scholarly journals Determinants of Credit Risk in the Banking Sector of Ghana: A Panel Co-integration Approach

2020 ◽  
Vol 5 (4) ◽  
Author(s):  
Thomas Appiah ◽  
Frank Bisiw
Keyword(s):  
Credit Risk ◽  
Least Squares ◽  
Banking Sector ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
High Rate ◽  
Long Run ◽  
Integration Techniques ◽  
The Government ◽  
The Impact

The economic development of any nation hinges on the health of its financial system. In recent years, the health of the Ghanaian Banking sector has been affected severely as a result of high levels of non-performing loans (NPLs), which has been identified as a major threat to the overall profitability and survival of banks. To minimize the impact of NPLs on the financial sector, key stakeholders such as the government, bank officials and regulators are working hard in that regard. However, any policy response aimed at dealing with the high rate of non-performing loans first requires the understanding of the underlying determinants of NPLs. Against this backdrop, this paper apply panel co-integration techniques to investigate the determinants of credit risk (NPLs) in the banking sector of Ghana.  We use NPL as a proxy to measure credit risk and assess how it is influenced by macroeconomic and bank-specific factors. A balanced panel data of 16 universal banks in Ghana from 2010 to 2016 has been analyzed using Panel co-integration techniques such as Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS). Our result shows that growth in the economy, measured by Gross Domestic Product (GDP) has significant influence on the NPLs of banks in the long-run. The results further revealed that capital adequacy, profitability and liquidity of banks are significant predictors of NPLs. However, our results suggest that bank size, inflation and interest rate have statistically insignificant influence on the NPLs of Ghanaian banks. The study recommend, among others, that whereas it is important for government and policymakers to work to improve macroeconomic outcomes, banks should also improve their capital adequacy, profitability, and efficiency position as these bank-specific interventions could significantly improve credit quality and minimize NPLs.

scholarly journals The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 174
Author(s):  
Khalid Eltayeb Elfaki ◽  
Rossanto Dwi Handoyo ◽  
Kabiru Hannafi Ibrahim
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Least Squares ◽  
Financial Development ◽  
Correction Term ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

scholarly journals Impact of Macroeconomic Factors on Banking Profitabilty

2018 ◽  
Vol 5 (1) ◽  
pp. 44
Author(s):  
Lutfullah Lutf ◽  
Hafizullah Omarkhil
Keyword(s):  
Banking Sector ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Related Factors ◽  
Comparative Performance ◽  
Macroeconomic Factors ◽  
Macroeconomic Variables ◽  
Interest Income ◽  
Long Run ◽  
The Impact

This study comparatively focuses on the impact of macroeconomic determinants and the internal indicators on bank performance. It comparatively evaluates the differential effects of macroeconomic variables and bank specific variables. Thus, considering five-five banks from each system, a comparative performance investigation between conventional & Islamic banks is the aim of this paper. To determine the short-run and long-run impact of these factors, co-integration & general to specific approach are adopted. This study also considers bank specific and macroeconomic variables in two separate models (Return on Assets and Return on Equity). Our objective is to find whether or not Islamic banks are performing well in the country as compared to their conventional counterparts. The results indicate that in the long run, Gross Domestic Product, and inflation, is positively related to performance, while Interest rate has no effect on the performance of banking sector in Pakistan. Similarly, bank size, capital adequacy, expenses, interest income and non-interest income are the bank related factors that significantly influence the performance of financial sector.

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 Modelling the impact of oil price fluctuations on food price in high and low-income oil exporting countries

2020 ◽  
Vol 66 (No. 10) ◽  
pp. 458-468
Author(s):  
Chen Ding ◽  
Umar Muhammad Gummi ◽  
Shan-bing Lu ◽  
Asiya Muazu
Keyword(s):  
Least Squares ◽  
Low Income ◽  
Ordinary Least Squares ◽  
Food Prices ◽  
Oil Price ◽  
Low Income Countries ◽  
Long Run ◽  
Oil Markets ◽  
Short Run ◽  
The Impact

Oil exporting economies were the most hit by the recent oil price shock that spills on the food market in an increasingly volatile macroeconomic environment. This paper examines and compares sub-samples [before crisis <br />(2000 Q1–2013 Q1) and during crisis (2013 Q2–2019 Q4)] as to the impact of oil price on food prices in high- and low-income oil-exporting countries. We found an inverse relationship between oil and food prices in the long run based on full samples and sub-samples in high-income countries. The story is different during the crisis period: in low-income countries and all the countries combined, oil and food prices co-move in the long run as measured by the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS). Our findings suggest that economic structure and uncertain events (crises) dictate the behaviour and relationship between food and oil markets. Food and oil prices may drift away in the short-run, but market forces turn them toward equilibrium in the long-run. Moreover, low-income countries are indifferent in both periods due to limited capacity to balance the increasing demand for and supply of food items.

