Linkages between gold and Latin American equity markets: portfolio implications

Purpose. The authors aim to examine the mean and volatility linkages between the gold market and the Latin American equity markets in the entire sample period and two crises periods, namely the US financial crisis and the Chinese crash. Design/methodology/approach. To examine the return and volatility spillovers, the authors employ VAR-BEKK-GARCH model on the daily data of four emerging Latin American equity markets which include Peru, Chile, Brazil and Mexico, which ranges from January 2000 to June 2018. Findings. The results show that the return transmissions vary across the stock markets and the crises periods. The volatility transmission is found to be bidirectional between the gold and stock markets of Brazil and Chile during the US financial crisis. Furthermore, the volatility spillover is unidirectional from Brazil to gold and from gold to Peru stock market during the Chinese crash. We also calculate the optimal weights hedge ratios for gold and stock portfolio. The result suggests that portfolio managers need to increase the weight of gold for the equity portfolios of Peru and Mexico during the US financial crisis. Furthermore, during the Chinese crisis, investors may raise the investment in gold for the equity portfolios of Brazil and Chile. Finally, the cheapest hedging strategy is CHIL/GOLD during the US financial crisis, whereas MEXI/GOLD during the Chinese crash.Propósito: Los autores pretenden examinar los vínculos entre la media y la volatilidad entre el mercado del oro y los mercados de valores latinoamericanos en todo el período de la muestra y en dos períodos de crisis, a saber, la crisis financiera estadounidense y la crisis china. Diseño/metodología/enfoque: Para examinar los efectos de contagio de la rentabilidad y la volatilidad, los autores emplean el modelo VAR-BEKK-GARCH en los datos diarios de cuatro mercados bursátiles latinoamericanos emergentes que incluyen Perú, Chile, Brasil y México, que van desde enero de 2000 hasta Junio ​​de 2018. Hallazgos: Los resultados muestran que las transmisiones de retorno varían según los mercados de valores y los períodos de crisis. Se ha descubierto que la transmisión de la volatilidad es bidireccional entre los mercados de oro y de valores de Brasil y Chile durante la crisis financiera estadounidense. Además, el derrame de volatilidad es unidireccional desde Brasil hacia el oro y desde el oro hacia el mercado bursátil de Perú durante la crisis china. También calculamos los ratios de cobertura de pesos óptimos para la cartera de oro y acciones. El resultado sugiere que los administradores de cartera necesitan aumentar el peso del oro en las carteras de acciones de Perú y México durante la crisis financiera de Estados Unidos. Además, durante la crisis china, los inversores pueden aumentar la inversión en oro para las carteras de acciones de Brasil y Chile. Finalmente, la estrategia de cobertura más barata es CHIL/ORO durante la crisis financiera estadounidense, mientras que MEXI/ORO durante la crisis china

Does Fintech-Driven Inclusive Finance Induce Bank Profitability? Empirical Evidence from Developing Countries

This study explores the effect of fintech-driven inclusive finance on the profitability of banks using an unbalanced panel dataset from 660 banks across 40 developing countries between 2011 and 2021. We start with a fixed-effect estimate and subsequently validate our main findings using two-stage least squares (2SLS-IV), two-step system generalized method of moments (GMM), and generalized least squares (GLS) methodologies. Our analysis centers on three key profitability metrics: ROA, ROE, and NIM. Our findings suggest that fintech-backed inclusive finance boosts ROA by 9.10%, ROE by 18.87%, and NIM by 7.98%, highlighting the growing importance of mobile, internet, and agent banking in these nations. We also note that large banks benefit more from inclusive finance than small ones. Additionally, conventional banks see a more marked improvement in profitability than Islamic and savings banks. The relationship between inclusive finance and bank profitability is stronger in countries with higher GDP growth and those actively advancing financial inclusion through fintech, compared to countries with slower GDP growth and less emphasis on financial inclusion. When examining the interaction effects, the COVID-19 pandemic has further emphasized the positive connection between fintech and bank profitability. This suggests that fintech-driven inclusive finance can play a role in enhancing bank profitability, even in challenging times like the COVID-19 period. The transition towards fintech, however, mandates substantial investments, enhanced financial literacy, and heightened customer security, presenting persistent challenges for governments, policymakers, regulators, and financial institutions.</p

Factors affecting the Risk-taking Behavior of Commercial Banks in Bangladesh

This study examines the capital regulation, profitability, bank size, liquidity, off-balance sheet activities, charter value, dividend payout ratio and macroeconomic variables as determinants of bank risk (credit risk and overall risk) by using information from 30 Bangladeshi commercial banks over a period of 2005-2013. We use Generalized Methods of Moments (GMM) in a balanced dynamic panel data framework. The empirical results show a negative relation between credit risk and capital regulation and a mixed relation between overall risk and capital regulation. We find a negative relation between credit risk and profitability and a positive relation between overall risk and profitability. The results also show that larger banks take higher credit and overall risk. It is also evident that off-balance sheet activities are positively related with both credit and overall risk. We also find that banks with high liquidity take more credit risk. Negative association is found between credit risk and charter value and mixed evidence is found on the relationship between charter value and overall risk. We also observe that dividend payout ratio is not an important factor of bank risk. With regard to the impact of macroeconomic variables we find no significant impact on risk. Finally we find that lagged risk is an important determinant of bank risk

