Banking during the COVID-19 Pandemia

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Banking and Finance".

Deadline for manuscript submissions: closed (31 December 2023) | Viewed by 26045

Special Issue Editor

Department of Business and Management, LUISS University, 00197 Roma RM, Italy
Interests: relationship banking; corporate governance; SMEs financing

Special Issue Information

Dear Colleagues,

Coronavirus disease 2019 (COVID-19) has generated significant instability and high volatility in global capital markets. The financial sector has been one of the most affected, with bank valuations dropping in all countries around the world. The low-interest rate scenario, along with the significant impact of COVID-19, is reducing the core banking profitability in mature markets. Financial institutions are thus shifting towards commission-based income from the likes of payments and tech businesses.

Moreover, the halt to the economy has represented a large shock to the corporate sector, which had to scramble for cash to cover operating costs as a result of the revenue shortfall. Banks, at this stage, are called to guarantee the necessary liquidity to the real economy, also conveying trust and reliability to end-customers towards a path of recovery. In order to continue financing the real economy and support its recovery, banks are called to distinguish between purely temporary phenomena, destined to be reabsorbed in a short time, and longer-lasting impacts which would require actions of management and reclassification.

Changes triggered or accelerated by the COVID-19 crisis are forcing banks globally to reassess traditional products, strategies, and business models. Banks, even the most territorial and branch-centric ones, are forced to encourage the use of channels that have never been their strategic priority. This phase would be particularly complex, and banks need to address it by demonstrating real proximity with their customers. A clear understanding by banking operators of their delay in the provision of services, which has become more tangible than ever before because of COVID-19, could make them even more inclined to accelerate the digital transformation path through partnerships and collaborations within the fintech community.

Dr. Pierluigi Murro
Guest Editor

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Published Papers (7 papers)

