Showing papers on "Earnings before interest and taxes published in 2021"

Determinant of Sharia Bank's Financial Performance during the Covid-19 Pandemic

Abstract: Financial performance as a measuring instrument to know the process of implementing financial resources owned by the company. The Covid-19 pandemic has impacted the banking sector, resulting in poor financing due to debtors' disbursements as a result of the large number of people losing their jobs and difficulties in financing payments. This research aims to analyze the financial performance of Islamic Banks during the Covid-19 pandemic, using records of annual financial statements from 2011 to 2020 through Multiple Linear Regression testing and linearity testing of the model used ramsey test. As a result of this study, the results of the t test found that the Capital Adequacy Ratio (CAR), Operating Costs to Operating Income (BOPO), Financing to Deposit Ratio (FDR) had a positive and significant effect on financial performance (ROA) while Not Performing Financing (NPF) had a negative and insignificant effect on financial performance (ROA). Furthermore, simultaneously capital adequacy ratio (CAR), Operating Costs to Operating Income (BOPO), Financing to Deposit Ratio (FDR) and Not Performing Financing (NPF) significantly influenced the financial performance (ROA) of Sharia banks in Indonesia.

Can Digital Inclusive Finance Narrow the Chinese Urban–Rural Income Gap? The Perspective of the Regional Urban–Rural Income Structure

Abstract: This paper empirically studies the impact of digital inclusive finance on the income structure of urban and rural residents in eastern, central, and western China. The results show that, first, digital inclusive finance is beneficial to narrowing the urban–rural per capita disposable income gap that has a disequilibrium effect among regions. Second, narrowing the wage income, property income, and transfer income gaps is beneficial but has little effect on the net operating income gap between urban and rural residents. Third, narrowing the wage income, property income, and transfer income gaps reduces the total income gap, and the wage income gap has the strongest intermediary force. In the end, the paper puts forward corresponding countermeasures for the development of digital inclusive finance to narrow each of these income gaps in different regions of China.

Investigating the relationship between working capital management and business performance: evidence from the 2008 financial crisis of EU-28

Abstract: This study examines the relationship between working capital management and business performance.,The relationship between the working capital management and business performance is examined using panel data analysis for a sample of EU-28 listed firms for the period from 2003 to 2012. To examine this relationship, an ordinary least squares (OLS) regression model is used to analyze the data obtained from the sample. The dependent variable consists of three measurements, namely return on asset (ROA), return on equity (ROE) and earnings before interest and taxes margin (EBITM), which are used as proxies for accounting-based measures of performance.,The authors examined the aforementioned relationship during the 2008 financial crisis. The OLS regression analysis suggests that there is a negative relationship between gross working capital and business performance for code law countries. The results also show that liquidity measures estimated by current ratio have a statistically significant impact on business performance indicated by ROA for all EU countries. The 2008 financial crisis had a significantly negative impact on ROA. Additionally, the findings regarding financial inclusion show a negative relationship between gross working capital and business performance among EU and other performer countries.,Overall, the empirical findings are consistent with Afrifa's (2016), who suggests that cash flow should increase investment in working capital to improve performance indicated by EBITM for old EU members.,While many empirical studies investigate the relationship between working capital and firm profitability, most do not consider the impact of the 2008 financial crisis apart from Tsurate (2019). The authors examine whether legal origins are important determinants of working capital management policies and business performance. Thus, empirically, the code law countries have a negative relationship between gross working capital, business performance and EBITM.

Do corporate taxes harm economic performance? explaining distortions in r&d- and export-intensive uk firms

Abstract: This paper analyzes the effects of corporate tax liability on firm-level total factor productivity (TFP) as the key driver of economic performance. This is a new dimension in the UK productivity puzzle that has not attracted attention so far. We use 6559 manufacturing firms over 2004–2011 to investigate whether higher levels of corporate tax affect the productivity catch-up process by reducing after-tax earnings that could alternatively be used for productivity-enhancing investment, particularly focusing on RD second, as R&D- and export-intensive firms tend to have relatively higher TFP growth, higher levels of tax liability as a share of earnings before interest and taxes decelerate TFP growth of these firms.

