Now showing items 21-39 of 39

    • THE ROLE OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) IN PREDICTING FINANCIAL DISTRESS CASE OF KSA

      Mahees, Mohamed; Alqashqari, Marwah; Finance
      This study explores the potential of environmental, social, and governance (ESG) metrics in predicting financial distress in Saudi Arabian industries over an eleven-year period from 2012 to 2022. We start by defining what financial distress is. Financial distress occurs when a company is unable to meet its financial obligations due to insufficient earnings or income. Our research shows that incorporating ESG metrics enhances the capability to identify financial distress. Using ESG data reduces the likelihood of misclassifying struggling or delinquent industries as financially stable. We employ the Z score model to identify industries with a high risk of failure and examine how ESG factors influence a company's performance and impact the investors' decision-making. Our results demonstrate that industries with lower ESG scores are more likely to experience financial distress, while industries with higher ESG scores are more likely to remain financially stable over time. Moreover, we found that ESG metrics can provide valuable insights into a company's risk exposure and potential for long-term financial sustainability. The implications of our study extend beyond the Saudi Arabian context and have broader relevance for investors and policymakers seeking to assess the financial health and sustainability of companies across different industries. Our findings highlight the importance of incorporating ESG metrics into financial analysis and decision-making processes, particularly in the context of emerging markets where companies may face higher levels of environmental and social risks.
    • Causes Of Financial Distress In Saudi Insurance Industry

      Shaheen, Rozina; AlQathmi, Joud; Finance
      The insurance industry in Saudi Arabia has grown significantly in recent years, but this expansion has also introduced additional challenges. Financial distress, which may be brought on by a number of circumstances, is one of the biggest problems insurance businesses encounter. In the following paper, we examine the factors that contribute to and determine financial difficulties in the Saudi Arabian insurance sector. Our investigation is limited to a sample of 20 Saudi Arabian insurance firms. To investigate the elements that lead to financial hardship in this sector, we utilize a panel data set spanning the years 2015 to 2020. Our findings suggest that important predictors of financial distress in the Saudi Arabia insurance industry include variables including capital adequacy, liquidity, and profitability. Additionally, we discover that macroeconomic factors like inflation and GDP growth significantly affect financial distress. Our findings specifically imply that lower levels of financial distress in the insurance sector are related with better GDP growth rates and lower inflation rates. Also, we look into how regulatory issues affect financial hardship in the Saudi insurance sector. Our findings imply that regulatory elements like market structure and solvency standards have a major effect on financial distress. Particularly, we show that insurance businesses are less likely to encounter financial trouble if they operate in a more competitive market and if they are subject to tougher solvency rules. Overall, our findings offer understanding into the elements that fuel the financial crisis in the Saudi insurance sector. Our study's findings indicate that in order to lower their risk of financial difficulty, insurance businesses should concentrate on maintaining appropriate capital and liquidity levels as well as increasing profitability. To lessen the probability of financial difficulty in the business, regulators may also take into account enacting stronger solvency criteria and encouraging competition in the insurance market.
    • Investigate comprehensive consideration for a time-based walkability approach in Jeddah - The 15-minutes approach as a case study

      Mohamed, Mady; Khalil, Ahad; Master of Science in Urban Design
      In a globally connected world, the concept of intelligent cities is booming daily. The demand for active and livable neighborhoods has increased. After the pandemic, the decision makers/urban planners started promoting new urban models such as the 15-minute city. This approach focused on the pedestrian walkable distance within 15 minutes of their daily needs and urban services. Jeddah city has challenged rapid urban growth, which caused neglected walking and cycling transit mode and reliance on private cars resulting from the city's land use distribution. From this perspective, the current thesis will explore the relationship between walkability, distance, and time to test the appropriateness of the 15-minute city to Investigate the ability to improve walking transportation within the neighborhoods in Jeddah. The main aim is to design a guideline model for enhancing the time-based walkability Jeddah approach by taking the 15-minute neighborhoods as a case study by improving walking transport within the neighborhood. The research utilizes a combined methodological approach: an analytical literature review, field study, and case study analysis. The literature review will help understand the walkability and pedestrian requirements and their relationship to each other. Later the questionnaire with users', the observations, and the interviews with experts were used to conduct the field study. The author selected two districts in Jeddah to examine achieving the principles of the time-based walkability approach in Jeddah in a selected neighborhood. Also, to explore the proposed time/distance to be used for walkability in Jeddah. Later, the proposed principles of the time-based walkability approach are derived using the analytic hierarchy process (AHP) method to categorize the essential criteria or variables into a hierarchy system. The expected result of this study is to formulate a model for enhancing time-based walkability in Jeddah that helps to enhance walkability—aiming to enhance walkability in terms of sustainable, affordable, and practical solutions for a hot arid zone to be aligned with the Saudi 2030 vision.
    • An Examination of Herd Behavior: Evidence from Saudi Arabia Stock Exchange

