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Effect of Bank Specific Factors on Profitability of Commercial Banks in Ethiopia
Issue:
Volume 9, Issue 2, March 2021
Pages:
23-27
Received:
10 October 2020
Accepted:
28 October 2020
Published:
16 April 2021
Abstract: Financial institutions specifically commercial banks play a significant and energetic role for developing an economy of a country. When the banking sector in a country is functioning in an efficient, effective, and disciplined way it leads to bring a rapid growth in the various sectors in the country. Many factors may impact on profitability of commercial banks. Basically, it can be categorized as bank internal factors and bank external factors. This paper tried to investigate the effect of bank specific factors on profitability of selected commercial banks in Ethiopia. The researcher identified return on asset as a dependent variable whereas bank size, capital ratio and management efficiency as an independent variables. For the achievement of the objectives the researcher collected secondary data in the form of annual audited financial statements from eight selected sampled commercial banks to investigate the effect of selected bank specific factors on profitability for six years from 2013 to 2018. In order to select sampled banks from all the total of 17 commercial banks operating, purposive sampling method was employed. This study adopted an explanatory approach by using panel data research design to fulfill the objectives. The collected data have been analyzed using random effect model of panel data analysis. The results of the study shows that capital ratio and management efficiency are positively related with profitability but bank size negatively related with profitability. Bank size significantly negatively affects profitability, capital ratio insignificantly positively affects profitability and management efficiency significantly positively affects profitability of banks. It is concluded that management efficiency is the major factor of profitability from the variables included in the model.
Abstract: Financial institutions specifically commercial banks play a significant and energetic role for developing an economy of a country. When the banking sector in a country is functioning in an efficient, effective, and disciplined way it leads to bring a rapid growth in the various sectors in the country. Many factors may impact on profitability of com...
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The Effect of Executive Share Ownership, Executive Compensation, and Independent Commissioners on Tax Avoidance
Ellena Nabilah Nur Alisha Ansar,
Wahyu Ari Andriyanto,
Ekawati Jati Wibawaningsih
Issue:
Volume 9, Issue 2, March 2021
Pages:
28-35
Received:
20 March 2021
Accepted:
10 April 2021
Published:
16 April 2021
Abstract: Tax is a contribution that mandatory to be paid by personal and corporate taxpayers. The government used that tax for national development. Tax becomes a burden for companies that it is mandatory to be paid. If the companies got larger income so that the taxes that must be paid become larger too. On the other hand, if the companies got smaller income, the taxes that must be paid will become smaller. This leads the companies to avoid taxes that mandatory to be paid by reducing their amount of taxes. This is called tax avoidance. Tax avoidance influenced by several factors such as corporate governance. This study aims to determine the effect of executive share ownership, executive compensation and independent commissioners on tax avoidance. This study uses manufacturing companies listed on the Indonesia Stock Exchange (BEI) for the period 2015-2019. The sampling technique used was purposive sampling method. The sample used in this study were 52 manufacturing companies listed on the Indonesia Stock Exchange (BEI) during the 2015-2019 period. Hypothesis testing is done using multiple linear regression analysis with the SPSS 26 program and a significance value of 5%. The results of this study indicate that: (1) Executive share ownership has no significant effect on tax avoidance, (2) Executive compensation has significant positive effect on tax avoidance, (3) Independent commissioners have no significant effect on tax avoidance, (4) Executive share ownership, executive compensation, and independent commissioners are only able to explain tax avoidance by 3,1%.
Abstract: Tax is a contribution that mandatory to be paid by personal and corporate taxpayers. The government used that tax for national development. Tax becomes a burden for companies that it is mandatory to be paid. If the companies got larger income so that the taxes that must be paid become larger too. On the other hand, if the companies got smaller inco...
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Firm Size, Asset Tangibility, Growth, Volatility, Dividends and the Capital Structure of Nigerian Quoted Firms
Issue:
Volume 9, Issue 2, March 2021
Pages:
36-52
Received:
11 March 2021
Accepted:
23 March 2021
Published:
29 April 2021
Abstract: Empirical work on capital structure in emerging markets like Nigeria has been sparse and met with low explanatory power. This study investigates the determinants of capital structure in Nigeria. The population of study comprises all non-financial corporations quoted on the Nigerian Stock Exchange (NSE) for the period 1999-2014 out of which 50 companies that met the minimum data criteria were utilized. Using panel data least squares regression, modified to weighted (cross section- and period-) models, the research documents the following findings. First, the factors that exert positive influence on corporate borrowing include firm age, intangible assets and expected inflation while those factors that exert negative influence on capital structure include tangible assets, growth, size, volatility of earnings, profitability, liquidity, dividend-paying status and uniqueness of industry. The results were, at best, mixed with respect to the portability of pecking order, target adjustment, trade-off, agency and market conditions models. The pecking order beats the trade-off model based on the signs of coefficients of firm-level attributes. In order words, asymmetric information explains why smaller, less profitable, less liquid firms with more risky intangible assets and which are low dividend-payers end up relying primarily on debt financing and vice versa. The study recommends the use of leases for financially- and collateral-constrained firms as well as instruments that facilitate information symmetry in financial markets.
Abstract: Empirical work on capital structure in emerging markets like Nigeria has been sparse and met with low explanatory power. This study investigates the determinants of capital structure in Nigeria. The population of study comprises all non-financial corporations quoted on the Nigerian Stock Exchange (NSE) for the period 1999-2014 out of which 50 compa...
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The Design of Stratified Contingent Bank Liability Structure to Release Risk Incentive Effects
Issue:
Volume 9, Issue 2, March 2021
Pages:
53-59
Received:
19 March 2021
Published:
8 May 2021
Abstract: This paper proposes a new type of bank liability structure with stratified contingent capital based on the suggestions of Basel III and TLAC Term Sheet. It try to solve the problem that the total loss absorbing capacity of global systemically important banks is insufficient and the single contingent capital-CoCos will bring extra risk to the bank in recent years. Compared with single contingent capital, the bail-in mechanism of stratified contingent capital is more complex and its risk effects will be more uncertain. Therefore, this paper studies how to design the parameters setting of stratified contingent liability structure to release the incentive effect of original shareholders’ risk taking. Firstly, it analyzed the basic setting of bank capital structure and bail-in mechanism. And then, it calculated the value of CoCos, TLAC bonds, and original shareholders’ equity by replicating payoffs using sets of exotic options. Finally, it calculated the elasticity of the original shareholders’ equity value to the volatility of asset value. The elasticity is used to analyze the incentive effect of original shareholders’ risk taking. The numerical analysis shows that risk incentive effect is more sensitive to the parameters setting of CoCos. In any case, conversion rate has a more important impact than the trigger threshold. In particular, the effect of risk taking can be eliminated by setting the parameters properly.
Abstract: This paper proposes a new type of bank liability structure with stratified contingent capital based on the suggestions of Basel III and TLAC Term Sheet. It try to solve the problem that the total loss absorbing capacity of global systemically important banks is insufficient and the single contingent capital-CoCos will bring extra risk to the bank i...
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