Corporate Social Responsibility and Financial Performance among Energy Sector Companies

Abstract: Corporate social responsibility (CSR) is one of the main drivers of corporate reputation. Many studies show that CSR can positively affect financial performance (FP) and vice versa. However, the relationship between FP and CSR depends on the type of industry in which the company operates, and there is little research regarding the energy sector in this area. The basis of empirical research in this study is slack resource theory which argues that financial performance is the cause of corporate social performance. This paper aims to analyze if financial performance affects corporate social responsibility adoption in energy sector companies. In order to achieve this goal, the study specifically examines the relationship between selected financial performance indicators and CSR adoption. Analyzing an international sample of 219 companies from thirty-two countries for 2020, we observed the statistically significant relations between financial performance and the implementing of the CSR strategy of the energy industry companies. The Return on Assets measure (ROA) and the Earnings Before Interest and Taxes measure (EBIT) were significantly higher among companies implementing the CSR strategy. The Enterprise Value to earnings before interest, taxes, depreciation, and amortization ratio (EV EBITDA) was lower among companies that adopted CSR. We did not confirm that the Return on Equity measure (ROE), Beta coefficient, and EBITDA per Share correlated with CSR adoption. Our research had implications for firms’ investment policies in social initiatives and highlighted the relation between the financial performance and CSR initiatives of the energy sector companies.

Deep-learning- and reinforcement-learning-based profitable strategy of a grid-level energy storage system for the smart grid

Abstract: A profitable operation strategy of an energy storage system (ESS) could play a pivotal role in the smart grid, balancing electricity supply with demand. Here, we propose an AI-based novel arbitrage strategy to maximize operating profit in the electricity market composed of a grid operator (GO), an ESS, and customers (CUs). This strategy, the buying and selling of electricity to profit from a price imbalance, can also cause a peak load shift from on-peak to off-peak, a win-win approach for both the ESS operator (EO) and the GO. Particularly, to maximize the EO's profit and further reduce the GO's on-peak power, we introduce a stimulus-integrated arbitrage algorithm, providing an additional reward to the EO from the GO with different weights for each peak period. The algorithm consists of two parts: the first is recurrent neural network-based deep learning for overcoming the future uncertainties of electricity prices and load demands. The second is reinforcement learning to derive the optimal charging or discharging policy considering the grid peak states, the EO's profit, and CUs’ load demand. We find it significant that the suggested approach increases operating profit 2.4 times and decreases the on-peak power of the GO by 30%.

Comparison of Islamic and Conventional Banking Financial Performance during the Covid-19 Period

Abstract: The COVID-19 pandemic that is spreading in Indonesia has affected economic growth, likewise banks sector. This study aims to determine the financial performance factors that are affected by the COVID-19 pandemic, both in Islamic and conventional banking which are included in the CBGB 2 category so that banks in Indonesia can anticipate it. This study uses the Artificial Neural Network (ANN) method with 6 financial performance variables in the period of January 2020 - September 2020, namely Capital Adequacy Ratio (%), Operating Expenses / Operating Income (%), Net Operation Margin (%), Landing on Deposits. Ratio (%), Short Term Mismatch (%) which are used as the independent variable, as well as Return on Assets which is used as the dependent variable. The results showed that the COVID-19 pandemic affected financial performance factors in the form of a Funding to Deposit Ratio of 35.21%; Short Term Mismatch of 26.92% and Net Operation Margin of 26.92% in Islamic banking. Whereas in conventional banking, Operating Expenses to Operating Income was 72.87% and the Capital Adequacy Ratio was 17.31%. This result is also in line with previous research where Islamic banking is more vulnerable than conventional banking in facing financial crises.

Profitability analysis of hotel companies in the Republic of Serbia

Abstract: The purpose of the research is to examine the level and trends of profitability ratios of hotel companies operating in the Republic of Serbia in the period from 2016 to 2019. The research was conducted on a sample of 100 hotel companies, where profitability was measured by the operating profit rate, the net profit rate, the rate of return on total assets and the rate of return on equity. The results of the research show that the values of the used profitability indicators have increased in 2017 compared to 2016, but decreased in 2018 and 2019. Statistical analysis found that changes in the operating profit rate and net profit rate during the observed four-year period were not statistically significant, while the decline in the value of the rate of return on total assets in 2018 compared to 2017 and the decline in the rate of return on equity in 2018 compared to 2017 and in 2019 compared to 2018 was statistically significant. The results of the research can be important for (1) the management of a company, (2) its owners, because they enable gaining an insight into the level of profitability of entrusted companies, i.e. the companies that are in the ownership, and (3) investors and creators of tourism development policy.

