Influence of Macroeconomic Factors in Failure of Return of Bank Loans in Kosovo

2018 ◽  
Vol 9 (5) ◽  
pp. 97-106
Author(s):  
Nagip Skenderi ◽  
Adem Dreshaj
Keyword(s):  
Sustainable Development ◽  
Banking System ◽  
Bank Loans ◽  
Bank Loan ◽  
Crucial Issue ◽  
Macroeconomic Factors ◽  
Grace Period ◽  
Independent Variables ◽  
Maturity Period ◽  
Banking Business

Abstract The risk from non-payment of loans is a challenge for all the banks. Payment of the loans is a crucial issue for efficient functioning of the banking system. Loaning is one of the main uncertainties in the banking business, for loan payment can be rarely guaranteed completely. Often, a question occurs: what are the factors that influence in failure of the return of bank loan? What are the politics that must be followed to stimulate the return of bank loans? Through this research we aim to highlight the reasons of debtors in failing of loan return by studying the link of macroeconomic factors with NPL (non-performing loans). This is a first research in Kosovo that analyses the link of the macroeconomic factors influence (GDP, interest norms, unemployment, inflation, maturity period and grace period) these referred in the research as “independent variables” in failure of bank loan return that in the study bellow are referred as “dependent variable NPL for the Kosovo bank sector. This study argues as what is needed for the Kosovo banking system and presents the ideas of sustainable development of banking system in correspondence with non-performing loans, acknowledgment of the factors that hinder the return of the bank loans and reorientation of the loaning politics.

Discretionary Accruals in Italian Private Firms and Non-Linear Bank Loan Granting

2017 ◽  
pp. 83-99
Author(s):  
Elisabetta Mafrolla ◽  
Viola Nobili
Keyword(s):  
Financial Reporting ◽  
Banking System ◽  
Regulatory System ◽  
Discretionary Accruals ◽  
Bank Loans ◽  
Bank Loan ◽  
Banking Union ◽  
Private Firms ◽  
European Banking Union

This paper investigates whether and at what extent private firms reduce the quality of their accruals in order to signal a better portrait to the bank and obtain new or larger bank loans. We measure earnings discretionary accruals of a sample of Italian private firms, testing whether new and larger bank loans are associated with a higher (lower) quality of earnings in borrowers' financial reporting. We study bank loan levels and changes and how they impact discretionary accruals and found that, surprisingly, private firms' discretionary accruals are systematically positively affected by an increase in bank loans, although they are negatively affected by the credit worthiness rating assigned to the borrowers. We find that the monitoring role of the banking system with regard to the adoption of discretionary accruals is effective only when the loan is very large. This paper may have implications for policy-makers as it contributes to the understanding of the shortcomings of the banking regulatory system. This is an extremely relevant issue since the excessive amount of non-performing loans held by Italian banks recently threatened the stability of the European Banking Union as a whole.

Bank Loans with Chinese Characteristics: Some Evidence on Inside Debt in a State-Controlled Banking System

2011 ◽  
Vol 46 (6) ◽  
pp. 1795-1830 ◽  
Author(s):  
Warren Bailey ◽  
Wei Huang ◽  
Zhishu Yang
Keyword(s):  
Banking System ◽  
Bank Loans ◽  
Bank Loan ◽  
Inside Information ◽  
Inside Debt ◽  
Social Instability ◽  
Chinese Characteristics ◽  
Loan Approval ◽  
Loan Announcements ◽  
Local Stock

AbstractWe study a transitional economy where state-controlled banks make loan decisions based on noisy inside information on prospective borrowers, and may lend to avert unemployment and social instability. In China, poor financial performance and high managerial expenses increase the likelihood of obtaining a bank loan, and bank loan approval predicts poor subsequent borrower performance. Negative event study responses occur at bank loan announcements, particularly for borrowers measuring poorly on quality and creditworthiness, or for lenders or borrowers involved in litigation regarding loans. Our results highlight dilemmas in a state-led financial system and the local stock market’s sophistication in interpreting news.

scholarly journals Pengaruh Makroekonomi, Capital Adequacy Ratio, Loan To Deposit Ratio dan Pertumbuhan Kredit terhadap Non Performing Loan pada Bank Asing di Indonesia Periode 2013-2014

