This document summarizes a study that examined the relationship between excess value and excess profitability among deposit money banks in Nigeria from 1998-2007. The study used regression and correlation analyses of accounting data from 18 sampled banks. The analyses revealed a positive and statistically significant correlation, indicating a relationship between excess value and excess profitability for both diversified and standalone banks. Prior literature on the costs and benefits of corporate diversification was reviewed. The study aimed to measure this relationship for Nigerian banks and hypothesized no significant relationship, which the analyses did not support.
The purpose of this study is to measure the impact of penetration of foreign banks in the Indonesian banking industry. The measured effects are limited to competition and efficiency during the years 2000-2011, during which was a recovery from the economic crisis in Indonesia. Panzar-Rosse measures the competition and Conjectural Variation approaches. The efficiency is measured by the Standard Profit Efficiency approach. By using panel regression method with SUR (Seemingly Unrelated Regression), we found that penetration of foreign banks will increase competition and efficiency of banking in Indonesia, especially to medium and small banks through spillover effect on domestic banking system. The increase in total assets, total loans and the amount of third party funds held by foreign banks in Indonesia will increase competition and efficiency of banks in Indonesia.
The Influence of Solvency Ratio Decision on Rural Bank Dinar Pusaka In The Di...inventionjournals
The solvency ratio is a ratio that can be used to influence lending decisions on the BPR. This research purpose to test and find empirical evidence whether the Debt to Assets Ratio, Times Interest Earned Ratio, and Long-term Debt to Equity Ratio influence on lending decisions. The population useful for customers apply for credit to the BPR Dinar Pusaka in the district Sidoarjo. The sample in this research were selected using purposive sampling method until elected only 30 customers during the three periods, namely the year 2013 to 2015. Data analysis technique used is the logistic regression analysis. The research results show that Times Interest Earned Ratio variable does not affect the lending decisions. Meanwhile, the variable Debt to Assets Ratio and Long-term Debt to Equity Ratio influence on lending decisions
The purpose of this study is to measure the impact of penetration of foreign banks in the Indonesian banking industry. The measured effects are limited to competition and efficiency during the years 2000-2011, during which was a recovery from the economic crisis in Indonesia. Panzar-Rosse measures the competition and Conjectural Variation approaches. The efficiency is measured by the Standard Profit Efficiency approach. By using panel regression method with SUR (Seemingly Unrelated Regression), we found that penetration of foreign banks will increase competition and efficiency of banking in Indonesia, especially to medium and small banks through spillover effect on domestic banking system. The increase in total assets, total loans and the amount of third party funds held by foreign banks in Indonesia will increase competition and efficiency of banks in Indonesia.
The Influence of Solvency Ratio Decision on Rural Bank Dinar Pusaka In The Di...inventionjournals
The solvency ratio is a ratio that can be used to influence lending decisions on the BPR. This research purpose to test and find empirical evidence whether the Debt to Assets Ratio, Times Interest Earned Ratio, and Long-term Debt to Equity Ratio influence on lending decisions. The population useful for customers apply for credit to the BPR Dinar Pusaka in the district Sidoarjo. The sample in this research were selected using purposive sampling method until elected only 30 customers during the three periods, namely the year 2013 to 2015. Data analysis technique used is the logistic regression analysis. The research results show that Times Interest Earned Ratio variable does not affect the lending decisions. Meanwhile, the variable Debt to Assets Ratio and Long-term Debt to Equity Ratio influence on lending decisions
How does capital structure affect firm s market competitiveness.pdfNghiên Cứu Định Lượng
Các quyết định về vốn hiệu quả không chỉ làm tăng hiệu quả hoạt động của doanh nghiệp mà còn mang tính chiến lược để mang lại lợi thế cạnh tranh của doanh nghiệp trên thị trường. Sử dụng một tỷ lệ nợ phù hợp giúp doanh nghiệp cân bằng giữa nguồn lực bên trong và bên ngoài để cạnh tranh với các doanh nghiệp trong ngành. Nghiên cứu này nhằm tìm ra ảnh hưởng của cấu trúc vốn thông qua hệ số nợ (DR) đến năng lực cạnh tranh của doanh nghiệp (HHI) ở Việt Nam. Một mẫu gồm 574 công ty niêm yết trên sàn giao dịch chứng khoán của Việt Nam từ năm 2010–2018 được nghiên cứu bằng phần mềm STATA. Kết quả cho thấy cấu trúc vốn ảnh hưởng đến năng lực cạnh tranh của doanh nghiệp hình chữ U ngược. Đồng thời, DR ảnh hưởng đến HHI dưới dạng hàm hình chữ U trong các sản phẩm công nghiệp, thông tin và viễn thông và hàng tiêu dùng. Trong khi đó, DR ảnh hưởng đến HHI theo hình chữ U ngược trong các lĩnh vực dịch vụ tiêu dùng, nguyên vật liệu và tiện ích cộng đồng. Với kết quả của phân tích này, nghiên cứu cũng cung cấp các thảo luận cũng như các hàm ý chính sách đối với doanh nghiệp sử dụng tối ưu cơ cấu vốn để tạo lợi thế cạnh tranh trên thị trường.
