scholarly journals ASSESSMENT OF CREDIT RISK IN NEPALI COMMERCIAL BANKS

2018 ◽  
Vol 3 (3) ◽  
pp. 65 ◽  
Author(s):  
Shiva Raj Poudel
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Negative Impact ◽  
Positive Impact ◽  
Panel Data Analysis ◽  
Fixed Effect Model ◽  
Capital Adequacy ◽  
Gdp Growth ◽  
Capital Adequacy Ratio

The main objective of the study is to identify the major indicators of credit risk among the Nepali commercial banks. The study is conducted using the sample of 15 commercial banks operated in Nepali economy. One way Fixed Effect Model (FEM) of panel data analysis is used as a major tool of analysis. All the data for the study were obtained from the database of Nepal Rastra Bank for bank specific variables and database of World Bank for macroeconomic variables for the year 2002/03 to 2014/15. The credit risk among the commercial banks in Nepal was regressed on bank specific variables such as liquidity, capital adequacy ratio, bank size, and interest spread. Similarly, the effects of macro-economic variables such as GDP growth, rate of inflation and interbank interest rate were also examined along with bank specific variables in identifying credit risk in Nepali commercial banks. The study reveals that liquidity has the significant positive impact on credit risk in Nepali commercial banks. In contrast, capital adequacy ratio and interest spread have the significant negative impact on credit risk. The analysis further confirmed that bank size and interest spread both have no any clear direction of impact on credit risk. Moving towards the GDP growth, credit risk in Nepali commercial banks is negatively fluctuates with GDP growth, however, the statistics show the coefficients are insignificant at 5% level. Contrarily, Inter-bank interest rate has insignificant negative impact on credit risk in Nepali commercial banks.

scholarly journals IMPACT OF CREDIT RISK ON PROFITABILITY OF COMMERCIAL BANKS IN NEPAL

2018 ◽  
Vol 3 (6) ◽  
pp. 161
Author(s):  
Shiva Raj Poudel
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Negative Impact ◽  
Positive Impact ◽  
Panel Data Analysis ◽  
Fixed Effect Model ◽  
Capital Adequacy ◽  
Return On Equity ◽  
Significant Negative Impact ◽  
The Impact

The main purpose of the study was to examine the impact of credit risk on profitability of the commercial banks in Nepal. Data were collected from the sample of 15 commercial banks operated in Nepali economy for the period of 2002/03 to 2014/15. One way Fixed Effect Model (FEM) of panel data analysis is used as a major tool of analysis. The profitability of the commercial banks is measured in terms of return on equity and is regressed on bank specific variables and macro-economic variables. The results confirmed that credit risk has the significant negative impact on profitability of commercial banks in Nepal. In addition, solvency ratio, interest spread rate, and inflation have the insignificant negative impact on profitability. In contrast, capital adequacy ratio, total assets, and GDP growth have the significant positive impact on profitability of commercial banks in Nepal. Finally, inter-bank interest rate has insignificant positive impact on profitability.

scholarly journals PENGARUH RISIKO KREDIT, MINIMALISASI RISIKO, PERTUMBUHAN PRODUK DOMESTIK BRUTO, DAN INFLASI TERHADAP PENDAPATAN BUNGA BERSIH PADA PERUSAHAAN PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2013-2016

2020 ◽  
Vol 7 (1) ◽  
pp. 23
Author(s):  
Devi Widyawati ◽  
Desta Rizky Kusuma
Keyword(s):  
Risk Aversion ◽  
Credit Risk ◽  
Sampling Method ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Gdp Growth ◽  
Panel Regression ◽  
Net Interest Margin ◽  
Capital Adequacy Ratio ◽  
The Impact

The aim of this research is to examine empirically the impact of credit risk, risk aversion, gross domestic product (GDP) growth, and inflation to Net Interest Margin on banking companies enlisted in BEI year 2013-2016. The factors that influenced NIM is credit risk which is proxied with NPL (Non Performing Loan) ratio, risk aversion which is proxied with CAR (Capital Adequacy Ratio), GDP growth and inflation. The period used is from 2013-2016.This research is causal research, that is to find recausality of independent and dependent variable. The population is 42 banking companies. The sampling method used is purposive sampling method. Based on the criteria, there are 41 banking companies. The hypothesis trial is done by the analysis of data panel regression an before do it, the research did a classic assumption trial. The result of hypothesis trial is done partially is t-test showed that NPL has t-statistic score is 1,4136 and t-tabel score is 1,290 on alpha 10% , so NPL has positive impact to NIM. CAR has t-statistic score is -0,2698 and t-tabel score is 1,290 on alpha 10%, so CAR doesn’t have impact to NIM. GDP growth has t-statistic score is 2,9349 and t-tabel score has 1,290 on alpha 10%, so GDP growth has positive impact to NIM. Inflation has t-statistic -0,5184 and t-tabel score is 1,290 on alpha 10%, so inflation doesn’t have impact to NIM.