      BenSaïda, Ahmed; Nour, Layali; Master of Science in Finance
      Abstract This research study seeks to determine if herding behavior exists among publicly listed companies in the Saudi Arabia stock exchange market at a sectoral level. To measure herding behavior, the study employs the Cross-Sectional Absolute Deviation (CSAD) of returns and Modified Cross-Sectional Absolute Deviation (MCSAD) models which include trading volume. The analysis utilizes daily data for 215 companies across 20 sectors from January 1, 2018, through December 31, 2022. Two Hypotheses are examined and empirically confirmed. The first hypothesis is that herding behavior exists in the Tadawul. The second hypothesis is that the incorporation of volume data in the analysis enhances the accuracy in identifying herding behavior in the Saudi Arabia stock market, as trading volume is a crucial factor that influences herding behavior in the financial market. The results reveal that almost half of the market sectors exhibit signs of herding behavior, with some sectors being more susceptible to this behavior than others. Additionally, the study also demonstrates that trading volume has a key role in foretelling herding behavior in the Saudi Arabia stock market. This research adds a lot to our understanding of herding behavior in the Saudi Arabia stock market by highlighting the importance of trading volume as a key factor in predicting the occurrence of this phenomenon. The study’s conclusions may have a big impact on investors and regulators, giving them important knowledge about market behavior and assisting them in making better investment choices.
    • Assessing The Probability of Default Risk for Saudi Arabia Corporate Sector

      Saida, Ahmed; almaghrabi, Nouf; Finance
      Saudi Arabia's corporate sector has grown rapidly, boosting its economy and regional power. However, corporate default is still becoming a risk in any growing economy. Investors, financial institutions, politicians, and stakeholders must recognize and assess this risk to make informed decisions and mitigate the risk. This paper assesses corporate default risk and Saudi Arabian listed company creditworthiness during period of 2018–2022. Principal Component Analysis (PCA) was utilized in this study in order to conduct principal component variables based on initial variables from company’s performance. After that, logistic regression was employed to identify which principal component variables has most effect on a company’s credit risk. Based on the empirical results, the study determines the default predictors (variables) of Saudi Arabian listed companies. The straightforward nature of the model makes it accessible to investors and creditors, even for individuals without prior statistical or information technology experience. It can be utilized to assess the level of commercial credit risk posed by listed companies in Saudi Arabia. Furthermore, since most listed companies are required to submit annual financial statements, the data collection process for incorporating into the model is relatively straight forward. However, for future research, it is recommended to explore the use of credit risk scores developed by credit rating agencies or financial data provider platforms like Bloomberg or Reuters, as this may enhance the accuracy and robustness of the predictive model. Looking at logistic regression result, the study suggests that company’s profitability ratios, liquidity ratios, activity ratios are the most affecting factor in company credit risk.
    • The Role of ESG in Predicting Middle East Corporate Financial Distress

