Assessing Financial Performance of Malaysian Islamic and Conventional Commercial Banks Using Financial Ratios

A rapid growth of Islamic banking has led the Malaysian economy to gaining greater prosperity than before. Presently, there are more than 20 Islamic banks operating in Malaysia. Financial ratios calculated from the categories of liquidity, profitability, risk and solvency, and efficiency of banks can be used to gauge the overall financial performance of the banking industry. The objective is to assess the overall performance of Islamic banks as well as conventional banks in Malaysia using financial ratios. The findings indicated that conventional commercial banks in Malaysia do have better quality assets, are more liquid, and are more profitable than Islamic banks. Total expenses in conventional banks are much higher, which may affect profitability and the significant amount of non-performing loans （NPLs）, thus increasing solvency risk. The findings show positive insights of Islamic banks, whose confidence and trust are rising, over a short period with strong improvements in asset utilization, effective management, and expenditure control. This comparative study clearly identified that conventional banks are better financial performers compared to Islamic banks in Malaysia during the period of 2006-2010.     

Trade Credit in the Crisis： Selling or Financing？

The work investigates the use of trade credit in Italy for reasons of a financial nature. The analysis considers Italian small and medium-sized enterprises （SMEs） and investigates, over the years of 2009-2011： the existence of functional relationships between the incidence of trade receivables and payables and corporate profitability; the existence of interdependencies between trade credit policy and trade debt policy; and the coexistence of interchangeable and complementary conditions between trade debts and bank loans and other sources of funding. To verify the research hypotheses, linear regression models on a yearly basis are used and these models are put under observation over the years of 2009-2011. We can conclude that there are interdependencies between trade credit policy and trade debt policy and that trade credit is a source of flexible way of financing, also available in periods of crisis, which has a positive effect on the profitability of SMEs and can be utilized as a complementary and substitute source of financing to bank loans.     

Survey of the Creditor＇s Ability to Collect and Use the Enterprise Information

This paper is concerned with the analysis of the creditor＇s ability to collect, analyze and judge business information, which is a realistic problem for the bank to control the risk of loan effectively. We not only know the bank＇s application of financial and non-financial information during the process of credit extension but also investigate the use of non-financial information by questionnaire. It is discovered that the bank even believes the information that directly acquired by itself while collecting, analyzing and judging the reliability of business information. Through some sensitive information such as the changing of accounts receivable and cash flow and the connection trade, it can predict the potential risk further. In addition, the results show that it is the perfection of internal control system of intermediary （such as accounting firm） and the business enterprise itself that make the bank get the true information of business enterprise.     

An Assessment of the Within-Year Seasonality in the Loan Loss Provisioning Behavior of European Banks

This study aims at assessing whether a significant within-year seasonality exists in the loan loss provisioning behavior of European listed banks observed in the period from 2004 to 2013. Since the accuracy of auditing processes and the level of disclosure requirements in financial reports differ among quarters, during the year, banks may have a leeway to underestimate and postpone the complete provisioning of loan losses in the less regulated and less audited quarters. We hypothesize that those differences are relevant factors which determine non-lower or significantly higher average levels of loan loss provisions in the half-yearly and especially in the annual financial reports than in the interim management statements disclosed in the first and the third quarters of the year. We also investigate the impact of the recent financial crisis and develop a special analysis for the ltalian banks＇ case. The empirical results support our hypotheses, suggesting that, in some cases, a convergence among quarterly levels of auditing processes and disclosure requirements may be needed. Our work contributes to the existing literature by providing additional evidences and considerations on the within-year seasonality in the loan loss provisioning behavior of European listed banks observed in the last decade.     

Shadow Banking Credit Intermediation： Determinants of Default Risks in Securitization and Collateralization

The growth in shadow banking system over the past few years is acknowledged as the key risk to Malaysia＇s financial stability. This is because that it is associated with growth in the household debts extended by the shadow banks. In line with initiatives by the Bank Negara Malaysia （the Central Bank of Malaysia） to enhance surveillance on the activities of the shadow banks in Malaysia, this study attempts to examine the determinants of default risks of shadow banks restricting to focus on their two main activities： securitization and collateralization. The results provide empirical evidence that future methodology to examine the systemic risks in the shadow banking system may need to account for additional explanatory variables that measure collateralized assets that are being intermediated.     

