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Hyper-personalized banking in the GCC: A Kuwaiti context with UAE perspectives
Get PDFHyper-personalized banking, fueled by AI and data analytics, promises to revolutionize customer experiences. However, its successful implementation in Kuwait faces unique challenges. This research uncovers a crucial tension: Kuwaiti customers desire the benefits of hyper-personalization but demand stringent data privacy and control. We find that while Kuwaiti banks possess the technological capabilities, regulatory clarity and strategic focus are needed to fully leverage this potential. Through in-depth interviews and comparative case studies, we identify critical success factors, including transparent data practices, customer empowerment, and proactive financial guidance. Our findings offer actionable insights for Kuwaiti banks to navigate the complexities of hyper-personalization, build customer trust, and gain a competitive edge in an evolving financial landscape
Institutional quality and Islamic financial development
Get PDFThe Islamic financial system has become an important source of financing for many Muslim and non-Muslim countries. Therefore, this paper examines the role of institutions in facilitating the development of Islamic financial institutions. The study covers the period 2013-2021 for a panel of 11 leading economies in Islamic finance and employs fixed effects with the Driscoll and Kraay (1998) estimator. The results show a positive impact of effective governance on the development of Islamic finance. However, regulatory quality has a significant negative impact on the development of Islamic finance. Thus, we argue for the improvement of critical institutions that include political, legal, governmental, and regulatory aspects
African stock markets’ connectedness: Quantile VAR approach
Get PDFThe present paper investigates African stock markets’ linkages by considering stocks in the continent’s largest economies, specifically Egypt, Kenya, Morocco, Nigeria, South Africa, and Tunisia. Using a dataset that spanned November 25, 2008, to September 18, 2023, the quantile connectedness approach of Chatziantoniou et al. (2021) is employed, and the results unfold these interesting dynamics of African market connectivity: (i) In the bearish market phase, South African stock dominated the entire network, transmitting shocks to the remaining stocks, while Moroccan and Kenyan stocks played similar role mildly. (ii) In the bullish market phase, Nigerian stock dominated the market as a major net transmitter of shock supported by South African and Kenyan stock markets. (iii), The Egyptian and Tunis stock markets are net shock receivers in both the bear and bull market phases. (iv), At the median quantile value, stocks become less riskier and the Kenyan stock market becomes the most vulnerable while Nigerian, Egyptian, and South African stock markets are influenced by other stock markets when markets are calm. (v), Though, African stocks are underperforming, interested portfolio managers will learn from the trading strategies to be adopted to maximize their returns. These findings will benefit portfolio managers, international stakeholders, and regulators
Predicting stock prices in the Pakistan market using machine learning and technical indicators
Get PDFThis study uses advanced machine learning models to predict stock prices in the Pakistani stock market using 27 technical indicators. It evaluates the predictive capabilities of four techniques, SVM, LSTM, and Random Forest for binary classification of stock price movements. ANN and SVM show the highest accuracy at 85%, followed by Random Forest at 84% and LSTM at 78%. Key indicators such as %R, Momentum, and Disparity 5 are critical across all models. The research provides valuable insights for investors and analysts to improve decision-making. It underscores the importance of technical indicators and establishes a data-driven approach to navigating the complexities of the Pakistani stock market. The study further emphasizes the importance of technical indicators and suggests exploring hybrid models that incorporate real-time data, sentiment analysis, and external factors for better stock price prediction
Measuring the connectedness of the Nigerian banking network and its implications for systemic risk
Get PDFThis study examines fifteen major banks’ network connectedness in the Nigerian banking system via its stock returns. The paper studies both the static and dynamic network connectedness of banks built on the generalized forecast error variance decomposition, using daily data from January 4, 2005, to June 28, 2019, of publicly traded banks. This study finds a substantial total connectedness, with a high pairwise connectedness among the system’s large banks. The dynamic evolution of connectedness in the network reveals that banks’ connectivity increases in response to certain economic episodes. The evolution of the global network's topological properties reveals that it is mainly susceptible to shocks threatening its stability. Additionally, the study computes a composite index of systemic importance for the Nigerian banking system by combining several network centrality metrics using the principal component analysis. The outcome shows that large banks are more centralized in the network, and the larger the scale of assets a bank has, the more systemically relevant the bank is in the network. Since systemic risk emanates from connectedness, frequent assessment of the banking system's connectedness and systemic importance will aid policy decisions. The proposed measure of systemic importance can be incorporated into the CBN’s stress testing mechanism for fast-tracking risk potential banks
