scholarly journals Determinants of the credit risk in developing countries: a case of Kosovo banking sector

2017 ◽  
Vol 12 (4) ◽  
pp. 90-97 ◽  
Author(s):  
Jehona Shkodra ◽  
Hysen Ismajli
Keyword(s):  
Social Sciences ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
Risk Exposure ◽  
Limited Data ◽  
Limited Participation ◽  
Banking Systems ◽  
Statistical Program

The determinant of the credit risk of banks in a developing country have limited data to analyze and limited participation in literature. Determinants of credit risk are very important in order to define the non-performing loans (NPL) in Kosovo banking systems. Even though banking system in Kosovo is the newest in region, it is comparable with banking systems to all places in regions (Albania, Serbia, Montenegro, Macedonia, Bosnia and Herzegovina, etc.).The main purpose of this paper is to classify some factors that influence credit risk in commercial banks in Kosovo. The research includes seven commercial banks for the period 2006–2015. Data analysis and interpretation are processed with Statistical Program for Social Sciences SPSS v.19.0.The effect of variations in the determinants of credit risk exposure is based on using a multivariate panel regression model. Our empirical results suggest that a significant relationship exists between credit risk and the following variables: Profitability (ROE and ROA), Inefficiency (IE), Loans to deposit ratio (LDR), Credit growth (CG) and Deposit rate (DR), while variables of Solvency (SR) and Credit rate (CR) are not statistically significant in terms of credit risk.

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.

scholarly journals Analysis of The Influence of Liquidity, Credit and Operational Risk, in Indonesian Islamic Bank’s Financing for The Period 2007-2013

2015 ◽  
Vol 17 (3) ◽  
pp. 279 ◽  
Author(s):  
Ousmane Diallo ◽  
Tettet Fitrijanti ◽  
Nanny Dewi Tanzil
Keyword(s):  
Credit Risk ◽  
Causal Relationship ◽  
Risk Sharing ◽  
Banking Sector ◽  
Panel Data Analysis ◽  
Banking System ◽  
Liquidity Risk ◽  
Operational Risk ◽  
Islamic Banking ◽  
Islamic Bank

The purpose of this paper is to analyze the influence of credit, liquidity and operational risks in six Indonesian’s islamic banking financing products namely mudharabah, musyarakah, murabahah, istishna, ijarah and qardh, in order to try to discover whether or not Indonesian islamic banking is based on the “risk-sharing” system. This paper relies on a fixed effect model test based on the panel data analysis method, focusing on the period from 2007 to 2013. The research is an exploratory and descriptive study of all the Indonesian islamic banks that were operating in 2013. The results of this study show that the Islamic banking system in Indonesia truly has banking products based on “risk-sharing.” We found out that credit, operational and liquidity risks as a whole, have significant influence on mudarabah, musyarakah, murabahah, istishna, ijarah and qardh based financing. There is a correlation between the credit risk and mudarabah based financing, and no causal relationship between the credit risk and musharaka, murabahah, ijarah, istishna and qardh based financing. There is also correlation between the operational risk and mudarabah and murabahah based financing, and no causal relationship between the operational risk and musharaka, istishna, ijarah and qardh based financing. There is correlation between the liquidity risk and istishna based financing, and no causal relationship between the liquidity risk and musharaka, mudarabah, murabahah, ijarah and qardh based financing. A major implication of this study is the fact that there is no causal relationship between the credit risk and musharakah based financing, which is the mode of financing where the islamic bank shares the risk with its clients, but there is an influence of credit risk toward mudarabah mode financing, a financing mode where the Islamic bank bears all the risk. These findings can lead us to conclude that the Indonesian Islamic banking sector is based on the “risk sharing” system.

scholarly journals Political risk and banking sector performance in Nigeria

2021 ◽  
Vol 16 (3) ◽  
pp. 1-12
Author(s):  
Adefemi A. Obalade ◽  
Babatunde Lawrence ◽  
Joseph Olorunfemi Akande
Keyword(s):  
Credit Risk ◽  
Stock Price ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Banking System ◽  
Political Risk ◽  
Political Systems ◽  
Business Outcomes ◽  
Stage System ◽  
The Stability

Political risk is prevalent in Nigeria and tends to influence business outcomes and the stability of the banking system. As a result of this study, it was determined whether political risk matters to the performance of the banking sector in Nigeria. The effect of political risk on different banks’ performance measures, such as return on assets, return on invested capital, credit risk and stock price, were examined in a panel of 12 selected commercial banks for the period 2006–2018. Data was analyzed using a two-stage system of generalized method of moments. The results provided evidence that the effect of political risk on bank performance depends on the performance proxies. Specifically, political risk was found to be negatively related to banks’ returns on invested capital and positively related to deteriorating credit risk. Hence, it can be concluded that political risk induces poor banking system performance in Nigeria. The study provides a critical insight into the management of a country’s political systems in terms of their potential to create unfavorable conditions for banking systems to thrive.

scholarly journals COMPETITION OF TRANSNATIONAL BANKS: MAIN TRENDS AND WAYS OF DEVELOPMENT

