Impact of COVID-19, Political, and Financial Events on the Performance of Commercial Banking Sector

Ghouse, Ghulam; Bhatti, M. Ishaq; Shahid, Muhammad

doi:10.3390/jrfm15040186

Cited by 13 publications

(7 citation statements)

References 61 publications

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“…The financial system allows for massive investment and efficient capital allocation through the banking sector leading to revenue growth. The size of the banking sector in Pakistan accounts for threefourths of Pakistan's financial sector, which can be attributed to the rapid growth of the banking sector over the last two decades [53]. Pakistan, as well as other countries, is going through an important period, such as COVID-19, which can be indirectly related to the performance of the banking sector.…”

Section: Turkish Banki̇ng Sectormentioning

confidence: 99%

Comparison of the Turkey and Pakistan Bankıng Sector during the Covıd 19 Pandemic Process and Analysis of the Relationship wıth the Internal Factors Determined Regardıng Financial Vulnerabilities

Islatince

2023

JEMT

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The banking sector, the importance of which cannot be denied in the development of national economies, may be subject to many internal or macroeconomic factors that can cause vulnerability. On December 1, 2019, the adverse effects of the covid 19 pandemic, which started in Wuhan, China and spread all over the world in a brief period, revitalized the importance of the financial fragility problem in the Turkish banking sector as well as in the banking sectors of other countries around the world. This study it is aimed to analyze the relationship levels of the endogenous factors associated with financial vulnerability in the Turkish-Pakistani banking sector with the data for the period of 2016-2020 based on two countries. For this purpose, the micro variables of 24 deposit banks operating in the Turkish banking sector and 23 deposit banks operating in the Pakistani banking sector were determined as return on assets, interest margin, return on equity, liquidity, and financial leverage. Financial vulnerability is defined as the capital adequacy ratio and correlation and regression analyses were conducted to identify the relationship with micro variables. In the literature review, it has been observed that studies and research have been undertaken on financial vulnerability and stability in the Turkish banking sector and in different countries. However, these studies are mainly regional assessments rather than comparisons between two different countriesın this context, the evaluation of the vulnerability of the banking sectors of the two countries in the covid 19 process indicates that this study is distinct from the others. In addition, this comparison of the financial vulnerability levels of banks in the event of a possible crisis in the banking sector of the two countries is intended to assist similar academic studies and to enrich and diversify the literature.

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Section: Turkish Banki̇ng Sectormentioning

confidence: 99%

Comparison of the Turkey and Pakistan Bankıng Sector during the Covıd 19 Pandemic Process and Analysis of the Relationship wıth the Internal Factors Determined Regardıng Financial Vulnerabilities

Islatince

2023

JEMT

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“…However, lower interest rates could have an impact on commercial banks, especially on their net interest margins (NIMs), which represent the difference between interest on loans and interest on deposits. When a central bank lowers interest rates, it usually leads to lower borrowing costs for consumers and businesses [9]. Therefore, commercial banks may face pressure to lower loan interest rates.…”

Section: Market Riskmentioning

confidence: 99%

Risk Assessment of the Banking Industry under COVID-19

Jin

2023

AEMPS

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The outbreak of the COVID-19 pandemic in 2020 has brought various risks and threats to the entire banking industry, from which we can also know the importance of bank risk management. This paper mainly describes, analyzes, and summarizes the five aspects of liquidity risk, credit risk, market risk, and systemic risk. With regard to liquidity risk, the article describes the impact of the Federal Reserves continuous interest rate hikes on the banking industry in order to curb the high inflation caused by the COVID-19 pandemic and takes the collapse of Silicon Valley Bank as an example for analysis. Regarding credit risk, this article takes Credit Suisse Bank as an example. Highly leveraged speculative transactions caused huge losses to the company due to the high default rate during the epidemic. For the analysis of market risk, the article synthesizes the deeds of Credit Suisse Bank and Silicon Valley Bank, focuses on the interest rate, and the reasons for the collapse of Credit Suisse and Silicon Valley Bank are different on the surface, but the underlying logic of the two events is traced to the same There is a close relationship between the current interest rate environment and the changes in interest rates in recent years. As for systemic risk, the article mainly writes about the purpose and effect of Basel III and the supervision of the capital adequacy ratio during the epidemic. Overall, commercial banks need to closely monitor these risks and take steps to mitigate them to ensure their stability and continued operations during the pandemic.

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“…Previous study by [25] showed the heteroskedasticity component of stock market returns can be employed to forecast future market value. Factors such as political events [26] and general economic conditions [27] could affect the stock price movements and these factors only can be measures through news and bulletin. Instead of taking risk full step by extracting the qualitative variables, GARCH model can capture the information and news reported within the historical trading days.…”

Section: Introductionmentioning

confidence: 99%

Heteroscedasticity effects as component to future stock market predictions using RNN-based models

Sadon,

Ismail,

Khamis

et al. 2024

PLoS ONE

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Heteroscedasticity effects are useful for forecasting future stock return volatility. Stock volatility forecasting provides business insight into the stock market, making it valuable information for investors and traders. Predicting stock volatility is a crucial task and challenging. This study proposes a hybrid model that predicts future stock volatility values by considering the heteroscedasticity element of the stock price. The proposed model is a combination of Generalized Autoregressive Conditional Heteroskedasticity (GARCH) and a well-known Recurrent Neural Network (RNN) algorithm Long Short-Term Memory (LSTM). This proposed model is referred to as GARCH-LSTM model. The proposed model is expected to improve prediction accuracy by considering heteroscedasticity elements. First, the GARCH model is employed to estimate the model parameters. After that, the ARCH effect test is used to test the residuals obtained from the model. Any untrained heteroscedasticity element must be found using this step. The hypothesis of the ARCH test yielded a p-value less than 0.05 indicating there is valuable information remaining in the residual, known as heteroscedasticity element. Next, the dataset with heteroscedasticity is then modelled using an LSTM-based RNN algorithm. Experimental results revealed that hybrid GARCH-LSTM had the lowest MAE (7.961), RMSE (10.466), MAPE (0.516) and HMAE (0.005) values compared with a single LSTM. The accuracy of forecasting was also significantly improved by 15% and 13% with hybrid GARCH-LSTM in comparison to single LSTMs. Furthermore, the results reveal that hybrid GARCH-LSTM fully exploits the heteroscedasticity element, which is not captured by the GARCH model estimation, outperforming GARCH models on their own. This finding from this study confirmed that hybrid GARCH-LSTM models are effective forecasting tools for predicting stock price movements. In addition, the proposed model can assist investors in making informed decisions regarding stock prices since it is capable of closely predicting and imitating the observed pattern and trend of KLSE stock prices.

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Impact of COVID-19, Political, and Financial Events on the Performance of Commercial Banking Sector

Cited by 13 publications

References 61 publications

Comparison of the Turkey and Pakistan Bankıng Sector during the Covıd 19 Pandemic Process and Analysis of the Relationship wıth the Internal Factors Determined Regardıng Financial Vulnerabilities

Comparison of the Turkey and Pakistan Bankıng Sector during the Covıd 19 Pandemic Process and Analysis of the Relationship wıth the Internal Factors Determined Regardıng Financial Vulnerabilities

Risk Assessment of the Banking Industry under COVID-19

Heteroscedasticity effects as component to future stock market predictions using RNN-based models

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