      Shaheen, Rozina; Alguthmi, Manar; Finance
      Extant literature suggests that environmental, social, and governance (ESG) can potentially impact predicting financial distress. However, to our knowledge, no studies consider ESG a predictor of ME corporate financial distress. This research investigates the issue by analyzing 14 companies headquartered in the ME from 2005 to 2022. A multiple linear regression analysis was employed in the study to investigate the association between financial distress prediction and ESG with various factors. Our findings indicate that the ESG variable can be considered in predicting financial distress in the ME corporate sector, as companies with a higher ESG score are associated with a lower risk of financial distress. In addition, focusing on maintaining and increasing earnings assets, generating revenue to maintain profitability, and a higher current asset to meet the financial obligation are statistically significant and indicate better financial performance. However, the inflation variable is less effective in predicting financial distress. Due to the study's restrictions on the corporate sector and not all organizations using ESG reporting, other companies cannot be examined. This study is essential for investors in ME corporate sector to recognize the importance of ESG and other factors to predict financial distress and reduce risk.
    • Investigating the Determinants of Financial Distress in Saudi Corporate Sectors

      Shaheen, Rozina; Elhussaini, Noura; Finance
      The research aimed to analyze the determinants of financial distress in a cohort of 16 Saudi Arabian firms, covering the period from 2011 to 2022. A multiple linear regression analysis was employed in the study to investigate the association between financial distress and various firm-specific and macroeconomic factors. The empirical findings indicated that firm-specific factors such as gross profit, total assets, turnover ratio, solvency ratio, leverage ratio, and EA exhibit a statistically significant influence on the probability of encountering financial distress. Empirical evidence suggested that companies exhibiting higher gross profit and total assets tend to have a lower probability of experiencing financial distress. Conversely, firms with higher turnover, solvency, and leverage ratios are more prone to financial distress. Furthermore, companies exhibiting a higher rate of earnings growth (EA) tend to exhibit a decreased probability of encountering financial distress. Financial distress is not significantly impacted by GDP and inflation, which are both macroeconomic variables. Our findings indicate that the ESG score does not have a statistically significant effect on financial distress, which contradicts prior research. The implications of this study’s findings hold significant weight for policymakers, investors, and managers of firms in Saudi Arabia. The outcomes of this study can be utilized by policymakers to formulate effective policies that foster financial stability and avert financial turmoil. Similarly, investors and managers can leverage the insights to make well-informed judgments regarding their investment and operational tactics. In summary, our research enhances comprehension of the factors that lead to financial distress. Future studies should focus on finding out whether inflation has a significant effect on financial distress which our study failed to demonstrate.
    • Effect of COVID 19 on Micro Finance: A Case of Saudi Arabia

      Tayachi, Tahar; Azzebedi, Azhar; Finance
      COVID 19 has created a wave of disruption among many large, small and medium enterprises across the world. The Saudi government and Saudi Central Bank adopted a proactive stance and issued a series of support packages after the first COVID-19 case was recorded on March 2, 2020. In this research, we aimed at analyzing how micro finance firms survived the COVID 19 economic fluctuations in Saudi Arabia. We also wanted to generate exposure of the positive and negative aspects of COVID 19 on the micro finance ecosystem in Saudi Arabia, to understand how micro finance has helped public during COVID 19 and to determine how artificial intelligence has helped the financial institutions survive COVID 19. The target audience are the employees belonging to different divisions of companies operating in the financial sector of Saudi Arabia. The population includes both male and female. The sample contains men and women belonging to the age group of 20 – 40 years. The sample size consists of 80 research participants. We found out that, SMEs and Startups were benefitted with Microfinance of Bab Rizq Jameel during COVID 19. COVID 19 restricted many operational activities and had a huge impact on funds and financial stability of businesses. However, Micro financing programs help us in increasing the productivity of business processes during COVID 19. We also found out that, Covid 19 allowed finance sector to identify new business opportunities such as integration of artificial intelligence.
    • The Impact of ESG Performance on the Financial Performance of Saudi Arabian Companies

