European Journal of Economics, Finance and Administrative Sciences

Issue 99
August-November, 2018

Bank-Specific and Macroeconomic Determinants of Capital Adequacy Ratio: Evidence from Kuwaiti Banks
Aly M Hewaidy and Husain Y Alyousef

Practical experience and existing literature indicates that banks held capital higher than the requirement of legal authorities. This suggests that there are some factors other than legal capital requirements determine banks’ capital structures. This study investigate the impact of bank-specific and macroeconomic factors on bank’s Capital Adequacy Ratio (CAR). Size, profitability (ROA & ROE), Asset Quality (AQ), Management Quality (MQ), Liquidity (LIQ), Net Interest Margin (NIM), and bank type are used as bank-specific factors. Gross domestic product (GDP) and inflation are used as macroeconomic factors. Annual data for all Kuwaiti listed banks is used for the period from 2009 to 2016. The findings indicate that in terms of bank characteristics, only bank size, AQ, MQ and bank LIQ have significant impact on CAR. The findings suggests that CAR tends to be more affected by how efficient bank resources are utilized than by any other bank characteristic or macroeconomic variable.
Keywords: Capital Adequacy Ratio (CAR); Conventional and Islamic Banks, determinations of CAR; Kuwait Banking System.

Empirical Assessment of the Effects of Financial Inclusion on Poverty Reduction in Nigeria
Anthony E. Ageme, C. A. Anisiuba, Felix Chukwubuzo Alio, Hillary Chijindu Ezeaku and J.U.J. Onwumere

In recent time, financial inclusion-poverty relation has been on the front burner of economic discourses. Most of the attempts in literature to examine the link between the two were largely based on theoretical exploration and thus far, only few works applied empirical approach to the problem. In this study, our goal was to ascertain the effect of financial inclusion on poverty reduction in Nigeria using quarterly data from 2009:Q1 to 2014:Q4. Moreover, this study is distinguished among existing literatures by choice of financial accessibility parameters, which are based objectively on financial technological innovation and distinct bank-based channels for financial accessibility. The findings reveal that Automated teller machines inclusion channel and deposit money bank credit to the rural populace have significant positive effect on poverty reduction, whereas web-based/internet banking channel and microfinance credit exert negative impact on poverty reduction. Negative effects ascribed to internet banking channel may not be unconnected with the low literacy level especially among the banking public. Hence fewer percentage of adult banked population in Nigeria use the web channels to access financial services compared to the ATMs that have continued to attract wider usage and acceptance. The results of Johansen cointegration test indicate the existence of long-run equilibrium relationship between financial inclusion and poverty reduction however, speed of adjustment based on the ECM shows that 71 percent of deviation from equilibrium path is corrected every quarter. Diagnostic tests confirm the stability and correctness of our model. We recommend that increase in alternative banking outlets should be accompanied by vigorous financial education so that the vast unbanked public, whose economic prosperities are yet to be integrated into the financial system, can be financially included.
Keywords: Financial inclusion, poverty reduction, ATM, Internet banking, ECM.

Understandability in Italian Financial Reporting and Jail: A Link Lived Dangerously
Maria Silvia Avi

TIFRS Conceptual Framework establishes that understandability identifies a fundamental principle of the financial report even if the document underlines how this postulates represents an important element but with a level of relevance slightly lower than that of the Fundamental qualitative characteristics (Beest F., Braam G., Boelens S., 2009; Jonas G.J., Blanchet J., 2000) identified in relevance, materiality, faithful representation in measurement of the economic facts objects of accounting. Alongside these standards, the IFRS Conceptual Framework (Ankarath N., KJ Mehta K.J., Ghosh T.P., Alkafaji Y.A., 2010; Alexander D., Britton A , Jorissen A., 2007; Cristea, S. M. and Saccon, C. ,2008; Delvaille, P., Ebbers, G. and Saccon, C. 2005; Haller A., B. Eierle, 2004; Nobes, C. W., M. Gee and A. Haller, 2010; Alexander, D., Nobes C., 2013; Nobes C.W., Stadler C., 2015; Nobes C., 2016; Hopwood, A. G., Chapman C. S., Shields M. D. (2007a); Hopwood ,A. G., Chapman C. S., Shields M. D., 2007b) identifies individual Enhancing Qualitative Characteristics in comparability, verifiability, timeliness and understandability. It should be noted that these latter characteristics are not irrelevant but are indicated as indispensable principles for the improvement of corporate communication (Hopwood, A. G. and Peter Miller,1994; Yuthas K., Rogers R., Dillard J.F., 2002).
In Italy, the situation is profoundly different (Nobes, C.W.,2013) . The understandability is considered of equal importance to the faithful representation in measurement of the economic facts object of accounting. Recently, the jurisprudence of the last instance has also highlighted how a lack of understandability, even in the presence of a faithful representation in measurement of the economic facts object of accounting entails penal sanctions and causes penal falsehood in financial reporting. In this case, it is about " false penal quality". It should be noted that Italian law provides for a prison term of between one and five years for penal false corporate communications unless the facts that are not relevant, taking into account the nature and size of the company and the methods or effects of the conduct (in this case imprisonment from 6 months to three years is provided).
Keywords: understandability, IFRS Fundamental qualitative characteristics; IFRS Enhancing Qualitative Characteristics, faithful representation in measurement of the economic facts object of accounting, penal “ qualitative” false; financial reporting, understandability and jail.