The literature shows little evidence on the effects of the business model upon the volatility of banks in developing and fast growing economies. Hence, this study examines the effects of busi-ness model choice on bank’s stability in ASEAN countries. Using GMM and other robust econo-metric methods on the sample of 99 joint stock commercial banks, we find significant and nega-tive impacts of diversification model in which bank shifts toward non – interest and fee – based activities. We also find that the impacts are different between two groups of countries. For Vi-etnam, Indonesia and the Philippines, the diversification entails negative impacts on the stability while demonstrating positive impacts for Thailand and Malaysia. Upon the findings, we draw policy implications for a more sustainable development in ASEAN banking business.
The aims of the paper are to study the financial performance between the independent finance companies and the
integrated finance companies over the period 2001-2011.
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
Evaluating Loan Loss Provisioning for Non-Performing Loans and Its Impact on ...Fakir Tajul Islam
Using the aggregate data of 56 commercial banks in the last 9 years
(2009-2017), this study attempts to evaluate the Impacts of LLP maintained for NPLs on profitability, as it may help
to take the level of the LLP, and NPLs in the optimum level of business success.
Effect of Portfolio Diversification on Commercial Banks Financial Performance...inventionjournals
The study examined the effect of portfolio diversification on Commercial Banks financial performance. Mixed method of research design was used and data was collected using questionnaires and interview schedules. Target population was 43 licensed Commercial Banks in Kenya from which one hundred and thirty three (133) managers were randomly selected to form sample size. Validity of the research instruments was ensured through content, face and construct validity testing. Data was analyzed using descriptive statistics and inferential statistics which included correlation analysis and bivariate regression analysis. The study established a positive statistically significant relationship between portfolio diversification and financial performance. The portfolio diversification explained 68% of the changes in the financial performance of commercial banks in Kenya and that most banks diversify their investments which has enabled them to increase profits and performance in the past years.The study recommended that financial institutions should invest in a combination of assets which are negatively correlated because this maximizes revenue (returns) and minimizes losses (risks). Further study should be undertaken to establish the best combination of assets that can yield an efficient portfolio.
How does capital structure affect firm s market competitiveness.pdfNghiên Cứu Định Lượng
Các quyết định về vốn hiệu quả không chỉ làm tăng hiệu quả hoạt động của doanh nghiệp mà còn mang tính chiến lược để mang lại lợi thế cạnh tranh của doanh nghiệp trên thị trường. Sử dụng một tỷ lệ nợ phù hợp giúp doanh nghiệp cân bằng giữa nguồn lực bên trong và bên ngoài để cạnh tranh với các doanh nghiệp trong ngành. Nghiên cứu này nhằm tìm ra ảnh hưởng của cấu trúc vốn thông qua hệ số nợ (DR) đến năng lực cạnh tranh của doanh nghiệp (HHI) ở Việt Nam. Một mẫu gồm 574 công ty niêm yết trên sàn giao dịch chứng khoán của Việt Nam từ năm 2010–2018 được nghiên cứu bằng phần mềm STATA. Kết quả cho thấy cấu trúc vốn ảnh hưởng đến năng lực cạnh tranh của doanh nghiệp hình chữ U ngược. Đồng thời, DR ảnh hưởng đến HHI dưới dạng hàm hình chữ U trong các sản phẩm công nghiệp, thông tin và viễn thông và hàng tiêu dùng. Trong khi đó, DR ảnh hưởng đến HHI theo hình chữ U ngược trong các lĩnh vực dịch vụ tiêu dùng, nguyên vật liệu và tiện ích cộng đồng. Với kết quả của phân tích này, nghiên cứu cũng cung cấp các thảo luận cũng như các hàm ý chính sách đối với doanh nghiệp sử dụng tối ưu cơ cấu vốn để tạo lợi thế cạnh tranh trên thị trường.
