The impact of financial structure on the performance of European listed firms

By considering different systems of legal protection this study examines the impact of capital structure on the performance of listed firms in European region. Based on 5050 listed firms in eight European countries, the results of the study reveal that the owners in low level of legal protection are more likely to use the capital structure of the firms in order to serve their proper interests. In high level of legal protection, the market based system and the debts are enrolled to constraint the expropriation of private benefits.peer-reviewe

The mutual impacts of corporate governance dimensions and legal protection systems on the performance of European banks : a post-crisis study

The paper provides new evidence on the relation between corporate governance practices, legal rights and European banks’ performance during the post-crisis period. Using a sample of 935 banks in 30 European countries, the results reveal that at a high level of legal protection European banks are more able to follow the international recommendations and codes of corporate governance practices and vice-versa. Additional analysis shows that all the corporate governance variables have the same impacts on the banks’ performance. At low, middle and high levels of legal protection, the results reveal positive impacts of committees’ number (such as remuneration, nomination and audit committee) and independent members of banks’ boards. The other dimensions of corporate governance (ownership concentration, executive pay and CEO duality) do not have any impact on bank performance. Only at the low level of legal protection the results show a negative impact on board size on European banks’ performance.peer-reviewe

The Impact of oil Prices on the Financial Performance of Banking Sector in Middle East Region

The objective of this study is to determine the impact of oil price fluctuations on the financial performance of banking sector in 8 oil producing and exporting countries in Middle East region (Kingdom Saudi Arabia, United Arab Emirates, Qatar, Bahrein, Kuwait, Jordan, Oman, Iran) in the period between January 2012 and December 2017. The results do not reveal the same impact of oil price fluctuations on the financial performance of banking sector in each studied country. A significant direct impact of oil prices on the financial performance of banking sector has been found in Bahrein, Oman and Iran. In Jordan, Kuwait, Qatar, Saudi Arabia and United Arab Emirates, the results do not reveal any direct impact of oil price fluctuations on the financial performance of banking sector. The analysis also showed that the size of the economy in each country and its diversification in non-oil sectors have a direct impact on the relationship between oil price fluctuations and financial performance of banking sector. The existence of well diversified economy in non-oil sector reduces the direct impact of oil price fluctuations on the financial performance of banking sector. Keywords: Oil prices, Banks, Financial Performance, Macroeconomics Factors.  JEL Classifications: E02, E44, E6, G21, Q41 DOI: https://doi.org/10.32479/ijeep.807

The Impact of Oil Prices on Stocks Markets: New Evidence During and After the Arab Spring in Gulf Cooperation Council Economies

This study investigates the impact of stock price fluctuations on stock markets in six countries in Gulf Cooperation Council (Saudi Arabia, Kuwait, Oman, Bahrain, United Arab Emirates (UAE) and Qatar) during and after the recent geopolitics conflicts, known as Arab Spring, from January 2011 to December 2017. Two statistical models were implemented to measure the relationship between oil price fluctuations and stock markets returns. The logistic smooth transition model (LSTR) was implemented to measure the relationship between oil price direction (positive/negative) and stock markets returns. The exponential smooth transition model (ESTR) was applied to capture the relationship between the magnitude of oil price fluctuations (small/large) and stock markets returns. The results reveal several asymmetrical results of oil price directions (positive/negative) on stock markets returns in some GCC countries. In Saudi Arabia, Kuwait and Bahrain, the negative oil price fluctuations have larger impact on the returns of stocks markets than positive oil price fluctuations. The results reveal also that the existence of political instability increases the sensitivity of stock markets returns on negative oil price shocks. In addition, the results of ESTR model do not reveal any asymmetrical relationship between the magnitude of oil price changes and stock markets returns in GCC region except Oman. A high level of oil price shocks has larger impact on Omani stock market returns than small oil price shocks. Keywords: Oil prices, Stock Markets, Arab Spring, Geopolitical conflicts, Gulf Cooperation Council JEL Classifications: E02, E44, E6, G18, Q41 DOI: https://doi.org/10.32479/ijeep.797

Knowledge Management and Job Performance: The Case of Lebanese Banking Sector

This study examines the impact of knowledge management on the job performance of Lebanese banking sector during 2019. The research employed knowledge acquisition, knowledge sharing, knowledge creation, knowledge codification and knowledge retention as proxies to analyze the knowledge management variable. The job performance is measured by considering quantitative and qualitative variables. The research reveals that knowledge acquisition, knowledge sharing, knowledge creation and knowledge retention have a positive impact on the job performance of the Lebanese banking sector. The result also reveals a non significant impact of knowledge codification on the job performance. The knowledge management should be as a mandatory condition in banking sector for making high level of job performance.   Keywords: Knowledge Management, Job Performance, Banking Sector, Technology, Knowledge Retention.  JEL Classifications: M1, M12, D8 DOI: https://doi.org/10.32479/irmm.924