2021 ◽  
pp. 151-157
Author(s):  
Надежда Константиновна Савельева ◽  
Татьяна Алексеевна Тимкина
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
Competitive Advantages ◽  
International Banking ◽  
Statistical Research ◽  
Cross Border ◽  
The World ◽  
Financial Transactions ◽  
Level Analysis

Статья посвящена проблемам сохранения конкурентных преимуществ коммерческих банков для осуществления финансовых операций на трансграничных рынках. Целью исследования является анализ основных тенденций развития деятельности транснациональных банков в условиях глобализации. Объектом исследования являются мировые лидеры международной банковской сферы. Научная новизна заключается в разработке основных направлений развития банковской системы на международном уровне, результатах анализа опыта лидирующих транснациональных банковских компаний в условиях пандемии The article is devoted to the problems of maintaining the competitive advantages of commercial banks for the implementation of financial transactions in cross-border markets. The aim of the study is to analyze the main trends in the development of the work of transnational banks in the context of globalization. The object of research is the world leaders of the international banking sector. In the process of research, the authors have analyzed theoretical and practical material used in general methods of scientific knowledge and statistical research. Scientific novelty lies in the development of the main directions for the development of the banking system at the international level, analysis of the experience of leading transnational banking companies in the context of a pandemic.

scholarly journals Improved forecast assessment for the expected credit losses in credit risk monitoring in commercial banks in the context of international and Russian practices

2020 ◽  
Vol 15 (3) ◽  
pp. 445-457
Author(s):  
Elena Vladimirovna Travkina ◽  
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Assessment Model ◽  
Financial Instruments ◽  
Credit Risk Assessment ◽  
Ifrs 9 ◽  
Credit Losses

Current banking sector’s performance raises the issues connected with the IFRS 9 Financial Instruments driven transformation of the forecast assessment for the expected credit losses during monitoring and credit risk assessment in commercial banks. In this regard, it becomes important to conduct a comprehensive systematization of the existing Russian and international practices for monitoring and evaluating credit risk in commercial banks. The purpose of the study is to develop a comprehensive approach to the use of an effective model for the impairment of expected losses in banking activities. The novelty of the study includes the enhancement of the tools for the forecast assessment of the expected credit losses among the commercial banks’ clients to improve the credit risk management efficiency. The results from the implementation of IFRS 9 Financial Instruments in the banking area show that modern conditions maintain the uncertainty of the long-term impact of the credit risk on the commercial banks’ performance. What is more, a huge amount of additional information gives significant difficulties, which contributes into the sophisticated calculations of the future credit losses of the banks. It has been justified that a forecast assessment model for the expected credit losses of the clients during the monitoring and bank’s credit risk assessment should be based on the collective or individual ground. The efficient application of the expected losses impairment in the banking performance has been described as a fundamental tool to simulate the expected credit losses to provision for impairment. This model has been shown to be determined by the features of the credit activities and bank portfolio, types of its financial tools, sources of the available information, as well as the applied IT systems. The proposed model validation algorithm for the expected impairment losses could reduce the expected credit losses, decrease the volume of the created assessed reserves, as well as improve the overall commercial bank performance efficiency. Theoretically, the study develops the credit losses risk management in the context of the transformations in the global and Russian banking practices. From the perspective of the practical value, the research gives an opportunity to create an efficient forecast assessment model for the expected credit losses of the commercial banks’ clients, this model contributing into the cost effectiveness of the bank’s credit activities. A promising further research is considered to be aimed at developing the tools for the assessment of the commercial banks’ credit activity results in the context of the adopted changes connected with the introduction of IFRS 9 Financial Instruments in the Russian banking sector.

scholarly journals The Effect of Risks on Banking Safety: Applied Study on Jordanian Traditional Banks (2005-2016)

2017 ◽  
Vol 9 (9) ◽  
pp. 102
Author(s):  
Mohammad Abdel Mohsen Al-Afeef ◽  
Atallah Hassan Al-Ta'ani
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Liquidity Risk ◽  
Interest Rate Risk ◽  
Bank Credit ◽  
Applied Study ◽  
Rate Risk ◽  
The Impact

Banking sector is one of the most important sectors that support the sustainable economic development in Jordan, therefore this study aimed to test the impact of risks; (Liquidity risk, bank credit risk and interest rate risk) on the safety in the banking sector in the Jordanian commercial banks during the period 2005-2016.The results of the study showed that there is a statistically significant impact for each of liquidity risk and interest rate risk on the safety in the banking sector, and there isn't statistically significant impact for credit risk on the safety in the banking sector during the period of this study, and also find that the explanatory of model was 60.5%, which means that 39.5% due to other factors.

scholarly journals Revenue Diversification, Risk and Bank Performance of Vietnamese Commercial Banks

2019 ◽  
Vol 12 (3) ◽  
pp. 138 ◽  
Author(s):  
Ngoc Nguyen
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
Transformation Model ◽  
Annual Reports ◽  
Bank Performance ◽  
Method Of Moment ◽  
Revenue Diversification ◽  
Interest Income ◽  
Using Data

