Financing/financing provided by banks or loaned to the community in the form of credit is certainly not a bank- owned fund itself because in addition to the capital owned by banks is limited, but also the public deposit funds are stored in various forms, such as: savings, or deposits. This is in line with the basic business of banking that is funding and lending and its relation to the bank's intermediation function. (M. Bahsan, 2007: 73-74).
Capital variables that indicate the capacity of banks (assets and capital) in carrying out operational activities including credit activities. The proxy used is the Capital Adequacy Ratio (CAR). CAR is a ratio that shows how far all risk-bearing bank assets (credit, participation, securities, bills on other banks) are also financed from the bank's own capital funds in addition to obtaining funds from sources outside the bank, such as funds from the public, loans, and others (Dendawijaya, 2003). From this understanding means that the bank's own capital is used to finance assets that contain risks. The higher the capital owned by the bank, the easier it will be for banks to finance assets that contain risk. Likewise, if credit is not accompanied by sufficient capital, it will potentially lead to non-performing loans so it can be concluded that the higher the CAR will be able to reduce credit risk faced by banks (Gunawan. & Sudaryanto, 2016). According to the moral hazard hypothesis, low capital encourages companies to engage in risky lending practices which generally contain credit scoring and poor monitoring (Berger & Deyoung, 1997). So that low capital can interfere with activities, especially in determining the standards of prospective debtors who are eligible to receive credit loans. This is in accordance with the results of the research that has been done (Ntow & Alu, 2016) and (Gunawan. & Sudaryanto, 2016).
Corporate Governance generally refers to the process or mechanism by which the affairs of businesses and institutions are directed and managed, with a view to improve long term value of shareholders while taking into account the interests of other stakeholders interested in the well-being of an entity (Sanda, Mikailu and Garba, 2005; Central Bank of Nigeria, 2006; Chuku, 2009). The 2005 banks’ consolidation was the most widespread banking reform in recent years and a major attempt at the economic management of Nigeria. Strengthening corporate governance is one of the goals that the Central Bank of Nigeria (CBN) and other regulatory agencies like the Securities and Exchange Commission (SEC) set out to achieve with the bank consolidation exercise of 2005 (some key elements of the 13-point agenda of the 2005 banking reform are presented as Appendix I). To achieve this objective, a code of best practices was first issued in 2003 by the Nigerian Securities and Exchange Commission (SEC), later approved by the Bankers' Committee in compliance with the provisions of the code made mandatory by Central Bank of Nigeria the same year (CBN, 2006).The aftermath of the 2005 consolidation exercise saw the emergence of twenty five (25) banks after various processes of recapitalisation, and mergers and acquisitions of the eighty nine (89) banks that operated in Nigeria just before the commencement of the 2005 bank consolidation (see Appendix II). This paper investigates whether the 2005 bank consolidation has achieved one of its major objectives viz strengthening corporate governance of deposit money banks (DMBs) in Nigeria and if both consolidation and the emergent corporate governance mechanisms of the banks are associated with any improvement in the performance of the DMBs studied. The paper is presented in five sections. This introduction is followed by the review of relevant literature on corporate governance and bank consolidation in Nigeria. Section three explains the methodology of the research while section four presents and discusses the results. Section five concludes the paper.