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Research

14 pages, 3334 KiB  
Article
COVID-19 Pandemic and Indices Volatility: Evidence from GARCH Models
J. Risk Financial Manag. 2023, 16(10), 447; https://doi.org/10.3390/jrfm16100447 - 17 Oct 2023
Viewed by 1368
Abstract
This study examines the impact of volatility on the returns of nine National Stock Exchange (NSE) indices before, during, and after the COVID-19 pandemic. The study employed generalized autoregressive conditional heteroskedasticity (GARCH) modelling to analyse investor risk and the impact of volatility on [...] Read more.
This study examines the impact of volatility on the returns of nine National Stock Exchange (NSE) indices before, during, and after the COVID-19 pandemic. The study employed generalized autoregressive conditional heteroskedasticity (GARCH) modelling to analyse investor risk and the impact of volatility on returns. The study makes several contributions to the existing literature. First, it uses advanced volatility forecasting models, such as ARCH and GARCH, to improve volatility estimates and anticipate future volatility. Second, it enhances the analysis of index return volatility. The study found that the COVID-19 period outperformed the pre-COVID-19 and overall periods. Since the Nifty Realty Index is the most volatile, Nifty Bank, Metal, and Information Technology (IT) investors reaped greater returns during COVID-19 than before. The study provides a comprehensive review of the volatility and risk of nine NSE indices. Volatility forecasting techniques can help investors to understand index volatility and mitigate risk while navigating these dynamic indices. Full article
(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)
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17 pages, 319 KiB  
Article
Does Financial Technology Adoption Influence Bank’s Financial Performance: The Case of Jordan
J. Risk Financial Manag. 2023, 16(9), 413; https://doi.org/10.3390/jrfm16090413 - 18 Sep 2023
Viewed by 1961
Abstract
This research will examine the impact of the adoption of financial technology on conventional banks’ financial performances. The research will place emphasis on the listed commercial banks at Amman Stock Exchange—ASE, using financial data for the period 2012–2020. The main study tool was [...] Read more.
This research will examine the impact of the adoption of financial technology on conventional banks’ financial performances. The research will place emphasis on the listed commercial banks at Amman Stock Exchange—ASE, using financial data for the period 2012–2020. The main study tool was a questionnaire that focuses on three main dimensions: financial inclusion—(FI), alternative payment methods—(APMs) and automation—(Auto). A total of 115 questionnaires were distributed to all commercial banks listed at Amman Stock Exchange—ASE. Multivariate regression analysis was employed to test the impact of the FinTech dimension as a proxy for independent variables on Jordanian commercial bank’s financial performance as a proxy for dependent variables. Based on the analysis results, the study concludes that all three FinTech dimensions: FI, APMs and Auto. reflected a positive significant impact on Jordanian commercial bank’s financial performance indicators (total deposit, total loans and net profit margin). Therefore, banks in general should invest more and more into financial technology tools and applications, in order to recruit potential clients and retain their current clients, to be able to sustain under fierce competition within the banking sector. Full article
(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)
25 pages, 766 KiB  
Article
The Impact of Multi-Layer Corporate Governance on Banks’ Performance under the GFC and the COVID-19: A Cross-Country Panel Analysis Approach
J. Risk Financial Manag. 2023, 16(1), 15; https://doi.org/10.3390/jrfm16010015 - 27 Dec 2022
Cited by 2 | Viewed by 2893
Abstract
This paper examines the impact of multi-layer corporate governance (MCG) on banks’ performance under the global financial crisis (GFC) and COVID-19. Using a random and fixed effects method, we regressed the impact of MCG variables on return on assets (ROA), return on equity [...] Read more.
This paper examines the impact of multi-layer corporate governance (MCG) on banks’ performance under the global financial crisis (GFC) and COVID-19. Using a random and fixed effects method, we regressed the impact of MCG variables on return on assets (ROA), return on equity (ROE), and non-performing loans (NPL) of a panel data of 44 conventional banks (CBs) and 40 Islamic banks (IBs), across 17 countries, and over the period from 2006 to 2020. The results show that board of directors (BoD)’ structure has no association with CBs performance whereas the chief executive officer (CEO) duality is strongly negatively impacting CBs performance, especially during the GFC. In addition, supervision framework proxies have a strong positive influence on CBs performance, especially in the period after the GFC. Furthermore, cross-membership and the size of the Shariah board (SB) have a significant negative influence on IBs’ performance, but SB qualification has a positive non-significant impact overall—with the exception of NPLs, which had a positive significant impact during the GFC. The supervision position has a favorable impact on IBs performance except during crises. Full article
(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)
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18 pages, 1113 KiB  
Article
Impact of COVID-19, Political, and Financial Events on the Performance of Commercial Banking Sector
J. Risk Financial Manag. 2022, 15(4), 186; https://doi.org/10.3390/jrfm15040186 - 18 Apr 2022
Cited by 6 | Viewed by 3986
Abstract
This paper employs a structural empirical model to gauge the possible effects of COVID-19, political and financial events on the returns and volatility of commercial banks. It observes that insured and run-prone uninsured depositors choose between differentiated commercial banks, which appears to be [...] Read more.