How Forest Subsidies Impact Household Income: The Case from China

Abstract: (1) Background: It is of great significance to evaluate the impact of forestry subsidies on the income of forest farmers to improve policy and enhance efficiency. (2) Methods: Based on the static panel data of household tracking surveys from 2014 to 2018 in Sichuan, Liaoning, and Zhejiang provinces in China, the impacts of forestry subsidies on forest farmer income and impact paths were systematically verified via parameter estimation with the Fixed-Effect model. (3) Results: Forestry subsidies significantly increased forest farmer income. The impact paths could be summarized as follows: First, from the perspective of operating income, forestry subsidies effectively motivated forestry production and promoted the expenditure on forestry production, and thus increased forest farmer operating income. Second, from the perspective of wage income, forestry subsidy policies played a negative role in releasing the forest farmer labor force for off-farm employment. Third, from the perspective of transfer income as a kind of transferred governmental financial subsidy, forestry subsidies covered a large proportion of transfer income for forest farmers. (4) Conclusions: Forestry subsidies could directly increase the transfer income, effectively improve the forestry production capacity, and increase the income of forest farmers. However, forestry subsidies could also bind forest farmers to forestry production to a certain extent, which was not conducive to the liberation of the labor force.

Investigation of the micro energy grid operation under energy price uncertainty with inclusion of electric vehicles

Abstract: Distributed generation (DG) and electric vehicles (EVs) have received much attention in recent years due to increasing energy demand and environmental concerns. Smarter and more flexible utilization of different energy carriers can be achieved by the integrated energy scheduling in the presence of such modern technologies. However, the market price uncertainty makes the energy scheduling a challenging task. In this paper, the impact of electricity price uncertainty on the micro energy grid (MEG) operation is studied and the role of DG units and EVs on dealing with such uncertainty is investigated. In this regard, the paper employs energy hub approach to calculate the optimal energy scheduling and the operating profit of the energy network. The Monte Carlo simulation technique is used to address the price uncertainty and the Coefficient of Variation (CV) criterion is selected for the purpose of quantifying the risk of operating profit variability. The results show that using DG in the MEG, increases profit while reducing the risks. It is also shown that adding EVs to the grid can increase operating profit whereas the risk is almost constant.

Does Working Capital Management Influence Operating and Market Risk of Firms

Abstract: Extant empirical studies have predominantly focused on the nexus between working capital management (WCM) and corporate profitability. While there is a dearth of literature on the nexus between WCM and a firm’s risk, the present study examines Pakistani-listed firms coming from 12 diverse industrial segments to observe this association for a time span of ten years (2005–2014). To ensure robustness, we employed a System Generalized Method of Moments (SGMM) regression estimation to investigate the influence of WCM on the operational and market risk for firms. Empirical testing revealed that higher working capital levels were associated with lower volatility in firms’ stock price, which shows that shareholders prefer a conservative working capital policy. Moreover, firms with better cash positions were subject to lesser stock market volatility. In contrast, excess working capital and a larger net trade cycle were associated with increased volatility in the operating income. Besides, firms with lower working capital levels relative to their respective industry experienced fewer fluctuations in their operating profits. Our findings assert that short-term financial management has important ramifications for firms’ operating and market fundamentals. Practical implications are discussed for corporate managers and relevant stakeholders.

Do the Telecom Giants in Oman – Omantel and Ooredoo have the Same Financial Status?

Abstract: Purpose: The purpose of the study was to investigate the difference between the financial position of Omantel and Ooredoo and to investigate performance efficiency of Omantel and Ooredoo. Design/methodology/approach: The secondary data was obtained from the annual reports of Oman's major telecom providers listed in the Muscat Securities Market (MSM) for the period 2015 to 2020. The data collected from the financial statements was analysed using ratio analyses with the help of excel. Findings: The study revealed that Omantel had a better performance compared to the private telecom sector – Ooredoo in terms of current assets, non-current assets, shareholders’ equity, operating profit, and net profit. The study further confirmed that Omantel performed well over the years 2015 to 2020. Research limitations/implications: The study confirmed that the Oman telecom financial performances can be measured using current assets, non-current assets, liabilities, shareholders’ equity, operating expenses, operating profit, and net profit which can be a good measure to adjudge the financial performances of the telecom sector in Oman. Social implications: The study helps the stakeholders of the Oman telecom to understand the factors and the telecom-related customer services that might help to enrich the financial performances of the Oman telecommunication sector and to take necessary changes in the strategy and suitable decisions accordingly. Originality/Value: The study was restricted to two major Oman telecom service providers selected and the study had relied mostly on quantitative techniques involving financial statement analyses. The study can be extended to all the telecom providers in Gulf Cooperation Council (GCC) countries including the most determining factor viz. growth performance.