Financial Losses in Smoking and Its Consequences in BANGLADESH

Smoking is a mega problem in Bangladesh. Financial losses and consequences of smoking in Bangladesh are the main spotlights of this study. Huge financial losses are involved in this ghastly habit. Losses are occupied in individual, family and national levels. Its indirect losses are found significant. This paper presents the bad effects of smoking in the form of direct and indirect losses. Smoker is not only the affected person of smoking but also the others. In consequences part, it reveals the main issues that are held responsible for problems in family and society as a whole. It identifies the main causes of smoking. The vision of this writing is refrain people from smoking. The vision is also followed by a vital issue i.e. economic viewpoint of Bangladesh. Finally, it sets some recommendations for overcoming awful effects of smoking. Key Words: Smoking, Financial Losses, Direct Losses, Indirect Losses, Opportunity Cost, Consequences, Banglades

Competition and Profitability of Banks: Empirical evidence from the Middle East & North African (MENA) Countries

This paper uses generalized method of moments (GMM), Least Squares (LS) and Generalized Linear Model (GLM) to examine the impact of competition on profitability of banks and Stochastic Frontier approach (SFA) is used to estimate of cost efficiency. We have used an unbalanced panel dataset from a sample of emerging economic MENA countries over the period between 2011 and 2017. We find out that have a significant and negative impact of competition on profitability of banks. The empirical findings of this study suggest that (1) MENA banks should more improve the process of managing and monitoring the loan segment business ; the result which reducing in the level of credit risk which leads to higher profitability (2) MENA banks should shrink higher level of banking sector development. (3) MENA banks should make full conduct of available funds to engage in various natures of businesses; if there is an issue of insolvency, robust government support would give protection to MENA banks. Finally, it also provides some compulsory policy implications which will be very much beneficial for a wide range of stakeholders

Linkages between gold and Latin American equity markets: portfolio implications

Purpose. The authors aim to examine the mean and volatility linkages between the gold market and the Latin American equity markets in the entire sample period and two crises periods, namely the US financial crisis and the Chinese crash. Design/methodology/approach. To examine the return and volatility spillovers, the authors employ VAR-BEKK-GARCH model on the daily data of four emerging Latin American equity markets which include Peru, Chile, Brazil and Mexico, which ranges from January 2000 to June 2018. Findings. The results show that the return transmissions vary across the stock markets and the crises periods. The volatility transmission is found to be bidirectional between the gold and stock markets of Brazil and Chile during the US financial crisis. Furthermore, the volatility spillover is unidirectional from Brazil to gold and from gold to Peru stock market during the Chinese crash. We also calculate the optimal weights hedge ratios for gold and stock portfolio. The result suggests that portfolio managers need to increase the weight of gold for the equity portfolios of Peru and Mexico during the US financial crisis. Furthermore, during the Chinese crisis, investors may raise the investment in gold for the equity portfolios of Brazil and Chile. Finally, the cheapest hedging strategy is CHIL/GOLD during the US financial crisis, whereas MEXI/GOLD during the Chinese crash

The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh

The main purpose of this study is to identify the impact of intellectual capital efficiency (ICE) also known as knowledge capital along with its components human capital efficiency (HCE) and structural capital efficiency (SCE) on bank risk-taking behavior in Bangladesh. To reveal this effect, the study uses generalized method of moment (GMM) estimator and Two Stages Least Square estimator (to check the Robustness) and unbalanced panel data of 32 commercial banks of Bangladesh consisting of 530 bank-year observations during the year 2003-2020. The main results of the study are: (a) ICE is significantly and positively connected with a bank’s credit risk which indicates credit risk grows up with the increase of Intellectual capital efficiency, and (b) Both the human capital efficiency and structural capital efficiency positively impacts credit risk but the impact of SCE is not significant as HCE, (c) Bank performance (ROA), RWATA, macro variable inflation, and size have a negative impact on bank risk whereas ID and GGDP insignificant positively impact on bank’s risk. Finally, the results of the study will assist the stakeholders, policymakers, and academicians for future research

The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh

The main purpose of this study is to identify the impact of intellectual capital efficiency (ICE) also known as knowledge capital along with its components human capital efficiency (HCE) and structural capital efficiency (SCE) on bank risk-taking behavior in Bangladesh. To reveal this effect, the study uses generalized method of moment (GMM) estimator and Two Stages Least Square estimator (to check the Robustness) and unbalanced panel data of 32 commercial banks of Bangladesh consisting of 530 bank-year observations during the year 2003-2020. The main results of the study are: (a) ICE is significantly and positively connected with a bank’s credit risk which indicates credit risk grows up with the increase of Intellectual capital efficiency, and (b) Both the human capital efficiency and structural capital efficiency positively impacts credit risk but the impact of SCE is not significant as HCE, (c) Bank performance (ROA), RWATA, macro variable inflation, and size have a negative impact on bank risk whereas ID and GGDP insignificant positively impact on bank’s risk. Finally, the results of the study will assist the stakeholders, policymakers, and academicians for future research