annual banking conference 2013 - abcabc.bibm.org.bd/brochure/abc-2013.pdf · welcome you all to the...

Annual Banking ConferenceAnnual Banking Conference20132013

Welcome Message

Director General Bangladesh Institute of Bank Management

welcome you all to the Annual Banking Conference-2013 organized by the Bangladesh Institute of Bank Management (BIBM). It is a two-day long platform of interaction intends to bring together banking experts,

academicians and researchers from home and abroad to exchange and share knowledge, experience and research outputs on banking and related issues. The banking industry throughout the world which is in a state of change, facing many problems and challenges, has to address those issues in a pragmatic manner and with the utmost integrity. I hope that the deliberations in this Conference would generate new and innovative ideas on identifying and tackling systemic crises which is a great difficulty for the sector.

This year the Conference focuses on four areas- “Financial Market and Monetary Policy”, “International Banking, Sustainable Finance and Information Technology”, “Risk Management in Banking” and “Human Resource Management and Islamic Banking”. The Conference accommodates six papers on “Financial Market and Monetary Policy”, and six papers on “International Banking, Sustainable Finance and Information Technology” on day one and the second day of the Conference includes presentation of seven papers on “Risk Management in Banking”, and five papers on “Human Resource Management and Islamic Banking”.

Organizing Annual Banking Conference is a daunting task in view of time and other constraints. It would not have been possible without continuous effort of my BIBM colleagues and other concerned bankers, academicians and researchers. I, on behalf of the Conference organizer, express my heartiest gratitude and sincere thanks to all contributors of the Annual Banking Conference-2013 for providing all kinds of support to make the conference successful. Finally, we extend our gratitude to our Governing Body and specially to its Chairman, Governor, Bangladesh Bank for motivating, encouraging and helping us for organizing this annual banking conference.

I wish a grand success of the conference.

Dr. Toufic Ahmad Choudhury

Annual Banking Conference-2013www.bibm.org.bd 1

Sunday, 24 November, 2013 Time Program Location

Annual Banking Conference-2013www.bibm.org.bd2

0930-1030

1030-1100

1100-1330

1330-1500

BIBM Auditorium

BIBM Auditorium

BIBM Canteen

Inaugural Session (Day One)

Welcome Address by Dr. Shah Md. Ahsan Habib, Chairman Organizing Committee

Inauguration of the Conference by Dr. Atiur Rahman, Chairman, BIBM Governing Board and Governor, Bangladesh Bank

Presentation of the Inaugural Research Paper titled “A Review of the Banking Activities-2012” by Dr. Toufic Ahmad Choudhury, Director General, BIBM

Refreshment

Plenary Session-1: Financial Market and Monetary Policy

Chair: Mr. Ziaul Hassan Siddiqui, Former Deputy Governor, Bangladesh Bank

Panelists: Dr. Md. Sadiqul Islam, Professor, Department of Finance, University of Dhaka. Dr. Md. Akhteruzzaman, Economic Advisor, Bangladesh Bank Dr. Prashanta Kumar Banerjee, Professor & Director (RD&C), BIBM

Papers to be Presented:

Paper-1:Monetary Policy Shocks and Bank Deposits in Bangladesh: A Cointegration Analysis

Paper-2:Long-run Effects of Public Debt on Bank Deposit: Cointegrating VAR Analysis of Bangladesh

Paper-3:Sector-wise Productivity and Efficiency Trends of Different Commercial Banks in Bangladesh

Paper-4:Evaluation of Performance, Activities and Challenges in the Banking Sector- A Comparative Analysis of Selected Banks of Bangladesh

Paper-5:The Government Business Support Services through Development Banks in Malaysia- View from Malay Entrepreneurs

Paper-6:Stock Return Volatility and Asymmetric Effects in Stock Market of Nepal

Lunch

Program Schedule Day One

1500-1730

1730

BIBM AuditoriumPlenary Session-2: International Banking, Sustainable Finance & Information Technology

Chair: Professor Shibli Rubayat Ul Islam, Dean, Faculty of Business Studies, University of Dhaka

Panelists: Dr. Fahmida Akter Khatun, Research Director, Center for Policy Dialogue (CPD) Dr. Ananya Raihan, Executive Director, Dnet. Dr. Shah Md. Ahsan Habib, Professor & Director (Training), BIBM


Paper-7:The Demand for International Reserves of BangladeshPaper-8:Development and Challenges of International Trade Payment Methods:

Bangladesh PerspectivesPaper-9:Challenges of Financial Inclusion: A Study on Dhaka CityPaper-10:Involvement of Banks in Small Enterprise Financing : Problems and Issues

for BangladeshPaper-11:Electronic Banking Products and Services of Selected Private Commercial

Banks in Bangladesh: Trends and ChallengesPaper-12:Banking in India: An Empirical Study on Innovative Trends by Use of IT

Products

Refreshment

Annual Banking Conference-2013www.bibm.org.bd

Sunday, 24 November, 2013 Time Program Location

Program Schedule Day One

0930-1000

1000-1030

1030-1300

1300-1430

BIBM Auditorium

BIBM Auditorium

BIBM Canteen

Inaugural Session (Day Two)

Key Note Paper Presenter:

Khondkar Ibrahim Khaled, Dr. Muzaffer Ahmad Chair Professor, BIBM

Chair: Dr. Toufic Ahmad Choudhury, Director General, BIBM

Refreshment

Plenary Session-3: Risk Management in Banking

Chair: Mr. S.K. Sur Chowdhury, Deputy Governor, Bangladesh Bank

Panelists: Dr. M Amzad Hossain, Dean, Faculty of Business Studies, Rajshahi University Mr. Faruq Moinuddin, Additional Managing Director, The City Bank Ltd. Mr. Ahmed Kamal Khan Chowdhury, Deputy Managing Director, Prime

Bank Ltd.


