Indian Journal of Finance and Banking 2021-04-08T14:20:36+00:00 Managing Editorial Board Open Journal Systems NEURAL NETWORKS IN FINANCE: A DESCRIPTIVE SYSTEMATIC REVIEW 2021-02-24T17:56:30+00:00 K. Riyazahmed <p><em>Traditional statistical methods pose challenges in data analysis due to irregularity in the financial data. To improve accuracy, financial researchers use machine learning architectures for the past two decades. Neural Networks (NN) are a widely used architecture in financial research. Despite the wider usage, NN application in finance is yet to be well defined. Hence, this descriptive study classifies and examines the NN application in finance into four broad categories i.e., investment prediction, credit evaluation, financial distress, and other financial applications. Likewise, the review classifies the NN methods used under each category into standard, optimized and hybrid NN. Further, accuracy measures used by the research work widely differ, in turn, pose challenges for comparison of a NN under each category and reduces the scope of formalizing a theory to choose optimum network model under each category. </em></p> <p><strong>JEL Classification Codes: </strong>G1, G17, M150.</p> 2021-02-24T17:33:23+00:00 ##submission.copyrightStatement## LEVERAGE INDUCED FINANCIAL DISTRESS OF MANUFACTURING FIRMS IN BANGLADESH: A COMPARISON BETWEEN LISTED MNCS AND DOMESTIC FIRMS BY APPLYING ALTMAN’S Z SCORE MODEL 2021-02-27T14:42:51+00:00 Syed Mohammad Khaled Rahman Md. Khairul Islam Md. Mofazzal Hossain <p><em>Financial distress arises from excessive debt capital. The purpose of the study was to determine Altman's Z score and analyze as well as compare the effect of debt on Z scores of </em><em>listed MNCs &amp; domestic companies of Bangladesh over 24 years (1996-2019). The study was based on secondary data. Seven local companies and seven MNCs were selected as a sample from six manufacturing industrial sectors. It was found that on average one local firm was in the grey zone and the rest 13 firms were in the safe zone (Z scores&gt;2.99). MNCs’ </em><em>Z scores were significantly higher than that of domestic companies. </em><em>The grand mean of the Z score of MNCs was 5.398 while that of domestic companies was 4.155. In the case of domestic companies, Z score changes by 0.01 or 0.24% for a 1% change of total debt in opposite direction. </em><em>MNCs’ Z score decreases by 0.005 or 0.073% for a 1% increase of total debt. Domestic companies should increase Z score by redesigning the capital structure and improving basic earning power. The study has practical implications for corporate managers, policymakers, investors, and government because future strategy, policy, and business performance depend on the zone in which the firms are situated.</em></p> <p><strong>JEL Classification Codes: </strong>G30, G32, G39.</p> <p>&nbsp;</p> 2021-02-27T14:40:59+00:00 ##submission.copyrightStatement## IMPACT OF INFORMATION TECHNOLOGIES’ INVESTMENTS ON THE PROFITABILITY OF TUNISIAN BANKS: PANEL DATA ANALYSIS 2021-03-12T18:42:25+00:00 Syrine Ben Romdhane <p style="text-align: justify;"><em>This study examines the relationship between Information Technology investment and the profitability of Tunisian banks, via static and dynamic panel regression models. Our study focused on 15 Tunisian banks for 19 years (2001-2019). To assess the profitability of these banks, three measures were used: two traditional accounting ratios and net interest margin. Our research has shown the importance of the role played by IT in Tunisian banks since IT investments improve their profitability. This finding contradicts the “Productivity Paradox” that high IT investments are not associated with better performance. Indeed, Tunisian banks are acting on their size to boost their performance, and the more the banks take the risk by granting more loans, the more profitable they are by increasing their Return on Assets. Finally, public banks are more profitable than private banks when considering their net interest margin.</em></p> <p><strong>JEL Classification Codes:</strong> B21, C58, G21, G32, O32.