      Shaheen, Rozina; Alhanafi, Tala; Finance
      In this paper, the effect of ESG practices on companies’ financial performance in Saudi Arabia is investigated. The research tests this relationship on the ground of two essential variables; the accounting indicator ratios ROA (return on assets), ROE (return on common equity), and ROC (return on capital) used to measure the financial performance, and the ESG disclosure value. ESG is a non-financial score that measures a company's environmental, social, and governance reporting practices. Sustainability practices is one of the most prominent and vital pillars that are incorporated into the Saudi Vision 2030 which is why this article attempts to measure its impact on firm profitability. Through the utilization of the Bloomberg database, the financial statements and ESG reports of 26 companies through the period 2012-2021 were extracted and examined. The raw data was organized by sector, then analyzed using the Eviews software r esulting in around 1000 data points.The sectors are banking sector, food & beverages sector, insurance sector, energy sector, materials sector, commercial & professional sector, utilities sector, telecommunication services sector, retailing sector, real estate sector, diversified financials sector, and lastly the consumer sector. The analysis was done on all sectors together as a whole, and then for each sector separately. When considering the effect of ESG on financial performance of companies from all sectors as a whole, findings revealed a positive relationship between ESG and all financial indicators (ROA, ROE, and ROC). However, only the relationship between ESG and ROE is significant while ROA and ROC demonstrated an insignificant positive correlation. Contrarily, when the hypothesis was tested on each individual sector, results diverged considerably. Four out of the eleven sectors examined had a uniform result. That is, the financial performance of the banking sector, commercial & professional sector, consumer services sector, and materials sector all exhibited a significant negative correlation with ESG. The other sectors, on the other hand, did not reveal consistent results, making it difficult to make an accurate and inclusive conclusion regarding whether ESG practices positively or negatively impact these sectors’ financial performance.
    • Study On Identifying The Factors Of Individual’s Adoption To Fintech In Saudi Arabia: An Empirical Analysis

      Raheem, Mohamed Mahees; Abulola, Salwa; Finance
      Financial technology offers customers an alternative to the old banking system and changes financial transactions (Ahmed & Schneegans, 2018). The Kingdom of Saudi Arabia (KSA) has encouraged and supported financial technology companies throughout. This study examines Saudi Arabians' fintech adoption factors. Financial technology adoption faces several challenges. These include unfamiliarity with the services, security and privacy concerns, and lack of IT infrastructure. Cultural and regulatory considerations may affect company and consumer financial technology adoption. Conservatism, risk aversion, and a preference for conventional financial services may have slowed financial technology implementation in Saudi Arabia. Fintech adoption in KSA requires a comprehensive plan that addresses the industry's existing position and challenges. The government must adopt the above policies to fully actualize Saudi Arabia's Fintech sector's potential. Financial technology has changed how people and organizations handle money, affecting the financial services sector. Entrepreneurs and investors are benefiting from Saudi Arabia's fintech boom. However, only a minority of people use financial technology, and this minority depends on many factors. This literature study examines Saudis' varied reactions to financial sector changes. This study relies on social science positivism. Positivism encourages quantitative research for understanding study subjects and its linked parts. This approach lets researchers do statistical evaluations of variable interactions and assign numerical values to abstract notions. Quantitative research depends on extrapolation and generalization. Quantitative research is more objective, efficient, exact, and able to quantify importance. Polls, surveys, and questionnaires measure public opinion. Legislation, infrastructure, and trust may hinder fintech adoption, according to study. Research from Saudi Arabia, Pakistan, and Hong Kong supportsthis study's conclusions. The study found that local fintech businesses should prioritize web usability, service quality, privacy, and information quality to enhance fintech acceptance in Saudi Arabia. These factors are crucial to financial technology adoption in Saudi Arabia. Financial technology companies should address infrastructure and customer distrust as barriers to widespread adoption.
    • Real Estate Investment Trusts in The Hospitality Sector of Saudi Arabia: Effect of Vision 2030 on REITs as an Investment Option

      Raheem, Mohamed Mahees; Sharaf Aldeen, Hadeel; Finance
      A Real Estate Investment Trust (REIT) is a type of investment company that owns and operates income-generating real estate assets, such as commercial properties, apartments, and hotels. REITs allow investors to pool their money and invest in a diversified portfolio of real estate assets. In Saudi Arabia, Real Estate Investment Trusts (REITs) in the hospitality industry have been established. Saudi Arabia's hospitality REITs have drawn both domestic and global investment, serving as a source of funding for the country's hospitality sector's growth and development. This study focuses on how Saudi Arabia's Vision 2030 affects the revenue generated by Real Estate Investment Trusts (REITs) in the hotel industry. The study compares the revenue performance of hospitality REITs after the adoption of Vision 2030, and results show that Vision 2030 has a beneficial effect on the revenue of hospitality REITs, with an increase in revenue growth rates following the adoption of the policy. The report emphasizes the importance of government policies in influencing the real estate market and contends that Vision 2030 has been instrumental in improving the revenue performance of the hotel industry.
    • The future of Artificial Intelligence in the Islamic banks of Saudi Arabia

