S. Aris, A. Messai, H. Mokhtari and M. Benslama
The use of LEO satellite systems has become widespread throughout the world, not only from the services standpoint but in large scale communication networks as well, as they make…
Abstract
The use of LEO satellite systems has become widespread throughout the world, not only from the services standpoint but in large scale communication networks as well, as they make it possible to communicate from any point of the globe. Lately, the communications in the satellite field have been markedly developed thanks to the Low Earth Orbit (LEO) satellites and GEO satellite orbit. This paper deals with the main survey of these networks by a demonstration of satellite constellations constitutions and the different interfering factors, namely the number of satellites in each orbit, modelling the HANDCHECK problems or Handover satellite probably blocking. In order to preserve the information, to make sure that a seamless communication between two satellite zones is ensured the Hand check should continuously be present in satellite networks. Although the achievement of such schemes is routine work in the laboratory, nontrivial problems emerge in long-distance applications. At present, the only suitable system for long-distance quantum communication is photons. The essential work carried out in our research laboratory concerns an approach in software development of the implementation of Quantum Key Distribution (QKD) Networks with LEO orbit satellites and a reduction of the telecommunication interruption risks, which indeed will provide a better communication quality.
Details
Keywords
Ronald Ravinesh Kumar, Peter Josef Stauvermann, Arvind Patel and Selvin Sanil Prasad
The banking sector stability depends in large part on the size of non-performing loans (NPLs). Hence, the factors which explain the problem loans are very useful information for…
Abstract
Purpose
The banking sector stability depends in large part on the size of non-performing loans (NPLs). Hence, the factors which explain the problem loans are very useful information for banks. Notably, studies in this regard with respect to the small developing countries’ banking sector have received less attention. Therefore, this study aims to examine the determinants of NPLs with a case of Fiji’s banking sector, over the period 2000-2013.
Design/methodology/approach
The balanced sample consists of the entire banking sector (five commercial banks and two non-bank financial institutions). First, the authors estimate a base model which comprise bank-specific indicators that are related to bank management and then they extend the estimations to include macroeconomic/structural factors such as economic growth, inflation, changes of the real effective exchange rate, unemployment, remittances, political instability and external events like the global financial crisis. The estimations are done using pooled OLS, the random effects and the fixed effects regression methods.
Findings
The results show that the following indicators have negative association with NPL and are statistically significant with the conventional levels: return on equity, capital adequacy requirement, market share based on assets, unemployment and time. On the other hand, the net interest margin has a positive and statistically significant association with NPL.
Research limitations/implications
Subsequently, the stability of the banking sector in small developing countries such as Fiji is largely dependent on banks’ profitability, solvency, size in terms of market share and the presence of a learning curve and keeping a close tab on the interest rate spread between loans and deposits.
Practical implications
The paper highlights the specific factors determining NPL in small developing economy of Fiji.
Originality/value
This study is the first to examine specific factors determining NPLs with respect to small developing economies in the Oceania region.
Details
Keywords
Egi Arvian Firmansyah, Masairol Masri, Muhammad Anshari and Mohd Hairul Azrin Besar
Islamic financial technology (fintech), primarily peer-to-peer (P2P) lending, plays a substantial role in funding the unbanked population and small and medium enterprises (SMEs…
Abstract
Purpose
Islamic financial technology (fintech), primarily peer-to-peer (P2P) lending, plays a substantial role in funding the unbanked population and small and medium enterprises (SMEs) by offering streamlined financial services through online digital technology. In addition, Islamic fintech lending offers a promising return rate for individual and institutional investors, and therefore, it is considered a worthy investment alternative for diversification. This study aims to examine the determinants of project returns of SMEs on Islamic fintech lending platforms, taking the case study of one Islamic fintech lending platform registered at the Financial Service Authority in Indonesia.
Design/methodology/approach
Project return information and other information, such as the name of the SME raising fund, project duration, location, contract (aqad) and value (amount of money) to be raised, were extracted from the Islamic fintech lending platform. Furthermore, a regression analysis was performed using the completed projects as sample data (n = 122) on the platform.