Effect of advertising spending on operating and market performance of banks: empirical evidence from Bangladesh

Abstract: The purpose of the paper is to empirically explore the economic effect of advertising spending on the performance of banks on a sample consisting of all banks listed on the Dhaka Stock Exchange over the period spanning from 2011 to 2019.,A dynamic panel data autoregressive approach of two-step system generalized method of moments (2-SGMM) estimation technique has been adopted in this study to analyze the contemporary and carryover effect of advertising on the financial performance of banks.,The findings indicate that advertising expenditure boosts banks' accounting returns but not their market value. Furthermore, advertising has a negative carryover effect on the financial performance of banks and is statistically significant for operating profit and return on equity. This finding demonstrates that the economic benefits of advertising expenditure lapse entirely within the current period and ought to be treated as an expense since it does not bring any future return for the banks in Bangladesh. In addition, this paper also offers no critical contrast between the impact of advertising spending on the performance of both conventional and Islamic banks operating in Bangladesh.,To the best of the authors' knowledge, no study so far has looked into the effect of advertising on the profitability and the market value of the banks operating in Bangladesh, and this is the first study that explores this relationship.

Micro- and small-sized enterprises’ willingness to borrow via internet financial services during coronavirus disease 2019

Abstract: This paper explores the relationships among micro- and small-sized enterprises’ (MSEs) willingness to borrow from internet financial services (IFS) and the related impacts of coronavirus disease 2019 (COVID-19) and then analyses the mediating effects of their beliefs on the advantages and disadvantages of IFS. We further analyse the differences produced by the moderator effects of MSEs’ enterprise variables (sector, operating years, entrepreneur's education, profit margin, and employee number) on the above relationships. We collected 632 valid reports by developing an online questionnaire in China and employing judgement sampling of MSEs with fewer than 50 employees and annual operating income less than RMB 5 million. Then, we analysed the findings with partial least squares structural equation modelling. The results show that COVID-19 significantly impacted most Chinese MSEs and that most Chinese MSEs tend to borrow via IFS, but the amount and period of MSEs’ willingness to borrow should not be affected by the impacts of COVID-19 on MSEs. Rather, the explanation concerns the greater unfamiliarity or uncertainty concerning IFSs relative to traditional financial instruments. Moreover, MSEs' understanding of IFS's advantages and disadvantages has significant adverse mediating effects on the relationship between MSEs' willingness to borrow via IFS and the impacts of COVID-19. Furthermore, the enterprise variables of MSEs, namely, their industry type, entrepreneur’s education, number of employees, profit margin, and operating years, have significant moderating effects on these relationships. The results have implications for the government’s comprehensive supervision system for IFS risks, IFS firms’ enterprise performance, risk survey, and information disclosure systems, and the development of customer-specific and easy-to-use marketing strategies for IFS firms.

ISO 9001: a vaccine for time of crisis

Abstract: ISO 9001 is applied by hundreds of thousands of companies throughout the world. For this reason, its effect on company results has been extensively studied. However, the results of those studies are inconclusive and sometimes contradictory. More in-depth research, with a new approach, is therefore necessary. The purpose of this paper is to analyse whether ISO 9001-certified companies suffered the effects of the financial and economic crisis of 2007–2008 to a lesser degree than non-certified ones.,A set of 179 companies certified by ISO 9001:2008 and 154 non-certified ones were analysed, as well as the accounting figures for net sales and operating income (EBIT: earnings before interest and taxes) from 2004 to 2012.,Companies from the industry and services sectors showed different results. Certified industrial companies achieved better outcomes than their non-certified counterparts. However, the deviations in outcomes were not significant for services companies.,One limitation of this study is that companies’ official results are not always their true results. Another limitation is that having to do with the criteria followed to suppress extreme cases, which is always subjective. Furthermore, the implications of the results could be of use for those managers who are responsible for implementing ISO 9001 and for deciding whether obtaining the ISO 9001 certification would be beneficial to their companies.,This study constitutes a new approach for the assessment of the benefits of the ISO 9001 certification.

Comparison of Multiple Machine Learning Models Based on Enterprise Revenue Forecasting

Abstract: Enterprise operating income is an important part of enterprise revenue. It is of great reference significance to realize the prediction of corporate income for corporate operating income management. However, the corporate income forecast process of most companies is time-consuming and error-prone because corporate revenue forecasts are calculated manually by hundred of financial analysts. Moreover, it is also difficult to forecast through traditional statistical methods because of the data noise that usually exists in such data, as well as the high dimensionality of the data. At the same time, the data set used in this paper is relatively small, so models such as neural networks with more strict data volume requirements are not suitable. To address the above problems, this paper proposes to use multiple models such as support vector machines to predict the business revenue data of enterprises on the basis of relatively controllable model complexity. And then, the prediction ability of the models is evaluated relatively reasonably using three indexes, mean absolute error (MAE), root mean square error (RMSE), and absolute error value (MAPE).