The Role of Information Security Development （ISD） in Effective Information Security Management （ISM） Implementation in the Banks： A Nigerian Case

This research discusses the role of information security development （ISD） using organizational factors such as information security plans, information security awareness, perceived quality training programs, information security policies and procedures, and organizational culture in effective information security management （ISM） implementation in the banks （a Nigerian case）. This paper explores the existing literature and a proposed framework that consists of ISD such as information security plans, information security awareness, perceived quality training programs, information security policies and procedures, and organizational culture in ISM implementation. ISD factors are found to be statistically significant, because it motivates an organization to implement effective ISM in the banks. Hence, it could be said that the role of ISD practices in an effective implementation of ISM among banks in Nigeria will be of great value.     

Office Channeling and Its Impact on the Growth of Indonesian Islamic Banking Industry

The purpose of this paper is to analyze that the office channeling policy that based on Bank Indonesia＇s rule No. 8/3/PBI/2006 had an impact on the growth of Islamic banking industry in Indonesia. This research used ordinary least square regression to analyze the impact of office channeling policy on the growth of Indonesian Islamic banking industry. The variable used in this paper is office channeling which is used as a dummy variable, and margin deposit and non-performing financing （NPF） are also used as control variables. The indicators of the growth of Indonesian Islamic banking industry are asset and third-party funds. The result shows that office channeling does not have an impact on the growth of Islamic banking industry which is measured by asset growth and third-party funds growth. According to this result, Bank Indonesia should have an innovative policy to stimulate the Islamic banking industry growth in Indonesia.     

Empirical Research on Accounting Profits and Net Cash Flow of Chinese Public Companies ——Analysis Based on Profitability

In traditional analysis, enterprises＇ performance evaluation largely depends on profits indices, which results in the public companies＇ strong pursuit of accounting profits and neglect of net cash flow. It is of great significance to study this phenomenon in public companies for it can help to evaluate their profitability correctly. By making an empirical research on the status quo of the medical public companies＇ accounting profits, net cash flow, receivable and prepaid items, it is found that the phenomenon that the current accounting profits and net cash flow are inconsistent universally exists in the public companies; the current growth rates of accounts receivable, notes receivable, other accounts receivable and accounts prepaid in the companies which the phenomenon exists in are higher than those in other companies and the industrial average, especially for the latter two items; this phenomenon in economically developed areas is more obvious than in other areas. How to avoid the contradiction of accounting profits and net cash flow in the public companies？ Firstly, the credit risk awareness and management should be strengthened. Secondly, cash budget management should be enhanced. Finally, the index system of evaluation of the public companies＇ operating performance should be improved.     

The Analysis of the Governance Effect of Chinese Public Corporation Based on Capital Structure

Under the existed system, the capital structure is the basis of the corporate governance, the structure of the corporate governance is the reflection of the capital structure. The choice of the capital structure decides the level of the corporate governance to a great degree. This paper discusses the governance effect of Chinese public corporation in the view of capital structure. At last, the author suggests that the government should change the state of state-owned stock which takes a great proportion, make the state-owned stocks and corporation stocks enter and circulate in the market, develop investment banks, promote the stockholder＇s rights to circulate and recombine, enhance the supervision and the management of the stock markets, perfect the mechanism of the market＇s operation, set up the mechanism of the way to protect to pay back the debt, perfect the system of bankruptcy and develop the way of bond-financing, offset the drawbacks of the indirect-financing among banks and so on. All of the advice was given to perfect the public company＇s capital structure and improve the efficiency of the corporate governance.     

Breakthrough of the Bottleneck in the Application of Management Accounting——Insights from Events Accounting

The purpose of management accounting information system is to serve for management. Since 1980＇s, innovations in management-have seen the application of several accounting techniques such as activity-based costing, balanced scorecard and target costing. However, subsequent surveys have shown that the application of these innovative management accounting techniques is not widespread. Indeed, the application of many techniques has been decidedly ephemeral. The authors suggest two important and interrelated reasons for the apparent failure to adopt such techniques. First, the absence of a conceptual framework needed to envision the collection and integration of multi-dimensional data needed in the modern organization. The second reason is the failure to exploit the data handling potentialities offered by modem computer systems. Reconstruction of contemporary management accounting system using insights from principles of events based accounting is offered as possible solution.     