Paper-1:An Analysis of Shock Absorbent Fund of Banking Sector in BangladeshPaper-2:Challenges of Operational Risks in Banks in Bangladesh and their Systemic

ConsequencesPaper-3:Identification of Domestic Systematically Important Banks (D-SIBs) in

Bangladesh: An Indicator-based Measurement ApproachPaper-4:Impact of Credit Risk Management on Profitability in Commercial Banks

in Sri Lanka Paper-5:Bank Credit Concentration in Bangladesh: Status and ImplicationsPaper-6:Status and Performance of Internal Control and Compliance Department of

Banks in BangladeshPaper-7:Treasury Risk Management Practices in Banks: A Study of Banking Sector

of Bangladesh

Lunch

Monday, 25 November, 2013 Time Program Location

4 Annual Banking Conference-2013www.bibm.org.bd

Program Schedule Day Two

1430-1700

1700-1730

1730

BIBM Auditorium

BIBM Auditorium

Plenary Session-4: Human Resource Management & Islamic Banking

Chair: Mr. S. A. Chowdhury, A.K. Gangopadhaya Chair Professor, BIBM

Panelists: Mohammad Abdul Mannan, Managing Director, Islami Bank Bangladesh Ltd. Mr. M. Muzahidul Islam, Professor, Department of Banking and Insurance,

University of Dhaka Dr. Mohammad Saleh Jahur, Professor, Department of Finance and

Banking, University of Chittagong.


Paper-1:Work-Family Balance (WFB) of Female Managers: What Bangladeshi Banks Offer?

Paper-2:Human Resource Management: Status and Challenges – A study in the Banking Sector of Bangladesh

Paper-3:Growth and Changes of Islamic Banking Performance in Bangladesh: A Duo-decennial scan of Industry Trend

Paper-4:Cost-Benefit Analysis of Implementing Shari’ah Auditing as a Separate Discipline in Bangladeshi Islamic Banks

Paper-5:Pricing Linkage between Islamic Banking and Conventional Banking: The Case of Bangladesh

Concluding Session

Concluding Speech by Md. Abul Quasem, Chairman, BIBM Executive Committee and Deputy Governor, Bangladesh Bank

Vote of Thanks by Dr. Toufic Ahmad Choudhury, Director General, BIBM

Refreshment

Annual Banking Conference-2013www.bibm.org.bd

Monday, 25 November, 2013 Time Program Location

Program Schedule Day Two

Abstract of the Conference Paper


Paper 1

Monetary Policy Shocks and Bank Deposits in Bangladesh: A Cointegration Analysis

Md. Anwar Hossen Graduate Thesis Student, Department of Economics, Shahjalal University of Science and Technology, [email protected] Hasanuzzaman Professor, Department of Economics, Shahjalal University of Science and Technology, [email protected] Uddin Ahmed Assistant Professor, Department of Economics, Shahjalal University of Science and Technology, [email protected]

he idea of the paper is to empirically investigate the dynamic inter-relationships between deposits of commercial banks and monetary policy variables in Bangladesh. A comparative analysis of five diversified banks - state

owned bank, foreign commercial bank, specialized bank, private commercial bank and islamic bank - has been done to see whether there is any monetary policy shock on these banks’ deposits. The auto-regressive distributed lag (ARDL) approach is used to examine the long-run relationship among the variables. The study focuses on the period from 1997-1998:Q2 to 2012-2013:Q2. The transmission of monetary policy effects to the commercial banks’ deposit is determined by the results from this test. The findings of the study show that the deposits of islamic bank and private commercial bank is insignificant to the monetary policy changes but perform better.

Paper 2Long-Run Effects of Public Debt on Bank Deposit: Cointegrating VAR Analysis of Bangladesh

Nobinkhor KunduAssistant Professor, Department of Economics, Comilla University, [email protected] BanuAssistant Professor, School of Business, Southeast University, [email protected] Tazul IslamDoctoral Student, Graduate School of Business Administration, Kobe University, JapanandAssistant ProfessorBangladesh Institute of Bank Management, [email protected]

his paper empirically investigates the long-run effects of public debt on total deposit as well as short-run dynamics in the context of banking industry in Bangladesh. Public debt from domestic source has been increasing further and

banks and nonbanks have been experiencing liquidity crisis over the time. Each year the national budget expenditure gets expanded because of increased interest payment and in future it is likely to create more budgetary deficit. Ever-rising public debt puts an upward pressure on real interest rate and crowding out private investment. As it is a time series data, cointegration techniques and vector error correction model has been applied to test the effects of public debt on bank deposit. The results find a convergence of the short-run dynamics towards the long-run equilibrium relationship between the total deposit (relative to GDP) and the explanatory variables in the model.