</p> 2021-03-12T18:40:59+00:00 ##submission.copyrightStatement## A COMPARATIVE STUDY ON INVESTMENT PATTERN OF SELF-EMPLOYED & START-UP ENTREPRENEURS WITH SPECIAL REFERENCE TO PAN INDIA 2021-03-14T12:10:44+00:00 Kannadas Sendilvelu Manita Deepak Shah <p>This study connotes the influence of demographical factors on the behavior of two categories of investors especially when they are pre-occupied with commitments and constraints. It also includes the subsequent effects on their risk appetite. &nbsp;It focuses on the fact that investors are not always rational in nature, have limits to their self-control and are influenced by their own limitations and bounded knowledge. This study is a comparative study between the Investment pattern of Self-Employed and Entrepreneurs. For the purpose of Study, we have taken 100 samples from Start-up entrepreneurs and Self-Employed. The Data used in the study are both primary and secondary. Using random Sampling technique, the responses were collected and analyzed using graphs and tables. Many developments were seen during the analysis. The analysis was carried by connecting the factors which are influential on one another and Chi-Square Test tools were utilized. Overall, the study has given new perspectives of the Financial Behavior of both Self-Employed and Entrepreneur which can further be analyzed by expanding the scope of the study and samples collected. There is still lot of scope to study and research in the area for contributing to the field of Behavioral Finance with various biases influencing the investing behavior.</p> <p><strong>JEL Classification Codes:</strong> G40, G41.</p> 2021-03-14T12:07:14+00:00 ##submission.copyrightStatement## THE ROLE OF INFORMATION TECHNOLOGY IN IMPROVEMENT OF QUALITY OF THE FINANCIAL REPORTS PREPARED BY THE COMMERCIAL BANKS IN BANGLADESH 2021-03-16T11:52:13+00:00 Md. Abu Sina Md. Shahnur Azad Chowdhury Md. Tafhim Shakib Sultana Akter A. B. M. Yasir Arafat <p style="text-align: justify;"><em>In the 21<sup>st</sup> century, from bank to insurance, multinational companies to government offices have increased thousands of times their profitability, productivity, sustainability, and also market expansion through the successful uses of ICT. Today another aspect is the preparation of a high-quality financial report that relies entirely on the information. Quality information depends on several characteristics like completeness, accuracy, timeliness, consistency, validity, accessibility, and integrity of that information, etc. Having these characteristics in financial information is the prerequisite for good financial reporting. Usages of IT have a great role in producing quality information and financial reporting consequently. The use of IT in the banking sector is more sophisticated than in other sectors in Bangladesh. Therefore, the purpose of this research is to examine analytically the relationship between the use of Information Technology and the quality of financial reporting. Using primary data sourced a structured questionnaire was administered to selected banks in Bangladesh and data analysis was done through the General Regression Model by OLS method to examine the nature of the relationship that exists between the quality of financial reports and the Adoption of Information Technology. The result of the data analysis of the study showed that a positive correlation exists between IT and the quality of reports.</em></p> <p><strong>JEL Classification Codes: </strong>M1, M15, Q55.</p> 2021-03-15T00:00:00+00:00 ##submission.copyrightStatement## MEASURES TO IMPROVE LIFE INSURANCE PROFITABILITY IN INDIA 2021-03-29T15:25:21+00:00 Ramesh Kumar Satuluri Raavi Radhika <p><em>With ~32 crore policies in-force and over ~11000 branches across locations, Life Insurance Industry in India is the 10th largest across the globe in terms of premium contribution. India's share in Global Life Insurance Market was 2.73% during 2019. The life insurance industry is also one of the largest employers with both direct and indirect employment. Life Insurance penetration in India is at 2.82% and density at 58 USD, which is way below the global statistics. This gives immense opportunity for global players to venture into the Indian insurance market. With a proposal for an FDI hike to 74%, we are expecting many big players to enter the Indian market. However, the attractiveness of the industry not depends solely on the market opportunity but also on the bottom line, which is profitability. Indian Insurance Industry is one of the highly regulated markets across the globe and perceived to be the lowest profit-making insurance market. Hence, the need for the study to improve the profitability of life insurance companies in India through structural and policy measures.