The literature shows little evidence on the effects of the business model upon the volatility of banks in developing and fast growing economies. Hence, this study examines the effects of busi-ness model choice on bank’s stability in ASEAN countries. Using GMM and other robust econo-metric methods on the sample of 99 joint stock commercial banks, we find significant and nega-tive impacts of diversification model in which bank shifts toward non – interest and fee – based activities. We also find that the impacts are different between two groups of countries. For Vi-etnam, Indonesia and the Philippines, the diversification entails negative impacts on the stability while demonstrating positive impacts for Thailand and Malaysia. Upon the findings, we draw policy implications for a more sustainable development in ASEAN banking business.
The aims of the paper are to study the financial performance between the independent finance companies and the
integrated finance companies over the period 2001-2011.
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
Evaluating Loan Loss Provisioning for Non-Performing Loans and Its Impact on ...Fakir Tajul Islam
Using the aggregate data of 56 commercial banks in the last 9 years
(2009-2017), this study attempts to evaluate the Impacts of LLP maintained for NPLs on profitability, as it may help
to take the level of the LLP, and NPLs in the optimum level of business success.
Effect of Portfolio Diversification on Commercial Banks Financial Performance...inventionjournals
The study examined the effect of portfolio diversification on Commercial Banks financial performance. Mixed method of research design was used and data was collected using questionnaires and interview schedules. Target population was 43 licensed Commercial Banks in Kenya from which one hundred and thirty three (133) managers were randomly selected to form sample size. Validity of the research instruments was ensured through content, face and construct validity testing. Data was analyzed using descriptive statistics and inferential statistics which included correlation analysis and bivariate regression analysis. The study established a positive statistically significant relationship between portfolio diversification and financial performance. The portfolio diversification explained 68% of the changes in the financial performance of commercial banks in Kenya and that most banks diversify their investments which has enabled them to increase profits and performance in the past years.The study recommended that financial institutions should invest in a combination of assets which are negatively correlated because this maximizes revenue (returns) and minimizes losses (risks). Further study should be undertaken to establish the best combination of assets that can yield an efficient portfolio.
This research work investigated the influence of firm size on the financial performance of deposit money banks quoted on the Nigerian stock exchange. The research work is necessitated by the need to find the factors that respond positively or negatively to the financial performance of deposit money banks in Nigeria. Five deposit money banks were sampled with the aid of Taro Yemeni sampling technique to represent the entire banking industry in Nigeria. The firm size proxied by log of total assets represents the explanatory variable while the financial performance measured by profitability proxied by return on asset is the dependent variable. The analysis was conducted using the pooled OLS regression and fixed effect/random effect regression with the aid of STATA for panel regression. In addition, descriptive statistics and correlation analysis were computed. The finding of the study indicates that firm size insignificantly negatively influenced financial performance as a result of diseconomies of scale. The study therefore recommends that the industry should minimize the cost of expansion and enjoy maximum benefits of economies of scale in addition to other factors that may stimulate financial performance should be considered instead of the firm size that indicate insignificantly negative effect.
A Comparative Analysis of Capital Structure between Banking and Non-Banking F...iosrjce
This research aims to compare the capital structure of Bangladeshi banking and non-banking
financial institutions through some measurements. The annual financial statements of 10 commercial banks and
10 non-bank financial institutions were used for this study which covers a period of five (5) years from 2009-
2013. The study assesses the capital structure of the banking and non-banking sectors measured by total debt
to equity ratio (DER), total debt to total funds ratio and performance by ROE, ROA, EPS.Descriptive statistics,
t-test have been used to show the differences between banking and non-banking capital structure and
performance. However this study concludes that there is no significant difference between Bank and non-bank’s
EPS but there is a significant difference between Bank and non-bank’s D/A ratio and D/E ratio and ROA and
ROE.