Female Entrepreneurs in the Hospitality Industry: A Panel Causality Analysis of EU Countries

2020 ◽  
pp. 097674792094248
Author(s):  
Sudeshna Ghosh
Keyword(s):  
Least Squares ◽  
Hospitality Industry ◽  
Ordinary Least Squares ◽  
Causality Analysis ◽  
Cultural Issues ◽  
Family Policies ◽  
Female Entrepreneurs ◽  
Panel Causality ◽  
Long Run ◽  
The Impact

This study investigates the determinants of female entrepreneurship (FE) in the tourism and hospitality industry in 30 European countries. Based on annual observations for the period 2006–2016 and using panel causality techniques, the study explores the impact of tourism receipts, GDP per capita, the Global Entrepreneurial Index (GEI), policies related to institutional and cultural issues, childcare and gender parity related to skills and entrepreneurship on FE. The results of robust second-generation panel methods indicate the existence of long-run cointegration among FE, GDP, tourism receipts and other variables of interest. The long-run elasticities of tourism receipts, GDP, GEI, childcare and the female–male ratio of access to human capital formation in terms of training obtained from the panel fully modified ordinary least squares (FMOLS), panel dynamic ordinary least squares (DOLS) and the pooled mean group estimator (PMG) estimation are significant in the context of FE. The study concludes that pivotal policy interventions are needed to ensure that family policies and procedures, social strategies and tax structures do not discriminate female entrepreneurs.

Investigation for Finance–Growth Nexus: A Dynamic Common Correlated Estimator Approach

2021 ◽  
pp. 097215092110162
Author(s):  
Saqib Mehmood ◽  
Ahmad Raza Bilal
Keyword(s):  
Developing Countries ◽  
Private Sector ◽  
Least Squares ◽  
Financial Development ◽  
Well Being ◽  
Ordinary Least Squares ◽  
Consumption Expenditures ◽  
Long Run ◽  
Domestic Credit ◽  
The Impact

The study investigated the impact of financial development in bringing the economic well-being, using the data of 10 selected developing countries, as a sample for the period from 1991 to 2017. However, the study utilizes the regression of group mean dynamic common correlated estimator (DCCE) by Chudik and Pesaran (2015) to analyse the said circumstance. For estimation, the present study is considering the major tycoons of financial development and their relevant areas that are significantly effecting the economic growth. However, the broad money (GAM1), domestic credit to private sector to GDP (GAM2), domestic credit to private sector by banks (GAM3), government’s final consumption expenditures (GAFCE) and foreign direct investment GAFC are major contributors in attaining the GDP per capita (GADA). However, the estimation of the concerned circumstance was also evaluated in terms of shorter and longer run estimations. The results of the short– and long–run estimations also authenticate the results of DCCE estimations. The robustness of the results is verified with the help of Pedroni (2004) test, fully modified ordinary least squares (FMOLS) test by Pedroni (2001) and dynamic ordinary least squares (DOLS) by Stock and Watson (1993) . The robustness tests also verify the factors that are considered as the major players of financial development for uplifting the concerned economies. Selected developing countries have the potential for utilizing their financial development options to manage their growth at the economic level. For practical implications and for policymaking, the ingredients of this particular study can be endorsed to get the desired results.

scholarly journals Credit Risk and Profitability of Banking Sector in Sri Lanka

2021 ◽  
Vol 3 (1) ◽  
pp. 65-71
Author(s):  
Herath Mudiyanselage Kasun Salitha Bandara ◽  
Ahamed Lebbe Mohamed Jameel ◽  
Haleem Athambawa
Keyword(s):  
Sri Lanka ◽  
Credit Risk ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Sri Lankan ◽  
Return On Assets ◽  
Net Charge ◽  
Panel Data Regression ◽  
Capital Adequacy Ratio ◽  
The Impact

This paper aims to investigate the impact of credit risk on the profitability of the banking sector in Sri Lanka. The profitability is measured with and Return on Assets. At the same time, credit risk is quantified with four indicators: Non-performing loan Ratio (NPLR), Loan to Deposit Ratio (LDR), Net Charge off Ratio (NCOR), and Capital Adequacy Ratio (CAR). Data from thirteen banks over eight years from 2010 to 2017 was analyzed using panel data regression analysis. The finding shows that the Profitability of the Banking Sector in Sri Lanka has been determined by important determinants such as credit risk. The study further finds that non-performing loans have negative and significant return on assets. However, the net charge-off ratio and the loan to deposit ratio are not important variables for expanding the bank's profitability. On the other hand, the CAR positively impacts returns on assets. The study suggested the need to strengthen the management of credit risk in order to preserve Sri Lankan banks' current profitability.

