The Effects of Liquidity Risk and Interest-Rate Risk on Profitability and Firm Value among Banks in ASEAN-5 Countries

This study explores the issues relating to liquidity risk and interest-rate risk, recognizing that existing studies are mostly vague in emerging and developing markets. Panel data estimation technique is employed in the study based on data extracted from 63 commercial banks in ASEAN-5 countries over the period 2009 to 2017 making up to 567 observations. The empirical results reveal that loan to deposit ratio have a positive significant effect on firm value while liquid asset ratio, interest rate risk (net interest margin and asset interest yield) have a negative significant effect on firm value for ASEAN. The loan to deposit ratio have a positive significant impact on return on asset, interest rate risk and banks size have a significant negative effect on return on asset for ASEAN banks while GDP and inflation have a positive significant effect on return on asset. Also, the liquidity risk have a negative significant effect on return on equity while the interest rate risk have a positive significant effect, bank size have a significant negative effect on return on equity while inflation rate have a positive significant impact on return on equity. Hence, this empirical study provides implications that emphasizes on the need for banks to adhere to prudential and regulatory guidelines and ensure corporate management with respect to liquidity exposure that is capable of critically affecting banks profitability and firm value. The dynamics of interest rate volatility in banks operating environment necessitates that financial institutions use sound risk management practices in order to obtain higher valuations, achieve better financial performance and experience diminished costs of financial distress that's useful for policy implementations in ASEAN economies and suggest that further study can explore the interaction between abnormal loan growth and non-performing loans with a robust econometrics model

Exploring Liquidity Risk and Interest-Rate Risk: Implications for Profitability and Firm Value in Nigerian Banks

The purpose of this paper is to examine the effects of liquidity risk and interest rate risk on profitability and firm value, current studies are typically limited in emerging markets. This study employs a panel data estimation technique and a sample of 16 banks operating in Nigeria over the period from 2009 to 2017 making up to 144 observations. The findings of the study reveal that liquidity risk (loan to deposit ratio and liquid asset ratio) have a significant negative effect on firm value, the net interest margin and GDP have a negative significant impact on firm value for Nigerian banks. The loan to deposit ratio have a negative significant effect on firm value while the liquid asset ratio have a positive effect on firm value. The net interest margin have a negative significant effect on firm value while the asset interest margin have a positive significant impact on firm value. The GDP and inflation both have a positive significant relationship with firm value. The liquidity risk (loan to deposit ratio and liquid asset ratio) have a significant negative impact on return on equity of Nigerian banks. The GDP growth rate have a positive significant effect on the value of firm. Hence, this empirical study emphasizes and contributes to the dynamic role of liquidity risk and interest-rate risk and it's implication on profitability and firm value of banks in Nigeria and suggest that further study can explore a comparative study between Nigeria and financial firms in developed economy

Loan Growth, Bank Solvency and Firm Value: A Comparative Study of Nigerian and Malaysian Commercial Banks

The study explore the issues relating to credit growth, non-performing credit and bank solvency in the banking industry, recognizing that existing studies are largely sketchy in emerging and developing markets. Panel data estimation technique is employed in the study based on data extracted from 26 commercial banks in Nigeria and Malaysia over the period 2009 to 2017 making up to 234 observations. The results reveal that the NPLs for all banks is only explained by loan growth and inflation, NPLs for Nigerian banks is only explained by loan growth, leverage, efficiency, size and inflations while NPLs for Malaysian banks is only explained by leverage, efficiency, size, GDP and inflation. The bank solvency for all banks is only explained by NPLs, loan growth and leverage. The solvency for Nigerian banks is explained by NPLs, leverage and GDP while loan growth, size and inflation explained bank solvency for Malaysian banks. Firm value for all banks is explained by solvency, NPLs, leverage, efficiency, size and GDP, the value of firm for Nigerian banks is only explained by solvency, loan growth, leverage, efficiency and size. The firm value for Malaysian banks is only explained by solvency, loan growth, leverage, efficiency, size, GDP and inflation. It is observed that bank solvency play an important role in the firm value of commercial banks in the period of study. Hence, this paper contributes to the understanding of the dynamic role of abnormal loan growth and how it can enhance the volume of non-performing credit and suggest that further study can explore the interaction between abnormal loan growth and non-performing loans

Internationalization of SMEs: A Developing Country Perspective

Internationalization has become increasingly important to the competitiveness of firms of all sizes, including small and medium-sized enterprises (SMEs). SMEs play a crucial role in the development of lower-income countries. In Bangladesh, SMEs account for between 80 and 85 percent of industrial employment and 23 percent of total employment and are critical to economic growth. Though the literature on firm internationalization is well established, the internationalization process of SMEs from developing countries, such as Bangladesh, remains relatively under-explored. The main aim of this study is to explore factors that hinder the internationalization of SMEs in a developing country, with Bangladesh serving as the context of the investigation. Qualitative research methods were adopted, comprising semi-structured interviews with leaders of 16 SMEs in Bangladesh. Six major themes were identified as hindrances to the firms’ internationalization: (1) lack of market knowledge, (2) lack of family support, (3) the proliferation of ‘scammer buyers’, (4) the (negative) involvement of third parties, (5) mismanagement of domestic ports, and (6) unregulated local market. Regarding positive factors, only one theme emerged from the data, the strong support from the local government, which provides considerable backing for local SMEs with international ambitions. This study’s primary contribution and originality lie in the context of the investigation, with Bangladesh primarily overlooked in the international business literature. Therefore, the study presents several novel insights into the internationalization process of SMEs