2018 ◽  
Vol 8 (2) ◽  
pp. 124
Author(s):  
Maya Rosita ◽  
Musdholifah Musdholifah
Keyword(s):  
Financial Statements ◽  
Negative Influence ◽  
Foreign Bank ◽  
Bank Loans ◽  
Capital Adequacy ◽  
Analysis Method ◽  
Macroeconomic Factors ◽  
Independent Variables ◽  
Capital Adequacy Ratio ◽  
Simultaneous Influence

The aim of this study was to understand the influence of macroeconomic factors in this research are exchange rate and inflation, while for the internal bank are capital adequacy ratio (CAR), loan to deposit ratio (LDR) and credit growth towards non performing loan (NPL). The data that used is quarterly data from financial statements of Foreign Bank in Indonesia period of 2013 until 2014. Data analysis method used is multiple-regression analysis. The results showed that there was a simultaneous influence of independent variables towards NPL of Foreign Bank in Indonesia. However, partially showed that CAR has a negative influence, the higher capital adequacy ratio, it can serve to accommodate the risk of losses faced by banks due to the increase in non performing loans. LDR has a positif influence, LDR shows expansion of bank loans made to measure current or whether bank intermediary function. LDR which leads to high risk of uncollectible loans to be high which will result in a non performing loans.

scholarly journals ESTIMATION OF Z-SCORE FOR UKRAINIAN BANKING SYSTEM

10.23856/3003 ◽  
2018 ◽  
Vol 30 (5) ◽  
pp. 43-51
Author(s):  
Bohdan Kyshakevych ◽  
Ivan Klymkovych
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Banking System ◽  
System Stability ◽  
Z Score ◽  
Macroeconomic Factors ◽  
Explanatory Variables ◽  
Banking Business ◽  
Score Model ◽  
Bank System

The article analyzes the problematic aspects of evaluating the financial stability of banking systems on the basis of the Z-score methodology. The econometric model estimation of Z-score for the Ukrainian banking system was constructed where the following indicators were chosen in role of explanatory variables:  the share of foreign capital in bank system, inflation, change in nominal GDP and share of overdue loans in credit portfolio. We have conducted the analysis of the banking sector in Ukraine on the base of the constructed Z-score model and determined macroeconomic factors that have the most significant impact on the Z-score assessment and banking system stability.  Drawbacks and limitations of the Z-score methodology usage in banking business are discussed.

scholarly journals Factors Affecting Liquidity Risk in the System of Vietnamese Commercial Banks

2014 ◽  
Vol 219 ◽  
pp. 34-48
Author(s):  
THÔNG TRƯƠNG QUANG
Keyword(s):  
Commercial Banks ◽  
Liquidity Risk ◽  
Bank Loan ◽  
Annual Reports ◽  
Internal Factors ◽  
Macroeconomic Factors ◽  
Factors Affecting ◽  
Independent Variables ◽  
Financing Gap ◽  
Asset Size

The research tries to identify causes of liquidity risk for the system of Vietnamese commercial banks. Data for the research are collected from annual reports in the years 2002-2011 by 27 Vietnamese commercial banks. The liquidity risk examined in the research is financing gap; and independent variables, or factors affecting the liquidity risk, are divided into two groups: internal and external ones. The estimated results of the models show that the liquidity risk among banks depends not only on internal factors, such as total asset size, liquidity reserve, inter-bank loan, and ratio of equity to capital, but also on external ones, or macroeconomic factors, such as growth rate, inflation, and especially effects of policy lags.

scholarly journals Industry-Specific and Macroeconomic Determinants of Non-Performing Loans: A Comparative Analysis of ARDL and VECM

2019 ◽  
Vol 12 (1) ◽  
pp. 325 ◽  
Author(s):  
Changjun Zheng ◽  
Probir Kumar Bhowmik ◽  
Niluthpaul Sarker
Keyword(s):  
Banking Sector ◽  
Statistical Significance ◽  
Banking System ◽  
Positive Association ◽  
Bank Loan ◽  
Significant Positive Association ◽  
Macroeconomic Factors ◽  
Distributed Lag ◽  
Vec Model ◽  
Macroeconomic Determinants

