scholarly journals Factors affecting the Risk-taking Behavior of Commercial Banks in Bangladesh

2015 ◽  
Vol 1 (2) ◽  
pp. 96 ◽  
Author(s):  
Mohammad Morshedur Rahman ◽  
Kazi Mohammed Kamal Uddin ◽  
Syed Moudud-Ul-Huq
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Balance Sheet ◽  
Bank Risk ◽  
Capital Regulation ◽  
Dividend Payout ◽  
Macroeconomic Variables ◽  
Negative Relation ◽  
Charter Value ◽  
Overall Risk

This study examines the capital regulation, profitability, bank size, liquidity, off-balance sheet activities, charter value, dividend payout ratio and macroeconomic variables as determinants of bank risk (credit risk and overall risk) by using information from 30 Bangladeshi commercial banks over a period of 2005-2013. We use Generalized Methods of Moments (GMM) in a balanced dynamic panel data framework. The empirical results show a negative relation between credit risk and capital regulation and a mixed relation between overall risk and capital regulation. We find a negative relation between credit risk and profitability and a positive relation between overall risk and profitability. The results also show that larger banks take higher credit and overall risk. It is also evident that off-balance sheet activities are positively related with both credit and overall risk. We also find that banks with high liquidity take more credit risk. Negative association is found between credit risk and charter value and mixed evidence is found on the relationship between charter value and overall risk. We also observe that dividend payout ratio is not an important factor of bank risk. With regard to the impact of macroeconomic variables we find no significant impact on risk. Finally we find that lagged risk is an important determinant of bank risk.

OFF-BALANCE SHEET ACTIVITIES AND BANK RISKS: AN INVESTIGATION OF THE LISTED COMMERCIAL BANKS IN CHINA (1999–2013)

2015 ◽  
Vol 10 (01) ◽  
pp. 1550004 ◽  
Author(s):  
KANGWEI YE
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Balance Sheet ◽  
Test Results ◽  
Bankruptcy Risk ◽  
Risk Characteristics ◽  
The Relationship ◽  
The Empirical Analysis ◽  
Bank Risks ◽  
Overall Risk

Based on a broad set of 16 listed commercial banks in China during the period 1999–2013, this paper makes the empirical analysis of the relationship between the development of off-balance sheet (OBS) activities and the banks' overall risk, bankruptcy risk and credit risk. Innovation of this article is mainly reflected in: (1) Considering different types of risk variables, it gives a more comprehensive disclosure of the bank's risk characteristics. (2) Dividing the research object into joint-stock commercial banks and state-owned commercial banks, and get some new test results: The development of OBS business of state-owned commercial banks increases the overall risk, bankruptcy risk and credit risk significantly. While in joint-stock commercial banks sample, the development of OBS business reduces the overall risk significantly.

scholarly journals Effects of Bank Capital on Profitability and Credit Risk: The Case of Vietnam's Commercial Banks

2016 ◽  
Vol 23 (04) ◽  
pp. 117-137
Author(s):  
Vinh Nguyen Thi Hong ◽  
Thao Le Phan Thi Dieu
Keyword(s):  
Moral Hazard ◽  
Credit Risk ◽  
Method Of Moments ◽  
Commercial Banks ◽  
Generalized Method Of Moments ◽  
Bank Risk ◽  
Bank Capital ◽  
Negatively Associated

This paper seeks to examine the effects of bank capital on profitability and credit risk of 30 Vietnam’s commercial banks from 2007 to 2014. Using the system generalized method of moments (GMM), the paper conducts several tests on the moral hazard and regulatory hypotheses on the relationships among bank capital, profitability, and credit risk. With no regard to other determinants, its results indicate that the effects are evident, i.e. bank risk is found to impact differently on bank returns, and it is also negatively associated with credit risk of commercial banks in Vietnam.

scholarly journals The Effects Of Ownership Structure And Listed Status On Bank Risk In China