Profitability Determinants of Go-Public Bank in Indonesia: Empirical Evidenc...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
mpact of Foreign Shares to Profitability in Turkish Participation Banksinventionjournals
Covering the period 2006 to 2015, this paper aims at empirically studying the impact of foreign shares on the profitability of participation banks. Several econometrical models have been implemented to reveal this relation among variables. There is no co-integration result between profitability on the one hand, and foreign shares, deposits, loans and equity on the other hand. According to the Granger causality test lag 1, a bidirectional relationship exists between deposits and loans. Meanwhile, a unidirectional relationship exists between profitability and foreign shares.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Characteristics of Nigerian Deposit Money Banks and Their Financial Outcomeijtsrd
The purpose of this research was to examine the connections between DMB profitability and various company characteristics in Nigeria. This study used panel data regression to evaluate five hypotheses on how market share, liquidity, credit risk, interest rate spread, and leverage affect bank profitability. Secondary data was gathered from the financial statements of the 19 deposit money banks listed on the international and local markets of the Nigerian Stock Exchange NSE between 2012 and 2021. The success of Nigerian banks is strongly influenced by their market share, liquidity, interest rate spread, and leverage. There was a connection between credit risk and ROA, however it was weak and not statistically significant. The report recommended that the Central Bank of Nigeria CBN create policies to enable banks increase their market share, rather than seeking to limit the number of firms in the banking sector. Dr. Confidence J. Ihenyen | Okpobo, Timinipre Joseph | Monron, Ezekiel Lawrence "Characteristics of Nigerian Deposit Money Banks and Their Financial Outcome" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-3 , June 2023, URL: https://www.ijtsrd.com.com/papers/ijtsrd56303.pdf Paper URL: https://www.ijtsrd.com.com/management/accounting-and-finance/56303/characteristics-of-nigerian-deposit-money-banks-and-their-financial-outcome/dr-confidence-j-ihenyen
The purpose of this research was to empirically investigate the effect of capital structure on financial sustainability
of deposit-taking micro finance institutions (DTMs) in Kenya. The specific objectives were to determine the impact
of debt on the financial sustainability of DTMs in Kenya, to assess the influence of retained earnings on the financial
sustainability of DTMs in Kenya, to examine the effect of ordinary share capital on the financial sustainability of
MFIs in Kenya, and to investigate the impact of preferred share capital on the financial sustainability of DTMs in
Kenya. The target population of the study was all the 13 DTMs in Kenya registered with the Central Bank of Kenya.
Secondary data was collected on all the DTMs financial data from the Central Bank of Kenya reports. Data was
analyzed using multiple regression model using SPSS and R as the data analysis tool. Based on the findings 76.9%
of the DTMs did not earn enough revenue to cover the actual financing direct costs, which include the total operating
costs, loan loss provisions and the financing costs but excluding the cost of capital. The analysis of variance
(ANOVA) table indicated that the predictor variables influenced the predictor variable significantly at 5%
significance level. Among the four variables; debt and retained earnings were statistically significant variable at 5%
significance level with 1.265 and 1.630 coefficient respectfully. Whereby the financial sustainability change by
1.265 and 1.630 for every unit change of debt or retained earnings respectfully. Therefore, for the deposit-taking
microfinance institutions to remain afloat in the lending business, they should utilize any borrowing opportunity,
plough back profits to the business, and low proportion of preferred share capital. Deposit-taking microfinance
institutions should avoid usage ordinary share capital as it negatively affected financial sustainability
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
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How corporate diversification affects excess value and excess profitability
1. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 3, No 5, 2012
How Corporate Diversification affects Excess Value and Excess
Profitability: A study of Deposit Money Banks in Nigeria.
Ugwuanyi Georgina Obinne Ph.D1 Ani Wilson UchennaPh.D1 Ugwu Joy Nonye Ph.D2 Ugwunta David
Okelue M.Sc3*
1. Department of Accountancy, Institute of Management and Technology Enugu, Enugu State, Nigeria.
2. Department of Business Administration, Institute of Management and Technology Enugu, Enugu State,
Nigeria.