Paper 3

Sector-wise Productivity and Efficiency Trends of Different Commercial Banks in Bangladesh

M. Mizanur RahmanSenior Vice President, Islami Bank Training and Research Academy, Mohammadpur, [email protected]

his study empirically investigated the efficiency of different Conventional, Islamic and Mixed-Islamic banks in Bangladesh. Nine years panel data (2003 to 2011), collected from the annual reports, were used. Data were analyzed

using stochastic parametric profit frontier and Data Envelopment Analysis (DEA), a non-parametric approach, to measure several efficiencies. These different measurements provide comprehensive and robust results of efficiency and productivity of individual bank compared to its peer group. Besides, the productivity trends of different important factors were also estimated and compared with different sectors. The results using SFA show that conventional and Islamic banks have been improving and converging to the highest level of efficiency. The DEA results show that conventional banks are only slightly more efficient than Islamic banks. Although amongst the conventional banks public conventional banks are least efficient. However, Islamic banks are improving and converging to a high level of efficiency. The study also finds that the Bangladeshi Islamic banking industry has in terms of assets, deposits, income and financing base, grown rapidly but still lagging behind comparing with the conventional counterparts. Therefore, Islamic banks should redirect their marketing and communication strategies to focus more on targeting floating customers. The shortage in human resource should also be given serious attention with short term and long term strategies.

Paper 4

Evaluation of Performance, Activities and Challenges in the Banking Sector- A Comparative Analysis of Selected Banks of Bangladesh

Hosnay NasrinFellow, Dept. of Economics, Rajshahi University &Senior Lecturer, Northern University Bangladesh, [email protected]

anking is the backbone of national economy.The commercial banking system dominates the financial sector with limited role of non-bank financial institutions and the capital market. This paper is an attempt to analyze the

activities, performance and challenges of most of the PCBs of Bangladesh. The major objectives of this study are to explore the performance and profitability trends of the commercial banks in Bangladesh, to examine comparative deposit management by Conventional and Islamic banking systems and also to identify challenges that are prevailing in basic banking and technology driven banking. The paper comprises of both qualitative and quantitative data for five general commercial banks and five Islamic banks. Average deposits and its growth and other relevant factors are the prime concern for comparison. Mean, median, correlation and regression analyses have been applied in this study. The research explores that the overall performance of IBs is better than that of CBs in terms of profitability, efficiency and stability. Dependence of deposit on the number of branches and the number of employees is higher in the Islamic banks as compared to Conventional banks. The paper ends with some recommendations focasing appropriate government policy for the development of the banking sector of Bangladesh.

Annual Banking Conference-2013www.bibm.org.bd 7


Paper 5

The Government Business Support Services Through Development Banks in Malaysia –Views from Malay Entrepreneurs

Mohd Nor Hakimin Bin YusoffUniversiti Malaysia Kelantan, [email protected] Rafi Bin YaacobUniversiti Malaysia Kelantan, [email protected]

he establishment of SMEs by the Bumiputra entrepreneurs has led to a rapid development in Malaysia. The government focuses on Malays entrepreneurship to eradicate poverty and to cope with social and economic

imbalance among races. In 1970 the government has launched a New Economic Policy (1970 -1990) which aimed to increase Malays ownership to 30%, but the target is yet to be achived despite various support services provided by the government. This study aims to investigate what inherent factors that prevent SMEs from using the services. This study also assesses the non-users perception of firms performance in absence of the government support services. The respondents are Malays SMEs all over Malaysia. Altogether 3,832 questionnaires were distributed via mail in June 2012 together with a stamped returned enveloped. 670 questionnaires were returned, 333 (49.7%) respondents did not utilise the support services due to complicated procedure imposed by the agencies in obtaining the facilities. Another reason is that they do not know about the services and are not aware that the services are provided. As far as firms performance is concerned, majority of entrepreneurs are satisfied with their business. In conclusion, the government and service providers should revisit their strategies to render the services conspicously amongst Malay entrepreneurs.

Paper 6

Stock Return Volatility and Asymmetric Effects in Stock Market of Nepal

Bharat Singh Thapa, M.Phil.Lecturer, Central Department of Management, Tribhuwan University, Apex College, Pokhara University, Kathmandu, [email protected] Mani Gautam, M.Phil.Faculty, Public Youth Campus, Tribhuwan Uinvesrity Senior Assistant Professor, Apex College, Pokhara University, Kathmandu, [email protected]

tock markets play a key role in effective allocation of savings and investments in the economy. However, high levels of volatility in stock markets may adversely affect the financial system and weaken the economy as a

whole. This paper, therefore, aims at measuring the volatility in the stock market of Nepal. The study uses GARCH (1, 1) for measuring conditional volatility, and EGARCH (1, 1), TGARCH (1, 1) and PGARCH (1, 1) models are used to identify the presence of the leverage effect in the volatility. Using daily return series of NEPSE index with 3567 observations covering the period of more than 14 years starting from July 16, 1997 to December 31, 2012, it is found that the stock market of Nepal is volatile. It has both symmetric and asymmetric effect in the volatility. There seems to be presence of volatility clustering which means large volatility follows another large volatility, and it is persistence over time. PGARCH (1, 1), as a best model in capturing asymmetric effect, confirms asymmetric effect suggesting that return reacts differently to different news in Nepal. Finally, the result of the GARCH –M model shows that Nepalese stock market does not offer any risk premium.