With the growth of an economy, the banking industry expands and the competitiveness becomes intense with the increased number of banks in the economy. The objective of this research was to discover the influence of industry-specific and macroeconomic determinants of non-performing loans (NPLs) in the entire banking system of Bangladesh. We performed an analysis for the period from 1979 to 2018 by an autoregressive distributed lag (ARDL) model and checked the robustness of the results in the vector error correction (VEC) model. The outcomes of this research suggest that both industry-specific and macroeconomic factors influence NPLs significantly. Among the industry-specific determinants, bank loan growth, net operating profit, and deposit rates negatively impact NPLs with statistical significance while bank liquidity and lending rates have a significant positive affiliation with NPLs. Gross domestic product (GDP) growth and unemployment, among the macroeconomic variables, have a negative connection with NPLs. Whereas, domestic credit and exchange rates have a significant positive association with NPLs. The contribution of this research is that the outcomes found by means of econometric models can be used for predicting and measuring NPLs in upcoming years, not only for Bangladesh but also for developing and emerging economies. Individual banks, as well as the banking sector, by and large, can get a guideline from this research.

scholarly journals The Impact Of Basel III On Italian Banks Loan Rates: An Accounting-Based Approach

2012 ◽  
Vol 11 (11) ◽  
pp. 1269
Author(s):  
Pasquale Di Biase
Keyword(s):  
Interest Rates ◽  
Banking System ◽  
Bank Lending ◽  
Capital Requirements ◽  
Bank Loans ◽  
Bank Loan ◽  
Basel Iii ◽  
Baseline Scenario ◽  
Percentage Point Increase ◽  
The Impact

This paper empirically investigates the impact of the new capital requirements imposed under Basel III on bank lending rates.A general accounting equilibrium model is developed in order to map the change in the average interest rate on bank loans which is required to preserve the economic performance and the market value of financial institutions under the new regulatory framework.The study refers to the Italian banking system. According to our estimates, the long-term impact of heightened capital requirements on bank loan rates is likely to be modest.In our baseline scenario, we find evidence that each percentage point increase in the capital ratio can be recovered by increasing interest rates with which borrowers are charged by only 5.75 basis points. We conclude that the Italian banking system should be able to adjust to the higher capital requirements imposed by Basel III through a set of operative and commercial levers with no significant effects on the cost of credit for companies and consumers.

scholarly journals FEATURES OF MODELING AND FORECASTING THE DEVELOPMENT OF BANKING BUSINESS IN UKRAINE

2021 ◽  
Author(s):  
Yaryna Pas
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Business Development ◽  
Bank Loans ◽  
Exogenous Variables ◽  
Indicator Variable ◽  
Increased Risk ◽  
Modeling And Forecasting ◽  
Banking Business ◽  
Simulative Model

The rapid dynamics of financial performance of banks leads to the study of the peculiarities of modeling and forecasting the development of the banking business. The negative trends of the global crisis and the spread of the pandemic are determined by the search for ways to maintain the efficient functioning of banks in the financial market. Modeling and forecasting the development of the banking business should be carried out using the tools of economic and mathematical modeling, the main feature of which is the use of indirect knowledge with the help of artificially created objects – models. To better understand the importance of modeling the development of the banking business, it is appropriate to give an example, the development and application of the wrong strategy for the development of the banking business can lead to significant problems not only in this area, including reduced liquidity of the banking system, increased problem loans, increased risk. The model of banking business development is built, which includes six equations on the main macroeconomic indicators (equation of capital and reserves of banks, equation of total assets of banks, equation of bank loans, equation of bank income, equation of bank expenses, equation of gross domestic product of Ukraine). Links between the performance of the banking sector and environmental factors, to analyze the factors influencing the development of the banking business, to forecast the dynamics of these indicators in different scenarios of economic conditions in general and the banking business in particular. The analysis of the obtained results of evaluation of the equations of the simulative model of banking business development for 2020 allowed determining that each equation of the simulative model is adequate, because the coefficients of multiple determinations take values that are close to one, including exogenous variables. To obtain the forecast values of other exogenous variables of the simulative model (the value of direct investment in Ukraine and the volume of sold industrial products) was used the method of constructing trend models, which describe the dynamics of a particular indicator (variable) over time. The forecast values of exogenous variables of the simulative model of banking business development for the I–IV quarters of 2022 are constructed. The analysis of forecast accuracy indicators showed that the value of the average absolute error (MAPE) of the amount of capital and reserves of banks in 2022 does not exceed 10% for neutral and optimistic forecasts.