In the future, when the process of economic integration in the banking sector is more powerful, and competitive, diversifying revenue is an inevitable and objective trend to help the banks increase profits, minimize risks and improve their competitive position in the system. The research is on the relationship between revenue diversification, risk and bank performance using data from audited financial statements and annual reports of 26 commercial banks listed and unlisted in Vietnam during the period 2010–2018. The research method uses Generalized Method of Moment (GMM) modeling techniques to solve endogenous problems, variance and autocorrelation in the research model. Research results show that diversification negatively impacts profitability and the higher the diversification, the higher the risk of commercial banks. However, the more diversified listed banks, the more increased the bank’s stability. The banks show the weakness and lack of experience of the banking system in developing a reasonable profit transformation model. The revenue diversification of banks is currently passive and moves slowly. Interest income is still the motivation of bank development, boosting profit growth. Growth, as well as the contribution from service activities, is not commensurate with potentials; although there are many positive points, they are not enough to cover risks from net interest income activities.

scholarly journals The Threats of Unsystematic Risks in Jordanian Commercial Banking Sector

2017 ◽  
Vol 9 (9) ◽  
pp. 175
Author(s):  
Ghaith N. Al-Eitan ◽  
Ismail Y. Yamin
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Fixed Effect Model ◽  
Commercial Banking ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Effect Model ◽  
The Impact ◽  
The Empirical Analysis

The objective of this study is to empirically examine the effect of unsystematic risks on the performance of commercial banks in Jordan, using panel data for the period of 10 years (2005-2015). The study uses earning per share and dividends as dependent variables to represent Banks’ performance. The empirical analysis based on the fixed effect model selected on the basis of Hausman test. The results indicate that the impact of Non-performing loans on commercial banks’ dividends is positive and significant while the impact of capital adequacy is negative and statistically significant on dividends. The results indicate that the credit risk, liquidity risk, non-performing loan and capital adequacy have significant effect on earnings per share and the effects are negative as expected. Based on the study it is recommended that the Jordanian commercial banks needs enhance the process of credit risk management to determine loan defaulter and impose the appropriate legal action against them.

scholarly journals Analysis of the Relationship between Credit Risk and Bank Performance of Some Commercial Banks in Ghana

2020 ◽  
Vol 8 (2) ◽  
pp. 34-51
Author(s):  
Joseph Acquah ◽  
Yusif Arthur ◽  
Damianus Kofi Owusu
Keyword(s):  
Credit Risk ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Quantitative Research ◽  
Banking Sector ◽  
Sampling Technique ◽  
Capital Adequacy ◽  
Research Approach ◽  
Independent Entity ◽  
The Relationship

This study analysed the relationship between credit risk and bank financial performance of selected commercial banks in Ghana for the period 2010 - 2014, using the banks respective financial statements. The study employed the quantitative research approach. The sample was Ghana Commercial Bank Limited, Zenith Bank Limited, UT Bank and Ecobank Plc. These four banks were selected using stratified random sampling technique. The data were primarily secondary and quantitative in nature. Both descriptive and inferential statistics were used to analyse the data. When the banks were compared, Ghana Commercial Bank Limited was found to be more liquid than Zenith Bank Limited. That of Zenith bank was also higher than UT bank and Ecobank Plc .However, profitability indicators showed that Zenith Bank Limited and Ecobank Plc utilised its assets better than Ghana Commercial Bank Limited and UT bank resulting in the two banks higher scores over the period. The findings show further that Ghana Commercial Bank Limited showed higher ratios for investment in the future while Zenith Bank Limited showed higher ratios of higher dividend immediately. However, Zenith Bank Limited capital adequacy level was far higher than the legal requirement of Banking sector while its counterparts fell slightly below it in terms of average. Based on the main findings and conclusions, it is recommended that Ghana Commercial Bank Limited should find a means of reducing its expenditure, introducing prudent assets management, should be cautious when assisting government in time of economic difficulty, and operate as an independent entity.

scholarly journals Management and Organization Issues of the Banking Sector in Kyrgyzstan

2017 ◽  
Author(s):  
Celaleddin Serinkan
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
General Information ◽  
Senior Management ◽  
Effective Management ◽  
Short Term ◽  
Measurement Tools ◽  
Staff Recruitment ◽  
And Training

The banking system is an integral part of contemporary economy. There are many reasons behind the success of the banks. One of the most important of these reasons is the development of effective management and organization in the banks. This study has been applied to commercial banks in Kyrgyzstan banking sector. The aim of this study is to identify the problems of commercial banks in Kyrgyzstan and to contribute to new work on their solution. The main issues such as planning, organization, decision making, human resources and training related to management and organizational problems of the enterprises in the study are discussed. Besides the general information about the research, the research method, sampling and measurement tools are given. Findings from the questionnaires were evaluated on the percentage (%) and frequency (f). In the results obtained, it was observed that commercial banks were making short-term plans and staff recruitment was dependent on management. It has been understood that senior management does not resort to employees' opinions when making a decision.

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