Earnings and cash flow persistence: Case of medium agriculture enterprises in Serbia

Abstract: This paper examines the earnings and cash flow persistence of selected agriculture Serbian enterprises as a measure of their earnings quality. We study the persistence of income statements and cash flow statement items of medium-sized agriculture enterprises in Serbia. Agriculture is a relevant sector for the national economy and medium-sized enterprises are the main drivers of her economic growth. We use panel regression analysis with annual data over the period from 2010 to 2018. The results of our research indicate that earnings and cash flow-based indicators have different persistence. Analysing accruals and net cash flows of operating activities as determinants of operating profit of analysed enterprises, we conclude that operating profit that represents accruals are more persistent than operating profit backed by net operating cash flows.

Determinants, Persistence and value implications of liquidity creation: An evidence from Indian Banks

Abstract: This study explores the micro and macro factors affecting liquidity created by Scheduled Commercial banks (excluding Regional Rural Bank) in India using the Generalized Method of Moments. Two measures of liquidity creation, the broad and narrow measures, were formed using RBI data available on Indian banks for the period 2005 to 2018. The study found that the variation in the broad measure was explained by equity ratio, market share, GDP, gross savings and lending rate whereas narrow measure was explained by equity ratio, market share, size and lending rate. Profitability and operating profit ratios did not affect liquidity creation. The crisis negatively affected both the measures of liquidity creation. The impact was more severe for the broad measure as compared to the narrow measure. We found the negative influence of capital on liquidity created by banks, which confirms that the implementation of Basel III norms in Indian banks will have negative implications for liquidity creation. Banks are perceived positively in the market when they create more liquidity.

Faktor-faktor yang mempengaruhi return saham bank umum konvensional lq-45 di bursa efek indonesia

Abstract: Bank companies manage corpoRate funding, one of which is by investing. Investments are carried out in the hope of obtaining stock Returns. This study examines the effect of Net Interest Margin, Capital Adequacy Ratio, Operating Income, Operational Expenses, and Bank Indonesia Reference Interest Rate on stock Returns in Indonesian banking companies. The sampling technique used was Purposive Sampling method, the sample obtained was 5 companies in the banking sector registered in LQ-45. Linear regression test is used to see the behavior of each variable. Data obtained as many as 200 out of 5 banking sector companies listed on LQ45 on the Indonesia Stock Exchange. The scope of research time is in the quarterly period of 2010 to 2019. The results show that the BI Reference Rate, Capital Adequacy Ratio and Operating Expenses, Operational Income, have no significant effect on bank stock Returns. On the other hand, Net Interest Margin has a significant effect on bank stock Returns.

Nonstandard monetary policies and bank profitability: The case of Spain

Abstract: The aim of this study is to examine the effects of non-standard monetary policy measures implemented by the Eurosystem on the Spanish banking sector profitability. To do this, a new database is built merging data from the Spanish Banking Industry Statistical Yearbook and from the Spanish Stock Market Commission. Applying different econometric techniques to a panel of 54 Spanish banks that covers the period 2001-2017 and controlling for bank-specific factors and macroeconomic conditions, no discernible impact is found between the Eurosystem's non-standard monetary policy measures (ECB's total assets, excess reserves and the slope of the yield curve) and bank profitability measured as return on assets, pre-tax operating income and interest margins. This result is robust to different specifications and to different groups of banks.

What Are the Reasons Behind the Economic Performance of the Hungarian Beer Industry? The Case of the Hungarian Microbreweries

Abstract: In terms of absolute alcohol consumption and total quantity consumed, beer is the most consumed alcoholic beverage in Hungary. The Hungarian beer industry is highly concentrated, the three largest, foreign-owned companies ruled the market for almost 90% of total turnover in 2009–2017. The study investigates the factors influencing the Hungarian beer industry’s economic performance, special attention given to the microbreweries. The analysis applied panel-data linear models for the period of 2009–2017. The financial performance of breweries is represented by companies’ turnover, Earnings Before Interest and Taxes (EBIT) and profit along with explanatory variables of the age of brewery, Social Media activity, geographical location, direct sales, and impact of tax reduction. Breweries with direct sales channels reached significantly higher sales, EBIT and profit. Breweries situated in or close to the capital are the most profitable due to the higher demand for high-quality beer, in contrast, the distance from the capital had a negative impact on the firms’ performance. The Social Media activity–often used as the only promotion channel for the microbrewery–positively impacts the brewery’s profitability. Finally, tax reduction for small breweries introduced in 2012 had the most significant positive influence on the industry.