scholarly journals Macroeconomic factors that influence the bank loans rate in international and Ukrainian practice

2021 ◽  
Vol 19 (4) ◽  
pp. 35-47
Author(s):  
Sergiy Ivakhnenkov ◽  
Svitlana Hlushchenko ◽  
Kamilla Sverenko
Keyword(s):  
Foreign Currency ◽  
Weighted Average ◽  
Bank Lending ◽  
Bank Loans ◽  
Bank Loan ◽  
Macroeconomic Factors ◽  
Long Run ◽  
Macroeconomic Indicators ◽  
Ease Of Doing Business ◽  
The Cost

The goal of the paper is to disclose the links between the dynamics of macroeconomic indicators and the level of bank loan rates based on international and Ukrainian practice. On the basis of the previous analysis, the paper also aims to identify the key trends in the formation of loan prices in the long run and identify problematic issues related to bank loan rates. The main characteristics of bank lending rates in Ukraine are: a) their high rates; b) sharp changes in the weighted average bank loan rates from year to year; c) higher loan rates for households compared to the cost of bank loans for businesses; d) higher bank loan rates for short- and medium-term loans versus long-term ones; e) lower rates on loans in foreign currency compared to the loans in hryvnia; and f) high share of non-performing loans to households and businesses in bank portfolios. In the context of world and Ukrainian practice, the paper demonstrates the reverse effect between macroeconomic indicators such as GDP per capita, the ratio of loans to GDP, the ease of doing business index and bank loan rates. The article also demonstrates a direct relationship between the dynamics of inflation rate in the country, the dynamics of non-performing bank loans and their rates.

scholarly journals Corporate green investment imperative and risk of a credit crunch in Poland

2021 ◽  
Vol 2021 (154) ◽  
pp. 233-248
Author(s):  
Irena PYKA ◽  
◽  
Jan PYKA ◽  
Keyword(s):  
Global Economy ◽  
Banking Sector ◽  
Credit Rating ◽  
Banking System ◽  
Bank Loans ◽  
Bank Loan ◽  
Credit Crunch ◽  
The European Union ◽  
Social Implication ◽  
Polish Economy

Purpose: The main subject of the article is a phenomenon that is increasingly common in countries of the global economy referred to as the so-called credit crunch. The study analyses the reasons that favour the escalation of risk of a credit crunch in the banking systems. The main objective of the article is to expose them as widely as possible, combining it with verification of the determinants of a credit crunch. Design approach: The empirical research conducted in this study focuses on the Polish banking system. For the first time the credit crunch was observed there in the second half of 2008. It was then that lending to households decreased by 25% and to enterprises by as much as 33%. In the Polish banking system, a drop in the volume of loans to enterprises has been observed for a long time, favouring the increase in risk of a credit crunch. Findings: The article evaluates the potential risk of a credit crunch in the Polish banking system pointing out their links resulting from the implementation of the new climate policy in the European Union as well as the COVID-19 pandemic. This is caused by the fact that during the COVID-19 crisis, credit rating of Polish enterprises decreased significantly, causing partial restrictions or even elimination of bank loan in industries threatened by the crisis. Research implication: The Polish economy is facing a significant challenge of meeting the EU criteria for limiting CO2 emissions, which will force domestic enterprises to invest considerably in environmental protection and will increase their demand for debt financing, including bank loans. Banks are preparing for green lending to the Polish economy which signifies a strong transition of loans to investments which meet the taxonomy criteria and are therefore subject to climate objectives. Practical and social implication: Industry risk will determine lending of Polish enterprises under the conditions of the European Green Deal. Green financing of investments of Polish enterprises is therefore becoming a significant potential cause of increasing risk of a credit crunch in the Polish banking sector. Originality/value: Presentation of the enterprise credit dilemmas in the conditions of financial instability of the global economy in the perspective of credit-crunch in Poland is a novel, original and contemporary subject. The diagnosis of the determinants of this threat has facilitated their positioning relatively to the risk of credit-crunch in the Polish banking sector. The results of this analysis underline the risks in this sector and the consequences of introducing European taxonomy of green investments as factors limiting credit actions and enterprise credits in banks.

Sign in / Sign up

Export Citation Format

Share Document