9Annual Banking Conference-2013www.bibm.org.bd

Paper 7

The Demand for International Reserves of Bangladesh

Sadia AfrinDeputy Director, Monetary Policy Department, Bangladesh Bank, [email protected] Sarder Joint Director, Monetary Policy Department, Bangladesh Bank, [email protected]. Golzare NabiDeputy General Manager, Research Department, Bangladesh Bank, [email protected]

any emerging economies, including the South Asian countries like Bangladesh, are stockpiling their international reserve holdings as cushions against unfavorable macroeconomic fluctuations. However, holding

foreign exchange reserves involves both benefits and costs. Thus holding reserves to an optimal level and knowing the determinants of foreign exchange reserves are important for policy making and no substantial study on this issue for Bangladesh economy has been done so far. In this backdrop, the objective of this paper is to analyze the adequacy level of current reserve holdings of Bangladesh by some benchmark ratios and estimate the reserve demand function for Bangladesh. In doing so we apply the Johansen cointegration technique and the error correction model to have the long run as well as the short run dynamics of reserve demand. Along with other determinants of long run reserves, the study includes monetary disequilibrium following Badinger (2004) into the short run model. The findings of the study based on quarterly data over period 1997-2012 suggest that the recent international reserves level of Bangladesh is adequate in comparison to its fundamentals and the current account vulnerability (import to GDP) and exchange rate flexibility play important role in Bangladesh’s demand for international reserves.

Paper 8

Development and Challenges of International Trade Payment Methods: Bangladesh Perspective

Antara ZareenLecturer, Bangladesh Institute of Bank Management, [email protected]. M. Nessarul HaqueAssistant Vice President, Mutual Trust Bank LimitedTofayel AhmedLecturer, Bangladesh Institute of Bank Management, [email protected]

ith the development of trade in the globe, the diversity in the use of different trade payment methods is evolved. On the ground of smooth payment, the choice and use of trade payment methods differ. Among the four trade

payment methods, cost and risk issues are the main driving force for selection. As trade is the ultimate flow to link with global economy, so the contribution of banking community in trade payment is in the focus area as the bargaining position of the country depends on the efficiency level on handling international trade payments. In Bangladesh, documentary credit besides other methods plays the major role as trade payment method. For import, it is because of regulatory reasons. And for export the use of documentary collection is growing as there is no such regulatory obligation. But to be in the competitive trading field the use of other trade payment methods is the prerequisite. In the study, an overview of trade payment methods in Bangladesh, is trying to be captured. Moreover the status as well as the challenges in practicing different payment methods is highlighted here. To find out the development of international trade payment methods in Bangladesh, the paper has also discussed relevant regulations and reviewed pertinent literature to create the backdrop of the study. Published data are the major source of information for this paper.


Paper 9

Challenges of Financial Inclusion: A Study on Dhaka City

Md. Abdus Salam SarkerAssistant ProfessorDepartment of Business AdministrationCity University, [email protected]

lthough the development of information and communications technology is opening up the opportunity for providing essential financial services to most people in the country; still many formidable challenges are there to

include financially excluded population in the process of improvised financial and economic growth through financial inclusion (FI). The paper has highlighted the basic features & need of FI for social and economic development; also reveal the financial particulars & barriers to be included in the financial services for the unprivileged segments of the society. Research methodology is partly descriptive, and partly exploratory. A field survey (through a structured questionnaire) has been conducted conveniently over 220 respondents from the financially excluded populations under the Dhaka metropolitan area to collect relevant data. The findings of the study reveal that there are four levels (social, personal, economic and market-based/systemic) of barriers to the FI. It can be noted that FI can be even increased by paying more heed to the barriers faced by the unprivileged groups of the society. The outcome of the study is expected to guide regulators/policymakers to formulate strategies/introduce financial products or services to include more people in the endeavor of sustainable economic and social development of society.

Paper 10

Involvement of Banks in Small Enterprise Financing: Problems and Issues for Bangladesh

Ashraf Al MamunAssociate Professor, Bangladesh Institute of Bank Management, [email protected], [email protected]. Mosharref HossainLecturer, Bangladesh Institute of Bank Management, [email protected]. N. K. MizanLecturer, Bangladesh Institute of Bank Management, [email protected]

he economic and social importance of the Small and Medium Enterprise (SME) sector is well recognized in academic and policy literature. SMEs play a very significant role in the economy in terms of balanced and

sustainable growth, employment generation, development of entrepreneurial skills and contribution to export earnings. Small enterprises lack access to finance due to their own constraints as well as the financial institutions’ perception of high risk and high cost. This paper attempts to find out the problems encountered by small enterprises in obtaining loans from banks in Bangladesh and the major problems faced by banks while financing small enterprises. Small enterprises face several problems in obtaining loan from banks. It is evident that high interest rate is the most significant problem followed by excessive security and guarantee requirement, working capital requirement, complexity of documentation, non availability of loan in due time, non availability of required amount, banker's reluctance and negligence, and mal-practices of bank officials. On the other hand, banks cited different problems related to small enterprise financing of which non availability of required documentation, absence of good record of transactions, bad repayment history, lack of financial capacity, lack of security and guarantee are very common. Based on the study findings, a set of policy recommendations have been formulated.


