The budget speech

Merton's model, credit risk and volatility skews

This paper investigates the association of philanthropic giving with market-based performance and institutional ownership using data from banks in Bangladesh from 2007– 2013. Our findings suggest that banks with a higher level of philanthropic giving achieve better performance, with a positive association also found between philanthropic giving and institutional ownership. This implies that institutional owners invest in banks that contribute more to philanthropic activities. These findings should be of interest to managers, regulators and policy makers in countries that share similar financial and socio-economic systems.

Philanthropic Giving, Market-Based Performance and Institutional Ownership: Evidence from an Emerging Economy

The much anticipated fourth edition of Craig Deegan's Financial Accounting Theory delivers authoritative and completely up to date material with the discussion of both existing theories and newer theories that have surfaced as financial reporting has become more international. This edition includes a new selection of modern 'Accounting Headlines' which provide current examples of organisations and individuals putting accounting theory into practice in both local and global settings. Financial Accounting Theory covers additional topics such as critical perspectives, public sector accounting and fair value. Workflows and processes are presented using enhanced visual charts to help demonstrate how accounting works in practice. Deegan presents the concepts in a clear and straightforward style, while challenging students to think critically about the range of accounting theories. Financial Accounting Theory provides a sound basis for readers contemplating further research and develops habits of analytical reasoning and critical thinking.

New Zealand Financial Accounting

Purpose The authors investigate the association of the constructed corporate social responsibility (CSR) measures with the banks’ profitability, social contributions and CSR spending as well as the market reaction to CSR spending. Design/methodology/approach Using textual analysis of the CSR reports of banks listed on the Chinese market, the authors construct CSR measures in six domains: business, environment, human rights, corporate governance, charity and social capital. Our textual-based CSR measures contain substantial and valuable information beyond what Rankins CSR ratings offer. Findings The findings suggest that banks with stronger engagements and interests in the business-related CSR domain experience higher profitability, while those that are more committed to the corporate governance and charity-related domains create larger social contributions. Banks tend to incur higher CSR spending when they are more active in corporate governance. Although the stock market reacts positively to CSR expenditures, the reaction is less favorable for banks with CSR expenditures above the industry norm. Practical implications This study offers insights to policymakers of the regulatory bodies and the banks in China. To enhance the financial safety and soundness of the banking system, the regulatory bodies should encourage banks to strategically allocate corporate resources to achieve higher CSR ratings and engage more business-related CSR activities. To create larger social values, bank management should invest more in philanthropic CSR initiatives such as corporate governance and charity activities. To pursue higher corporate profits, they should engage more in self-centered business-related CSR activities. However, according to the reaction of the market, they should not over-invest in CSR activities. Originality/value While the use of textual analysis to evaluate CSR disclosure has recently emerged in the literature, few studies focus on banks in China. Using the term frequency–inverse data frequency (TF-IDF) method, the authors constructed a score for each of the six CSR domains: business (BUS), environment (ENV), human rights (HR), corporate governance (GOV), charity (CHY) and social capital (SCAP). To the best of our knowledge, no studies have adopted the textual approach to evaluate social reporting quality and CSR activities in the context of the banking industry in China.

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Are corporate social responsibility reports informative? Evidence from textual analysis of banks in China

Purpose: The purpose of this study is to analyze and forecast the financial sustainability and resilience of commercial banks of Bangladesh in response to the negative effects of COVID-19 pandemic. Design/methodology/approach: Eighteen publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as a sample for this study. To measure the riskiness of banks' credit portfolio, nine industries of DSE have been considered to determine probable loss of revenue arising from the COVID-19 pandemic shock. Moreover, two commonly used multiple-criteria-decision-making (MCDM) tools namely TOPSIS method and HELLWIG method have been used for analyzing the data. Findings: Based on the performance scores under TOPSIS and HELLWIG method, banks are categorized into three groups (six banks each) namely top resilient, moderate resilient and low resilient. It is found that EBL and DBBL are the most resilient banks, and ONEBANK is the worst resilient bank in Bangladesh in managing the COVID-19 pandemic shock. Research limitations/implications: This study concludes that banks with low capital adequacy, low liquidity ratio, low performance and higher NPLs are more vulnerable to the shocks caused by the COVID-19 pandemic. The management of commercial banks should emphasize on maintaining higher capital base and reducing default loans. Originality/value: Resilience of the Bangladeshi banking sector under any adverse economic event has been examined by only using stress testing approach. This study is empirical evidence where both TOPSIS and HELLWIG MCDM methods have been used to make the result conclusive. © 2021, Ratan Ghosh and Farjana Nur Saima.

Resilience of commercial banks of Bangladesh to the shocks caused by COVID-19 pandemic: an application of MCDM-based approaches

The purpose of this study is to investigate whether financial resource allocation decisions for corporate social responsibility (CSR) depends on slack resources and free cash flow,The study's sample consists of 202 company-year observations from 51 financial institutions over the period 2015–2019 The authors collected CSR data from CSR review reports published by the Central Bank (Bangladesh Bank) The financial and governance data are collected from corporate annual reports and year-end review reports published by the Dhaka Stock Exchange This study uses both the random-effect and generalized estimating equation models to test the hypotheses,The authors establish two key findings consistent with the predictions of slack resource theory and free cash flow theory First, the authors find a significant and positive relationship between slack resources and CSR expenditure This result also supports the traditional thinking about corporate giving – that doing well enables doing good Second, the author show that increases in free cash flow are associated with increases in CSR expenditure This indicates the presence of agency problems between managers and shareholders regarding CSR expenditure,This study is the first to show the positive impacts of slack resources and free cash flow on CSR expenditure in an emerging economy characterized by both capital constraints and high salience of CSR expenditure The study has important implications for regulators, advocacy groups, shareholders and analysts in emerging economies that share similar contextual characteristics