Bank Negara Malaysia (BNM) or Central Bank of Malaysia finally approved domestic bank to provide full range of services over the internet effectively from 1 st June 2000. On June 15, 2000, Maybank, the largest domestic bank became the first bank to offer online banking services in Malaysia. The basic online services offered include bill payment, funds transfer, credit card payment, account detail as well as transaction history. The second domestic bank, which offered online banking services, was Hong Leong Bank. It commenced its internet banking operations known as “EC-banking” in December 2000. Subsequently, the Southern Bank had followed the trend by offering online banking services as well. Alliance Bank’s internet banking service was launched in June 2001 and Bank Islam was also launched its internet banking in 2003. In between 2000 and 2007, AmBank, Bumiputra Commerce, Public Bank, RHB Bank, Citibank, HSBC Bank, OCBC Bank and UOB Bank started to launch its online banking services in Malaysia. Affin Bank BHD is poised to catch up with the rest of the online world. The bank has finally launched affinOnline.com, its very own internet based retail banking facility on 1 st Jan 2009, followed by Bank Simpanan Nasional offered internet banking services to its clients on 2 nd Dec 2009. Subsequently, AmIslamic Bank, Bank Kerjasama Rakyat, Bank Muamalat, CIMB Bank, EON Bank, RHB Islamic Bank, Al Rajhi
The era spans between 1892 and 1952. One important feature of the era was the absence of banking legislation. That resulted in a boom in banking, especially indigenous banks which later in many instances ended in failure. Also during the era, three foreign banks and two biggest indigenous banks were established. While the foreign banks were: (1) The Bank of British West Africa Ltd (BBWA) (2) The Barclays Bank Dominion, Colonial and Overseas; and (3) The British and French Bank of Nigeria. The indigenous banks were :(4) The Africa Continental Bank Ltd (5) National Bank, founded by Dr. Nnamdi Azikwe from Tinubu properties Limited. The industrial and Commercial Bank was established in 1929. After a tenuous survival of barely one year, against the hostile competition of the overseas banks, it was forced into voluntary liquidation. In 1931, the Nigerian Merchantile Bank was established with the support of some of the former directors of the Industrial and Commercial Bank. It had branches in Lagos and Aba. Due to poor patronage, it was forced into voluntary liquidation in 1936. In September 1933, the mutual Aids society was also established by Nigerians as a private company under the Money Lenders ordinance of 1929. The company was linked with the National Bank of Nigeria Limited to assist small – scale indigenous enterprises. Three directors of the Nigerian Merchantile Bank were among the promoters of the two new companies. While Agbonmagbe Bank Limited (now Wema Bank) was established in 1945, the Nigerian farmer Bank was established in 1947.
Significantly more accurate comparison between the two systems can be made by equating the calculated ratings of the groups to the composition of the assessments placed based on the methodology of the "Banks, Investments, Money". For example, in assessing the "Best Bank" includes 12 indicators, divided as follows: 4 to evaluate the effectiveness of the bank (33.3% share in the entire evaluation), 4 for evaluating the quality of assets (33.3 ,% share) and 4 to assess the resource base of the bank (33.3%). Applying this logic to the ratings of the different groups of ALER(TS), our assessment of the best bank would lend types:
The first part of this section examines the criteria set by the major CRAs in assigning credit ratings to banks. This forms the basis for the empirical investigation of the determinants of bank credit ratings and aims to identify the broad categorization of these determinants. It further draws on previous studies that investigate the determinants of bank credit rating. A rating ranks the credit quality of say, a bank, in an ordinal fashion using coded letters assigned by the respective agencies. These rankings are mere ordinal numbers and not absolute values representing the level of risk. The rating of an entity aims to reduce information asymmetry between the issuer and other market participants, and as such, makes the market more efficient. CRAs stress that their ratings constitute opinions on the creditworthiness of an issuer or an issue, and not a recommendation whether to invest or not. The processes and methods employed by the major rating agencies vary widely. However, in general terms, CRAs rely on a variety of criteria ranging from qualitative factors such as competitive position and market share to quantitative assessment including financial variables (e.g. measuring balance sheet strength) in assessing the inherent risk of the issuer (the bank in this case). Rating a corporate entity will always involve some element of qualitative judgements, due to the large number of factors influencing the situation and riskiness of the entity.
The public banks have remained laggards in the race for adopting Internet banking practices. There are very few nationalised banks like State Bank of India, Punjab National Bank, Bank of Baroda, Allahabad Bank, Syndicate Bank and Bank of India that offer Internet banking services. SBI’s Internet banking initiative, launched in July 2001, is in fact doing quite well. One can only imagine the complexities involved in deploying a core banking solution for an entity the size of State Bank of India. With more than 13,600 branches spread across the length and breadth of the country, the project was huge in size and complicated in its implementation. Another public sector giant Punjab National Bank’s (PNB’s) has also come a long way since March 2000, when IT systems were deployed only at 500 branches, and were very inadequate. Only 35 percent of the bank’s business was computerized and a number of small software packages ran on standalone PCs. 97 per cent of Bank’s business is captured through computers. Core Banking Solutions (CBS) has been implemented in 504 Service Outlets (SOLs) covering 101 centres of country. The bank implemented Structured Financial Messaging Solutions (SFMS) for funds transfer from any of the CBS branches at 101 centres.
