study.

This article aims to investigate how institutional characteristics affect the level of financial development of economies collectively and compare between developed and undeveloped economies.

A dynamic panel with 131 countries, including developed and developing ones, was utilized; the estimators of the generalized method of moments system (GMM system) model were selected because they have econometric characteristics more suitable for analysis, providing superior statistical precision compared to traditional linear estimation methods.

The results from the full panel suggest that concrete and well-defined institutions are important for financial development, confirming previous research, with a more limited scope than the present work.

Limitations of this research include the availability of data for all countries worldwide, which would make the research broader and more complete.

A panel of countries was used, divided into developed and developing countries, to analyze the impact of institutional variables on the financial development of these countries, which is one of the differentiators of this work. Another differentiator of this research is the presentation of estimates in six different configurations, with emphasis on the GMM system model in one and two steps, allowing for comparison between results.

Using cross-country data on the 1,000 largest global banks for 2019, the paper aims to examine the response of bank risk and returns to the pandemic.

The author employs weighted least squares (WLS) techniques for the purposes of analysis.

The findings suggest that banks with Islamic windows increased their riskiness in response to the pandemic, although there was not much impact on profitability. Additionally, the author categorizes banks based on certain major characteristics and find that these findings are manifest primarily for well-capitalized and less liquid banks.

Research as to the impact of the pandemic on banks' balance sheets has been an unaddressed area of research. By focusing on a large sample of banks across countries with both Islamic and conventional banking presence, the analysis sheds light on the balance sheet response of banks to the pandemic, an aspect that has not been addressed earlier.

Lack of access to finance is a major constraint to the growth of small and medium-sized enterprises (SMEs) and entrepreneurship in developing countries. The recent proliferation of mobile phone services, access to the internet and emerging technologies has led to a surge in the use of FinTech in Africa and is transforming the financial sector. This paper aims to examine whether FinTech developments heterogeneously contribute to the growth of digital finance for SMEs and entrepreneurship in 47 African countries from 2013 to 2020.

The paper uses a novel method of moments quantile regression, which deals with heterogeneity and endogeneity in diverse conditions for asymmetric and nonlinear models.

The empirical results reveal that the rise of FinTech companies offering services in Africa heterogeneously increases digital finance for SMEs and entrepreneurship in their different stages of growth. FinTech developments have a strong and positive impact in countries with higher levels of digital finance than those with lower levels. FinTech developments and digital finance positively and significantly influence entrepreneurship in Africa, particularly in the nascent and transitional development stages of entrepreneurship. Institutional quality has a considerable positive moderating effect when used as a control rather than an interaction variable.

The results suggest the need to promote FinTech developments in Africa: to provide a wide range of alternative digital finance schemes to SMEs and to promote entrepreneurship, especially in countries where entrepreneurship is in the nascent and transitional development stages. The results also underscore the need to promote FinTech development through supportive regulations and institutional quality to reduce risks related to FinTech and digital financing schemes.

To the best of the authors’ knowledge, this paper is one of the first attempts to account for the often overlooked heterogeneity effects and show that the influence of FinTech developments is not homogenous across the varying development stages of digital finance and entrepreneurship.

This paper studies the determinants of the debt maturity of Mexican-listed companies by analysing the effects on the extensive (issuing or liquidating debt) and the intensive (debt maturity renegotiation) margins.

This study, using a Tobit model for panel data and measuring maturity as a time variable, shows that size, liquidity and leverage, among other firm characteristics, as well as the market interest rate, explain debt maturity. Additionally, the study employs the McDonald and Moffitt decomposition to determine whether the explanatory variables of maturity have a more significant effect on the decision to issue or liquidate debt or on debt maturity renegotiations.

The results obtained highlight that the market interest rate negatively affects debt maturity. On the other hand, variables like size, liquidity, collateral and leverage demonstrate a positive relationship with the dependent variable. In addition, the extensive margin has a higher impact on corporate debt than the intensive margin, suggesting that firms prefer to liquidate or issue new debt rather than renegotiate preexisting contracts.