Are Islamic incomes relevance to commercial banks in Malaysia？

A significant price-to-earnings relation is evident in many research findings, which includes study on Malaysia Stock Markets, that the strength, consistency and magnitude of the relation are not as large as those reported in institutionally more developed markets. However, the price adjustment is stronger if price reaction is measured over a long periods, which is consistent to speculative trading. Firm-specific variables such as revenue, firm size and debt-equity have no incremental information content beyond earnings implies that the market monitoring process in an emerging market focuses on earnings only during financial announcement. Therefore, this paper revisited the study on the relevant of accounting banks in Malaysia using the earnings response coefficients, earnings by looking at Islamic Income for commercial which are the earnings-to-share return coefficients that are estimated for sub earnings components by including Islamic banking incomes in the analysis. This paper discovered that though there is a positive effect, the earnings from Islamic banking operation are small. Thus, the total earnings as well as the sub-categories of earnings of banks appear to enter the pricing considerations of investors.     

Investor Relations （IR） in Business Communication on the Example of Poland

This paper focuses on investor relations （IR） as an element of companies＇ communication with the external environment. It shows the place and role of IR in communication with the general market, and the stock exchange market in particular. The study is illustrated with an example of IR in Poland, a relatively new European Union （EU） member state and an emerging market. As can be seen, IR goes beyond the traditionally understood maintenance of communication with the capital market. It is also shown that the main role of IR ought to be the reduction of investment risk and enhancement of the companies＇ value, which is of particular significance in light of the current globalization of capital markets. It has been found that Polish companies, especially those listed on the Warsaw Securities Exchange （WSE）, commonly rely on IR as a means of communication with the environment. And yet, as the results of the analysis show, the quality of that communication is still far from satisfactory, despite efforts undertaken by various external entities to encourage more focus on the development of IR, or understanding of the company＇s relevant staff of its important role.     

Working capital management and corporate performance： Case of Malaysia

Working capital always being disregard in financial decision making since it involve investment and financing in short term period. However, it is an important component in firm financial management decision. An optimal working capital management is expected to contribute positively to the creation of firm value. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. The intention of this study is to examine the relationship between working capital management and firm profitability. Cash conversion cycle is used as measure of working capital management. This study is used panel data of 1628 firm-year for the period of 1996-2006 that consist of six different economic sectors which are listed in Bursa Malaysia. The coefficient results of Pooled OLS regression analysis provide a strong negative significant relationship between cash conversion cycle and firm profitability. This reveals that reducing cash conversion period results to profitability increase. Thus, in purpose to create shareholder value, firm manager should concern on shorten of cash conversion cycle till optimal level is achieved.     

Investigating Voluntary Risk Disclosure： The Case of Jordanian Banks

The aim of the study is to investigate whether banks in Jordan are compliant with the International Financial Reporting Standards （IFRS） 7 requirement for mandatory disclosure and to find out the extent to which the banks provide voluntary risk disclosures. To achieve the objectives of the study, we collected data from all 15 banks listed on the Amman Stock Exchange for the year ending December 2013. The findings of the study suggest that there is strong compliance with respect to mandatory risk disclosure, as required by IFRS. However, the results generally signal a need for further improvement in the voluntary risk disclosure area, since most of the banks do not provide adequate information that can be of use to stakeholders. We also suggest future avenues of research into the topic to determine progress.     

Global Financial Crisis and Accounting Rules： The Implications of the New Exposure Draft （ED） Financial Instruments： Expected Credit Losses on the Evaluation of Banking Company Loans

During the financial crisis, the delayed recognition of credit losses on loans and other financial instruments was identified as a weakness in existing incurred loss model of impairment stated by International Accounting Standards （IAS） 39, because it is believed that this delay might generate pro-cyclical effects. In response to the recommendations of G20, Financial Crisis Advisory Group （FCAG）, and other international bodies, the International Accounting Standards Board （IASB） has undertaken, since 2009, as a part of the project to replace IAS 39, a project （partially shared with Financial Accounting Standards Board （FASB）） aimed at introducing an expected loss model of impairment. Within the scope of this subset project, the IASB has previously issued two exposure documents proposing models to account for expected credit losses： an exposure draft （ED） Financial Instrument： Amortized Cost and Impairment, published in November 2009, and a supplementary document （SD） Financial Instrument： Impairment, published jointly with the FASB in January 2011. However, neither of the two proposals received strong support from interested parties. Recently, the IASB, after the FASB＇s decision to withdraw from the joint project and to develop a separate expected credit loss model based on a single measurement approach consisting in the sole recognition of lifetime expected credit losses, published a third proposal--Ahe so-called expected credit losses model （ED/2013/3 Financial Instruments： Expected Credit Losses）.     

