Does economic freedom fosters banks’ performance? Panel evidence from Malaysia

Sufian, Fadzlan; Habibullah, Muzafar Shah

doi:10.1016/j.jcae.2010.09.003

Cited by 99 publications

(118 citation statements)

References 58 publications

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“…A positive impact of size can be related with profitability because economies of scale may decrease the cost of processing and collecting the information (Boyd, 1993). The study is consistent with most of the previous studies including Kahf (2004);Al-Tamimi (2005);Kosmidou, (2005) and Sufian and Habibullah (2010).…”

Section: Discussion Of Results Of the Long Run Relationshipsupporting

confidence: 93%

“…There seems to be no contradiction between Shariah and non-Sharia banks with regards to COST as its impact is negative and significant for both profitability measures in both types of banking systems. This study is consistent with Kosmidou, (2005);and Sufian and Habibullah (2010);Ramadan, Kilani and Kadumi (2011) and Teng et al (2012).…”

Section: Discussion Of Results Of the Long Run Relationshipsupporting

confidence: 91%

“…For instance studies by Athanasoglou (2005); Naceur (2006) and Teng (2012) have confirmed that it has no significant relationship with the profits of bank. By contrast, the works of Bikker (2002); Athanasoglou et al, (2008); Uhomoibhi (2008); Kosmidou (2008); Srairi (2009); Sufian and Habibullah (2010);and Kharawish et al (2011) concluded that there is a positive the profitability of banks and GDP.…”

Section: Macroeconomic Variables and Bank Performancementioning

confidence: 96%

“…However, Berger (1997); Sufian & Habibullah (2010) and Kusmidou et al, (2005) found an adverse relationship between expenses and profitability.…”

Section: Bank Specific Determinants and Banking Performancementioning

confidence: 99%

“…Micro or banks-specific determinants are mainly influenced by banks' management decisions and policy objective. Following Sufian andHabibullah (2009), andKosmidou (2008), the left side variables in this study are ROA and ROE. They reflect the income earned on each dollar and show that how effectively the management is utilizing the financial resources of the bank to produce earnings (Hassan & Bashir, 2003).…”

Section: Dependent Variablesmentioning

confidence: 99%

See 4 more Smart Citations

Impact of Macroeconomic Factors on Banking Profitabilty

Lutf

Omarkhil²

2018

IFB

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This study comparatively focuses on the impact of macroeconomic determinants and the internal indicators on performance of conventional and Islamic banks in Pakistan. It evaluates the differential effects of macroeconomic variables and bank specific variables with a baseline study of five banks from each system. To determine the short-run and long-run impact of these factors, co-integration & general to specific approach are adopted. This study also considers bank specific and macroeconomic variables in two separate models (Return on Assets and Return on Equity). Our objective is to find the extent to which each system of banking is performing in the country. The results indicate that in the long run, Gross Domestic Product, and inflation, is positively related to performance, while Interest rate has no effect on the performance of banking sector in Pakistan. Similarly, bank size, capital adequacy, expenses, interest income and non-interest income are the bank related factors that significantly influence the performance of financial sector.

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Section: Discussion Of Results Of the Long Run Relationshipsupporting

confidence: 93%

Section: Discussion Of Results Of the Long Run Relationshipsupporting

confidence: 91%

Section: Macroeconomic Variables and Bank Performancementioning

confidence: 96%

“…However, Berger (1997); Sufian & Habibullah (2010) and Kusmidou et al, (2005) found an adverse relationship between expenses and profitability.…”

Section: Bank Specific Determinants and Banking Performancementioning

confidence: 99%

Section: Dependent Variablesmentioning

confidence: 99%

See 3 more Smart Citations

Impact of Macroeconomic Factors on Banking Profitabilty

Lutf

Omarkhil²

2018

IFB

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Does democracy matter in banking performance? Exploring the linkage between democracy, economic freedom and banking performance in the European Union member states

Socol,

Iuga

2023

Int. J Fin Econ

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Literature on the effects of socio‐political factors and the quality of political‐economic institutions on banking performance is scarce and mixed. To contribute to this literature, this study analyzes whether democracy and economic freedom affect the banking sector in European Union member countries. We provide empirical evidence of the influence of democracy and economic freedom on banking performance using a sample of 27 countries from 2001 to 2020, and accounting‐based return on assets (ROA) and return on equity (ROE) as performance measures. A dynamic model (system GMM) was used to address issues such as heteroscedasticity, serial correlation, and endogeneity. These findings indicate that democracy is positively associated with banking performance, whereas economic freedom negatively affects it in the sample countries. Additionally, this study adds to the growing literature on the relationship between control variables (macroeconomic determinants, bank‐specific factors, or a country's legislative regime) and banking performance. This study is practically valuable for managers, investors, stakeholders, policymakers, and academicians.

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Financial inclusion, economic freedom and financial stability in sub‐Saharan Africa

Frimpong

Yusuf

Boateng

et al. 2023

Thunderbird Intl Bus Rev

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Executive Summary The study examines the role of economic freedom in the relationship between financial inclusion and stability in sub‐Saharan African economies. By employing the System General Method of Moment and data from 39 sub‐Saharan African countries between 2004 and 2017, the study examines whether economic freedom (i.e., financial and business freedom) conditions the effect of financial inclusion on stability. Results from the study show evidence of a positive impact of financial inclusion on financial stability in sub‐Saharan African economies. Again, the results depict that financial inclusion could better enhance financial stability in economies with a high level of economic freedom (i.e., financial and business freedom). The results suggest that policymakers should allow financial institutions to operate with the level of freedom required to provide services at the lowest possible price. Further, it is recommended that policymakers should ensure that administrative requirements are minimal, bureaucracy costs are lesser, and licensing regulations for startups and expansion of existing firms are friendly. With this, associated increases in business and financial freedom would have promising implications for the relationship between financial inclusion and stability. Managerial Implications of the Study This research is very vital for firms in both the financial and nonfinancial. Specifically, managers of firms in the financial sector can embrace the level of financial freedom that would be allowed by the government, to come up with new and inclusive financial products, while putting in measures not to endanger the stability of the financial sector. Managers in the business sector could also take advantage of the business freedom that would be allowed by the government to diversify business operations, increase profitability and avoid causing nonperforming loan problems to banks. Originality/Value The study provides the first insight into how economic institutions condition the effect of financial inclusion on financial stability, which has not been previously studied.

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Does economic freedom fosters banks’ performance? Panel evidence from Malaysia

Cited by 99 publications

References 58 publications

Impact of Macroeconomic Factors on Banking Profitabilty

Impact of Macroeconomic Factors on Banking Profitabilty

Does democracy matter in banking performance? Exploring the linkage between democracy, economic freedom and banking performance in the European Union member states

Financial inclusion, economic freedom and financial stability in sub‐Saharan Africa

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