Source: Compiled and Computed from Reserve Bank of India and CMIE Prowess The table 7 it is understood that while analysing the Total Investment to Total Asset Ratio, in public sector banks, the Indian overseas bank exhibits the highest Total Investment to Total Asset Ratio with the mean value of 30.06 followed by IDBI bank with the mean value of 29.31. The bank of India shows the lowest mean value of 21.78 followed by bank of Baroda with the mean value of 19.97. Punjab national bank was found to be stability in total investment to total asset ratio with the coefficient of variation value of 3.79 followed by canara bank with the value of 5.81. Indian overseas bank was disclosed the inconsistency with the value of 41.32. In Total Investment to Total Asset Ratio, state bank of India and central of India show the highest growth with the CAGR value of 0.78 and 0.62 percent respectively. Indian overseas bank was reveals the negative growth during the study period. In private sector banks, the Yes bank indicates the highest Total Investment to Total Asset Ratio with the mean value of 31.86 followed by Jammu and Kashmir bank with the mean value of 31.09. Yes bank was recorded lowest mean value of Total Investment to Total Asset Ratio with 20.88. Total Investment to Total Asset Ratio was found to be consistent in Lakshmi vilas bank with the coefficient of variation value of 7.94 followed by south Indian bank with the value of 9.55. Yes bank examines the instability in Net Total Investment to Total Asset Ratio. Lakshmi vilas bank indicates the high growth rate in Net NPA to Net Advances Ratio with the CAGR value of 1.79
The above data clearly shows that Punjab and Sind bank rank first in reduction of NPAs followed by State Bank of Bikaner and Jaipur, Indian Overseas Bank, Union Bank of India, Andhra Bank, Central Bank, Punjab National Bank. Other bank that comes under top ten in reduction of NPAs is Allahabad Bank, Oriental Bank of Commerce, United Bank of India and Vijay Bank. The bank that shows negligible response to reduction of NPAs is State Bank of Travancore, Bank of India, and State Bank of Hyderabad.
2. MS Linda Mary Simon (2012). The author explains the study on customer perception towards various services provided by the bank. It is prudent that public sector banks have a strong presence in the market but currently they are facing a tough competition from private sector banks in terms of quality and products.
The relationship between banks and customers cannot be overemphasized. A banker and a customer’s relationship depend on the type of transaction, products or services offered by bank to its customers. The legal relationship between a bank and its customer differs in several important respects from the relationships between most other service providers. This relationship could be referred to that of a Pledger and a Pledgee. This happens when customer pledges (promises) certain assets or security with the bank in order to get a loan. In this case, the customer becomes the Pledger, and the bank becomes the Pledgee. Under this agreement, the assets or security will remain with the bank until a customer repays the loan. In this paper, a quantitative research was carried out with questionnaire on the relationship between banks and customers in Greece. The aim of our research is to find out: (i) which banks in Greece are most popular and why; (ii) their outstanding services; and (iii) what type of relationship do customers have with these banks. In conclusion, we find out that in one hand, the relationship between banks and customers is good and all interviewers visit a bank branch at least once a month. On the other hand, not all customers are satisfied with the bank rates, hence, they ask for better services such as continuous update of information, transaction of their accounts, interest rates, loans and various e-banking products.
Agriculture, the third branch of the national economy in terms of gross value added share in GDP by services and industry, are experiencing reduced access to loans from commercial banks, as they perceive agriculture as one risky high compared to other areas to which the bank oriented financial resources.
4. BILLS PURCHASED AND DISCOUNTED: It is also a method for borrowing from banks. Under this method bank provides credit against the dated bills of exchange before its maturity. Seller writes such bill and buyer accept it. The buyer promises to pay in the given period. Such bills are discounted by banks and a payment is made to the customers. If the buyer does not make the payment of the bill then the bank gets payment from the seller.
Samad (2015) studied the determinants of Bangladesh bank profitability. Results indicated that bank specific and internal factors such as loan-deposit ratio, loan-loss provision to total assets, equity capital to total assets, and operating expenses to total assets were significant factors. Bank sizes and macroeconomic variable showed no impact on profits. The short survey of bank determinant literature reveals three most important features. First, almost all Malaysian banking studies focused on Islamic banks, excepting Vejzagic and Zarafat (2014). However, their study concentrated only on six commercial banks and they used only macroeconomic variables. They did not use bank specific factors. Second, the studies of the determinants of bank profitability other countries such as GCC and Jordan also focused on the determinants of Islamic banks. This paper is different from other studies mentioned in the literature. First, the study focuses on the profitability determinants of twenty four commercial banks, both conventional and Islamic, over 2009-2011. While the previous studies such as Abdulla and Idrees (2013), and Muda, Shaharuddin and Embaya (2013) focused only the Islamic banks of Malaysia, Wasiuzzaman and Tarmizi (2010) concentrated only on the macroeconomic variables, this study combines both Islamic banks and conventional banks. Second, this study focuses on the bank specific factors as well as bank external factors.