Does hydropower growth threaten fish security under the pathway of sustainable development? Evidence from European Union economies

2021 ◽  
pp. 0958305X2110463
Author(s):  
Mohd Alsaleh ◽  
Abdul Samad Abdul-Rahim
Keyword(s):  
European Union ◽  
Least Squares ◽  
Ordinary Least Squares ◽  
The European Union ◽  
Industry Growth ◽  
Hydropower Production ◽  
The Government ◽  
Hydropower Industry ◽  
The Impact ◽  
Efficiency And Productivity

This research explores the impact of hydropower growth on fish supply in European Union Region nations from 1990 to 2019. Using the panel fully modified ordinary least squares, the outcome exhibits the reduced fish supply with the growth in hydropower production. Also, human population density and growth economics were found to be decreasing fish supply and their habitats. While institutional quality and expenditure were found to be increasing fish species and numbers, the finding implies that fish supply in the European Union Region could efficiently be minimized by boosting the quantity of hydropower production with operational procedures. This can ultimately add more burden on an already degraded natural resource and negative environmental impacts. The predicted outcomes are confirmed by dummy panel ordinary least squares and pooled ordinary least squares thus, thought to be valid. The research advised the European Union nations to develop the efficiency and productivity of hydropower in the energy mix to lessen the carbon dioxide releases. The authorities from these nations should further participate in the sustainability of hydropower industry growth by exploring the probability of the unified river managing structures to resolve conflicting economic, political, and ecological benefits. The government of the said nations can similarly stress the sustainability of the hydropower output to reach energy certainty and conservation of fish resources to achieve food security.

scholarly journals Modeling broadband, mobile telephone and economic growth on a macro level: Empirical evidence from G7 countries

Accounting ◽  
2021 ◽  
pp. 837-844
Author(s):  
Tekin Birinci ◽  
Dervis Kirikkaleli
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Ordinary Least Squares ◽  
Mobile Telephone ◽  
Information And Communications Technology ◽  
Annual Data ◽  
G7 Countries ◽  
Long Run ◽  
Causality Tests ◽  
The Impact

Information and Communications Technology (ICT) has played overwhelming roles in the economic and social development of nations and continents in the last two decades. This study aims to explore the impact of mobile telephone and broadband use on economic growth in G7 countries using annual data covering the period of 2000-2017. We performed Pedroni cointegration, Kao cointegration, fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS), and panel Granger causality tests to investigate the causal and long-run effects. The empirical findings reveal that (i) mobile telephone and broadband use contribute to economic growth in the long-run; (ii) changes in mobile telephone and broadband use significantly lead to a change in economic growth.

scholarly journals DAMPAK PENERBITAN DAN PENJUALAN SURAT UTANG NEGARA BAGI PEREKONOMIAN INDONESIA

2017 ◽  
Author(s):  
Irma Setyawati
Keyword(s):  
Banking Sector ◽  
Descriptive Analysis ◽  
Capital Adequacy ◽  
Government Bond ◽  
Interest Payment ◽  
Library Research ◽  
Capital Adequacy Ratio ◽  
Bond Property ◽  
The Government ◽  
The Impact

The edition and the sale of the country's obligation letter/government bond give the impact to the banking sector, monetary, and fiscal, as well as the monitory authority. The objective of the study is to verify the impact of the edition and the sale of the government bondfor lndonesia economy. The methods used are descriptive analysis of the collected data from library research and other resources related to the topic.The research found that the impact to the Capital Adequacy Ratio is getting better, the impact to the monetary is the increase of the money quantity as much as the interest payment given by the government conserving the government bond property, the impact to the monetary authority is the decrease of liquidity support and the increase of lndonesian Bank outstanding to the government. The sale of government bond gives fresh fund to the government which can be invested, to the productivity asset, to support the process of economy recovery Post print

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