scholarly journals DETERMINANTS OF NON-PERFORMING LOANS: EVIDENCE FROM CONVENTIONAL BANKS IN MALAYSIA

2020 ◽  
Vol 8 (2) ◽  
pp. 423-430 ◽  
Author(s):  
Eni Noreni Mohamad Zain ◽  
Puspa Liza Ghazali ◽  
Wan Mohd Nazri Wan Daud
Keyword(s):  
Exchange Rate ◽  
Data Streams ◽  
Commercial Banks ◽  
Negative Relationship ◽  
Real Effective Exchange Rate ◽  
The Real ◽  
Significant Negative Relationship ◽  
Effective Exchange ◽  
Conventional Banks ◽  
Effective Exchange Rate

Purpose of the study: This paper attempts to determine the determinants of non-performing loans in commercial banks in Malaysia. This study attempts to explore the specific bank factors as well as macroeconomics factors that are contributing to the non-performing loans. Methodology: This paper analyzes the data using eight local commercial banks in Malaysia. The data collected from the annual report and Data Streams database for the year 2009 to 2018. A panel data approach has been used to analyze the data. All the determinants regressed against non-performing loans by using STATA 14 as a tool. Main Findings: The results of this study present that capitalization had a significant negative relationship with non-performing loans, while the real effective exchange rate had a significant positive correlation with non-performing loans. Applications of this study: This study highlights the crucial factors of the non-performing loans that can be used by the bank or financial institutions. Novelty/Originality of this study: This study includes one new variable for the macroeconomics factors, which is the real effective exchange rate, and the result shows it is significant towards non-performing loans. Therefore, this study enhances the existing model with the new variable that can be used to find what is affecting the non-performing loans.

scholarly journals Equilibrium Real Exchange Rate and Misalignment: The Sierra Leone Perspective

2021 ◽  
Vol 8 (3) ◽  
pp. 41
Author(s):  
Abu Bakarr TARAWALIE
Keyword(s):  
Exchange Rate ◽  
Sierra Leone ◽  
Government Expenditure ◽  
Unit Root Test ◽  
Real Effective Exchange Rate ◽  
The Real ◽  
Long Run ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
Long Run Equilibrium

This paper estimates the equilibrium real effective exchange rate and determine the level of exchange rate misalignment in Sierra Leone, for the period 1980 to 2018. The paper utilizes the behavioral equilibrium exchange rate methodology within the Johansen maximum likelihood framework to estimate the long run equilibrium real effective exchange rate. The unit root test result shows that all the variables are integrated of order one, whilst the cointegration test establishes the existence of one cointegrating vector as evidenced by both the Trace and Maximum Eigen Statistics. The normalized long run results reveal that openness, government expenditure and money supply were the most significant determinants of the real effective exchange rate in the long run. Furthermore, the findings reveal that the real effective exchange rate experienced sustained deviation from the long run equilibrium real effective exchange rate during the study period, with episodes of overvaluation and undervaluation. Specifically, the real effective exchange rate was overvalued by 3.69 percent during the period between 1980-1985; undervalued by 1.8 percent between 1986-1997, and overvalued by 0.9 percent between 1998-2004, Thus, the paper reveals episodes of misalignment of the real effective exchange rate. Based on these findings, the study recommends that, the monetary authorities should ensure stability of the exchange rate and maintain price stability, through sterilization of capital flows as well as contain money growth within the statutory limit.

scholarly journals Portfolio Investment Flows, GDP, and Investment in Brazil

2016 ◽  
Vol 8 (12) ◽  
pp. 1
Author(s):  
Roberto Meurer
Keyword(s):  
Exchange Rate ◽  
Correlation Coefficients ◽  
Strong Relationship ◽  
Production Costs ◽  
Real Effective Exchange Rate ◽  
Portfolio Investment ◽  
The Real ◽  
Financial Variables ◽  
Effective Exchange ◽  
Effective Exchange Rate

Foreign portfolio investment (FPI) flows have grown substantially in recent decades, following changes in the international financial system. In Brazil, FPI represented 66% of foreign direct investment between 1995 and 2009, which makes it meaningful to analyze these flows. In this paper, the relationships between FPI flows to Brazil, GDP, investment, and financial variables from 1995 to 2009 are analyzed, employing quarterly data and applying descriptive statistics, correlation coefficients, and Granger causality tests. Results show a positive relationship between flows, GDP, and investment. Relationships between flows and financial variables show a strong relationship between FPI and the real effective exchange rate, which could be one of the channels through which the flows are related to real variables by means of changes in relative domestic and foreign production costs. Expectations about future behavior of the economy seem to be an important explanation for the relationship between flows and the real variables. Because FPI is volatile and this volatility relates to real variables through the real effective exchange rate and the interest rate, there is a case to be made for the implementation of capital controls.

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