The Mediating Role of Customer Empowerment in the Effect of Relationship Marketing on Customer Retention: An Empirical Demonstration from Islamic Banks in Kuwait
Faraj Mazyed Faraj Aldaihani and Noor Azman Bin Ali

The paper aims to explore the mediating role of customer empowerment in the effect of relationship marketing on customer retention. Fulfillment of this aim is occasioned by testing effects of relationship marketing and customer empowerment on customer retention as well as the effect of customer empowerment on customer retention. Conducting a survey on a sample contained 360 clients of Islamic banks in Kuwait via a structured questionnaire developed by virtue of prior related works, a total of 341 questionnaires were received by hand complete and valid for data analysis with a high response rate of 94.7%. Testing the collected data using IMB SPSS and IBM AMOS, the hypothesized model was found to fit the observed data well and the hypotheses were verified. Thereafter, it was derived that customer empowerment significantly mediated the effect of relationship marketing on customer retention, i.e., relationship marketing and customer empowerment had significant influences on customer retention. Concurrently, customer empowerment had a significant effect on customer retention.Similar results were directly or indirectly echoed in the literature. Despite the importance of these results, the paper had two major limitations concerned generalizability of the results and the cross-sectional nature of the study. Thereafter, it was recommended to carry out further studies using longitudinal data from various industries. The originality of the paper can be recognized by its value in deeming customer empowerment as a basic element that glues relationship marketing to customer retention.
Keywords: Relationship marketing, customer empowerment, customer retention.

An Investigation of Organizational Effects of Consoli-dated Financial Statement. An Exploratory Analysis on the Italian Municipalities
Cristian Carini , Laura Rocca , Claudio Teodori and Monica Veneziani

The consolidated financial statements (CFS) are considered both as an external reporting tool and as an integral part of the broader reform of the internal accounting system for organizations. The analysis is aimed at understanding the perception of the possibility of use CFS for assessing group performance and the organisational implications. This survey was carried out through questionnaires sent to the Italian Municipalities ad-dressing the mandatory adoption of CFS. The results show that the CFSs are perceived as a useful tool for studying and evaluating the boundaries of the local group. However, it is not perceived as potentially suitable for modifying the configuration of the group. With regard to the group’s performance, the results are contradictory. The main ap-proach of controlling Municipalities is a top-down relation with the subsidiaries, not oriented towards a strategic vision of the group. In fact, the majority of local authorities believe that relations with the subsidiaries are often of a conflictual nature, rather than open collaboration.
Keywords: Consolidated Financial Statement, Utility, Conflict and Cooperation, Local Government.

The Effectiveness of Implementation HR Practices in the Jordanian Health Sector
Mohammed N. Al-Qudah,Faleh O. Khawaldeh and Anas M. Bashayreh

This study aims to identify the effectiveness of the following human resource management practices (strategic planning, job analysis, training, compensation and rewards) in the Jordanian health sector; and to ensure that there are differences of statistical significance in the practices of human resources management, between the types of specialized staff in health institutions. The study has relied on the descriptive analysis method. Questionnaire has been prepared for primary data collection. A total of 420 questionnaires were distributed on the sample and 69% were retrieved. The Study found: Health institutions do not apply the following practices (the strategic planning for human resources, job analysis and its description, training, compensation and incentives) However, they were obliged to apply some practices such as compensation and incentives resulting from the continuous requests by the staff as a condition for continuing work. There is a difference in the approximations averages of the members of the sample study as to practices with the difference in the type of staff (medical or managerial) and it was in favor of the medical staff.
Keywords: Human Resource Management, Job Analysis, Jordanian Health Sector, Implementation Human Resource