3. Department of Banking and Finance, Renaissance University Ugbawka, Enugu State, Nigeria.
* E-mail of the corresponding author: davidugwunta@gmail.com
Abstract
This paper examines the relationship between excess value and excess profitability using deposit money banks in
Nigeria as focal points of the study. The study relied on historic accounting data generated from financial
(annual) reports and accounts of sampled banks between the ten-year period covered by the study. Borrowing
from previous studies, appropriate regression and correlation equations were formulated to measure the
relationship between excess value and excess profitability of Nigerian banks. The regression and correlation
analyses revealed that the correlation is positive and significantly different from zero. This implies that there is
significant relationship between excess value and excess profitability of deposit money banks in Nigeria. Thus
the study provides evidence that there is a significant relationship between excess value and excess profitability
of both diversified and standalone banks.
Keywords: Diversification; excess value; excess profitability; stand alone banks.
1. Introduction
The relationship between excess value and excess profitability of banks has received considerable attention by
many academics in recent times. What is not clear however is the strength, sign, and size of that relationship in
many emerging countries including Nigeria.
With regard to the overall effect of diversification on a bank’s performance, Boyd and Prescott (1986)
recommends that the optimal organization of a bank is one where it is as diversified as possible but Acharya et al
(2004) suggest that there seem to be diseconomies of diversification for a bank that expands into industries
where it faces a high degree of competition or lacks prior lending experience. Acharya, et. al., (2004:49) further
suggests that these diseconomies arise in the form of a worsening of the credit quality of loan portfolios
simultaneously with a fall in bank returns (perhaps due to worse monitoring, adverse selection, higher overheads,
or some combination of these factors). Such diseconomies imply that the optimal industrial organization of a
banking sector might be one that comprises several focused or specialized banks instead of a large number of
diversified banks, an outcome that may also be attractive from a systematic risk standpoint. However, according
to Bernstein (1996:6), the choice of focus or diversification in the business activities of firms is the subject of a
large body of literature in corporate finance. The evidence seems to indicate that diversification is value
destroying, leading to what is known as the “diversification discount”. Theoretical explanations for this include
managerial risk aversion, agency problems between managers and shareholders, inefficiency of internal capital
markets, and power struggles between different segments of a firm. However, diversification is particularly
important for a bank, given its nature as a financial intermediary.
In a like-manner, the efficiency is measured by how well banks achieve an optimal risk – return trade-off in the
mix of their business activities. Banks as financial intermediaries generate financing from three sources:
depositors, equity holders and debt-holders. They then allocate these funds to a credit (D’Souza and Lai, 2002;2).
On the other hand, Acharya, et. al., (2002) tested the following two hypotheses(i) diversification improves bank
returns and (ii) diversification reduces the risk of banks; when studying the diversification effect on loan
portfolios on the performance of a sample of Italian banks. They find that diversification reduces bank returns
while producing a riskier portfolio. Furthermore, banks with higher risk are more likely to improve their returns
with focus. Their test relies on showing that as focus increases, either returns rise and risk falls, or returns fall
and risk rises. The outcome is unambiguous for a bank when risk and return move in opposite directions.
However, in the event that both risk and return move in the same direction, the implications are ambiguous.
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In practice however, banks cannot fully diversify all their risks. Overall, results support Winton (1999)’s
hypothesis that diversification (focus) has a small benefit (cost) at low bank risk levels, and also has maximum
benefit (cost) at moderate risk levels, and in fact, hurts (helps) bank returns at very high risk levels. This was
found to hold for both industrial and asset sectoral focus, for return on bank assets as well as stock returns of
banks, and for a variety of accounting and stock return based measures for unexpected and expected bank risk. In
considering whether diversification improves bank efficiency or not, Acharya, et. al., (2004) stated that with
respect to bank mergers, there are no important scale effects, but there can be important economies (and
diseconomies) of scope to consider. Thus, merger between banks with different business lines but with
similarities in the regional composition in their portfolios can result in more efficient entities. In determining
whether a merger between two financial institutions will be beneficial (in terms of improving bank efficiency), it
is thus essential to consider the resulting change in the portfolio composition of the merged institutions. This is
consistent with the message from the theoretical analysis in D’Souzd and Lai (2002), which considered the
effects of a merger between two banks on the merged institution’s capital-allocation decisions and the subsequent
impact on the efficiency of financial markets in which the bank is a market-maker.