Corporate Governance Effects on Bank Profits in Gulf Cooperation Council Countries during the Pandemic

During the COVID-19 lockdown, the typical bank in the Middle East lost liquidity due to deposit drains and experienced increases in nonperforming loans. The loss of liquidity was a supply shock, while the increase in nonperforming loans was a demand shock. Corporate governance increases the board’s oversight of top management’s implementation of strategies to reduce these shocks. Two corporate governance measures include a political concentration in the ownership and the presence of independent directors on the board of directors. Politically connected shareholders can ensure the continuous flow of deposits through their access to large depositors, thereby reducing supply shocks. Supply shocks may also be overcome by the large deposit balances from oil wealth. Independent directors are not employees of the banks on whose boards they serve, thereby providing objective evaluations of management’s performance. Managers who are evaluated by independent directors can reduce nonperforming loans by strictly evaluating the creditworthiness of borrowers and providing incentives for timely repayment. Thus, demand shocks may be overcome by the scrutiny of management by independent directors. These conditions prevail in the Gulf Cooperation Council (GCC countries). Using a sample of 326 GCC banks, we perform OLS regressions followed by two-stage least squares and GMM estimator robustness checks of ownership’s political concentration, independent directors, bank size, and bank liquidity on returns on assets and equity. Ownership political concentration, independent directors, bank size, and liquidity ratio significantly explained the return on assets and on equity. We conclude that large shareholders use political connections to cope with crises and that large banks are able to make new loans due to liquidity from large reserves. Independent directors evaluate management performance objectively, thereby requiring that management reduce nonperforming loans. We close research gaps of bank performance in GCC countries, as opposed to the entire MENA region, the latter being the focus of the literature. The significance of this paper is that it demonstrates the ability of banks to employ corporate governance to cope with crises. This is an original approach, as it seeks the outcome of a positive signal on bank performance of the reduction in the supply shock through ownership political concentration and reduction in the demand shock by independent directors. As corporate governance variables mitigate both shocks, corporate governance may assist banks in coping with liquidity crises

THE IMPACT OF FINANCIAL AND LEGAL STRUCTURES ON THE PERFORMANCE OF EUROPEAN LISTED FIRMS

ABSTRAC

The Impact of Corporate Governance and Political Connectedness on the Financial Performance of Lebanese Banks during the Financial Crisis of 2019–2021

The Lebanese banking sector has become risky due to political and economic crises. At such times, corporate governance mechanisms ensure objectivity of assessment and rationality in decision making. We examine the impact of internal corporate governance mechanisms on the performance of Lebanese banks, with political involvement in the administration and ownership of the banks. We used linear regression on a sample of 194 bank-year observations from 2016 to 2021. The presence of independent members on boards of directors, and ownership concentration due to family ownership, had positive effects on bank return on assets, return on equity, liquidity levels, and loans issued. Efficient control, along with the presence of audit, and compliance committees reduced risk by increasing capital adequacy and reducing non-performing loans. Both administrative political connections and ownership political connections increased return on assets, increased return on equity, increased liquidity levels, and increased loans to deposits, while increasing non-performing loans. Agency conflicts suggest that granting loans due to political pressure increased non-performing loans

The impact of corporate governance and political connectedness on the financial performance of lebanese banks during the financial crisis of 2019-2021

The Lebanese banking sector has become risky due to political and economic crises. At such times, corporate governance mechanisms ensure objectivity of assessment and rationality in decision making. We examine the impact of internal corporate governance mechanisms on the performance of Lebanese banks, with political involvement in the administration and ownership of the banks. We used linear regression on a sample of 194 bank-year observations from 2016 to 2021. The presence of independent members on boards of directors, and ownership concentration due to family ownership, had positive effects on bank return on assets, return on equity, liquidity levels, and loans issued. Efficient control, along with the presence of audit, and compliance committees reduced risk by increasing capital adequacy and reducing non-performing loans. Both administrative political connections and ownership political connections increased return on assets, increased return on equity, increased liquidity levels, and increased loans to deposits, while increasing non-performing loans. Agency conflicts suggest that granting loans due to political pressure increased non-performing loans