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In the aftermath of the Islamic resurgence movement, the call for the abolition of interest and the introduction of profit and loss sharing schemes gained momentum. Islamic writers have concentrated on describing the operations of an Islamic bank in an interest based economy and others have outlined the principles and functions of the Islamic economy. However there has not yet been a comprehensive study dealing with the implications of abolishing interest in a specific country. Therefore the major objective of this thesis is to examine the possible introduction of interest free banking in Kuwait, its implications, operations, advantages and diyantages. It also focuses upon the transformation process necessary to bring about these required changes. The first chapter presents an overview of the Islamic economic system and its underlying principles; these are the cornerstone for any transformation from the conventional economic system to a new Islamic system. The second chapter focuses on Islamic banking, its methodology, objectives and main operations in theory and practice. The third chapter deals with the main features of the Kuwait economy. An emphasis is put upon the existing banking system and the role of the central bank in conducting its interest-based monetary policy. The thesis then describes the changes required in the current financing instruments employed by Kuwaiti banks in order to adapt to a new Islamic system. In this respect it is assumed that the current banking structure will remain intact. Stress is placed upon the changes required in the short, medium and long-term financing instruments used domestically. The central bank's changing role and the monetary policy implications of a new Islamic system are also analysed. The final chapter summarises the findings and recommendations of the thesis and the advantages and disadvantages of interest free banking with reference to Kuwait.

During the most recent financial crisis, a myriad of banks defaulted. This scenario encouraged the development of a mathematical model for how default spreads through a system of banks. As we will see, the problem brings together ideas from many fields in Mathematics: Combinatorics, Linear Algebra, Calculus, Statistics and Probabilities. Afterwards, we will turn our attention not only towards implementing the model in MATLAB, but also towards interpreting the results obtained.

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Целью работы является анализ реформирования банковской системы Китая. / The aim of the work is to analyze the reform of the Chinese banking system.

Cette thèse est la première tentative pour examiner empiriquement trois aspects différents liés au système bancaire parallèle. Nous cherchons à mieux comprendre le sujet de la finance de l'ombre.Le chapitre 1 se concentre sur la corrélation entre le système bancaire parallèle et les autres institutions financières ordinaires, principalement les banques, les compagnies d'assurance et les fonds de pension. Les résultats suggèrent que le système bancaire parallèle agit comme un complément et non comme un substitut à d'autres institutions financières régulières.Le chapitre 2 examine les déterminants des prêts bancaires parallèles. Ce chapitre étudie comment la réglementation et d'autres facteurs influencent le rôle du système bancaire parallèle dans l’offre de crédit. Les résultats de ce chapitre indiquent que le système bancaire parallèle n'est pas une réponse à une réglementation stricte.Le chapitre 3 montre qu'il y a un impact positif du système bancaire parallèle sur la stabilité et la rentabilité bancaires. Cependant, ces résultats sont inversés pendant les périodes de crise. Ces résultats indiquent que le système bancaire parallèle a un impact positif pendent les « bonnes » périodes et un impact négatif pendant les « mauvaises». / This PhD dissertation is the first attempt to empirically examine three different aspects related to the shadow banking system. We generally aim at providing a better understanding of the shadow banking topic.Chapter 1 focuses on the correlation between the shadow banking system and other regular financial institutions mainly banks, insurance companies, and pension funds. The results suggest that shadow banking system is acting as a complement and not a substitute to other regular financial systems.Chapter 2 examines the determinants of shadow banking loans. This study investigates how regulations and other factors impact the role of the shadow banking system in supplying credit. This chapter’s results indicate that shadow banking system is not an answer to high and severe regulations.Chapter 3 shows that there is a positive impact of the increased share of shadow banking system on banking stability and profitability. However, these results are inversed during crisis periods. These results indicate that shadow banking system makes good times better and bad time worse.