Paper 11

Electronic Banking Products and Services of Selected Private Commercial Banks in Bangladesh: Trends and Challenges

Md. Mizanur RahmanSenior Lecturer, Department of Business Administration, Metropolitan University, [email protected] Jamal UddinAssistant Professor, Department of Business Administration, Metropolitan University, [email protected] SiddiqaPost Graduate Student, Department of Business Administration, Metropolitan University, [email protected]

anking is essential, banks are not” (Bill Gates, 2008). This quotation means, the traditional branch banking is going to vanish in order to be surrogated by Electronic Banking (E-banking) which continues to attract new

users. It provides users, working with a home computer attached by network to their bank, with the ability to authorize payments, reconcile accounts, and access a variety of other banking services with the help of ATM, Visa Card, Master Card, Q-cash, E-cash, Ready cash, Mobile, Internet etc. E-banking has a lot of benefits which add value to customers’ satisfaction. For collecting the data a highly structured questionnaire was made. The questionnaire was designed into four parts. The statistical techniques used for the analysis were the descriptive analysis, ANOVA analysis and Chi-Square test. There are some associated challenges identified in the study that seem to hinder the success of e-banking services and thus constitute major concern to both financial institutions and customers. The paper recommends various measures that should be put in place to make e-banking system smooth, effective and more secure. This paper concludes that e-banking has become important phenomenon in the banking industry and it will continue as more progress and innovations are made in information technology.

Paper 12

Banking in India: An Emperical Study on Innovative Trends by Use of It Products

Dr. Kishore Kumar DasHead, Department of Commerce, School of Commerce and Management Studies, Ravenshaw University, Cuttack, [email protected]. Subhasmita MallickResearch Scholar, Ravenshaw University, Cuttack, [email protected]

he Indian banking sector has evolved from a sleepy business institution to one of the strongest drivers of nation’s economic growth. This transformation is the outcome of the technological revolution that has brought a complete

pattern shift in the banking operations and the deliverance of banking services. The purpose of present study is to investigate the current trends and technological development in the Indian banking sector, to monitor and analyze the benefits and challenges of innovative banking trends implemented in Indian banking sector. In this study a quantitative approach was followed to gather adequate and reliable data from different journals, magazines, net sites, published data from various issues of RBI and KPMG. The collected data were analyzed using a descriptive analysis to provide an insight into the impact of technological innovations on performance efficiency of Indian banking sector. The study is a conceptual one with detailed review of literature. From the study it can be concluded that the effective use of technology has a multiplier effect on growth and development in Indian banking sector. The main prominent technological advances in the banking sector contributing to the improved efficiency and cost reductions for customers are using ATMs, credit cards, internet banking, mobile banking and computers.

“


Paper 13

An Analysis of Shock Absorbent Fund of Banking Sector in Bangladesh

K .M. Abdul WadoodGeneral Manager, Bangladesh Bank, [email protected]. Md. Ezazul IslamDeputy General Manager, Chief Economist Unit, Bangladesh Bank, [email protected]. Bayazid SarkerJoint Director, Banking Regulation and Policy Department, Bangladesh Bank, [email protected], [email protected]

egulatory capital and specific provision play a vital role to absorb risk in banks. Bank, being a highly leveraged institution, has an obligation to maintain specific shock absorbent provisional fund as well as regulatory capital.

Recent several financial scams have raised an inquisition that who will compensate the loss. It is also question of adequate regulatory actions, preparations and protections for banking soundness. This paper is an endeavor to analyze the structural changes of shock absorbent funds (regulatory capital and specific provision) to defense banks’ run and depositor confidence in the banking system in Bangladesh. The study uses component wise analysis of bank capital. It focuses on trend analysis of shock absorbent fund especially regulatory capital of types of banks. The study finds that shock absorbent fund of PCBs and FCBs is healthy and it may shade credit risk and protect depositors’ interest. The study also finds that recent financial scam unearths in SCBs and DFIs deteriorate their financial health. Shock absorbent fund is not enough to defense risk which erodes depositor confidence and it may transmit to bank run. The study advocates a comprehensive policy measures. One of these is to decouple the dual control of SCBs so that BB can play its due role to SCBs like PCBs and FCBs.

Paper 14

Challenges of Operational Risks in Banks in Bangladesh and their Systemic Consequence

Md. Shahinul IslamDeputy General Manager, Bangladesh Bank Training Academy, [email protected]. Ala UddinJoint Director, Financial Stability Department, Bangladesh Bank, [email protected] Shahriar SiddiquiJoint Director, Financial Stability Department, Bangladesh Bank, [email protected]

lthough banks in Bangladesh manage a number of risks in a prudent manner, however, they are facing a new challenge of managing operational risks emanated from internal and external frauds. Bangladesh banking

industry experienced several financial scams in its history, of which some recent ones are grave and devastating in nature and severity; Hall-Mark and Bismillah Groups scams have exceeded billions of Taka. The objectives of this paper are to present the issues for risk-based capital requirements emanated from financial scams, highlight the implications for due diligence, and to give consideration to the regulatory and standardizing approaches of operational risk as a response to frauds similar to that of the stated ones. This paper notes that the amount of capital held for operational risk will often exceed capital held for market risk and that the largest banks need to allocate several billions of Taka in capital to mitigate operational risk loss. This paper suggests that the regulators should devote sharp attention to this risk and require banks to hold adequate capital for potential operational losses before they materialize. Regulators should also take into account the possible erosion in confidence on banks emanated from scams causing various systemic consequences in the complex and interconnected banking system. On the other hand, banks should develop a framework for managing operational risks in a more prudent manner and evaluate the adequacy of their capital considering the extent and severity of this risk.