Based on this, some critical questions need to be asked and answered by this paper. Such questions include:
How does the excess value and excess profitability of the diversified banks relate with those of the standalone
banks? The objective of this paper is to measure the relationship between excess value and excess profitability of
Nigerian banks; and the paper hypothesizes that there is no significant relationship between Excess Value and
Excess profitability for both diversified banks and standalone banks.
The rest of the paper is divided into four sections. Section 2 highlights the review of related literature.
Methodological issues are the concern of section 3. Section 4 is devoted to presentation of the data and results.
We present conclusions in section 5.
2. Review of Related Literature.
This research work rallied around the studies of Berger and Ofek (1995) and Lins and Servaes (2002). Berger
and Ofek (1995) studied the diversification effect on firm value by evaluating US firms that have multi-segment
investments in comparison with the sum of imputed stand-alone firms in the same industry. They came up with
theoretical arguments that diversification has both value – enhancing and value reducing effects. They
discovered that potential benefits of operating different lines of business within one firm include greater
operating efficiency, less incentive to forego positive net present value projects, greater debt capacity, and lower
taxes. Their research also believed that potential costs of diversification include the use of increased
discretionary resources to undertake value decreasing investments, cross-subsidies that allow poor segments to
drain resources from better – performing segments, and misalignment of incentives between central and
divisional managers. They however, could not come up with clear prediction about the overall value effect of
diversification.
Lins & Servaes (2002) studied whether Corporate Diversification is beneficial in emerging markets. In their
study, they focused on countries identified by IMF and The Economic Magazine as emerging market countries.
Seven of such countries were used (Hongkong, India, Indonesia, Malaysia, Singapore, South Korea, and
Thailand) all of which were located in Asia. They relied on firms that report consolidated financial statements.
They ensured that the firms they used were all listed in stock exchanges. In their research, they maintained
consistency with US data by excluding firms whose primary business were financial services, or that have
diversified into financial services (Lins & Servaes, 2002). Their final sample consisted of 1,195 firms. Their
research came up with facts that diversified firms’ trade at a discount of approximately 7%, compared to single
segment firms. They also studied whether they could link the characteristics of firms to the diversification
discount. The result showed that diversified firms are less profitable than focused firms but this result only
explained part of the discount.
According to Banal – Estanol and Ottaviani (2006), the motive of banks for merging is for diversification. These
authors in their paper formulated a single modeling framework to analyze the role of risk and diversification in
banking competition and to quantify the impact of mergers on the welfare of borrowers and depositors. The
model has two main ingredients – banks are assumed to be risk averse or behave in a risk averse fashion. This
assumption is in line with the evidence in Hughes and Mester (1998) who attribute the banks’ choice of financial
capital (above the cost-minimizing level) to risk aversion. Risk averse banks can improve their protection against
financial risks by merging with other banks. Through such mergers, banks can achieve a larger scale, increase
their geographical scope, and offer a more diverse mix of financial services. In addition, better diversified banks
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may take on additional risks, by holding riskier loans or reducing equity ratios (Demsetz and Strahan, 1997).
Banks are imperfect competitors in the markets for loans and deposits. Following the Monti-Klein framework,
banks are modeled as financial intermediaries that grant loans and collect deposits. A limited number of banks
set loan and deposit rates independently. Subsequently, borrowers and depositors endowed with different
preferences choose the bank to which they supply and from which they demand funds. Bana-Estanol and
Ottaviani (2006) therefore contributed the following facts: one, the impact of the different types of risk on the
competitive behaviour of banks. They noted that as the risk in the interbank market increases, banks reduce their
deposit rates but increase their loan rates. They established that merged banks are able to diversify some of the
risks and essentially reduce the risk cost associated with more borrowing or lending activity. When banks are
imperfectly competitive, a cost reduction makes the merged bank more aggressive. In response to a tougher
competitor, the rival banks have an incentive to act back their activity to the benefit of the merged bank.
Although rivals might offer fewer loans and collect fewer deposits, the reduction is compensated by the
increased activity by the merged bank. As a result, both lenders and borrowers might be better off as a result of
the merger.