      Tayachi, Tahar; Baladraf, Ayesha; Finance
      The paper demonstrates the future of artificial intelligence in the Islamic Banks of Saudi Arabia which introduces with the meaning of artificial intelligence and the benefits which AI may bring with itself in the future. Further, how banks differ in their use of AI from the banks that do not use AI or use original intelligence (Artificial Neural Network) and the acknowledgement of 4 purely Islamic banks in KSA. The literature has analyzed the pros of AI in the Islamic banks taking into consideration machine learning, natural language processing, text mining through neural network of deep learning, algorithmic trading and robotics. It has further analyzed AI’s limitations with regards to its costs, technological unemployment, lack of human creativity and its accountability and regulation. Lastly, the literature has stated AI from the sharia’a point of view. In order to test hypothesis concerning future studies, it was important to collect data which was sampled amongst the residents of Jeddah, Saudi Arabia who use the 4 purely Islamic banks, Bank Al-Bilad, Bank Al-Jazira, Al-Rajhi Bank and Alinma Bank. Upon various interpretations concerning AI’s accountability and its impact on sharia’a board, robot’s impact in the long run, AI’s ethics and its uses which people have already encountered and the time period for which AI may imitate human learning in the future- we find that generation Z and millennials are very influenced by AI and have positive views about its scope in the future especially taking vision 2030 in consideration or the near future of KSA. However, it is important to note that research limitations include no access to banking authorities due to the recovery after the pandemic of COVID-19 besides, further research is suggested concerning Ai’s accountability and to what extent will AI understand the Islamic banks and especially, the religious side and its efficiency in applying sharia’a laws. Thus, there will always be room for improvement regardless of how the research shows the future relationship between Islamic banks and artificial intelligence.
    • The Covid-19 Impact On growth and Development Of the Hospitality Sector

      Tayachi, Tahar; Alghamdi, Razan; Finance
      The purpose of this study is to identify the major impacts of the covid-19 pandemic on the financial stability of the hospitality sector. Due to the financial crunch, low borrowing rates, and stagnant wages in recent years, the hotel and leisure business has faced a number of challenges. The supply chain and related industries, such as events, are feeling the effects of the current economic downturn, which is being felt by everyone involved in it. One of the most severe consequences of the outbreak on the food and beverage industry is the closure of dining restaurants and other public gathering places. The global research on the food and beverage industry divides it into online and offline chains. The COVID-19 outbreak had an effect on both of these regions. The researcher used secondary data collection method such as the world-bank dataset. It was found that Covid-19 has impacted the hospitality sector negatively ever since its outbreak. Tourism has been one area that has been adversely impacted by the outbreak of coronavirus. The coronavirus pandemic's immediate and enormous impact on tourism is having a ripple effect on the rest of the economy in many countries.
    • The effectiveness of e-invoicing in boosting tax income in Saudi Arabia

