JAN-JUN 2018

Jan - Jun 2018 Volume 34 Issue 01

1. LOYALTY INTENTION TOWARDS ISLAMIC BANK: THE ROLE OF RELIGIOSITY, IMAGE, AND TRUST

Authors: DWI SUHARTANTO, NURAENI HADIATI FARHANI, MUHAMMAD MUFLIH and SETIAWAN

Abstract

Having customer loyalty is an important strategy in the competitive banking industry. However, literature shows a lack of attention on assessing loyalty in the context of Islamic banking. This study examines the loyalty intention towards Islamic banks including three important determinants, namely religiosity, trust, and image. This study surveyed 200 samples of Islamic bank customers collected from Bandung, Indonesia. To analyze the data, this study applies variance-based structural equation modelling (PLS). The results of this study offer a plausible explanation on the direct effect of religiosity on loyalty intention. Besides direct effect, this study shows that the effect of religiosity on loyalty intention is mediated by trust and image towards Islamic banks. This study highlights the importance of religiosity for loyalty of Islamic bank customers. Theoretical and managerial implications of these findings are discussed.

Keywords: Banking, image, Islamic, loyalty, religiosity

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2. THE IMPACT OF SERVICE PERSONAL VALUES ON CONTINUANCE INTENTIONTOWARDS ON-DEMAND RIDESHARING SERVICES

Authors: EUGENE CHENG-XI, AW, NORAZLYN KAMAL BASHA and NG SIEW IMM

Abstract

Competition in the on-demand ridesharing service industry is becoming increasingly intense, and sustainability of this innovative business model is uncertain. Studying service personal values mayprovide insight for service providers to implement appropriate customer retention strategies. Therefore, the objectives of this study was to validate a structural model where service personal values influence perceived value, and perceived value acts as the predictor ofsatisfaction, which inturn, affects customers’ continuance intention. Through a purposive sampling technique, 280 questionnaires were collected from respondents with experience using on-demand ridesharing servicesin Malaysia. The findingsrevealed thatservice personal valuesinfluenced perceived value,perceived value influenced satisfaction, and satisfaction influenced continuance intention. Furthermore, perceived value mediated the relationship between service personal values and satisfaction. Implications and future research directions were discussed

Keywords: Continuance Intention, Customer Satisfaction, On-demand Ridesharing Services, Perceived Value, Service Personal Values

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3. COMPOSITE TRADE SHARES MEASUREMENT FOR TRADE OPENNESS ON INFLATION AMONG SELECTED DEVELOPING COUNTRIES

Authors: TEE, HENG GUAN1, SHIVEE RANJANEE KALIAPPAN, LEE CHIN, and RUSMAWATI SAID

Abstract

This paper examines the nexus between trade openness and inflation among 42 selected developing countries between 1985 and 2014 using five years averages to validate the Romer hypothesis for the role played by trade openness in influencing inflation. As suggested by Romer hypothesis, trade openness has negative relationship with inflation yet there is no empirical consensus between trade openness and inflation. This paper follows the newly developed measurement proposed by Squalli and Wilson (2011) to consider a multidimensional index, composite trade shares, to measure for trade openness. The results from system GMM estimation indicated the rejection of Romer hypothesis when using Composite trade shares measurement for trade openness but support Romer hypothesis when using the trade shares measurement. The rejection of Romer’s hypothesis using the composite trade shares measurement suggests that policymakers need to aware of inflation following greater trade openness. Apart from that, income redistribution and greater government expenditures are important in reducing the negative impact brought by greater trade openness.

Keywords: Composite trade shares, inflation, Romer hypothesis, developing countries, system GMM

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4. THE IMPACT OF FINANCIAL CONSTRAINTS AND RATINGS ON FIRM PRODUCTIVITY IN MALAYSIA

Authors: MOHD ADIB ISMAIL, NUR MADIHAH ROZAK and MURNIYUNUS MAWAR

Abstract

Each firm needs sufficient financial resources to ensure that it can operate smoothly and expand its market share. However, firms will face problems if there are financial constraints and low ratings to convince outside investors. Therefore, this study aims to analyze the impact of financial constraints and the influence of a firm's rating on firm productivity. The firms selected as the sample of study are firms listed on Bursa Malaysia's main board. The firm data are obtained from Thomson Reuters Data Stream and rating agencies’ websites. The collected data are annual data from 2000to 2015. The firm's production data are analyzed to obtain the Total Factor Productivity (TFP). Further, TFP is tested using a dynamic panel data model that employsthe generalized method of moments (GMM) to analyze the impact offinancial constraints and ratings on firm productivity in Malaysia. The findings showthat financial constraints and short-term ratings play important roles in influencing firm productivity. In this regard, the results show that firms rely heavily on internal funding sources. In addition, an increase in firms’ short-term ratings have a positive impact on their productivity. In contrast, long-term ratings do not have a significant impact on firm productivity. It implies that better short-term ratings are important in such that firms provide a positive signal to investors to invest in the firms. Hence, providing external sources of financing.

Keywords: Financial constraints; firm's productivity; credit ratings; short-term ratings; long-term ratings

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5. FINANCIAL ACCESS AND INEQUALITY: A QUANTILE ASSESSMENT

Authors: RADITYA SUKMANA AND MANSOR H. IBRAHIM

Abstract

This paper examines finance – inequality relations by focusing on whether financial access mitigates income inequality at different levels of inequality. Applying quantile regressions to a cross-country data set of 73 countries, we find evidence that financial access serves as an inequality-mitigating factor only when income inequality of a country is low. In other words, for countries experiencing high inequality, emphasizing financial access in the development of finance may notreduce income inequality. From the analysis, we also find the significant role of trade openness and infrastructure in equalizing income distribution respectively at low and high inequality levels. The implications of these results are clear: there is no single policy that would fit all. In countries with low income inequality, the policy emphasis should be on widening financial access. Meanwhile, infrastructure development should be given priority in countries with high income inequality.

Keywords: Financial Access; Income Inequality; Quantile Regression

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6. CORPORATE GOVERNANCE AND BANK PERFORMANCE AFTER THEFINANCIAL CRISIS: NOTE ON THE WALKER REVIEW

Authors: MUHAMMAD FAIZ AHMAD MIZAN

Abstract

This study analyses whether board independence and expertise in banks have increased and whether banks’ board term duration has shifted to annual basis following the recommendations of Walker (2009). This study employed the two-step system generalised method of moments estimation method to analyse the relationship between these changes and bank performance. Findings provide empirical evidence that by adapting the recommendations in the Walker Report related to the increase in percentage of outside directors with financial expertise, electing a chairperson with financial expertise and a shift in the board member re-election term to annual basis enhances bank performance. Lastly, this study demonstrates that an increase in boardindependence and expertise and a shift in the board re-election term to annual basis are particularly relevant for small banks (as measured by total assets). These findingsare robust to the alternative bank performance measure using Tobin’s Q.

Keywords: Board structure; Board independence; Board expertise; Walker Report

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Accountancy Business and the Public Interest

Accountancy Business and the Public Interest

Jan - Jun 2018 Volume 34 Issue 01