In addition, diversification may help banks to explore better investment opportunities and create synergies in
different regions and different business sectors, thereby enhancing firm value. These arguments suggest a
negative relation between bank diversification and the cost of debt financing. The results therefore, suggest that
different types of diversification involve different levels of trade-off between the benefits and costs.
It is also well documented that merger and acquisition (M & A) activities in the banking industry can achieve
cost savings and synergy gains, as well as increased market power, thereby yielding a lower cost of capital
(Pilloff, 1996; Houston, et. al., 2001; Penas and Unal, 2004). Also, Berger, et. al., (1999) found that
consolidation in financial services industry has been consistent with greater diversification of risks on average
but with little or no cost efficiency improvements.
With regard to the benefits of diversification through mergers and acquisitions, Soludo (2004:3) added that
diversification through mergers and acquisition is an instrument for enhancing banking efficiency, size, and
development roles. It was equally noted that mergers and acquisitions trend is influenced by factors such as
prospects of cost-savings due to economies of scale as well as more efficient allocation of resources; enhanced
efficiency in resource allocation; and risk reduction arising from improved management. According to the study
of Delong (1999), he observed that although the number and size of mergers within the banking industry have
steadily increased, there is no clear evidence that banking mergers are economically valuable to shareholders
upon announcement. Several studies find that on average, the sum of the weighted gains to the partners arising
from mergers is negligible.
Delong (1999), examined the wealth effect of bank mergers by distinguishing between types of mergers.
Specifically, mergers are classified according to their focus or diversification along the dimensions of activity
and geography. The study determines the value effect, for bidders and for targets of mergers, and the combined
value effect for these players for each group according to the focusing versus diversifying classification. The
results show that bank mergers that focus both geography and activity are value-increasing whereas diversifying
mergers (who diversify either geography or activities or both) do not create value. Overall mergers in the
banking industry neither create nor destroy shareholders wealth, but mergers that focus both geography and
activities earn a positive 3% return. Bidders in this group do not destroy value, while bidders in the other groups
do destroy value.
3. Methodological Framework.
The study adopted an Ex-post-facto design approach. This approach according to Onwumere (2009:113),
involves events that have already taken place and as such no attempt is made to control or manipulate relevant
independent and dependent variables. As an analytical research, all manners of tools (mathematical, econometric,
statistical etc,) were employed in the appraisal of data with the aim of establishing relationships (Onwumere,
2009:42). The population of this study is presumed to cover the twenty five (25) banks which emerged (out of 89
banks) having met the minimum capitalization requirement, at the close of the first phase of the consolidation
programme on 31st December, 2005 but for the analysis, eighteen (18) banks selected through the Yaro Yamane
(1964) formula constitutes our sample. The study relied on historic accounting data generated from financial
(annual) reports and accounts of sampled banks between the period 1998 and 2007 (a ten-year period).
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3.1 The Test Statistic
This paper hypothesizes thus: There is no significant relationship between Excess Value and excess profitability
of both diversified and standalone banks. This hypothesis was tested by checking the strength of relationship
between the variables through correlation analysis.
The test-statistic for the correlation analysis is the Pearson’s product moment correlation coefficient having the
formula:
R = NΣxy – (ΣX)(Σy)
NΣNx2 – (ΣX2)(NΣy2) – (Σy2) …………………………………(1)
Prior to the correlation analysis, a multiple linear regression analysis was applied for Excess profitability using
the following model:
EP = bo + b1 DD + b2 TA + e ………………………………………………… (2)
Where EP = Excess profitability
bo = regression constant
b1 – b2 = coefficients of regression
DD = Diversification Dummy
TA = Total Assets
e = The stochiastic error term
Where;
Excess Value is computed as the log of the ratio of the actual market value to the imputed market value OR the
actual market value minus the book value.
The diversification dummy is an indicator variable set equal to one if the bank has subsidiaries/Associates and/or
conducts GROUP annual reports and accounts; but equal to zero if the bank has no subsidiaries/Associates and
thus has only the BANK annual reports and accounts.
Geographical diversification is an indicator variable set equal to one if the bank has dominant foreign interest
(51% and above) but equal to zero for banks with dominant local interests.
Imputed market value is obtained as the median actual market value of standalone banks times the actual market
value of diversified banks.
Excess profitability is computed as the actual profitability minus the imputed profitability of banks, where the
imputed profitability is obtained as the median profitability of stand-alone banks.
