scholarly journals Investigating the Determinants of Nonperforming Loans in the Romanian Banking System: An Empirical Study with Reference to the Greek Crisis

2011 ◽  
Vol 2011 ◽  
pp. 1-13 ◽  
Author(s):  
Sofoklis D. Vogiazas ◽  
Eftychia Nikolaidou
Keyword(s):  
Interest Rates ◽  
Banking Sector ◽  
Banking System ◽  
Stress Tests ◽  
Nonperforming Loans ◽  
Greek Crisis ◽  
Time Series Modelling ◽  
Recent Financial Crisis ◽  
Greek Banks ◽  
The Impact

This paper aims to investigate the determinants of nonperforming loans in the Romanian banking sector by means of time series modelling. It is motivated by the hypothesis that macroeconomic-cyclical indicators, monetary aggregates, interest rates, financial markets, and bank-specific variables influence the nonperforming loans in the Romanian banking system. Using monthly series that span from December 2001 to November 2010, we cover both the booming period and the recent financial crisis. Given the significant presence of the Greek banks in Romania, the novelty of the paper lies in the introduction of variables that proxy the Greek crisis. Thus, we examine the existence of a potential transmission channel to the Romanian banking system by investigating the impact of the Greek crisis to the Romanian nonperforming loans. Our findings indicate that macroeconomic variables, specifically the construction and investment expenditure, the inflation and the unemployment rate, and the country's external debt to GDP and M2 jointly with Greek crisis-specific variables influence the credit risk of the Romanian banking system. The results have several implications for policymakers, regulators, and managers as the most recent published stress tests on the Romanian banking system are based on end 2008 data.

scholarly journals IMPACT OF MACROECONOMIC FACTORS IN NONPERFORMING LOANS IN KOSOVO

2019 ◽  
Vol 34 (1) ◽  
pp. 125-131
Author(s):  
Donjeta Morina
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
Influential Factors ◽  
Gdp Growth ◽  
Macroeconomic Factors ◽  
Nonperforming Loans ◽  
Macroeconomic Indicators ◽  
The Impact

An efficient and developed banking system is essential for the growth of any economy and the purpose of any banking system is to operate profitably in order to maintain sustainability and financial stability. Banks carry out many activities to make a profit, and the main activity of each bank is lending, thus enabling consumption and investment in the economy. Despite the importance of this activity in terms of income for banks, the lending process is not as easy as one might imagine. During this activity, banks faced delays from borrowers, which resulted in non-performing loans, as an obstacle to the efficiency of banking activities. The level of these loans varies from country to country and is nowadays considered as an integral part of the commercial banking of each country. There are many factors that directly or indirectly affect the level of these loans and the key influential factors are considered the macroeconomic factors. They are considered to be the main cause of the increase in non-performing loans as they generally affect all sectors of the economy. As a result of the negative reversal of these factors, borrowers will encounter liquidity shortages, which in turn will increase the likelihood of delays in fulfilling liabilities to the bank, in this case directly affecting the level of nonperforming loans. The key macroeconomic factors examined in the literature are Economic Growth, Unemployment, Inflation, Credit Interest Rates and Exchange Rates.The purpose of this paper is to analyze the impact of macroeconomic factors such as GDP Growth, Inflation, Interest Rates on credits and Unemployment on the level of non-performing loans in Kosovo by looking at macroeconomic indicators over the period 2010 - 2018. The purpose of this paper is to analyze the impact of macroeconomic factors such as GDP Growth, Inflation, Interest Rates on the credits and Unemployment on the level of non-performing loans in Kosovo by looking at macroeconomic indicators over the period 2010 - 2018. A multiple regression model was applied to see the effect of these factors on the level of non-performing loans in Kosovo over the years taken in the study. To realize the purpose of the study through this model are defined macroeconomic factors as independent variables as necessary for analysis and is seeing their impact in non-performing loans defined in study as the dependent variable. The results show that interest rates are considered as the main macroeconomic factor affecting the level of nonperforming loans in Kosovo and is the main factor positively related to this type of loans. In recent years, the decline of interest rates in the banking sector has had a positive impact on the decline of non-performing loans, which has increased the financial stability within this sector.

scholarly journals CREDIT AND INVESTMENT ACTIVITY IN THE CONDITIONS OF THE COVID-19 PANDEMIC