      Shaheen, Rozina; Aldabbagh, Maria; Finance
      There are several approaches of evaluating the efficiency of the tax system. The authors claim that the absence of tax evasion is evidence of its efficacy. This study is conducted to demonstrate the efficiency and usefulness of electronic invoicing in Saudi Arabia, with the ultimate goal of increasing tax revenue for the Saudi economy. And then there's the matter of contrasting the state of the country's tax coffers before and after the introduction and implementation of e-invoices. This study also looks at how the introduction of e-invoicing in Saudi Arabia and the performance of companies has led to an increase in revenue taxes. The number of VAT rates and their levels in effect in a given nation are two of several variables that affect this occurrence. The purpose of these factors is to examine how the number of VAT rates and the basic VAT rate impact the efficiency of this tax. A literature search in the area of European Union value added tax served as the basis for the investigation. E-invoicing may provide taxpayers with cost savings from reduced printing, storing, and administrative costs, improved information security and accessibility, and integration of invoice issuance with internal accounting, payment, and billing and external supplier, client, and public sector accounting, payment, and procurement systems. Tax administrations may be able to reduce tax noncompliance and informality at a lower cost by reducing sales omission, purchase over-invoicing including the reporting of purchases unrelated to business operations, fraudulent transactions, and general tax submission errors by enhancing control over the invoicing process and enabling real-time monitoring of taxable transactions. Due to the requirement to invest in new information technology and educate new personnel, taxpayers and tax collection agencies may incur large expenditures to adapt to e-invoicing. Administrative categories were used to classify businesses into waves according to their size and regulatory demands. Due to their larger percentage of VAT income and better ability to update IT systems, larger enterprises were more likely to be compelled to deploy e-invoicing earlier. Due to the greater deterrent impact and ease of monitoring their behaviour, the tax administration prioritised the adoption of e-invoicing by taxpayers with a history of noncompliance. 6 In addition, the issue of tax evasion was highlighted, and statistics on the total tax income were provided for companies in different sectors in Saudi Arabia. The study findings for Saudi Arabia in the years 2021 and 2022 follow. We were able to categorize the sectors according to how effectively they kept up the efficiency of VAT collection and how the total income tax had increased between these years. We have also extracted Saudi Arabia’s revenue on taxes in year 2020, 2021 and 2022 to analyze the income performance throughout the years. The research concludes by analyzing the correlation between the preincome tax before the implementation of e-invoicing and after to prove the efficiency of how well e-invoicing are used to generate revenue.
    • Effects of fintech on financial stability by studying GCC banks

      Raheem, Mohamed Mahees; Alkabbani, Dania; Master of Science in Finance
      There is controversy over whether FinTech causes financial institutions to become fragile. We exploit the introduction of FinTech regulatory sandboxes as an exogenous shock and investigate the heterogeneous effects of FinTech on the fragility of financial institutions using a panel sample of listed banks from GCC countries. Our results will show that if a shock to FinTech innovations does or doesn’t significantly impact bank fragility. Secondly, we will conclude if promoting FinTech reduces or increases financial institution fragility in emerging (developed) financial markets. Finally, we will discover FinTech’s influences on bank fragility via profitability
    • Investigation of Four factors for Fama and French in S&P 500 Index

      Tayachi, Tahar; Albakri, Abdulrahman; Master of Science in Finance
      This research presents the evolvement of the Fama-French models and how it’s valid to use in investment and risk perspective. The test conducted was replacing the Fama-French model with other factors which is important in investment. These are the factors. Liquidity: is important for learning how easily a company can pay off it's short term liabilities and debts, Return on equity: is used to evaluate corporate strength and efficiency. It's a measure of overall profitability, and of how well the company's leadership manages its shareholders' money and Leverage: used to significantly increase the returns that can be provided on an investment. They lever their investments by using various instruments, including options, futures, and margin accounts. The testes included approximately 506 Companies is S&P 500 and included tests like Fixed effect, Random Effect and regression analysis.
    • Sustainable Banking as a Driver for Growth in Saudi Arabia

      Tayachi, Tahar; Rafia, Sara; Finance (16/12/2022)
      The study emphasizes the importance of sustainable finance resources to transition from mainstream economic systems to responsible and resilient ones. The investigation on whether sustainable and ethical financial firms are more profitable or not in the long term was gathered through a designed questionnaire for participants. According to the study, most individuals believe that financial institutions would be better off in the long term by adopting sustainable policies.
    • Customer Satisfaction Between online and on-site banking services in Saudi Arabia

      Shaheen, Rozina; Alsakkaf, Doaa; Finance
      The banking industry is increasingly expanding it is use of online banking as an effective and viable platform for creating customer value. It is one of the common services provided by traditional banks in order to deliver reliable and convenient services to internet customers. With the exponential advancement of digital technologies as a commercial tool, Internet banking can be used to draw more consumers to make banking transactions in similar banks. However, the key issue that providers face with Internet banking is that a substantial number of bank clients are unable to use the Internet banking services that are available. This occurred because the services provided by Internet banking have yet to meet the needs of their customers. Customer’s satisfaction and preference are essential factors in a bank's ability to maintain a competitive advantage.