This table reports the results of robustness checks on the bank monitoring channel. Panels A and B report the results of ordinary least squares (OLS) regressions using a sample of 126 Japanese banks spanning the period before the introduction of the Tokyo bank tax. In Panel A the dependent variables are the shares of the local portfolio, LP (loans granted to firms located in the same area code as the bank is located) and distant portfolio, DP (loans granted to firms outside the area code where the bank is located) to the banks total loan portfolio. In Panel B the dependent variables are the shares of the intangible portfolio, IP (loans granted to firms belonging to the top quantile of the distribution of their pre-tax period intangible assets) and pledgeable portfolio, PP (loans granted to firms belonging to the bottom quantile of the distribution of their pre-tax period intangible assets) to the banks total loan portfolio. The main explanatory variable is Placebo-TAX, an indicator variable equal to one for banks affected by the Tokyo bank tax when it comes into effect and zero otherwise, but this time we falsely assume that this happens one year prior to the actual introduction. To control for potential heterogeneity between affected and unaffected banks the lagged values of capital adequacy, asset quality, management efficiency, earnings, liquidity, market share, diversification and size (see Table 3.2 for definitions of these variables) are included in the regressions as further control variables. In addition, a set of time dummies and bank specific fixed effects are included across both regressions. Panel C reports results on the effect of the Tokyo bank tax on the borrowers’ cost of public debt using bonds issued during the period before the introduction of the Tokyo bank tax. The dependent variable, BPS, is the at-issue yield spread in basis points of the debt security over that of a corresponding Japanese government security of comparable maturity. The main explanatory variable is 𝑃𝑙𝑎𝑐𝑒𝑏𝑜𝑇𝐴𝑋 𝐵𝑜𝑛𝑑 , an indicator variable equal to one if the two largest
Bayyurt (2013) compared the performance of the foreign and domestic deposit banks in Turkey using several MCDM methods, viz. DEA, TOPSIS, and ELECTRE III, using the Mann-Whitney U-test and the independent samples t-test. The results of the study showed that foreign-owned banks performed better than domestic banks, as foreign banks could find cheaper international funds, and domestic banks had more employees than foreign banks for similar banking functions, resulting in lower employee productivity. Önder and Hepşen (2013) proposed a performance evaluation model for Turkish banks using time series forecasting methods and multi-criteria AHP and TOPSIS methodology. They applied the model under ten performance categories as prescribed by the Bank Association of Turkey: capital ratios, balance sheet ratios, assets quality, liquidity, profitability, income-expenditure structure, share in sector, share in group, branch ratios, and activity ratios.
Bank of Baroda is one among the foremost outstanding banks in Asian nation, having its total assets as Rs 1,43,146 Crores as on 31 st March 2007.The bank was based by prince Sayajiro Gaekwad three (also known as Shrimant Gopalrao Gaekwad) , then prince of Baroda on 20 th of July 1908 with a paid capital of RS ten lacs. From its introduction in an exceedingly little building of Baroda, the bank has return an extended thanks to accomplish its current position united of the foremost vital banks in Asian nation. On 19 th of July 1969, Bank of Baroda was nationalized by the govt of Asian nation with 13 alternative industrial banks.
The application of ICT in banking overcomes obsolete communication methods with their clients. First, this was the one-way communication in the form of delivery of basic information on the bank’s website for its existing and future customers, then this became a two-way communication in order to respond to the customer’s e-mails, but from the marketing aspect. Finally, presenting the concept of e-banking has meant a progress in the communication between the bank and the client because this way the client can perform banking transactions on the Internet from anywhere, without going to the bank branch office.
Among the facilities that the Rural Development Program offers is the fact there is no more need of a guarantee banking letter from the beneficiary before depositing his project. After signing the contract, he will go to the bank in order to negotiate his loan. The beneficiary will be able to solicit an advance of up to 10% from the total eligible value of the project. This advance can be favorable also in the way in which the bank calculates the risk of granting the loan and of the conditions in which the loan is granted. Another facility is that the beneficiary can use as warrantee the investment and the equipment [National Bank of Romania, 2007].