Findings
The results show that the rate of return is significantly affected by project duration and type of Sharia-compliant contract. Location and project value are, however, found to be statistically insignificant. This study’s overall results align with the Signaling theory, indicating the importance of information for decision-making.
Research limitations/implications
Due to limited access to the data, our study uses data from one of seven Islamic fintech lending platforms; thus, the study results may not be generalized to the general population.
Practical implications
The results suggest that investors aspiring to invest their funds in SME projects on Islamic fintech lending platforms should consider the project duration and contractual agreement since these factors significantly influence the return. Additionally, society may consider the Islamic fintech lending platform a viable investment instrument since its return rate follows the risk-return principle in classical and established finance theories. That is why Islamic fintech lending platforms are competitive compared to the more established ones, such as the Islamic stock market.
Originality/value
To the best of the authors’ knowledge, this study is the first study using an empirical approach to reveal the project return determinants of SMEs on Islamic fintech lending platform.
Details
Keywords
Junkyu Lee and Peter Rosenkranz
The recent rise of nonperforming loans (NPLs) in some Asian economies calls for close analysis of the determinants, the potential macrofinancial feedback effects, and the…
Abstract
The recent rise of nonperforming loans (NPLs) in some Asian economies calls for close analysis of the determinants, the potential macrofinancial feedback effects, and the implications for financial stability in the region. Using a dynamic panel model, we assess the determinants of the evolution of bank-specific NPLs in Asia and find that macroeconomic conditions and bank-specific factors – such as rapid credit growth and excessive bank lending – contribute to the buildup of NPLs. Further, a panel vector autoregression (VAR) analysis of macrofinancial implications of NPLs in emerging Asia offers significant evidence for feedback effects of NPLs on the real economy and financial variables. Impulse response functions demonstrate that a rising NPL ratio decreases the GDP growth, credit supply and increases the unemployment rate. Our findings underline the importance of considering policy options to swiftly and effectively manage and respond to a buildup of NPLs. The national and regional mechanisms underlying NPL resolution are important for safeguarding financial stability in an increasingly interconnected global financial system.
Details
Keywords
Baljinder Kaur, Rupinder Kaur, Kiran Sood and Simon Grıma
Purpose: Worldwide economies have been shattered by the alarming increase in Non-Performing Assets (NPAs) in Banking Sector. In India, the rise in NPA levels gives a clear insight…
Abstract
Purpose: Worldwide economies have been shattered by the alarming increase in Non-Performing Assets (NPAs) in Banking Sector. In India, the rise in NPA levels gives a clear insight into the health of industry and state. This study aims to determine how NPAs in India impact the profitability of eight banks chosen from the public and private sectors; specifically: Punjab National Bank (PNB), Bank of India (BOI), UCO Bank, Punjab and Sind Bank (PSB), HDFC Bank, Axis Bank, ICICI Bank, and Yes Bank; during the period 2009/2010 to 2017/2018.
Design/methodology/approach: The study utilised IBM SPSS version 20 application to carry out our statistical analysis of measures of central location (mean and median), measures of dispersion (standard deviation), to carry out the Kolmogorov–Smirnov test to check the normality of data, the Mann–Whitney U test (for two groups) for median comparison between private and public sector banks and the Kruskal–Wallis test (for more than two groups) for median comparison for more than two banks. p ≤0.01 and p ≤0.05 were the two-tailed significance level used for determining the significance of all statistical tests.
Findings: Trend analysis and statistical tests show that the trend in public sector banks to have NPAs is higher compared to private sector banks, and losses arising from NPA impact the banks’ profitability.
Practical implications: It is apparent that NPAs are a large threat to banks in India as it reflects the state of the Indian economy. The growth of the economic cycle is predominantly dependent on the smooth and profitable functioning of private and public sector banks. This current study focusses on and compares the impact of NPAs on the profitability of public and private sector banks. NPAs have grown exponentially more in the case of public sector banks than private sector banks, which has affected the former banks’ financial health and performance. Increases in the level of NPAs adversely affect the working style and long-term stability of public and private sector banks in the economy.