Impact of tangible book value and operating earnings on firm value variants in South Africa

Abstract: Orientation: Empirical knowledge regarding which financial statement variables are linked to firm value is critical for profitable equity investment. Research purpose: The study examines the impact of earnings before interest and taxes from continuing operations (EBITCOs) and tangible book value (TBV) on firm value variants (enterprise value and market capitalisation) in South Africa. Motivation for the study: The need to determine the impact of book value and operating income on firm value post-global financial crisis motivated this study. Furthermore, conflicting empirical results motivated this investigation to determine if value relevance depends on the measure of firm value used by employing two variants of firm value. Research approach/design and method: A dynamic panel of 50 firms was used, employing an autoregressive distributed lag model in two-step system generalised method of moments (GMM). Main findings: Results showed that EBITCO is value relevant regardless of the firm value variant used. Tangible book value lacks value relevance irrespective of the firm value measure used. Practical/managerial implications: During a takeover bid, investors should use EBITCO in valuing target firms and disregard TBV. New owners in an acquisition are guaranteed value for their money because of the link between EBITCO and enterprise value. Accounting standards setters should maintain the requirement that mandates companies to produce comprehensive financial statements. Company executives should implement strategies that boost EBITCO as a way of maximising shareholder value. Contribution/value-add: Conservative measures of variables were adopted, something rarely done by scholars. Thus, the study contributes to the scant body of knowledge on value relevance that utilises conservative financial statement variable measures.

It Pays to Have Guanxi: Social Networks and Household Income in China

Abstract: We examine the role of social networks in household income using three waves of household surveys from 2011 to 2015 in China We find that gift expenditure as a proxy for social networks is positively associated with total household income Social networks' positive impact on property income is stronger among residents in urban areas, while it has a larger impact on salary income, transfer income, and operating income among rural residents In addition, social networks mainly affect income sources through improved financial sophistication, higher job position levels, closer government connections, and greater accessibility to operating loans The results remain intact after addressing endogeneity issues and are robust to alternative social network measures The findings highlight the importance of social networks in household economic welfare in China

A Firm Lower Bound: Characteristics and Impact of Corporate Minimum Taxation

Abstract: This paper examines the role of minimum taxes and attempts to quantify their impact on economic activity. Minimum taxes can be effective at shoring up the corporate tax base and enhancing the perceived equity of the tax system, potentially motivating broader taxpayer compliance. Where political and administrative constraints prevent reforms to the standard corporate income tax, a minimum tax can help mitigate base erosion from excessive tax incentives and avoidance. Using a new panel dataset that catalogues changes in minimum tax regimes over time around the world, firm-level analysis suggests that the introduction or reform of a minimum tax is associated with an increase in the average effective tax rate of just over 1.5 percentage points with respect to turnover and of around 10 percent with respect to operating income. Minimum taxes based on modified corporate income lead to the largest increases in effective tax rates, followed by those based on assets and turnover.

Cost cutting measures at cooperative banks in germany as a result of digitalization and their consequences

Abstract: The banking market in Germany is facing big challenges due to digitalization. The digital transformation is significantly influenced by technological progress and the low-interest phase. The article deals with the group of cooperative banks, which consists of many individual cooperative credit institutions. Cooperative banks are credit institutions whose objective, according to their statutes, is the economic promotion of their members through joint business operations. The traditional classical business model is traditionally based on personal customer contact. More mergers are to be expected in the banking sector in the coming years. The process of branch closures and staff reductions is also inevitable. Although the role of branches is up for discussion, they are increasingly falling victim to increased cost pressures. These changes have an impact on many aspects of how bank customers demand, evaluate and ultimately purchase financial services. In recent years, it has become clear that banks lack a clear strategy. The aim should be that the strategy does not focus exclusively on cost cutting, such as branch closures and staff reductions . The main purpose of this research is to investigate whether these cost cutting measures in cooperative banks are operationally justified in relation to the available operating profit, cost income ratio and return on equity. The results of this article may be relevant for researchers dealing with the Digital Transformation in the banking sector in Germany.