Paper 15

Identification of Domestic Systemically Important Banks (D-SIBs) in Bangladesh: An Indicator- based Measurement Approach

Mohammad Shahriar SiddiquiJoint Director, Financial Stability Department, Bangladesh Bank, [email protected]. Manzur-E-MaulaDeputy Director, Financial Stability Department, Bangladesh Bank, [email protected] Director, Financial Stability Department, Bangladesh Bank, [email protected] Shahidul HaqueAssistant Director, Financial Stability Department, Bangladesh Bank, [email protected]

lobal financial crisis in late 2000 signed the limitations of risk-weighted asset (RWA) regulatory framework that omitted a huge proportion of actual risk exposures of systemically important institutions. Those institutions

created ex-ante externalities leading to an excessive build-up of systemic risk, and ex-post externalities causing the failure of other institutions. As consequences, the aftermath of crisis contributed to severe systemic repercussions which called for more stringent regulations for those institutions. The primary objective of this paper is to assess the systemic importance of banks assuming the impact of their failure on the domestic economy. This paper develops a methodology with practicable modification of BCBS approach for dealing with the domestic systemically important banks (D-SIBs). However, the identification process is based on five indicators i.e. size, interconnectedness, non-substitutability, complexity and domestic sentiment as well as benchmarking and bucketing. Our quantitative result unveils not only a moderate level of systemic importance but also shows both rising and diminishing dominance of few banks in the system. Finally, we conclude that supervisory judgment could be incorporated with the numerical result to ensure the assessment of systemic importance comparable across time and afterward varying levels of higher loss absorbency (HLA) requirements could be applied.

Paper 16

Impact of Credit Risk Management on Profitability in Commercial Banks in Sri Lanka

Gayanika D.M.SUniversity of Sri Jayewardenepura, Nugegoda, Sri [email protected] Hemachandra D.W.KUniversity of Sri Jayewardenepura, Nugegoda, Sri [email protected]

redit risk management in commercial banks has become more important not only in the financial crisis period but also with the rapid phase of lending activities in banks. This study aimed to find out how the credit risk management

affects the profitability. The main objective is to describe the impact level of credit risk management on profitability. The study uses panel data from six local licensed commercial banks for the period of 2002 -2011. The dependent variable in this model is return on average assets as profitability indicator. The explanatory variables are non-performing loans to total loans (NPLR), provision for loan losses to total loans, total loans to total assets, total loans to total deposits, size factor measured by natural log of total assets as credit risk and profitability indicators. Macroeconomic variables are annual growth rate of gross domestic product, annual inflation rate and banking sector assets to GDP. The study found that the NPLR has the greatest significant impact on profitability. NPLR has strong negative impact on profitability which concludes that credit risk management has a significant impact on profitability. Another important finding is that size of the banks has significant negative impact on profitability. All the macroeconomic variables have significant impact on bank profitability while growth rate of GDP has the highest positive coefficient and annual inflation rate and banking sector assets to GDP have negative impact on banks profitability.


Paper 17

Bank Credit Concentration in Bangladesh: Status and Implications

Atul Chandra PanditAssistantProfessor, Bangladesh Institute of Bank Management, [email protected] Al FaisalLecturer, Bangladesh Institute of Bank Management, [email protected]

redit, the most important earning asset of banks, is exposed to various types of risks. If disbursement of bank credit is concentrated, it gives rise to credit concentration risk. This study investigated and reported, in first part,

the status of various types of bank credit concentration prevailing in Bangladesh. In the subsequent part, the implications of various types bank credit concentrations are summarized. The current study finds that bank credit in Bangladesh is concentrated in trade, in Dhaka division, in medium and large industries, in urban areas, in credit with high interest rates, in large loans and finally in terms of security against credit. These types of bank credit concentrations are undesirable for Bangladesh economy that distinctly depends on bank finance for industrialization. Such concentration may create rural-urban disparity in terms of industrialization, opportunities for employment generation, purchasing power, etc. These may also prevent inclusive economic growth and sustainable development of Bangladesh. Therefore, formation of well diversified bank credit portfolio is imperative for banks in Bangladesh.

Paper 18

Status and Performance of Internal Control and Compliance Department of Banks in Bangladesh

Md. Mahabbat HossainLecturer, Bangladesh Institute of Bank Management, [email protected], [email protected] KhatunLecturer, Bangladesh Institute of Bank Management, [email protected], [email protected]

isk management and control are not burden on business; rather the means by which business opportunities are maximized and potential losses associated with unwanted events are reduced. Thus, strengthening the capacity of

internal control and compliance department (ICCD) is indispensable. The objective of the study is to present the status and performance of ICCD of banks in Bangladesh. Primary data have been collected from ICCD of 24 banks through a questionnaire with a combination of open-ended and close-ended questions. It covers data for the year 2012. Though, most of the banks in Bangladesh have ICCD but the performance of this department needs to improve. Different operational manuals of banks have not been updated regularly. Adequate and skilled manpower should be deployed in this department. Performance of ICCD may regularly be evaluated by the Audit Committee of the Board.


