Why Banks Go to Emerging Countries and What is The Impact for the Home Economyy A Survey

Garcı́a-Herrero, Alicia; Navia, Daniel

doi:10.2139/ssrn.2831448

Cited by 1 publication

(2 citation statements)

References 59 publications

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“…The World Bank notes observable regional financial integration across the Sub-Saharan Africa region, which has been motivated by institutional, macro- and micro-behavioural factors (World Bank, 2012a, b; Garcia-Herrero and Simon, 2006). Within the East African Community (EAC), banks have demonstrated a fair degree of operational integration within EAC markets as well as throughout the larger East African region (World Bank, 2012a, b).…”

Section: Banking Sector Bank Performance and Regulation In East Africamentioning

confidence: 99%

“…Within the East African Community (EAC), banks have demonstrated a fair degree of operational integration within EAC markets as well as throughout the larger East African region (World Bank, 2012a, b). In some cases, institutional forces, such as normative and mimetic pressures, have seen banks operate across borders as they diversify their product offering and clientele (Garcia-Herrero and Simon, 2006). Regulation has, however, been indicated as a major impediment to the level of integration within the banking sector in the EAC (World Bank, 2012a, b; PwC, 2019).…”

Section: Banking Sector Bank Performance and Regulation In East Africamentioning

confidence: 99%

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Does banking regulatory regime affect the quality of bank earnings in the East African region?

Mathuva

Nyangu

2021

JAEE

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PurposeIn this paper, the authors examine the association between the banking regulatory regime and the quality of bank earnings. We further investigate whether the banking agency regulatory characteristics moderate the association between banking regulation and earnings quality.Design/methodology/approachUsing panel data spanning 29 years over the period 1991 to 2019, the authors model bank earnings quality as a function of scores for banking regulation for 170 banks in the East African region using both the feasible generalized least squares (FGLS) and generalized method of moments (GMM) estimation methods.FindingsThe results, which are robust for endogeneity among other checks, reveal a positive impact of bank regulatory mechanisms on the quality of bank earnings. The authors further establish differential impact of specific regulatory mechanisms, with some contributing positively toward earnings management while others contributing negatively toward earnings management. The differential impacts of banking regulation on earnings quality are also manifested in the country-level analyses.Research limitations/implicationsFirst, the study utilises a mix of bank-specific, country-specific as well as economy-specific variables in one dataset. Second, the authors utilise survey-based data using the World Bank's Bank Regulation and Supervision Surveys (BRSS) for the periods 1999 to 2019. The authors assume that the bank regulatory mechanisms in place pre-1999 are close to the mechanisms in place as per the 1999 BRSS. Given limitations in data availability, the authors are not able to control for banks engaging in multiple activities such as insurance, underwriting of securities, FinTechs, among others.Practical implicationsThe results are useful in bridging the gap between theory and practice regarding the expected effect of strict banking regulations on the quality of earnings in Eastern African Banks. For the positive impact of banking regulation on bank earnings quality to be felt, the institutional, social and environmental specificities of the five selected countries need to be adequately developed and taken into consideration.Originality/valueThis study is perhaps the first to utilise a large dataset of commercial banks from countries in a developing region characterised by relatively lower enforcement and dynamism in the banking regulation. Further, in-depth studies on the association between banking regulation and earnings quality remain sparse.

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Section: Banking Sector Bank Performance and Regulation In East Africamentioning

confidence: 99%

Section: Banking Sector Bank Performance and Regulation In East Africamentioning

confidence: 99%

Does banking regulatory regime affect the quality of bank earnings in the East African region?

Mathuva

Nyangu

2021

JAEE

View full text Add to dashboard Cite

show abstract

Why Banks Go to Emerging Countries and What is The Impact for the Home Economyy A Survey

Cited by 1 publication

References 59 publications

Does banking regulatory regime affect the quality of bank earnings in the East African region?

Does banking regulatory regime affect the quality of bank earnings in the East African region?

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