The main limitation of this study is the use of an unbalanced panel. The lack of data limits the application of specific methodologies suggested by the literature as a way to test the robustness of the estimates.

First of all, this study adds empirical evidence of debt maturity decisions by publicly traded firms in a middle-income country such as Mexico to the existing literature on maturity choice. Second, the study treats debt maturity as a time-censored, limited variable. Finally, the authors have used the McDonald and Moffitt (1980) methodology to decompose the effect of each independent variable into extensive and intensive margins.

Access to finance, especially by the poor and marginalized section of the population, is a prerequisite for creating employment opportunities, economic growth, poverty reduction and social cohesion. Access to finance makes transactions quicker, cheaper and safer. Most people around the world having an account in a formal financial institution serve as an entry point into formal financial sector. This study aims to analyze the status of financial inclusion in Assam with respect to demographic penetration, geographic penetration and usage ratio, i.e. credit–deposit ratio.

The study covers a period of 12 years from 2007–08 to 2018–19. Both the parametric and non-parametric statistical tools have been used to analyze the various dimensions of financial inclusion.

The study clearly indicates that there is a significant difference between Assam and aggregate India in financial inclusion and the status of Assam is somewhat lower as compared to the aggregate financial inclusion status of India. To achieve a satisfactory level of financial inclusion, it is not enough to open a bank account for the excluded people, but banks must look at flexibility and timeliness in services to offer a complete package to this segment of the population.

The study is a significant attempt to meet the shortcomings and improve banking coverage for achieving financial inclusion.

In the transitional process of promoting market-oriented interest rate, China is confronted with an important theoretical and practical issue: how to avoid bank runs and realize the smooth operation of the financial system. The purpose of this paper is to construct a bank-run dynamic model by taking into account a market environment with the transmission of multiple rounds of noise information, a comprehensive consideration of depositors’ expectation of return on assets (or earning rate/yields of assets), the efficiency of information processing and dissemination, and the different motives for premature withdrawal.

The authors discussed the dynamic process of bank runs, furnished the ratio and number of each round of bank run, and characterized the corresponding dynamic equilibrium as well. Furthermore, the authors expanded the benchmark model by incorporating the deposit insurance system (DIS) to discuss the action mechanism of DIS overruns.

The results show that DIS implementation has two opposite effects: stabilized expectation and moral hazard, by virtue of its influence over the two types of premature withdrawal motives of depositors; the implementation effect of DIS rests with the dual-effect comparison, which is endogenous to the institutional environment.

The policy implications are as follows: while implementing DIS, it is necessary to establish and improve the corresponding institutional construction and supporting measures, to consolidate market discipline and improve the supervisory role of the bank’s internal governance mechanism, so as to reduce the potential moral hazards. The financial system reform shall be furthered and the processing and dissemination efficiency of information be elevated to prompt depositors to form stable withdrawal expectations, thereby enhancing the stabilizing effect of DIS.

Islamic banks have significantly different balance sheets from their conventional counterparts, leading to different implications in relation to liquidity creation compared to conventional banks. This work, first, investigates the liquidity creation of conventional and Islamic banks in Middle Eastern and North African (MENA) countries between 2011 and 2016. It then tests the relationship between liquidity creation and performance of these banks.

It uses the data of 491 commercial banks across 18 MENA countries between 2011 and 2016. The analysis is based on panel data techniques.

The banks created US$18.596 trillion of liquidity, about 28.4% of total assets. Conventional banks created more liquidity compared with Islamic banks. Nevertheless, Islamic banks created more liquidity per asset compared with conventional banks. The regression analysis revealed a significant and negative correlation between liquidity creation and performance of the banks using return on average equity (ROAE) measure. However, no significant relationship is observed between liquidity creation and return on average assets (ROAA) of MENA banks. Moreover, there is no difference between Islamic and conventional banks in the relation between liquidity creation and bank performance.