2020 ◽  
Vol 1 (3) ◽  
pp. 51-59
Author(s):  
P. P. Pastushenko ◽  
V. M. Vasylkovskyi
Keyword(s):  
Interest Rates ◽  
Global Economy ◽  
Banking Sector ◽  
Banking System ◽  
Economic Consequences ◽  
Investment Activity ◽  
Lending Activity ◽  
The Individual ◽  
Investment Process ◽  
The Impact

The article is devoted to the practical analysis of credit and investment activity in the conditions of the COVID-19 pandemic. A vision of the factors influencing the COVID- 19 pandemic on the global economy has been formed. The dynamics of issued loans is analyzed and the scale of lending activity is calculated. It is noted that the impact of the COVID-19 pandemic on lending occurs in the presence of the following risks: declining incomes of potential borrowers limit their ability to service loans, and there is uncertainty about the recovery of income of citizens and businesses in the near future; deteriorating creditworthiness of borrowers and increasing credit risk lead to higher interest rates on loans, which limits the demand for them; banks are tightening lending standards, including lowering limits on credit products; restriction of borrowers' mobility, which has become an obstacle to obtaining a loan and is absolutely critical for those of them who do not use remote banking; lack of capital in banks to increase lending. Areas of participation of banks in the investment process are highlighted: mobilization of funds by banks for investment purposes; providing loans of investment nature; investing in securities (both at the expense of the bank and on behalf of the client). The comparison of credit and investment activity is carried out. It is proved that the period of the COVID-19 pandemic did not significantly affect the credit and investment activities of the banking system of Ukraine. It is determined that the economic consequences of the pandemic and the slowdown in economic growth may further affect the banking sector of Ukraine, and this will require unprecedented action at both the individual and national levels. Further research involves identifying different scenarios.

scholarly journals The Impact of COVID-19 on Bank Equity and Performance: The Case of Central Eastern South European Countries

2021 ◽  
Vol 13 (19) ◽  
pp. 11036
Author(s):  
Sylwester Kozak
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Capital Requirements ◽  
Financial Supervision ◽  
Annual Data ◽  
Stress Tests ◽  
Global Database ◽  
Nonperforming Loans ◽  
Central Eastern ◽  
The Impact

The purpose of this article is to examine the impact of the shock increase, in the value of nonperforming loans, on the equity level and profitability of 141 banks in 18 countries of Central Eastern South Europe (CESE). This study is important for assessing the financial stability of banks in this region in the face of the continuing negative effects of the COVID-19 pandemic. Based on the annual data, as of the end of 2020, from the S&P Global database, stress tests were carried out to check what value of NPL growth, over the next year, will lead to breach the regulatory capital requirements in domestic sectors and in individual groups of banks. The results indicate that the banks in CESE were well capitalized and had the ability to maintain capital requirements with a 12% increase in nonperforming loans. The resilience of domestic banking sectors varies, and it is higher in non-EU countries. Smaller and non-public banks show a greater ability to preserve the appropriate level of equity, although there is a risk that they may postpone the time of provisioning credit risk and additionally increase lending to lower the NPL ratio. Larger banks are more profitable in times of crisis. The results of the research are important for assessing the stability of the banking sector in CESE during the crisis and can be used by financial supervision of the region’s countries and banking market analysts.

scholarly journals Monetary policy collision on the performance of banking sector in India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Belavadi Nikhil ◽  
Shivakumar Deene
Keyword(s):  
Monetary Policy ◽  
Public Sector ◽  
Central Bank ◽  
Interest Rates ◽  
Banking Sector ◽  
Banking System ◽  
Economic Situation ◽  
Content Type ◽  
Public Sector Banks ◽  
The Impact

Purpose The study aims to identify the impact of monetary policy tools on the performance of banks in India, and this could be an excellent suggestion to the regulators in framing the favourable interest rates which would meet the macroeconomic objectives of the Indian economy. Design/methodology/approach The design adopted in this study is descriptive and analytical research. Correlation and regression analysis is used to determine the relationship between bank rate (BR) and the performance of public sector banks in India. The sample chosen for this study is the public sector banks actively performing in India. Findings The performance is measured by taking three factors, and they are deposits, loans and advances (L&A) and total asset value of the banks. All three factors have shown an impact of BR on them during the five years. L&A affected the least amongst the three factors, but the other two were significantly impacted by the change in BR by the Reserve Bank of India. So, there should be a favourable fluctuation in the BR which will bring flexibility in the banking system, and they can perform well in the economy and the central bank also can concentrate on the macro-economic situation in the country. Originality/value This paper helps in giving suggestions to the Central bank, researchers, financial institutions to look into the financial performance and monetary policy rates and the central bank also can concentrate on the macro-economic situation in the country.