This study investigates what impact mergers and acquisitions have on bank efficiency by examining both pre-merger and post-merger performance. Specifically, the research looks at the effect of bank efficiency on shareholder wealth creation upon bank merger announcement. The study finds supportive evidence that the market takes into account the pre-merger bidder bank’s efficiency in adjusting the bank stock’s price at the time of announcement. This suggests that bank efficiency has a significant positive effect on shareholder wealth creation when a merger is announced. Furthermore, in reacting to the announcement, the market also perceives the prospects for future enhancement of bank efficiency as a result of the current event. Thus, post-merger bank efficiency is found to also contribute to shareholder value creation on merger announcement. In particular, the study finds evidence suggesting that post-merger profit efficiency, rather than cost efficiency, has a positive effect on cumulative abnormal returns. The study investigates 56 commercial bank mergers that took place in 22 European countries between 2001 and 2007. The event study methodology is used to determine shareholder wealth creation, employing the market model in estimating expected returns. Efficiency is estimated using the parametric stochastic frontier approach. Performance improvement in the combined firm is obtained by comparing post-merger efficiency with pre-merger efficiency, which is the sum of bidder and target efficiencies after weighting them based on their pre-merger total assets. To find out whether efficiency has an effect on shareholder value creation, regression analyses are performed involving cumulative abnormal returns, a few efficiency variables, and a number of control variables. The main finding of this study is that pre-merger bank efficiency contributes to short-term shareholder value creation upon merger announcement. Some evidence is also found that post-merger bank efficiency has a positive effect on shareholder value creation at announcement time which is associated more with profit efficiency than with cost efficiency. Also, as the study finds statistically significant positive cumulative abnormal returns, the results of this study are supportive of the view that, increasingly, European merger studies that examine post-2000 data find that bank mergers are value-creating even for the bidding firms. Evidence that pre-merger bank efficiency has a positive effect on cumulative abnormal returns, and that the market takes into account perceived future bank efficiency on merger announcement, underscores the importance of efficiency as a performance measure. If how the market reacts to a merger announcement reflects future efficiency performance, shareholders, policy makers, and other stakeholders may be able to take that as one of the factors on which they can base their decisions regarding the yet uncompleted merger. They can also use previous efficiency records for predicting short-term and long-term performance of prospective parties to a merger before announcement.

vi Abstract The thesis investigates the linkages between macroeconomic performance and banks loans portfolio quality represented by the non-performing loans ratio in the Czech banking system in years 2003-2013. The empirical analysis evaluates how banks non-performing loans are influenced by several macroeconomic indicators such as GDP, inflation, interest rate, unemployment rate and exchange rate. First we investigate loans quality on the aggregate level, next we analyze the quality of loans of households and non-financial corporations sector separately as the macroeconomic variables may affect these two sectors of borrowers differently. Finally the analysis of mutual links is done for different loan categories according to the level of failure also. The empirical results from vector autoregression model and impulse response analysis generally suggest that favorable macroeconomic conditions improve banks loans quality by lowering the non-performing loans ratio and vice versa. The thesis also identifies the feedback effect of increasing non- performing loans ratio on economic performance. Keywords: banks loans quality, macrofinancial linkages, non-performing loans, Czech banking system

M.Com. (Financial Management) / It has been argued that inadequate credit risk management practices and high levels of credit risk was the cause of the 2007 to 2009 global financial crisis, as well as the banking crises over the two past decades, including the 1997 East Asian crisis. As a result, banks have increasingly prioritised credit risk management to ensure acceptable levels of profitability and to keep them from collapsing. However, research on the relationship between credit risk management and profitability in banks in South Africa remains limited. Therefore, this study addressed the question of whether credit risk management has an effect on profitability in South Africa’s four major banks. A quantitative approach was used to establish the relationship between profitability, represented by return on equity (ROE), and credit risk management, represented by two variables, namely capital adequacy ratio (CAR) and the non-performing loans ratio (NPLR). Secondary data for the years 2002 to 2013 was analysed using panel regression and the study concludes that not only does credit risk management have an effect on profitability in South African banks, but that bank size, operating expenses and economic growth also affect the profitability of South African banks. These findings would enable the enhancement of profitability in South Africa through constantly improving credit risk management practices and policies, and by addressing other factors that can negatively affect profitability.

This thesis studies the role of the banking system in several aspects of the macroeconomy, including the likelihood of financial crises, volatility of asset prices and the transmission of monetary policy. In chapter 2, I analyze the accumulation of international reserves by central banks as insurance against financial crises. In the model, private banks borrow from foreign creditors to invest in domestic projects. By lending to banks in response to liquidity shocks, the central bank can reduce the liquidation of bank assets and lower the probability of bank runs. I show that the central bank will hold more reserves when private banks hold lower reserves. I also find that if the central bank can borrow additional loans from external sources, then domestic banks will hold fewer reserves by themselves. If the borrowing cost of external loan is very high, then the central bank may actually want to accumulate more reserves in order to avoid borrowing from external sources at high costs. In chapter 3, I show that the ability of banks to supply liquidity through money creation is important for financial stability. By supplying liquidity, banks can smooth the sale of assets and stabilize asset prices. I find that without elastic money, the attempt of non-bank mutual funds to raise cash by selling assets will only add more volatility into the market. Elastic money provided by banks can help mutual funds better smooth the consumption of their shareholders. In chapter 4, we consider the role of elastic money in an different environment where liquidity shocks affect agents asymmetrically. We show how money growth and interest rate policy can be used to adjust the consumption level of households. We find that the optimal policy is affected by the sensitivity of the supply price to the interest rate. When the supply price is more sensitive to the interest rate, it would be better to adopt a higher inflation rate, and to make the zero-bound of nominal interest rate less likely to be binding. / Thesis (Ph.D, Economics) -- Queen's University, 2007-07-06 11:55:49.942