Paper 19

Treasury Risk Management Practices in Banks: A Study of Banking Sector of Bangladesh

Md. Ruhul AminAssistant Professor, Bangladesh Institute of Bank Management, [email protected], [email protected] RahmanLecturer, Bangladesh Institute of Bank Management, [email protected]

reasury is a highly sensitive operational organ of banks. Various risks are involved in treasury operations and so, appropriate risk management practices must be put in place in order to materialize the objectives of maximizing

profits by taking tolerable level of risk. This study aims to examine the treasury risk management practices by banks in Bangladesh. The study uses both primary and secondary data. Primary data have been collected through a questionnaire by interviewing the relevant treasury personnel. Secondary data have been collected from different published sources. Data have been analyzed by using graphs, tables and some key statistical ratios. The findings revealed that banks are exposed to different treasury risks particularly interest rate risk, liquidity risk and exchange rate risk. Banks assess the major treasury risks by applying different techniques such as gap analysis, duration analysis, liquidity contingency analysis, VaR analysis etc. and take necessary risk mitigating steps by using different instruments like derivatives, setting up various types of limit like daily turn-over limit, dealers limit and others. It is important to note that treasury risk management practices by most of the banks are limited to some familiar measures and in some cases limited to comply with the central bank’s regulation only. However, banks are moving towards holistic risk management practices gradually.

Paper 20

Work-family Balance (WFB) of Female Managers: What Bangladeshi Banks Offer?

Hasina SheykhAssociate Professor, Department of Banking & Insurance, Faculty of Business Studies, University of [email protected]&PhD Student, MGT & ORGUWA Business School, The University of Western Australia (UWA), 35, Stirling Highway, Crawley, WA [email protected]

his paper analyses the factors that shape work-family balance (WFB) of women working in managerial level in different banks of Bangladesh. Within the framework of work and family (WF), this research uses a gender-lens

first to look at the status of women’s employment in banking, leading to identify the WF-options that banks offer to minimize their work-family conflict (WFC). Being a part of PhD thesis, this paper focuses on its first-stage data where ten banks are studied through strategic interviews to consider employers’ views on their WFB-offerings. In next stages, it will continue to study the employees’ views on how they are enjoying those WF-options. The result is expected to be reported accordingly. At this stage, the research has two major findings. First, women participation has increased in banks although the number is few in senior level management. Second, only few WF-options are offered; various leave-options cover the majority, no formal flexibility in work is found prevailing, and only one participant bank has onsite child-care center. The research is among the firsts to examine the WFB of female managers in Bangladeshi banks considering both employers’ and employees’ views. The findings are believed to have practical implications on ensuring better employee relation.


Paper 21

Human Resource Management: Status and Challenges – A Study in the Banking Sector of Bangladesh

Mohammad Tazul IslamAssistant Professor, Bangladesh Institute of Bank Management, [email protected]. Masudul HaqueAssistant Professor, Bangladesh Institute of Bank Management, [email protected]

s people become the key competitive advantage in any industry especially banking, the Human Resource (HR) functions will and should play a more deliberate role. HR is no longer a backroom or support function. If all

other things being equal – financial, physical, and product assets – people will make the difference between two competing companies. The study identifies the current status of HRM in banks, the future challenges of HRM in banks and formulates some observations and recommendations. To fulfill the objectives of the study both primary and secondary data have been collected. A total number of thirty one banks have been considered for the study. The study finds that 33% employees in the banking sector of Bangladesh are between 30-40 years age and 11.76% bank employees are female. The current employee turnover rate is 3.14%, average per employee operating income is Tk 2.33 million and average per employee annual salary is Tk 0.56 million. Percentage of training expense in relation to total operating expense is only 0.74%. Only in 10% case, the day care facility is available for the employee’s of the bank. The study finally concludes that HRM is still an uncared issue in the banking sector of Bangladesh.

Paper 22

Growth and Changes of Islamic Banking Performance in Bangladesh: a Duodecennial Scan of Industry Trend

Limon Moinur RasulFinancial Analyst, Universal Financial Solutions Limited, [email protected]

he trends and changes of historical performance are the most authentic indicators to predict an industry’s success in order to forecast its future. The present paper investigates the growth and changes in performance of

Bangladesh’s Islamic banking industry during last twelve years period of 2001-2012. Here, the study compiles five pioneered fully-fledged Islamic banks that have been in operation in Bangladesh on or before 2001 to till date. To evaluate industry’s historical trend, fifteen financial ratios are employed under profitability, liquidity, leverage and efficiency. T-tests are applied to determine the difference in statistical significance of performance in between 2001-2006 and 2007-2012. In those selected years Islamic banks’ profit varied a lot in comparison to other selected variables. T-tests suggest no significant difference in performance during two equally divided periods in respect of profitability and liquidity except that one in net operating margin. On the other hand all but operating expenses to total assets under leverage and efficiency were significantly mismatched between two selected periods. These historical performance variations may lead the Islamic bankers as well as economic practitioners to realize some alternate ways for the future advancement of Islamic banking industry in Bangladesh.