scholarly journals Capitalization of banks: theory, practice and directions of ensuring

2018 ◽  
Vol 13 (1) ◽  
pp. 173-183
Author(s):  
Mark Myronenko ◽  
Olena Polova ◽  
Olha Khaietska ◽  
Natalia Koval
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
System Stability ◽  
The World ◽  
Banking Institutions ◽  
Key Issues ◽  
Recent Financial Crisis ◽  
Domestic Banks ◽  
Banking Institution ◽  
The Impact

In the article, the essence of the concept of a banking institution “capitalization” is revealed. The current state of capitalization level of domestic banks is investigated. The directions of strengthening the capitalization are offered, which will increase the com¬petitiveness of domestic banking institutions in the world financial market and will ensure the national economy stability on the way toward integration into the world economy.It is proved that the prospects for the development of any bank are largely determined by its capitalization level. Lack of proper development inhibits both individual banks and the banking sector as a whole.In the context of the recent financial crisis, the provision of sufficient capital for banks has been one of the key issues, because the lack of capital was the greatest threat to the banking system stability. With this in mind, the issue of the banking system capitaliza¬tion is particularly topical.Today, the development of the Ukrainian banking system under economic instability has faced the increase in competitiveness of domestic banks compared with foreign ones, in order to preserve the national priorities of the banking system in general under conditions of foreign capital movement.The processes of concentration in the banking system of Ukraine are analyzed using Herfindahl-Hirschman index in terms of assets and equity, allowing to estimate the level of monopolization and, therefore, the impact on economic development. To con¬sider the increase in the level of capitalization and reliability of the banking institutions of Ukraine, it would be advisable, first of all, for banks to improve the quality of capital and to ensure a sufficient level of coverage of risks taken by banks.

scholarly journals Assessing the Impact of Corporate Governance Index on Financial Performance in the Romanian and Italian Banking Systems

2021 ◽  
Vol 13 (10) ◽  
pp. 5535
Author(s):  
Marco Benvenuto ◽  
Roxana Loredana Avram ◽  
Alexandru Avram ◽  
Carmine Viola
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Banking Sector ◽  
Research Question ◽  
Interactive Effect ◽  
Banking System ◽  
Capital Adequacy ◽  
Banking Systems ◽  
Governance Index ◽  
The Impact

Background: Our study aims to verify the impact of corporate governance index on financial performance, namely return on assets (ROA), general liquidity, capital adequacy and size of company expressed as total assets in the banking sector for both a developing and a developed country. In addition, we investigate the interactive effect of corporate governance on a homogenous and a heterogeneous banking system. These two banking systems were chosen in order to assess the impact of corporate governance on two distinct types of banking system: a homogenous one such as the Romanian one and a heterogeneous one such as the Italian one. The two systems are very distinct; the Romanian one is represented by only 34 banks, while the Italian one comprises more than 350 banks. Thus, our research question is how a modification in corporate governance legislation is influencing the two different banking systems. The research implication of our study is whether a modification in legislation, thus in the index of corporate governance, is feasible for two different banking sectors and what the best ways to increase the financial performance of banks are without compromising their resilience. Methods: Using survey data from the Italian and Romanian banking systems over the period 2007–2018, we find that the corporate governance has a significant, positive and long-lasting effect on profitability and capital adequacy in both countries. Results: Taking the size of the company into consideration, the impact of the Index of Corporate Governance (ICG) on a homogenous banking system is positive while the impact on a heterogeneous banking system is negative. Conclusions: Our study provides evidence of the impact of IGC on financial performance and sheds light on the importance of the size of the company. Therefore, one can state that the corporate governance principles applied do not encourage the growth of large banks in heterogeneous banking sectors, thereby suggesting new avenues of research associated with new perspectives.

