Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt

Aly Saad Mohamed Dawood

doi:doi:10.11648/j.jfa.20200803.11

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Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt

Aly Saad Mohamed Dawood

Published in Journal of Finance and Accounting (Volume 8, Issue 3)

Received: 26 March 2020 Accepted: 26 April 2020 Published: 14 May 2020

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Abstract

This research aims to investigate the stability of Egyptian banks’ performance by measuring causal interrelation measurements between efficiency, market power, banks risk-taking, and capital adequacy variables, which might help decision-makers in banking system to direct their efforts in handling them. The data are collected from Egyptian Information Dissemination for the period from 2013 to 2017 for both income statement and balance sheet. These data are utilized to estimate cost efficiency, market power and calculate the banks risk-taking by using Front 4.1 package and multi-regressions have been applied to measure the causal interrelation between the above-mentioned variables. The results show that Union National Bank Egypt and Export Development Bank have the highest cost efficiency. And, Union National Bank Egypt and Egyptian Gulf Bank have the highest market power, while Suez Canal Bank and Qatar National Bank Alahly have the lowest market power. But low standard deviation range show that there is no significant effort for enhancing neither cost efficiency nor market power. The regression analysis of causal interrelation shows that capital adequacy ratio significantly responds positively to market power and negatively to cost efficiency, as such risk-taking significantly responds positively to both cost efficiency and market power, while both capital adequacy ratio and risk-taking are not responding significantly to each other. And, cost efficiency significantly responds negatively to capital adequacy and positively to both market power and bank risk-taking, moreover market power significantly responds positively to capital adequacy and negatively to both cost efficiency and bank risk-taking. Most results are consistent with literature review except capital adequacy ratio and risk- taking is not responding significantly to each other this may be addressed by some of activated acts of law 88 year 2003 that limit risk-taking for many risk types.

Published in	Journal of Finance and Accounting (Volume 8, Issue 3)
DOI	10.11648/j.jfa.20200803.11
Page(s)	107-114
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Banks Costs Efficiency, Banks Market Power, Banks Risk-taking, Banks Capital Adequacy

References

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APA Style

Aly Saad Mohamed Dawood. (2020). Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt. Journal of Finance and Accounting, 8(3), 107-114. https://doi.org/10.11648/j.jfa.20200803.11

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Aly Saad Mohamed Dawood. Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt. J. Finance Account. 2020, 8(3), 107-114. doi: 10.11648/j.jfa.20200803.11

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AMA Style

Aly Saad Mohamed Dawood. Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt. J Finance Account. 2020;8(3):107-114. doi: 10.11648/j.jfa.20200803.11

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@article{10.11648/j.jfa.20200803.11,
  author = {Aly Saad Mohamed Dawood},
  title = {Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {3},
  pages = {107-114},
  doi = {10.11648/j.jfa.20200803.11},
  url = {https://doi.org/10.11648/j.jfa.20200803.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200803.11},
  abstract = {This research aims to investigate the stability of Egyptian banks’ performance by measuring causal interrelation measurements between efficiency, market power, banks risk-taking, and capital adequacy variables, which might help decision-makers in banking system to direct their efforts in handling them. The data are collected from Egyptian Information Dissemination for the period from 2013 to 2017 for both income statement and balance sheet. These data are utilized to estimate cost efficiency, market power and calculate the banks risk-taking by using Front 4.1 package and multi-regressions have been applied to measure the causal interrelation between the above-mentioned variables. The results show that Union National Bank Egypt and Export Development Bank have the highest cost efficiency. And, Union National Bank Egypt and Egyptian Gulf Bank have the highest market power, while Suez Canal Bank and Qatar National Bank Alahly have the lowest market power. But low standard deviation range show that there is no significant effort for enhancing neither cost efficiency nor market power. The regression analysis of causal interrelation shows that capital adequacy ratio significantly responds positively to market power and negatively to cost efficiency, as such risk-taking significantly responds positively to both cost efficiency and market power, while both capital adequacy ratio and risk-taking are not responding significantly to each other. And, cost efficiency significantly responds negatively to capital adequacy and positively to both market power and bank risk-taking, moreover market power significantly responds positively to capital adequacy and negatively to both cost efficiency and bank risk-taking. Most results are consistent with literature review except capital adequacy ratio and risk- taking is not responding significantly to each other this may be addressed by some of activated acts of law 88 year 2003 that limit risk-taking for many risk types.},
 year = {2020}
}

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TY  - JOUR
T1  - Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt
AU  - Aly Saad Mohamed Dawood
Y1  - 2020/05/14
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200803.11
DO  - 10.11648/j.jfa.20200803.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 107
EP  - 114
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200803.11
AB  - This research aims to investigate the stability of Egyptian banks’ performance by measuring causal interrelation measurements between efficiency, market power, banks risk-taking, and capital adequacy variables, which might help decision-makers in banking system to direct their efforts in handling them. The data are collected from Egyptian Information Dissemination for the period from 2013 to 2017 for both income statement and balance sheet. These data are utilized to estimate cost efficiency, market power and calculate the banks risk-taking by using Front 4.1 package and multi-regressions have been applied to measure the causal interrelation between the above-mentioned variables. The results show that Union National Bank Egypt and Export Development Bank have the highest cost efficiency. And, Union National Bank Egypt and Egyptian Gulf Bank have the highest market power, while Suez Canal Bank and Qatar National Bank Alahly have the lowest market power. But low standard deviation range show that there is no significant effort for enhancing neither cost efficiency nor market power. The regression analysis of causal interrelation shows that capital adequacy ratio significantly responds positively to market power and negatively to cost efficiency, as such risk-taking significantly responds positively to both cost efficiency and market power, while both capital adequacy ratio and risk-taking are not responding significantly to each other. And, cost efficiency significantly responds negatively to capital adequacy and positively to both market power and bank risk-taking, moreover market power significantly responds positively to capital adequacy and negatively to both cost efficiency and bank risk-taking. Most results are consistent with literature review except capital adequacy ratio and risk- taking is not responding significantly to each other this may be addressed by some of activated acts of law 88 year 2003 that limit risk-taking for many risk types.
VL  - 8
IS  - 3
ER  -