Paper 23

Cost-Benefit Analysis of Implementing Shari’ah Auditing as a Separate Discipline in Bangladeshi Islamic Banks

Md. Jahidur Rahman Graduate School of Management, Ritsumeikan Asia Pacific University, Japan & Assistant Professor in Accounting, School of Business, Ahsanullah University of Science & Technology, [email protected] SuzukiProfessor, Graduate School of Management, Ritsumeikan Asia Pacific University, [email protected]

o ensure shariah compliance, Islamic banks in Bangladesh currently use “Internal Shariah Review”. However, it does not cover a thorough and comprehensive audit to examine the transactions after executing the contracts. So,

there lies a huge functional gap between shariah compliance and internal shariah review. The purpose of this research was to identify the feasibility of implementing shariah auditing in Bangladeshi Islami banks. This research tries to measure the respondents’ idea about establishing “Shari’ah Audit” as a discipline. It also investigates whether there should be a proper shariah audit side-by-side internal shariah review and how far Shariah audit would be worth implementing. For collecting primary data a survey questionnaire, with both ‘open-ended’ and ‘close-ended’ questions, was designed and distributed among the accounting academicians, audit practitioners and Shari’ah scholars in Bangladesh. A combination of quantitative and qualitative method was used to get the result. Most of the respondents opined that shariah auditing should be a separate discipline. Almost all the respondents think that because of the involvement of huge transaction and monitoring costs, Islamic banks in Bangladesh are unwilling to carry out shariah audit instead of or along with shariah review.

Paper 24

Pricing linkage between Islamic banking and conventional banking: The case of Bangladesh

Dr. Sarwar Uddin AhmedDean and Associate Professor, Independent University, [email protected]. Ashikur RahmanGraduate Assistant, Independent University, DhakaMohammad Fahad NoorLecturer, School of Business, Independent University, Dhaka

slamic banking is based on profit and loss mechanism where the use of interest is prohibited. Unlike conventional banks, these banks do not charge a specific rate of interest rather provides financing in exchange for profit sharing.

However, there are studies claiming that, in practice Islamic banking is same as conventional banking with regard to the use of interest. It is also claimed that, Islamic deposits are not interest-free, but are closely attached to conventional deposits. On this background, the objective of this study is to examine the relationship between pricing in Islamic banks vis-à-vis conventional banks by taking the case of Bangladesh. We have used monthly data during the period of 2009-2013. The findings of the study showed that there is no statistically significant difference between the monthly average lending rates of Islamic banks and conventional banks. However, there is significant difference between deposit rates.

Annual Banking Conference-2013 Organizing Committees:

BIBM Academic Committee (Overall Supervision)Dr. Shah Md. Ahsan Habib Professor & Director (Training) ChairmanDr. Prashanta Kumar Banerjee Professor & Director (R D & C) MemberFahmida Chowdhury Associate Professor MemberMd. Mohiuddin Siddique Associate Professor & Director (DSBM) MemberMd. Nehal Ahmed Associate Professor Member-Secretary

Organizing Sub-Committee (Academic)Dr. Shah Md. Ahsan Habib Professor & Director (Training) ChairmanMd. Nehal Ahmed Associate Professor MemberMd. Alamgir Assistant Professor MemberAtul Chandra Pandit Assistant Professor Member Md. Masudul Haque Assistant Professor MemberMd. Shahidullah Assistant Professor MemberMd. Ruhul Amin Assistant Professor MemberMd. Mosharref Hossain Lecturer MemberA. N. K. Mizan Lecturer MemberNur Al Faisal Lecturer MemberTofayel Ahmed Lecturer Member-Secretary

Organizing Sub-Committee (Administrative)Dr. Shah Md. Ahsan Habib Professor & Director (Training) ChairmanSk. Nazibul Islam Faculty Member MemberMd. Lutful Alam Maruf Network Manager MemberMd. Nuruzzaman Senior Accounts Officer MemberSharmina Nargish Senior Administrative Officer MemberSujan Kumar Ghosh Training Officer MemberPapon Tabassum Research Officer MemberFarhana Haque Assistant Librarian MemberMd. Habibur Rahman Assistant Officer (IT) Member Md. Hamidur Rahman Hostel Superintendent MemberAKM Shahinuzzaman Staff Officer MemberTarannum Purween Research Assistant MemberNur Al Faisal Lecturer Member-Secretary

Session Coordination Session-1 1. Atul Chandra Pandit Assistant Professor, BIBM 2. Md. Ruhul Amin Assistant Professor, BIBM Session-2 1. A.N.K. Mizan Lecturer, BIBM 2. Tofayel Ahmed Lecturer, BIBM Session-3 1. Md. Alamgir Assistant Professor, BIBM 2. Md. Mosharref Hossain Lecturer, BIBM Session-4 1. Md. Shahidullah Assistant Professor, BIBM 2. Nur Al Faisal Lecturer, BIBM



Graphics & Design

Md. Nasir UddinCSSA, BIBM

&

annual banking conference 2013 - abcabc.bibm.org.bd/brochure/abc-2013.pdf · welcome you all to the...

Documents