2013 ◽  
Vol 29 (3) ◽  
pp. 695 ◽  
Author(s):  
Maoyong Cheng ◽  
Hong Zhao ◽  
Junrui Zhang
Keyword(s):  
Regression Analysis ◽  
Credit Risk ◽  
Ownership Structure ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Capital Adequacy Ratio ◽  
Asset Quality ◽  
Relationship Of ◽  
The Relationship

This paper investigates the relationship of ownership structure, listed status and risk by using regression analysis based on the relevant data of Chinas commercial banks. Three main results emerge. First, compared to the state-owned banks, foreign-owned commercial banks exhibit better asset quality, lower credit risk and higher capital adequacy ratio; city commercial banks have lower credit risk and joint-stock commercial banks have lower credit risk and capital adequacy ratio. Second, listed status improves the asset quality and capital adequacy ratio. Finally, we also find that the listed status significantly moderates the relationship between ownership structure and risk. In conclusion, this study provides a theoretical reference for the reform of Chinas commercial banks.

scholarly journals Impact of credit risk (NPLs) and capital on liquidity risk of Malaysian banks

2017 ◽  
Author(s):  
Yaman Hajja
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Positive Relationship ◽  
Liquidity Risk ◽  
Dynamic Panel Data ◽  
Bank Capital ◽  
Dynamic Panel ◽  
Macroeconomic Variables ◽  
The Impact ◽  
The Relationship

We investigate the relationship between bank liquidity risk and credit risk and the impact of bank capital on liquidity risk. Using 19 Malaysian commercial banks data over 2002-2011 and applying dynamic panel data GMM estimation after controlling for bank-specific and macroeconomic variables, empirical results document a positive relationship between liquidity and credit risk and a non-linear U-shaped relationship between bank capital and liquidity risk.

scholarly journals The Impact of Business Scale of “Shadow Banking” on Credit Risk of Commercial Banks --Take Ten Domestic Listed Commercial Banks as Examples

2017 ◽  
Vol 9 (5) ◽  
pp. 94 ◽  
Author(s):  
Sijia Wen ◽  
Jishan Ma ◽  
Yawen Pan ◽  
Yuan Qi ◽  
Ruizhi Xiong
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Balance Sheet ◽  
Commercial Banking ◽  
Shadow Banking ◽  
Financial Products ◽  
Banking Business ◽  
The Government ◽  
Definition Of ◽  
The Impact

In this article, according to search for the definition of shadow banking, we can make sure the business kinds of “shadow banking”, discuss the influence of business in “shadow banking” on credit risk of commercial banks, and study the elements which may increase the credit risk of commercial banks by using the semi-annual panel data during 2011-2016 of 10 listed banks. Then we can come to some primary conclusions: The credit risk of commercial banks is related to the shadow banking business. All the survival scale increment of financial products increasing, the size of entrusted loans increasing in increment, and the increasing in the size of guarantee commitments will increase the credit risk of commercial banks. There is no obvious relationship between trust loan business and bank credit risk. Our study is of great significance for the government to supervise the off-balance-sheet business of commercial banks. At the same time, it also fills the vacancy of domestic commercial banking “shadow banking” business empirical research.

Capital regulation and ownership structure on bank risk

2019 ◽  
Vol 28 (1) ◽  
pp. 39-56 ◽  
Author(s):  
Aysa Siddika ◽  
Razali Haron
Keyword(s):  
Maximum Likelihood ◽  
Ownership Structure ◽  
Risk Taking ◽  
Commercial Banks ◽  
Dynamic Panel Data ◽  
Bank Risk ◽  
Capital Regulation ◽  
Content Type ◽  
Global Banking ◽  
The Impact