Social Implications: NPAs have a negative influence on the profitability of the banks as well as on the economic growth of the country too. However, it is recommended that management in the banking sector, particularly the public banks, should use various preventive and recovery strategies to reduce the risk of failure and to keep track of NPAs to stay safe.
Originality/value: This study aims to determine how NPAs in India impact the profitability of eight banks chosen from the public and private sectors; specifically: PNB, BOI, UCO Bank, PSB, HDFC Bank, Axis Bank, ICICI Bank, and Yes Bank; during the period 2009/2010 to 2017/2018.
Details
Keywords
Purpose: The main purpose of this chapter is to thoroughly investigate the diverse literature available concerning nonperforming loans (NPLs) and its determinants by studying and…
Abstract
Purpose: The main purpose of this chapter is to thoroughly investigate the diverse literature available concerning nonperforming loans (NPLs) and its determinants by studying and analyzing the empirical studies from 1985 to 2019.
Design/Methodology: A qualitative approach is being incorporated, and by using content analysis, various previous studies are reviewed and important issues like the objectives, methodology, key findings, and variables are reported.
Findings: The study tries to compile the main findings from the various studies done concerning NPLs and its determinants. The study shows how various determinants both bank-specific and macroeconomic affect the banking structure and thus the NPLs, in different countries and at different periods of time. The study also highlights how countries’ banking structure got affected by various economic phenomena like recession, contagious effect of the financial crisis, banking Basel norms, and NPL management strategies. Further major issues like data acquisition, lack of data reporting, countries specific banking conditions, methodologies used in the analysis, scarce resources, and disclosure hindrance which are faced by previous studies were also reported.
Originality/Value: As there are very few studies that provide a detailed viewpoint on NPLs and its determinants in this area, this research will provide a concise and detailed framework for the researchers to analyses the diverse literature on NPLs and its determinates.
Details
Keywords
Augustinos I. Dimitras, Ioannis Dokas, Olga Mamou and Eleftherios Spyromitros
The scope of this research is to investigate performing loan efficiency for fifty European banks during the period 2008–2017.
Abstract
Purpose
The scope of this research is to investigate performing loan efficiency for fifty European banks during the period 2008–2017.
Design/methodology/approach
The study is structured as a two-stage analysis of performing loan efficiency and its driving factors. In the first stage of the proposed methodology “Data Envelopment Analysis” is used to estimate performing loan efficiency for each bank included in the sample. A bootstrap statistical procedure enhances the findings. In the second stage, the impact of other factors on the efficiency scores of loan performance using tobit regression is investigated.
Findings
The results are consistent with the findings of the individual banks' financial analyses. According to the findings of DEA implementation, the evaluated banks may enhance their cost efficiency by 39% on average. In addition, the results indicate that loan efficiency performance improves after 2015, coinciding with the business cycle's upward trend. The tobit regression is employed in the second stage to examine the influence of bank-related and macroeconomic factors on banks' loan management efficiency. According to the findings of the tobit regression, three factors, namely the capital adequacy ratio, GDP per capita and managerial inefficiency, have a substantial influence on performing loan efficiency.
Originality/value
This research investigates the effectiveness of European economic policy in protecting the European banking system from the consequences of the sovereign debt crisis in several euro area members. The results highlight the distance of the Eurozone from the level of the ‘optimal currency area’.
Details
Keywords
Esther Laryea, Matthew Ntow-Gyamfi and Angela Azumah Alu
The purpose of this paper is to investigate the bank-specific and macroeconomic determinants of nonperforming loans (NPLs) as well as the impact of NPLs on bank profitability.
Abstract
Purpose
The purpose of this paper is to investigate the bank-specific and macroeconomic determinants of nonperforming loans (NPLs) as well as the impact of NPLs on bank profitability.