scholarly journals The Effect of Capital Adequacy on Returns of Assets of Commercial Banks in Kosovo

2019 ◽  
Vol 8 (2) ◽  
pp. 201
Author(s):  
Halit Shabani ◽  
Fisnik Morina ◽  
Valdrin Misiri
Keyword(s):  
Commercial Banks ◽  
Fixed Effects ◽  
Banking Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Financial Institution ◽  
Banking System ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Capital Adequacy Ratio

The purpose of this study is to analyze the effects of capital adequacy on the return of assets to the banking sector in Kosovo. The capital adequacy ratio measures the ability of a financial institution to meet its liabilities by comparing its capital with its assets. As the banking system is one of the strongest points of our country's economy, it is understood that the capital adequacy ratio is used by banks to determine the adequacy of their capital holdings while taking their risk exposures into account.This study will provide empirical evidence of the relationship between capital adequacy and return on commercial bank assets in Kosovo during 2008-2017. It will be using secondary data obtained from audited reports of domestic banks and reports from the Central Bank of Kosovo. To measure the empirical results during this research, these econometric methods have been used: the linear regression model, the model of the fixed effects, and the random model and the GMM model. Based on the results we can conclude that capital adequacy has a positive impact on asset returns and has a significant relationship. In addition, other factors have had a positive and negative impact on the return of commercial banks' assets in Kosovo. Keywords: capital adequacy, return on assets, loans, deposits, interest rates.JEL Classification: G21, G31, G32

scholarly journals Loan Loss Provision and Risk-Taking Behavior of Commercial Banks in Pakistan: A Dynamic GMM Approach

2019 ◽  
Vol 11 (19) ◽  
pp. 5209 ◽  
Author(s):  
Changjun Zheng ◽  
Shumaila Meer Perhiar ◽  
Naeem Gul Gilal ◽  
Faheem Gul Gilal
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Risk Taking ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Capital Adequacy Ratio ◽  
Risk Taking Behavior

The paper analyzes the determinants of the loan loss provision (LLP) of 22 commercial banks in Pakistan from 2010 to 2017. The motive of the research is that LLP is a measure of credit risk as a proxy for bank risk-taking behavior profits and banks’ sustainability. Especially after the occurrence of a global financial crisis. The quantitative research method of data collection from Bureau Van Dijk’s BankFocus portal and the World Bank’s World Development Indicators. Other than considering specific bank variables such as capital adequacy ratio, return on average equity, and government securities, the effects of macroeconomic variable inflation and lending interest rates are explicitly studied. The model of pooled ordinary least squares (POLS), fixed effect (FE), panel corrected standard error (PCSE), and panel data estimation in the form of a general method of moments (GMM) two-step system is used to find the risk-taking behavior of banks in Pakistan. The results obtained by the use of inflation (INF) as an instrumental variable of LLP are highly dependable with a negative impact on loan loss provision. Lending interest rate (LIR) has a positive and significant relationship with LLP and contribute in the study of macroeconomic variables for bank risk-taking, excessive amount of interest rate was not beneficial for banks to earn profits especially during the economic crises. Return on average equity (ROAE) significantly moderates LLP with a negative interaction and helped the bank with profitable operations and save bank from solvency. Capital adequacy ratio (CAR) and government securities (GOV) are insignificant to LLP. The result is robust by measure of endogeneity, and highlights the important role of commercial banks’ sustainability to explain risk-taking behavior in Pakistan with the intention to increase profits after the occurrence of financial crises. The study further contributes to future research on managerial policy and decision making. In summary, the paper on loan loss provision has the capacity to forecast commercial banks’ credit risk for risk-taking in an emerging country.

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 Comparative empirical analysis on the effect of mortgage loan on capital adequacy ratio

2017 ◽  
Vol 5 (3) ◽  
pp. 6
Author(s):  
Yusuf Dinç
Keyword(s):  
Credit Risk ◽  
Negative Impact ◽  
Capital Adequacy ◽  
Mortgage Loan ◽  
Basel Accord ◽  
Main Indicator ◽  
Capital Adequacy Ratio ◽  
Key Factor ◽  
Conventional Banks ◽  
Positive Results

Capital adequacy ratio is the main indicator for banks to proceed with their operations. Standards for the calculation of the ratio are based on Basel Accord. Key factor for the calculation is credit risk. Credit risk is a function of credit and collateral type. In this case, mortgage has lower risk weight based on its collateral structure on credit risk. This research evaluates the effects of mortgages on capital adequacy ratio to understand the effects of collateral based credits. The findings show positive results between capital adequacy ratio and mortgages of participation banks. However, mortgages have negative impact on capital adequacy ratio of conventional banks. Participation and conventional banks of Turkey are compared on linear regression to analyse the effects of mortgages on capital adequacy ratio. Results are important for further research and professionals.

