Purpose – The purpose of this paper is to evaluate the determinants of bank profitability in China. It examines the effects of inflation on bank profitability, while controlling for comprehensive bank‐specific and industry‐specific variables.Design/methodology/approach – The sample comprises a total of 101 banks (five state‐owned banks, 12 joint‐stock commercial banks and 84 city commercial banks). The period under consideration extends from 2003‐2009. The two step generalized methods of moments (GMM) estimators are applied.Findings – Empirical results exhibit that there is a positive relationship between bank profitability, cost efficiency, banking sector development, stock market development and inflation in China. The authors report that low profitability can be explained by higher volume of non‐traditional activity and higher taxation. Moreover, the authors confirm that there is a competitive environment in the Chinese banking industry. Furthermore, the authors propose policy actions that should be ta...

/pdf/bank-profitability-and-inflation-the-case-of-china-3h242lklvq.pdf

Bank profitability and inflation: the case of China

There is an abundancy of systems characterized by parabolic PDEs in science and engineering, especially in chemistry and physics. These systems have a scalar variable, we generally call time, defining the evolution of the system under consideration. The governing equation(s) involves the unknown(s) and their first order partial derivative(s) with respect to this variable. Time variant Schrodinger equations where the unknown is the wavefunction which is responsible for the probability density for the system and Liouville equations for the statistical mechanics where the unknown is somehow responsible for a density in the systems’ phase space (here we use the plurality since both case may differ from Hamiltonian to Hamiltonian). Certain PDE(s), depending on so-called spatial coordinates, govern the behavior of the system in these and similar cases even though the partial differential equation nature is not necessarily needed. Hence we give the following equation for more

MATHEMATICAL MODELS and METHODS in APPLIED SCIENCES

This article examines the effect of GDP growth on bank profitability in China over the period 2003–2009. The one-step system GMM estimator is used to test the persistence of profitability in the Chinese banking industry. The empirical findings suggest that cost efficiency is positively related to bank profitability, while lower profitability can also be explained by higher taxes paid by banks. In addition, there is a negative relationship between GDP growth and bank profitability. Furthermore, the results show that (1) the profitability in the Chinese banking industry is significantly affected by the level of non-performing loans, and (2) Chinese banks with higher levels of capital have lower profitability. Finally, we find that the departure from a perfectly competitive market structure in the Chinese banking industry is relatively small.

/pdf/bank-profitability-and-gdp-growth-in-china-a-note-4ncdt6vj63.pdf

Bank profitability and GDP growth in China: a note

This paper explores similarities and differences between public sector internal auditing and its counterpart in the private sector. Features examined include organizational status, outsourcing, using internal audit as a “tour of duty” function, activities and relationships with the external auditor. The study is based on a survey of chief internal auditors in organizations in Australia and New Zealand. Results suggest that there are differences in status between internal audit in the two sectors, with public sector internal auditors less likely to report to the chief financial officer. While a similar amount of work is outsourced, public sector organizations are more likely than those in the private sector to outsource to the external auditor. There is little difference between internal audit activities and interactions with external audit in the two sectors. However, private sector internal audit is perceived to lead to a greater reduction in audit fees compared to that in the public sector.

A Comparison of Internal Audit in the Private and Public Sectors

This paper analyzes the implications of the advanced measurement approach (AMA) for the assessment of operational risk. Through a clinical case study on a matrix of two selected business lines and two event types of a large financial institution, we develop a procedure that addresses the major issues faced by banks in the implementation of the AMA. For each cell, we calibrate two truncated distributions functions, one for "normal" losses and the other for the "extreme" losses. In addition, we propose a method to include external data in the framework. We then estimate the impact of operational risk management on bank profitability, through an adapted measure of RAROC. The results suggest that substantial savings can be achieved through active management techniques. © 2007 Elsevier B.V. All rights reserved.

Practical methods for measuring and managing operational risk in the financial sector: a clinical study

General assumption of this study is that the banks performance represents their ability to generate sustainable profitability and that banks' profitability is one important issue of contemporary banking field, grace to its role in emphasizing of the financial soundness of banks, abreast to others indicators regarding to the capital adequacy or assets quality. The paper examines how is affected banking profitability (expressed through traditional measures of performance ROA - Return on Assets and ROE - Return on Equity) by the CRR Credit risk ratio in Romanian banking system during March 2008 - June 2013. We developed two regression models in order to study the dependence between mentioned variables. We found that ROA and ROE vary each of them depending on the CRR Credit risk ratio, which is expressed as the ratio of gross value of exposure to loans and related interest under "doubtful" and "loss" to total classified loans and related interest pertaining to non-bank loans, off-balance sheet items excluded.

/pdf/analysis-of-the-romanian-banks-performance-through-roa-roe-447not48tw.pdf

Analysis of the romanian banks' performance through roa, roe and non-performing loans models

The purpose of this paper is to realize a comparative analysis of the internal banking control and internal audit, based on the Romanian banking system case. We identify the main differences and similarities between internal control and internal audit at the level of Romanian banks. Using national regulatory framework and active banks' from Romanian behavior, we find evidence of the risk-based audit approach and the solid interdependence between the banking internal control and banking internal audit.

/pdf/internal-banking-control-and-audit-a-comparative-approach-in-2hc28546so.pdf

Internal banking control and audit: a comparative approach in the romanian banking sector

The purpose of this paper is to survey the going concern principle and its application in auditor's work. The management of an entity is responsible for the assumption of the going concern principle in the compilation of the financial statements. We study the auditor's responsibilities in the audit of the financial statements relating to management's use of the going concern assumption in the preparation of the financial statements. We analyze the events and conditions that may cause significant doubt about the ability of an entity to continue as a going concern.

/pdf/significant-doubt-about-the-going-concern-assumption-in-3vnsxkz8uv.pdf

Significant doubt about the going concern assumption in audit

Empirical review of literature on banksâ€™ profitability suggests many determinants of banking profitability (measured through ROA Return on Assets and Return on Equity ROE, the main popular indicators of bank performance), from which we focus on GDP growth, Inflation, Loans/deposits ratio and Bank capital/total assets ratio. This paper intends to find if there is any significant relationship between ROA or ROE and these mentioned independent variables. We use Ordinary Least Squares OLS method with robust standard errors, consistent with panel-specific autocorrelation and heteroskedasticity. Our study is based on a panel database including 13 European Union countries over the period of 18 years ranging from 2000 to 2017. The empirical results reveal that there is a positive and a significant relationship between ROA or ROE and GDP growth, while the rest of the independent variables have a lesser influence on ROA or ROE.

Determinants of Banking Profitability through ROA and ROE: A Panel Data Approach

People with a high level of financial literacy represent a premise for the societies' evolution and wellbeing, because informed citizens are capable to manage their money, to take proper financial decisions and to contribute to general prosperity and financial stability. We analysed the ideological acceptations of the basic concepts and the methodology of measuring financial literacy. The paper emphasizes on the problem of low financial literacy across countries. This problem could be solved by developing a national strategy of financial education that is the premise for efficient financial education.

/pdf/from-literacy-to-financial-education-a-survey-of-methods-to-3janf0d7ey.pdf

From literacy to financial education: a survey of methods to measure phenomena. the particular situation of romania

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