The data are limited to the period 2011-2016; the period of this study was selected based on yearly data availability from the data source. Accounting measures were used to study the effect of liquidity creation on bank profitability, and the market-based measures were excluded, as there is no uniform sources in these countries that can be used to collect market-based data.

Bank managers must reach a trade-off between the advantages and disadvantages of liquidity creation, as well as consider the negative relationship between liquidity creation and bank performance when making their decisions.

First, to the best of the authors’ knowledge, this work is the first to analyse the relationship between the liquidity creation and performance of conventional and Islamic banks in MENA. Second, this study uses a sample of Islamic and conventional banks in MENA that have detailed information on the Orbis Bank Focus dataset, which is the most comprehensive database of commercial banks in the MENA region.

This study aims to investigate whether social capital mediates the impact of financial capital on business performance in Cameroon.

The study uses quantitative data collected from 370 small businesses in Yaoundé and Douala in Cameroon. All businesses in the sample are formally registered and are in the services sector. A structural equation modelling (SEM) approach is used for the analysis.

Structural and relational capital constraints are significant mediators of formal and informal finance. The magnitude effects of relational capital are the largest, underlining information's importance in resolving small and medium enterprises’ (SMEs') financial constraints. In addition, the effect of informal finance constraints on business performance is larger in magnitude, confirming the substantial impact of informal finance on SME operations.

The paper confirms that relational and structural social capital are vital in business. However, the study did not investigate the disaggregated effects of these dimensions of social capital. Furthermore, how SMEs transition between formal and informal finance could provide further understanding of the role of social capital. A disaggregated and panel data set would help to provide additional insights.

Social capital emerges as a pivotal factor in enhancing SME access to finance. The results, therefore, confirm the relevance of a holistic approach to easing financial capital constraints for SMEs and enabling small businesses to connect more to various stakeholders to amplify business performance. In addition, the findings identified some intervention points for the governments in Cameroon as it seeks to use SMEs as its pivot for development and to catapult itself to emerging economy status in its Cameroon 2035 vision.

The value of the study lies in assessing the mediating effect of cognitive, relational and structural social capital constraints on business performance and comparing the effect of formal and informal financial constraints on business performance.

This study investigates the influence of capital controls on financial market structure in Sub-Saharan Africa (SSA). This is especially relevant as the former restrictions are relatively common on the sub-continent. At the same time, the sub-region’s financial markets are highly bank-based and focused on the short term, with stock markets being illiquid and stunted.

To achieve its research objectives, the study posits an original model and uses comparative statics to analyze the relation between the aforestated phenomena in a representative SSA economy. Key hypothesized conclusions derived therefrom are tested using panel econometrics.

The comparative static analysis illustrates that capital controls favor banks, making them monopolistic and inefficient. This is confirmed by the empirical investigation, as the said market restriction skews financial market structure towards a bank-dominated system.

The study limits itself to capital controls and their effects on financial market structure. It does not particularly investigate the influence of different types of these restrictions. Specifically, it dichotomizes the influence of the examined controls on bank and stock markets.

The dissimilar influence of capital controls on banks relative to stock markets is critical for decision and policymakers. This paper highlights that capital controls may have unintended adverse effects on domestic financial markets. Also, they may not be the most appropriate policy to deepen markets and enhance domestic resource retention. There is, consequently, a need to determine fitting policies that attract rather than repel financial flows. Furthermore, capital controls may engender rather than address macroeconomic misalignment.

As a social imperative, it is necessary to analyze SSA’s framework of capital restrictions to better understand how they distort market incentives and mechanisms. This would help identify adverse effects that retard social development.

This study extends existing literature by developing a novel analytical framework incorporating key characteristics of SSA economies. This helps to better understand the nature of the capital controls–financial market structure relation in imperfect market conditions.