International Journal of Banking and Finance

A DEA AND TOBIT ANALYSIS OF THE DETERMINANTS OF COST AND PROFIT EFFICIENCY IN THE TURKISH BANKING SECTOR

Abdulhakim Diko — 2024-01-31

This paper aims to determine the factors affecting cost and profit efficiency of commercial banks in Turkey and to examine the
ownership effect on cost and profit efficiency in an emerging market. Another aim of the study is to carry out the most recent and longitudinal (2006-2020) analysis of efficiency in the Turkish banking industry. This study uses an intermediation approach with data envelopment analysis (DEA) as its methodology. A total of 23 commercial banks were selected as the study sample and their quarterly data from 2006- 2020 was collected. In addition, an external two-stage DEA model with Tobit regression was applied to examine the determinants of cost and profit efficiency. The results show that Turkish banks currently work with relatively higher cost efficiency than profit efficiency. On the other hand, foreign banks display a lower cost and profit efficiency performance. The downward trend in profit efficiency in the Turkish banking system sends a warning signal on the health and stability of the banking sector. Multivariate Tobit regression analysis reveals how Total Assets, Deposit Share, Asset Growth, Time Deposits, NPL, and Ownership Structure significantly affect cost and profit efficiency. Ratio of liquid assets to total assets is positively correlated with the efficiency values, in contrast to results from previous studies. Previous studies have mostly been limited to scale and technical efficiency and focused on the cost efficiency of Turkish banks. In this study, the gap in the literature is filled by a comparative examination of the cost and
profit efficiency at the scale of bank ownership. The study will look at and discussed these issues at the most stable period and the pre-pandemic period in the Turkish economy.

THE APPLICATION OF PROMISE (WA‘D) IN ISLAMIC BANKING CONTRACTS IN MALAYSIA: A MASLAHAH PERSPECTIVE

fadziani yaakub — 2024-01-31

The concept of promise in Islamic banking contracts is a novel tool that has been introduced as a result of recent advancements. Wa’d has grown in popularity in recent years because it provides great flexibility. It was primarily developed by Malaysia’s Islamic banks for product structuring. However, there are issues arising from this principle, which is considered to be against Shariah and merely intended to preserve the bank’s interests, which is of course, contrary to Maqasid al-Shariah. The purpose of this study is to look into the significance of the promise concept in Islamic banking contracts, taking into account the maslahah and mafsadah principles recommended in Maqasid al- Shariah. The study uses a qualitative approach as it allows a more in-depth understanding of the subject matter. Data were gathered using published literature and information from the official website of Bank Negara Malaysia (BNM). A semi-structured interview was conducted with three Shariah experts from the Shariah Advisory Council of Bank Negara Malaysia (SACBNM) and two industry practitioners from Bank Islam Malaysia Berhad (BIMB) and Maybank Islamic Berhad (MIB). The data obtained was analysed using the content analysis approach. In sum, the examination of Islamic law sources and discussions with Islamic scholars revealed that the use of the principle of promise in Islamic banking transactions can benefit the micro and macro economy. The concept of promise in Islamic banking contracts can benefit both customers and Islamic banks, particularly in terms of
meeting consumer needs, generating profit for Islamic banks, as well as contributing to the country’s development (maqasid kulliyah).

ANALYZING THE DOUBLE CROSSOVER MOVING AVERAGES STRATEGY BEFORE, DURING AND AFTER THE LOCKDOWN PERIOD

Farha Ghapar — 2024-01-31

Trading is a business, not an investment. Traders focus on minor to secondary trends, while investors focus on the primary trend. The
trading timeframe is crucial in technical analysis. As such a trader who trades with a minor trend timeframe, must have a trading strategy. We aim to examine the impact of the moving averages double crossover strategy on traders’ profit factor based on minor and secondary trend timeframes before, during and after the lockdown periods. Dow Theory was adopted for this study as a trend should be in effect until it gives a definite signal for a reversal. Data was collected from the Nasdaq Composite Index for a five-year period, from 2018 to 2022. During this time frame, the required data for the study was obtained at the point of the golden crossover and exiting at the dead crossover, in which 2018 to 2019 was the period before the lockdown, 2020 to 2021 was the period during lockdown, and 2022 was the year after lockdown. By using trading profits and loss for both longs and shorts, we back tested three strategies of double crossover moving averages that were as follows: i) EMA5 crossover EMA10, ii) EMA5 crossover EMA20 and iii) EMA20 crossover EMA50. A non-parametric analysis of independent samples was used. The result shows that there was a significant difference among those three strategies before the lockdown period, but no significant difference during and after the lockdown period.

MUTUAL FUND PERFORMANCE IN A BULLISH MARKET DURING THE COVID-19 CRISIS

Yunqi Chen — 2024-01-31

Active funds vs passive funds represent one of the most prominent investment decisions that ought to be undertaken by investors over the decades. Our paper seeks to offer an insight into the average performance of equity mutual funds during the period when there were roughly 70 ‘all-time-highs’ recorded by S&P 500 amid the COVID-19 health crisis. Additionally, our paper aims to explore the robustness and persistence of the explanatory powers of Morningstar sustainability globes, ratings from agencies and growth tilt during the health crisis. Our results indicated that the benchmark indexes seemed to dominate mutual funds in most cases during our sampling period. The ratings from Morningstar and/or Lipper together with growth investing appeared to be ideal elements to contemplate when making investment decisions during the COVID-19 health crisis.

FACTORS INFLUENCING STUDENTS’ COST OF LIVING: EVIDENCE FROM MALAYSIAN UNIVERSITIES

Hui Lin Tok — 2024-01-31

It is widely evident that cost of living among university students are increasing over time. That said, little is understood about factors
associated with general expenses among students in Malaysian universities. The present study uses primary survey data (n = 454)
to examine the correlates of the total amount of money spent by students in a month. An ordered regression model was used to shed
light on factors contributing to different magnitudes of expenses. The explanatory variables consisted of demographic factors, financial knowledge, parental income, peer influence, and personality trait of conscientiousness. Findings from the present study showed that a large proportion of students spent between Ringgit Malaysia (RM) 201 and RM400 per month. Young, male students tended to spend more than older, female students. Expenditure was higher among Chinese students than Malays. Educational levels and income were found to correspond to spending. Having good financial knowledge was associated with reduced expenditure. Students who were influenced by their peers were likely to indulge in high spending compared to those who were not. These findings have important implications for strategic planning and to assist policymakers, parents, and university authorities in formulating better intervention measures aimed at improving students’ spending behaviour, thereby lowering cost of living.