IMPROVING THE EFFICIENCY OF USING INFORMATION AND COMMUNICATION TECHNOLOGIES IN THE BANKING SYSTEM

2021 ◽  
Vol 4 (4) ◽  
pp. 41-46
Author(s):  
Ra’no Parpieva ◽  
◽  
Nafisa Norboyeva ◽  
Adiba Turayeva
Keyword(s):  
Information And Communication Technologies ◽  
Information Technologies ◽  
Banking Sector ◽  
Banking System ◽  
Modern Society ◽  
Communication Technologies ◽  
Payment Systems ◽  
Information And Communication ◽  
Effective Use ◽  
The Impact

This article will serve to select the system required for the effective use of information and communication technologies in the banking system and the impact of national payment systems in the banking sector on modern society, the effective use of new modern information technologies in the system.Study of foreign experience to select information and communication technologies that should be used in modern banks with information and communication technologies in the banking system, which have been used before.

scholarly journals EVALUATION OF FUNCTIONAL PERFORMANCE OF THE BANKING SYSTEM OF UKRAINE IN CONDITIONS FINANCIAL INSTABILITY

2021 ◽  
Author(s):  
Nataliia Danik ◽  
Kateryna Novak ◽  
Anastasiia Yakovenko
Keyword(s):  
Economic Crisis ◽  
Financial Stability ◽  
Structural Changes ◽  
Banking Sector ◽  
Synergistic Effects ◽  
Banking System ◽  
Scientific Article ◽  
Financial Instability ◽  
Industrial Complex ◽  
The Impact

The article covers the problems of the functioning of the banking sector of Ukraine during 2018-2021, as one of the main sectors of the financial market and the national economy as a whole. When analyzing the state of the banking sector, regularities and general trends in the functioning of the banking sector of Ukraine have been established, and appropriate calculations have been made. The impact of global financial crises on the activities of banking structures, which must operate in conditions of constant financial instability, is described. Today, the whole world, including Ukraine, is on the verge of a global financial and economic crisis. This raises the question of whether Ukrainian banks have the necessary margin of resilience to vulnerabilities to the financial and economic crisis. In recent years, the functioning and development of the banking system has been characterized by increased financial stability, the level of bank capitalization, liquidity, some improvement in asset quality, reducing risks in banking, as well as the presence of positive structural changes. Today, Ukraine's banking system operates in a complex socio-economic and legal environment, most of which - macroeconomic instability, irrational structure of the industrial complex, the crisis of science and technology, imperfect fiscal and monetary policy, low level of effective demand - complicate sustainable development banking sector and increase competitiveness. In conditions of instability, intensification of turbulent processes, the development of the banking system requires new innovative approaches to determining the mechanisms of effective functioning and stable development based on a system-synergetic approach, which led to the choice and relevance of the chosen topic of this scientific article. Efficiency of banks is a multicomponent, multifaceted, multidimensional system characteristic that depends on many factors and is an effective indicator of performance of functions and achievement of goals and objectives of banks development provided financial stability based on financial stability and dynamic balance, achievement of multiplicative and synergistic effects.

scholarly journals PANDEMIC CRISIS AND ITS EFFECTS ON BULGARIAN BANKING SYSTEM’S EFFICIENCY

2021 ◽  
Author(s):  
Gergana Mihaylova-Borisova ◽  
Keyword(s):  
Growth Rate ◽  
Interest Rates ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Debt Crisis ◽  
Parametric Method ◽  
Banking System ◽  
Data Envelopment ◽  
The Global Financial Crisis

The economies are once again facing the challenges of another crisis related to the spread of coronavirus in 2020. The banking sector, being one of the main intermediaries in the economies, is also affected by the spread of the new crisis, which is different compared to the previous crises such as the global financial crisis in 2008 and the European debt crisis in 2012-2013. Still, the banking sector in Bulgaria suffers from the pandemic crisis due to decelerated growth rate of loans, provided to households and non-financial enterprises, as well as declining profits related to the narrowing spread between interest rates on loans and deposits. The pandemic crisis, which later turned into an economic one, is having a negative impact on the efficiency of the banking system. To prove the negative impact of the pandemic crisis on the efficiency of banks, the non-parametric method for measuring the efficiency, the so-called Data envelopment analysis (DEA), is used.

Sign in / Sign up

Export Citation Format

Share Document