Slack resources, free cash flow and corporate social responsibility expenditure: evidence from an emerging economy

This study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of Bangladesh.,Thirty publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as sample for this study. Data have been collected from annual reports between 2011 and 2017 of the assessed banks. Pooled OLS model has been used for running regression model of this study.,Board independence has a negative and significant relationship with ROA and Tobin's Q. However, Board Independence has a positive and significant relationship with Stock Return. On the other hand, Board Diversity has a negative and significant relationship with ROA and ROE, which implies inefficiency of diversified board members in the context of Bangladesh. Family duality has a positive and significant relationship with ROA and a negative and significant relationship with Stock return. Board Meeting has a positive and significant relationship with ROA. Audit Committee Size has a negative and significant relationship with Tobins' Q. Independence of audit committee chairman has a negative and significant relationship with Tobin's Q and Stock Returns. Presence of non-executive directors and number of audit meetings have no significant relationship with any of the predicted variables.,Among all variables of the board characteristics, role of independent directors and participation of female directors have conflicting results in this study. This has raised a question about the fair appointment independent directors and their objective view on the board. Female directors' role is not convincing in the context of Bangladesh as most of the commercial banks are family-owned. Policymakers can tighten and supervise the appointment of independent directors to ensure good governance in the banking sector. Moreover, role of audit committee and independence of audit committee chairman have generated conflicting results in terms of market-based performance measure.,Banking sector of Bangladesh experiences huge corruption in the form of excessive NPLs and poor management quality which results in low profit for the firm. This study has explored the problems of management quality and flaws of audit committee which is hampering overall growth of banking industry. Improvement of independent directors' appointment and audit committee formation and reporting will certainly help banking industry of Bangladesh to improve overall performance.

Board characteristics, audit committee attributes and firm performance: empirical evidence from emerging economy

Over the last ten years (2010–2019), the amount of nonperforming loans (NPLs) has been more than tripled in the banking industry of Bangladesh. Thus, this paper explores the behavioral dimensions, which contribute to the NPLs.,By analyzing social, cultural, psychological, political, economic, internal control mechanism and law enforcement contexts of Bangladesh, this study identifies nepotism (NE), moral hazard (MH ), inadequate collateral (IC), poor credit assessment (CA), lack of proper monitoring (LPM), repayment flexibility (RF), business risk (BR) and lending interest rate (LIR) as the catalysts of raising NPLs. Next, a structured questionnaire survey has been performed in Bangladesh among bank officials who closely work in credit risk management, credit supervision, corporate finance and loan recovery department. Finally, partial least squares (PLS) path modeling, a variance-based technique of structural equation modeling, is used in this study as a statistical tool to analyze the data.,This study finds that moral hazard problem, lack of proper monitoring, inadequate collateral and nepotism have significant positive impact on the raising of NPLs. Unfortunately, this study does not find any statistical significance of poor credit assessment, business risk and repayment flexibility on the NPLs in Bangladesh. Finally, this study reveals that lending interest rate has significant positive impact on the NPLs. Hence, this study concludes that domestic lending interest rate is not lower enough, and so this double-digit interest rate affects negatively to loan repayment.,This study concludes that moral hazard problem of borrower, lack of board independence, lack of proper monitoring, form and extent of collateral, management lobbying, indecorous personal guarantee by management, dependent-independent directors and nepotism are extensively contributing for occurring NPLs in Bangladesh. These noninstitutionalized stimulators should adequately be scrutinized by regulatory bodies, policy makers and banks. Besides, LIR needs to be decreased in a convenient level for mitigating NPLs.,This study is the empirical evidence of behavioral dimensions related with the growth of NPLs in Bangladesh by taking direct response from knowledgeable bankers.

Behavioral determinants of nonperforming loans in Bangladesh

This paper tries to inspect the association and relationship between corporate governance determinants and level of non-performing loan (NPL) of listed commercial banks in Bangladesh. Recently Banks are facing a problem of default loan. This default loan or NPL may reduce the loan giving capacity of the Banks and it may decrease the economic growth of a country. Moreover, there is less research to find out the implication of good governance on the level of NPL in banking sector of Bangladesh than that of developed countries. Here, data from thirty listed commercial banks for the year 2008-2017 (10 years) are taken to explore the rapport between the corporate governance variables and NPL. Random Effect GLS regression method is used to analyze the data. Findings told that commercial banks follow the code of corporate governance on a comply basis however their relationship with NPL is positively significant within the taken determinants of corporate governance. It is expected that, banks with good quality management may ensure the quality of loan and it will reduce the level of NPL.

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Ratan Ghosh

Papers

Resilience of commercial banks of Bangladesh to the shocks caused by COVID-19 pandemic: an application of MCDM-based approaches

Slack resources, free cash flow and corporate social responsibility expenditure: evidence from an emerging economy

Board characteristics, audit committee attributes and firm performance: empirical evidence from emerging economy

Behavioral determinants of nonperforming loans in Bangladesh

Corporate Governance Practices and Non-performing Loans of Banking Sector of Bangladesh: A Panel Data Analysis