This paper employs a structural empirical model to gauge the possible effects of COVID-19, political and financial events on the returns and volatility of commercial banks. It observes that insured and run-prone uninsured depositors choose between differentiated commercial banks, which appears to be significantly impacted from the present pandemic, especially for the case of Pakistan’s commercial banking sector. The estimated volatility series for commercial banks is measured through the GARCH model, which explains the current financial and political distress for the case of shocks from COVID-19. We calibrate by Impulse Indicator Saturation (IIS) to detect the structural breaks formed by these events in the returns and volatility series of commercial banks. It is observed that the calibrated model possesses almost all financial events that have had a prominent impact on the returns and volatility series whereas two out of eighteen political events are unimpacted. Full article
(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)
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24 pages, 1468 KiB  
Article
Sovereign Exposures of European Banks: It Is Not All Doom
J. Risk Financial Manag. 2022, 15(2), 69; https://doi.org/10.3390/jrfm15020069 - 03 Feb 2022
Cited by 3 | Viewed by 2080
Abstract
We investigate whether sovereign bond holdings of European banks are determined by a risk–return trade-off. Using data between 2011 and 2018 for 75 European banks, we confirm that banks exhibited risk-taking behavior during the sovereign debt crisis, e.g., due to moral suasion. In [...] Read more.
We investigate whether sovereign bond holdings of European banks are determined by a risk–return trade-off. Using data between 2011 and 2018 for 75 European banks, we confirm that banks exhibited risk-taking behavior during the sovereign debt crisis, e.g., due to moral suasion. In the period 2015–2018, however, banks’ investments in sovereign bonds are characterized by sound risk–return considerations, suggesting a lessening of the doom loop. This result is mainly driven by banks in the core European countries, as banks in the GIPS countries do not exhibit such behavior, nor do they avoid riskier bonds following the sovereign debt crisis. Full article
(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)
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22 pages, 2541 KiB  
Article
Designing a Roadmap for Human Resource Management in the Banking 4.0
J. Risk Financial Manag. 2021, 14(12), 615; https://doi.org/10.3390/jrfm14120615 - 18 Dec 2021
Cited by 5 | Viewed by 5184
Abstract
The banking sector has been going through a rapid transformation due to digitalization, regulatory requirements, customer expectations, and demographic trends. The purpose of this paper is to provide an advanced overview of the practical applications of human resource management (HRM) in Banking 4.0. [...] Read more.
The banking sector has been going through a rapid transformation due to digitalization, regulatory requirements, customer expectations, and demographic trends. The purpose of this paper is to provide an advanced overview of the practical applications of human resource management (HRM) in Banking 4.0. This study used quantitative and qualitative methods to present the results of good practice form inventory and a Delphi study. The results of a European study show that human resource management practices such as reskilling, upskilling, and redeployment are a solution to mitigate challenges in the Banking 4.0 era. The HRM roadmap for banks will be a major guide to ensure effective workforce management. Full article
(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)
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16 pages, 471 KiB  
Article
Financial Stability of European Insurance Companies during the COVID-19 Pandemic
J. Risk Financial Manag. 2021, 14(6), 266; https://doi.org/10.3390/jrfm14060266 - 12 Jun 2021
Cited by 23 | Viewed by 6776
Abstract
The European Insurance and Occupational Pensions Authority suggests that as the coronavirus disease 2019 (COVID-19) pandemic has caused significant disruption to the economy, businesses, and people’s lives, national supervisory authorities should mitigate the pandemic’s impact on the European insurance sector. The functioning of [...] Read more.
The European Insurance and Occupational Pensions Authority suggests that as the coronavirus disease 2019 (COVID-19) pandemic has caused significant disruption to the economy, businesses, and people’s lives, national supervisory authorities should mitigate the pandemic’s impact on the European insurance sector. The functioning of insurance companies is in danger as they must balance a drastic increase in the number of claims with their capital and solvency stability. In this study, we evaluate the effects of the COVID-19 pandemic on insurance companies using European insurance companies’ financial statement data from 2010 to 2020. The results unambiguously demonstrate that the pandemic has negatively affected the functioning of the insurance sector. In particular, the return on assets decreased in German and Italian insurance companies during the pandemic. Furthermore, the solvency ratio decreased in the Belgian, French, and German insurance sectors. Conversely, the Polish insurance sector was unaffected. Moreover, we did not find any effects on the Z-score ratio in our sample. Lastly, the value of receivables owed to Belgian insurance companies increased. Based on this evidence, we argue that European legislators should discuss how to manage the probable financial problems of insurance companies during the COVID-19 pandemic. Full article
(This article belongs to the Special Issue Banking during the COVID-19 Pandemia)
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