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 The Impact of Macroeconomic and Banking Factors on Credit Growth in the Albanian Banking System

2015 ◽  
Vol 2 (1) ◽  
pp. 113 ◽  
Author(s):  
Ali Shingjergji ◽  
Marsida Hyseni
Keyword(s):  
Interest Rate ◽  
Unemployment Rate ◽  
Inflation Rate ◽  
Banking System ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
Gdp Growth ◽  
Credit Growth ◽  
Capital Adequacy Ratio ◽  
The Impact

The aim of this paper is to analyze the influence of some macroeconomic and bankhttp://ejes.euser.org/issues/may-august-2015/Ali.pdfing factors on credit growth in the Albanian banking system. From the literature review is noticed that the credit growth in the banking system is influenced by both macroeconomic and banking factors. We use credit growth as a dependent variable while as independent variables we use: GDP growth, inflation rate, unemployment rate, loan interest rate, capital adequacy ratio, bank size and NPL ratio. The relationship between credit growth and macroeconomic and banking factors was tested by using a regression model like the ordinary least squares (OLS). We take into consideration a period from 2002 – 2013 using quarterly panel data for the whole Albanian banking system with a total of 48 observations per each variable. The regression results find out that the credit growth in the Albanian banking system is positively related to GDP growth, inflation rate and capital adequacy ratio while is negatively related to unemployment rate, interest rate, non performing loans and bank size.

scholarly journals Impact of Credit Risk on the Profitability of Selected Commercial Banks Listed on the National Stock Exchange

2021 ◽  
Vol 1 (3) ◽  
pp. 1-15
Author(s):  
Sitaram Pandey ◽  
Amitava Samanta
Keyword(s):  
Credit Risk ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Series Data ◽  
Return On Assets ◽  
Return On Equity ◽  
Capital Adequacy Ratio ◽  
Indian Banks

This research is focusing on evaluation of the impact of credit risk on the profitability of selected commercial banks listed on National Stock Exchange. The financial ratios are taken as a proxy to evaluate credit risk and bank’s profitability. Profitability was measured through Return on Equity and Return on Assets whereas credit risk was measured by Pre-Provision Profit to Total Loans and Advances, Loan to Asset Ratio, Capital Adequacy Ratio, Credit to Deposit Ratio and Advances over Loan Funds. Based on the financial information of 2009 to 2017, the study concludes that Credit risk, as calculated from Pre-Provision Profit to Total Loans and Advances, Loan to Asset Ratio, Capital Adequacy Ratio, Credit to Deposit Ratio and Advances over Loan Funds have a non-significant relationship with profitability measured by Return on Assets whereas there is significant relationship exist only between Advances over Loan Funds and profitability measured by Return on Equity. The regression model of ROE shows the model is significant as compared to ROA model. The present study employed Auto Correlation and Durbin-Watson statistics, Unit root test & Multi-Collinearity tests to measure the robustness of time series data. Also the results of the regression analysis show that there exist a negative correlation between credit upon deposit ratio and return on equity. As per the current study, the Indian banks has to keep check on advances upon total funds ratio, as it was found most significant factor impacting the profitability of Indian banks.

scholarly journals The impact of credit risk management on the financial performance of United Arab Emirates commercial banks

2021 ◽  
Vol 10 (3) ◽  
pp. 303-319
Author(s):  
Jamil Salem Al Zaidanin ◽  
Omar Jamil Al Zaidanin
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
United Arab Emirates ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Income Ratio ◽  
The Impact

The main purpose of this study is to measure up to what extent the independent factors defined by capital adequacy ratio, non-performing loans ratio, cost-income ratio, liquidity ratio, and loans-to-deposits ratio impact the financial performance of sixteen commercial banks operating in the United Arab Emirates using panel data for the period of 2013-2019. The secondary data was collected from banks and examined by applying standard descriptive statistics and the random effect model for hypothesis testing. It is concluded from the regression outcomes that non-performing loans ratio and cost-income ratio have a significant negative impact on commercial banks profitability in the United Arab Emirates, while capital adequacy ratio, liquidity ratio, and loans -to-deposits ratio all have a very weak positive relationship on the return on assets but they are not determinants of bank’s profitability due to the insignificant statistical impact on it. It is therefore suggested that to enhance financial performance and minimize the risk of non-performing loans in the future, banks must watch very carefully the loans’ performance and analyze thoroughly the clients’ credit history and ability to pay back their debts prior to any approval of loan applications. Furthermore, banks should continuously improve their assets utilization, liquidity, and techniques of managing operating costs, improve the impact of capital adequacy, and the use of deposits for lending activities from a weak positive impact to a significant positive impact on their profitability. The researchers recommend that future studies on credit risk management influence on banks’ financial performance should consider more independent variables and longer periods of study such as twenty or thirty years to have more accuracy and generalized results.  

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