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Author Information

Aly Saad Mohamed Dawood

Department of Business Administration, Faculty of Management, Sadat Academy for Management Sciences, Cairo, Egypt, Seconded to Faculty of Business & Economics, Heliopolis University for Sustainable Development, Cairo, Egypt

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APA Style

Aly Saad Mohamed Dawood. (2020). Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt. Journal of Finance and Accounting, 8(3), 107-114. https://doi.org/10.11648/j.jfa.20200803.11

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ACS Style

Aly Saad Mohamed Dawood. Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt. J. Finance Account. 2020, 8(3), 107-114. doi: 10.11648/j.jfa.20200803.11

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AMA Style

Aly Saad Mohamed Dawood. Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt. J Finance Account. 2020;8(3):107-114. doi: 10.11648/j.jfa.20200803.11

Copy | Download

@article{10.11648/j.jfa.20200803.11,
  author = {Aly Saad Mohamed Dawood},
  title = {Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {3},
  pages = {107-114},
  doi = {10.11648/j.jfa.20200803.11},
  url = {https://doi.org/10.11648/j.jfa.20200803.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200803.11},
  abstract = {This research aims to investigate the stability of Egyptian banks’ performance by measuring causal interrelation measurements between efficiency, market power, banks risk-taking, and capital adequacy variables, which might help decision-makers in banking system to direct their efforts in handling them. The data are collected from Egyptian Information Dissemination for the period from 2013 to 2017 for both income statement and balance sheet. These data are utilized to estimate cost efficiency, market power and calculate the banks risk-taking by using Front 4.1 package and multi-regressions have been applied to measure the causal interrelation between the above-mentioned variables. The results show that Union National Bank Egypt and Export Development Bank have the highest cost efficiency. And, Union National Bank Egypt and Egyptian Gulf Bank have the highest market power, while Suez Canal Bank and Qatar National Bank Alahly have the lowest market power. But low standard deviation range show that there is no significant effort for enhancing neither cost efficiency nor market power. The regression analysis of causal interrelation shows that capital adequacy ratio significantly responds positively to market power and negatively to cost efficiency, as such risk-taking significantly responds positively to both cost efficiency and market power, while both capital adequacy ratio and risk-taking are not responding significantly to each other. And, cost efficiency significantly responds negatively to capital adequacy and positively to both market power and bank risk-taking, moreover market power significantly responds positively to capital adequacy and negatively to both cost efficiency and bank risk-taking. Most results are consistent with literature review except capital adequacy ratio and risk- taking is not responding significantly to each other this may be addressed by some of activated acts of law 88 year 2003 that limit risk-taking for many risk types.},
 year = {2020}
}

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TY  - JOUR
T1  - Cost Efficiency, Market Power, Solvency Risk, and Capital Adequacy for Listed Banks in Egypt
AU  - Aly Saad Mohamed Dawood
Y1  - 2020/05/14
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200803.11
DO  - 10.11648/j.jfa.20200803.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 107
EP  - 114
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200803.11
AB  - This research aims to investigate the stability of Egyptian banks’ performance by measuring causal interrelation measurements between efficiency, market power, banks risk-taking, and capital adequacy variables, which might help decision-makers in banking system to direct their efforts in handling them. The data are collected from Egyptian Information Dissemination for the period from 2013 to 2017 for both income statement and balance sheet. These data are utilized to estimate cost efficiency, market power and calculate the banks risk-taking by using Front 4.1 package and multi-regressions have been applied to measure the causal interrelation between the above-mentioned variables. The results show that Union National Bank Egypt and Export Development Bank have the highest cost efficiency. And, Union National Bank Egypt and Egyptian Gulf Bank have the highest market power, while Suez Canal Bank and Qatar National Bank Alahly have the lowest market power. But low standard deviation range show that there is no significant effort for enhancing neither cost efficiency nor market power. The regression analysis of causal interrelation shows that capital adequacy ratio significantly responds positively to market power and negatively to cost efficiency, as such risk-taking significantly responds positively to both cost efficiency and market power, while both capital adequacy ratio and risk-taking are not responding significantly to each other. And, cost efficiency significantly responds negatively to capital adequacy and positively to both market power and bank risk-taking, moreover market power significantly responds positively to capital adequacy and negatively to both cost efficiency and bank risk-taking. Most results are consistent with literature review except capital adequacy ratio and risk- taking is not responding significantly to each other this may be addressed by some of activated acts of law 88 year 2003 that limit risk-taking for many risk types.
VL  - 8
IS  - 3
ER  -

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