Purpose This paper aims to examine the impact of capital regulation, ownership structure and the degree of ownership concentration on the risk of commercial banks. Design/methodology/approach This study uses a sample of 565 commercial banks from 52 countries over the period of 2011-2015. A dynamic panel data model estimation using the maximum likelihood with structural equation modelling (SEM) was followed considering the panel nature of this study. Findings The study found that the increase of capital ratio decreases bank risk and the regulatory pressure increases the risk-taking of the bank. No statistically significant relationship between banks’ ownership structure and risk-taking was found. The concentration of ownership was found negatively associated with bank risk. Finally, the study found that in the long term, bank increases the capital level that decreases the default risk. Originality/value This study presents an empirical analysis on the global banking system focusing on the Basel Committee member and non-member countries that reflect the implementation of Basel II and Basel III. Therefore, it helps fill the gap in the banking literature on the effect of recent changes in the capital regulation on bank risk. Maximum likelihood with SEM addresses the issue of endogeneity, efficiency and time-invariant variables. Moreover, this study measures the risk by different proxy variables that address total, default and liquidity risks of the banks. Examining from a different perspective of risk makes the study more robust.

scholarly journals Credit Risk Management and Sub-Standard Loans of Commercial Banks in Nigeria: A Panel Data Analysis

2021 ◽  
Vol 2 (3) ◽  
pp. 169-190
Author(s):  
Anele Andrew Nwosi ◽  
Akani Elfreda Nwakaego
Keyword(s):  
Risk Management ◽  
Panel Data ◽  
Credit Risk ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Bank Risk ◽  
Credit Risk Management ◽  
Loan Portfolio ◽  
Risk Diversification ◽  
Risk Transfer

This study examined the effect of credit risk management on sub-standard loan portfolio of quoted commercial banks in Nigeria. Cross sectional data was sourced from financial statement of commercial banks and Central Bank of Nigeria Statistical bulletin from 2009-2018. Sub-standard portfolio was used as dependent variable while bank risk diversification, Basel risk compliance, risk transfer were used as independent variables. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study.   The empirical results proved that 41.7 per cent variations in the sub-sub-standard loans’ portfolio   was explained by credit risk management. From the random effect results, bank risk transfer and Basel compliance have positive relationship with sub-standard loan portfolio while risk bank risk diversification have negative relationship with sub-stand ad loan portfolio of the commercial banks.  We recommend that management of the commercial banks should be pro-active and devise effective measures of managing credit risk to reduce the incidence of sub-standard loans.  The monetary authority should monitor the Basel compliance rate and policies of the commercial banks to credit risk management

scholarly journals CREDIT DERIVATIVES IN BANKING: BENEFITS AND THREATS

2020 ◽  
Vol 3 (47) ◽  
pp. 7-16
Author(s):  
Anastasiia Petruk ◽  
Roman Stadniichuk
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Credit Derivatives ◽  
Third Party ◽  
Financial Instruments ◽  
Negative Consequences ◽  
Advantages And Disadvantages

Financial institutions have faced a variety of threats, the main reasons for which are weak lending standards, ineffective risk evaluation of the loan portfolio, lack of attention to economic and other factors that can affect the creditworthiness of bank counterparties. Thus, among various threats, credit risk, caused by lending, remains the main source of problems for commercial banks. However, globalization and liberalization of the global financial system has led to the appearance of other sources, including trade and investment transactions, which are reflected both on the balance sheet and off-balance sheet. Banks are increasingly faced with credit risk in other financial operations – for example, with derivative financial instruments. Effective credit risk management is a critically important component of the comprehensive approach to risk management and the long-term success of a banking organization. The use of financial instruments that allows commercial banks to transfer credit risk to a third party for a fee and, thus, avoid the additional costs for forming reserves, has become one of the ways to prevent negative consequences. However, despite the many advantages associated with the risk hedging, credit derivatives, like other financial innovations, pose additional risks directly related to the application of these instruments. For example, these risks have manifested themselves in the global financial crisis of 2008-2009 and minimized the positive effect of the credit derivatives. This article discusses the advantages and disadvantages of using credit derivatives by commercial banks, shows the need for timely identification of probable risks and the development of effective methods for managing them by both the risk management of the bank and regulators.

Sign in / Sign up

Export Citation Format

Share Document