</em></p> <p><strong>JEL Classification Codes: </strong>G22, I13, O16, A10, E22, G10.</p> <p>&nbsp;</p> 2021-03-29T15:23:38+00:00 ##submission.copyrightStatement## THE SPILLOVER OF THE COFFEE: MATERIAL MISSTATEMENTS AT (UN) LUCKIN COFFEE INC. 2021-04-03T18:43:26+00:00 Gagan Kukreja <p><em>The research investigates alleged material misstatements in the financials of Luckin Coffee, a Chinese company listed in NASDAQ. The research is exploratory and based on publicly available information. The financial data has been obtained from their quarterly and annual reports submitted to Securities and Exchange Commission. The research shows the alleged corruption by inflating sales and profits by C-suite executives of the company. Nevertheless, before doing so, what failures in corporate governance led to this crisis? The admission of such material misstatements resulted in a massive loss to the investors and shaken the investment community’s trust once again. The research tried to determine what kind of audit procedures should have been implemented to earlier detection of fraud? What should have been done to protect stakeholders? What extra measures should the U.S. stock exchange take into consideration before listing foreign companies? What kind of ethical standards must be taught to the students/future executives to avoid such material misstatements? How can accounting bodies address such material misstatements? How can audit procedures be improved? This research will facilitate the policymakers, accounting and auditing regulators, board and various other stakeholders to deter, detect and mitigate such financial material misstatements and offers recommendations. </em></p> <p><strong>JEL Classification Codes:</strong> M41, M42, M48, M148.</p> 2021-04-03T18:42:32+00:00 ##submission.copyrightStatement## INDIAN IT FIRMS CREATING MANAGEMENT CODES FOR FOREIGN EXCHANGE RISK 2021-04-08T14:20:36+00:00 Nitin Shankar Fatima Beena <p><strong><em>Purpose</em></strong><em>: India has been a preferred I.T. service sourcing nation globally and has been registering high growth. India has a significant pie of the global sourcing market, accounting for nearly 55 % share. It covers significant global through its more than one thousand centres spread across continents. With a year-on-year growth of 6.1%, India’s I.T. and ITES industry will increase to the U.S. $ 350 million by 2025. The extensive expanse of geographical coverage also translates into foreign exchange risk; hence foreign exchange risk management becomes an important strategy. The current study attempts to assess the impact of foreign exchange risk management on the Indian sector over 2007-2017; the period includes the 2008 financial crisis taken up in the current study.</em></p> <p><strong><em>Design/Methodology/ Approach: </em></strong><em>We analyzed the Indian I.T. companies listed on the BSE Ltd on their exposure, approach, and management towards foreign exchange risk. We investigated their annual reports from 2007 -2017 to understand their exposure and the adopted external foreign exchange risk management techniques. We further assessed the impact of these foreign exchange risk management techniques on the firm’s value.</em></p> <p><strong><em>Findings: </em></strong><em>The impact of foreign exchange risk management was significant on small-cap I.T. companies for the study period. Though for the during the 2008 crisis term, it was found to be insignificant.</em></p> <p><strong><em>Practical/Implications</em></strong><em>: Foreign exchange risk management is crucial for Indian I.T. companies indulging in cross-border trade. The current study incorporates external methods of managing foreign exchange risk management; hence even if the impact were found to be insignificant for Mid Cap and some Large-cap companies, they would be practicing internal hedging methods, which puts a strong case tapping trillion-dollar business through a fully functional competitive International Financial Centre.</em></p> <p><strong><em>Originality/Value: </em></strong><em>Our paper contributes to the literature on Foreign exchange risk management by Indian I.T. companies, which contributes handsomely to India’s GDP and Foreign exchange reserve.</em></p> <p><strong>JEL Classification Codes:</strong> F31, G32.</p> 2021-04-08T14:19:35+00:00 ##submission.copyrightStatement##