Design/methodology/approach
Using a sample of 22 Ghanaian banks over the period 2005-2010, the study employs a fixed effect panel model in estimating three different empirical models.
Findings
The study finds new evidence of bank-specific factors as well as macroeconomic factors determining NPLs. Inflation and industry concentration are not significant in determining NPLs, although both are positively related to NPLs.
Practical implications
The findings of this study have important implications for policy makers and bank managers.
Originality/value
The paper offers significant value in shaping and improving the banking sector of emerging markets.
Details
Keywords
Maria Grazia Fallanca, Antonio Fabio Forgione and Edoardo Otranto
This study aims to propose a non-linear model to describe the effect of macroeconomic shocks on delinquency rates of three kinds of bank loans. Indeed, a wealth of literature has…
Abstract
Purpose
This study aims to propose a non-linear model to describe the effect of macroeconomic shocks on delinquency rates of three kinds of bank loans. Indeed, a wealth of literature has recognized significant evidence of the linkage between macro conditions and credit vulnerability, perceiving the importance of the high amount of bad loans for economic stagnation and financial vulnerability.
Design/methodology/approach
Generally, this linkage was represented by linear relationships, but the strong dependence of bank loan default on the economic cycle, subject to changes in regime, could suggest non-linear models as more appropriate. Indeed, macroeconomic variables affect the performance of bank’s portfolio loan, but such a relationship is subject to changes disturbing the stability of parameters along the time. This study is an attempt to model three different kinds of bank loan defaults and to forecast them in the case of the USA, detecting non-linear and asymmetric behaviors by the adoption of a Markov-switching (MS) approach.
Findings
Comparing it with the classical linear model, the authors identify evidence for the presence of regimes and asymmetries, changing in correspondence of the recession periods during the span of 1987–2017.
Research limitations/implications
The data are at a quarterly frequency, and more observations and more extended research periods could ameliorate the MS technique.
Practical implications
The good forecasting performance of this model could be applied by authorities to fine-tune their policies and deal with different types of loans and to diversify strategies during the different economic trends. In addition, bank management can refer to the performance of macroeconomic conditions to predict the performance of their bad loans.
Originality/value
The authors show a clear outperformance of the MS model concerning the linear one.
Details
Keywords
Yok Yong Lee, Mohd Hisham Dato Haji Yahya, Muzafar Shah Habibullah and Zariyawati Mohd Ashhari
This paper aims to provide new empirical evidence on the non-performing loan (NPL) determinants of the EU conventional banks, in the context of macroeconomic factors, dimensions…
Abstract
Purpose
This paper aims to provide new empirical evidence on the non-performing loan (NPL) determinants of the EU conventional banks, in the context of macroeconomic factors, dimensions of country governance and bank-specific characteristics.
Design/methodology/approach
The panel data sets of 1,053 conventional banks were obtained over the period of 2007-2016. The Hodrick–Prescott filter was adopted to extract business cycle and credit cycle from real gross domestic product and credit to the private non-financial sector, correspondingly. System-generalised methods of moment was then used to identify the significant determinants of NPL.
Findings
The empirical results reveal that NPL is primarily driven positively by lagged-one NPL and risk profile. In consonance with the skimping hypothesis, NPL has a significant positive relationship with the cost efficiency. The empirical finding of the business cycle coincides with the Austrian business cycle theory. Particularly, NPL is relatively low during rapid economic growth of credit-sourced business boom. Whereas, business bust happens when credit creation runs its course and is associated with high NPL. This paper encapsulates that NPL is driven by not only macroeconomic factors and bank-specific characteristics but also the dimensions of country governance.
Practical implications
Policymakers should introduce policies that are geared towards proper dimensions of country governance.
Originality/value
The novelty of this research does not rely on the multidimensions of NPL determinants but on the disentanglement of the conventional banks with dual identity (i.e. Islamic banks, cooperative banks and ethical banks). It considers business cycle, credit cycle and previous NPL as the potential determinants.