Exploring fundamental anomalies: Evidence from the Moroccan stock market
Get PDFFundamental anomalies are explored, for the first time, in the Moroccan stock market. The sample includes non-financial companies from July 2001 to June 2020. We carry out, initially, sorts of returns on anomaly indicators, then, we follow through a regression analysis using a fixed-effect model and the system generalized method of moments methodology. The findings emphasize a significantly positive relationship between returns and the book-to-market ratio and a significantly negative relationship between returns and each of the price-to-earnings and the price-to-cash flow ratios. Regarding the size and the leverage effects, the findings highlight their absence. Finally, we cannot ascertain the existence of a positive or negative price-to-sales effect considering the contradictory results of the tests
Bad loan build-up in India: A reflection of soft budget constraints
Get PDFThis paper analyses the non-performing assets (NPA) crisis in the Indian banking system from the perspective of soft budget constraints. Using a panel dataset of 105 publicly listed firms, it explores the relationship between NPAs and bank lending behaviour, particularly examining credit rationing regarding firm size and risk level. The findings indicate that Indian banks favour large firms over smaller ones, while credit rationing is not adequately aligned with borrower riskiness. However, the Asset Quality Review (AQR) by the Reserve Bank of India and the introduction of the Insolvency and Bankruptcy Code (IBC) seem to have enforced risk-based lending to some extent. These results shed light on the systemic issues that drive NPAs, linking them to governance weaknesses and the prevalence of soft budget constraints
Corporate social responsibility knowledge base: A bibliometric analysis
Get PDFThis research aims to analyze the current landscape of Corporate social responsibility (CSR) research. Using the Scopus database, the study employed the PRISMA sampling technique and analyzed 3679 articles using the VOSviewer program. The results show the emergence of CSR research in 1989, with a notable focus on topics such as corporate performance, corporate governance, family business, and socially responsible investment. We also find no evidence of a relationship between the number of an author's articles and the number of citations. Moreover, CSR research is largely monopolized by developed countries, leaving developing economies in the dark. Our study provides valuable insights into the past, present, and future trajectories of CSR research
Cryptocurrency volatility and Egyptian stock market indexes: A note
Get PDFThis paper examines the effect of the riskiness of the top four cryptocurrencies on the riskiness of stock market indexes in Egypt, being recognized as a developing country. The analysis uses daily data on cryptocurrencies and the three stock market indexes covering January 2020 to January 2023. The risk is measured using the holding period Value at Risk (VaR). The GMM results show that (a) cryptocurrency volatility is negatively associated with the volatility of stock market indexes. That is, the higher the investors’ interest in trading cryptocurrencies, the lower the volatility of stock market indexes as investors trade stocks less frequently, (b) cryptocurrencies can provide hedge and diversification benefits, and (c) the relationship between volatilities of cryptocurrencies and stock market indexes varies across indexes, therefore, contingent
Shariah compliance and earnings management in India: Insights on reporting transparency and financial stability
Get PDFThe present study examines the impact of earnings management on financial stability and reporting transparency among Shariah and Shariah-non-compliant firms in India from 2008 to 2023. The Study uses Kothari and Roychodhury models to estimate earnings management proxies. Earnings manipulation and bankruptcy of the sample firms were estimated using Beneish’s M-score and Altman’s Z-score models. The Study reveals that compared to non-Shariah firms, the Shariah-complaint firms are less prone to earnings management and bankruptcy, and it was also found that they are more transparent in reporting their results. Overall, the study confirms that more than a religious indexation, Shariah screening is effective in maintaining ethical conduct of business practices that enhance the protection of investors. The findings of this study aid managers in policy formulations, and it will be helpful for potential investors in making investment decisions based on Shariah principles