Is the 2008 financial turmoil increasing the risk of a bank run？ An empirical research in Geneva

In this paper, the authors present the results of an empirical study that attempts to analyse the risk of bank run in Geneva, Switzerland. Two similar surveys have been conducted upon two independent samples of Geneva population （June 2008 and February 2009） to detect the existence of predictive signals leading to a bank run within the selected area. The authors discover that Geneva inhabitants are generally confident in Swiss banks; the risk of a bank run in the area is low. However, reliance to the national banking system is worsening： The number of people fearing about their savings and those thinking the default of a major Swiss bank as ＂possible＂ has significantly risen. Also, more and more people keep updated about the current financial crisis; overall trust in Swiss banks has slightly decreased.     

Empirical study on the financial repression of rural households＇ debit and credit and the effects on their welfare in less developed regions --Take Suqian city of Jiangsu province as an example

This paper carries out empirical analysis of the ration behavior of rural credit cooperatives in less developed regions in providing loan services to rural households. It also inspects the interaction between rural households＇ demand for credit and the loan supply from rural credit cooperatives with simultaneous discrete model. The performance of supporting agriculture through a new round reform of rural credit cooperatives is doubtable in this sample region.     

Board independence, ownership structure, audit quality and income smoothing activities： A study on Malaysian market

The 1997 economic crisis faced by many East Asian economies has generated a substantial amount of debate largely focused on issues such as the roles and functions of good corporate governance （CG）. Lack of transparency has been singled out as the major culprit of the crisis and it has been alleged to cause management to indulge themselves in unhealthy activities such as income smoothing （IS） act. The paper extends Nasuhiyah, Hian, Sob and WEI （1994） by incorporating contextual variables that proxy for CG, ownership structure and audit quality. The empirical analysis is conducted on a sample of Bursa Malaysia listed companies for a period between 1991 and 2000. The main intention of taking this time span is to observe to what extend has previous business operations inculcated the feature of CG in the running of their companies＇ activities despite not being obligatory for them to uphold. The results showed that the existence of non-executive directors and the presence of brand name auditors to be significant in hindering the management from indulging in IS. The study opens the way for a richer understanding of the links among CG, ownership structure, audit quality and IS in Malaysia.     

A system dynamics model for the assessment of the effects of advertising and sales promotion on profitability

Advertising and sales promotion have significant impact on raising customer awareness. They are tools by which customers become acquainted with new and innovative products and services of the companies. Despite the importance of these tools in increasing sales, it is not easy to evaluate their effect on sales. One of the problems confronted by the marketing managers is the determination of a clear relationship between the effectiveness of advertising and sales promotion on profitability. In this article, considering the relationship between these tools and brand equity, we have attempted to determine the relationship between effectiveness of these two factors and profitability. Next, a system dynamics model for representing the effects of marketing communication tools on company profitability is offered. Finally, using the data from a corporation and the numeric values related to each of the elements in the model, an attempt has been made to determine a number representing the magnitude of the effect of advertising and sales promotion on the corporation＇s revenue and profitability and to draw the respective curves related to the effects of these two factors.     

Personnel Management in the Slovak Building Industry： Analysis of Small,Medium-Sized,and Big Building Companies

This paper summarizes the results of the authors＇ research conducted in November 2013 with the aim to analyze the organization and standards of the personnel management in the Slovak building industry. The research was based on the presumption that optimal mastering of the personnel management is a precondition of the success of each building company that wishes to be a continuously prosperous, competitive, and respected economic and social entity. Altogether, 76 small （less than 50 employees）, 77 medium-sized （50-249 employees）, and 21 big （250 and more employees） building companies operating in the territory of the Slovak Republic took part in the research. The results of the research showed that the concept of the personnel management in big building companies （in particular in comparison to most small companies but some medium-sized companies） was more strategic and systematic which is natural given the high numbers of employees of various professions who carry out manifold building works in a huge set of working conditions. However, from the point of view of the current economic development, all building companies have to develop their adaptability to the building market and their capability to master various building works. It is just the personnel management that is used to make it all up provided it is implemented efficiently in a purposeful way in order to keep the stable operation of the building company and satisfaction of various needs of stakeholders including but not limited to employees and clients.