4. Findings
The hypothesis that there is no significant relationship between excess value and excess profitability of both
diversified and standalone banks were tested by employing a correlation analysis. Prior to the correlation
analysis, a multiple linear regression analysis was applied to excess profitability using the following models:
EP = bo + b1 DD +b2 TA +e …………………………………………………… (2)
Where EP = excess profitability
Bo = regression constant
B1 – b2 = coefficients of regression
DD = Diversification Dummy
TA = Total Assets
For the analysis, excess profitability was computed as the actual profitability minus the imputed profitability of
banks, where the imputed profitability is obtained as the median profitability of stand-alone banks.
The model summary in table 3 reports the strength of the relationship between the model and the dependent
variable (Excess Profitability). R, the multiple correlation coefficient is the linear correlation between the
observed and model-predicted values of the dependent variable. Its large value indicates a strong relationship. R
Square, the coefficient of determination, is the squared value of the multiple correlation coefficients. R2 shows
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that about 69% of the variation in excess profitability is explained by the model.
As shown in table 4, the only significant predictor is total assets with p-value of .000 being < 0.05 significance
level. This implies that total assets affect Deposit Money Bank’s profitability greatly. The p-value for DD is
0.794 which is > 0.05 significance level and as such is not significant. With the regression analysis results, the
strength of the relationship between the variables among the excess value and excess profitability of the banks
were then checked through correlation analysis.
The correlation reported in the table 5 above is positive and significantly different from zero. This implies that
there is significant relationship between excess value and excess profitability of these banks hence the null
hypothesis stands rejected while the alternative is accepted. Therefore, there is a significant relationship between
excess value and excess profitability of both diversified and standalone banks.
5. Conclusion
This paper sought to shed light on the strength, size and sign of the relationship between excess value and excess
profitability of Nigerian banks. Results from the statiscal analysis gives assurance that this objective has been
achieved. It was established that the relationship between the two variables is positive and significantly different
from zero. This implies that there is significant and positive relationship between the excess value and excess
profitability of both diversified and standalone banks. This suggests that the the null hypothesis stands rejected
while the alternate is accepted. It also means that the degree of profitability of these banks has an effect either
positive or negative on the value of the banks. Thus, there is a significant relationship between excess value and
excess profitability of banks – in both diversified and standalone banks at even one percent level of significance.
This result is in line with apriori expectation – that there is a significant positive relationship between excess
value and excess profitability and in line with the findings of Lins and Servaes, (2002). Thus an increase in
excess profitability brings about increase in the excess value for firms.
References
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Table 1: Descriptive Statistics.
Mean Std. Deviation N
Excess Profitability 1038846.9000 3291100.08855 180
DD .6500 .47830 180
Total Assets 79621270.6611 156070158.36603 180
Source: Authors’ SPSS computation
Table 2: The ANOVA for the Regression.
Model Sum of Squares Df Mean Square F Sig.
1 Regression 1328500262591705.000 2 664250131295852.000 192.644 .000(a)
Residual 610309560326557.000 177 3448076612014.450
Total 1938809822918263.000 179
a. Predictors: (Constant), Total Assets, DD b. Dependent Variable: Excess Profitability.
Source: Authors SPSS computation.
Table 3: Model Summary.
Adjusted R Std. Error of the Durbin Watson
Model R R Square Square Estimate
1 .828(a) .685 .682 1856899.73128 1.738
a . Predictors: (Constant), Total Assets, DD
Source: Authors SPSS computation
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Table 4: Coefficients.
Standardized
Model Unstandardized Coefficients Coefficients t Sig.
B Std. Error Beta
1 (Constant) -400707.073 245818.986 -1.630 .105
DD 75977.713 290263.858 .011 .262 .794
Total Assets .017 .001 .828 19.627 .000
a Dependent Variable: Excess Profitability
Source: Authors SPSS computation
Table 5: Correlations
Excess
Profitabi
lity Excess Value
Excess Profitability Pearson Correlation 1 .338(**)
Sig. (2-tailed) .000
N 180 150
Excess Value Pearson Correlation .338(**) 1
Sig. (2-tailed) .000
N 150 150
**Correlation is significant at the 0.01 level (2-tailed).
Source: Authors SPSS computation
132
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