NPLs — The Solution Recipe for Albania

2015 ◽  
Vol 3 (1) ◽  
pp. 48
Author(s):  
Elona Shehu ◽  
Elona Meka
Keyword(s):  
Interest Rate ◽  
Negative Relationship ◽  
Banking System ◽  
Gdp Growth ◽  
System A ◽  
Analysis Technique ◽  
Recent Financial Crisis ◽  
The Stability ◽  
Asset Quality ◽  
Macroeconomic Determinants

The quality of the loan portfolio in Albanian banking system is facing many obstacles during the last decade. In this paper we look at possible determinants of assets quality. During the recent financial crisis commercial banks were confronted with deteriorating asset quality that threatened not only the banking industry, but also the stability of the entire financial system. This study aims to examine the correlation between non-performing loans and the macroeconomic determinants in Albania during the last decade. NPLs are considered to be of a high importance as they represent the high risk exposure of banking system. A solid bank with healthy assets increases the market efficiency. Our approach is based on a panel data regression analysis technique from 2005-2015. Within this methodology this study finds robust evidence on the existing relationship between lending interest rate, real GDP growth and NPLs. We expect to find a negative relationship between lending interest rate and asset quality. Further we assume an inverse relationship between GDP growth and non-performing loans, suggesting that NPLs decrease if the economy is growing. Furthermore this study proposes a solution platform, which looks deeper into the possibility of creating a secondary active market for troubled loans, restructuring the banking system or implementing the Podgorica model. This research paper opens a new lieu of discussion in terms of academic debates and decision-making policies.

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 EU Geography of Non-Performing Loans (NPL)

2018 ◽  
Author(s):  
Sergey Avetisyan
Keyword(s):  
Geographical Distribution ◽  
Financial Stability ◽  
Global Economy ◽  
Spatial Organization ◽  
Banking System ◽  
Gdp Growth ◽  
Business Climate ◽  
Data Set ◽  
The Past ◽  
Asset Quality

Over the past decade, the credit quality of loan portfolios across most countries in the world remained relatively stable until the financial crises hit the global economy in 2007–2008. In this paper I discuss, the relationship between non-performing loans and economic landscape. Since 2008, nonperforming loans have been an increasingly hot topic in the international scene, due to their important and rising volume and their impact on the economy as a whole, on the banking system and on its credit supply. Since then, average bank asset quality deteriorated sharply due to the global economic recession. Yet the deterioration of loan performance was very uneven across countries. I am interested in explaining these differences in bank asset quality across countries and over time. In this paper, I therefore study the empirical determinants of non-performing loan (NPL) ratios using a data set for EU countries covering the past decade. The paper assumes that the spatial organization of banking systems and the geographical distribution of comercial banks branches, ATMs and GDP growth are major factors influencing the effectiveness in credit system. The aim of this paper is to construct a continuous and quantifiable model, which will demonstrate a role of economic condition, technology, competition, policy, business climate in Financial Stability. Main hypotheses suggests, that GDP growth, interest rate, new business, FDI, ATMs and geographical distribution of branches have an influences on NPL (non-performing loans).

scholarly journals Systemic Risk in the Interbank Market with Overlapping Portfolios

Complexity ◽  
2019 ◽  
Vol 2019 ◽  
pp. 1-12 ◽  
Author(s):  
Shanshan Jiang ◽  
Hong Fan
Keyword(s):  
Interest Rate ◽  
Systemic Risk ◽  
Banking System ◽  
Bipartite Network ◽  
Investment Risk ◽  
Interbank Market ◽  
Operating Rules ◽  
Proposed Model ◽  
The Stability ◽  
The Impact

The increasing frequency and scope of the financial crisis have attracted more attention in the research of the systemic risk of banking system. A new model for the interbank market with overlapping portfolios is proposed to simulate a banking system in this work. The proposed model uses a bipartite network of banks and their assets to analyze the impact of bank investment on the stability of the banking system. In addition, this model introduces investment risk and allows banks to make up for liquidity by selling devaluated assets, which reflects the operating rules of the banking system more realistically. The results show that allowing banks to sell devaluated assets to make up for liquidity can improve the stability of the banking system and the interbank market can also improve the stability of the banking system. For the investment of banks, the investment risk is an uncertain factor that affects the stability of the banking system. The proposed model further analyzes the impact of average investment interest rate, savings interest rate, deposit reserve ratio, and investment asset diversity on the stability of the banking system. The model provides a tool for policy-makers and supervision agencies to prevent the systemic risk of banking system.

scholarly journals An Analysis of Islamic Banks Performance using Sharia Maqashid Index, Sharia Conformity and Profitability (SCnP) and CAMELS

2020 ◽  
Vol 2 (01) ◽  
pp. 15-30
Author(s):  
Mokhamad Ikhsan Ramdhoni ◽  
Firdaus Ahmad Fauzi
Keyword(s):  
Quantitative Research ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Measuring Instrument ◽  
Ratio Measurement ◽  
Financial Ratio ◽  
Analysis Technique ◽  
Index Approach ◽  
Asset Quality

Indonesian Islamic banking system has existed for more than 25 years old. However, at this age, it still has not had its own instrument for measuring performance and still adopts the orthodox measuring instrument which is restricted to financial ratio measurement only. The use of this orthodox measuring instrument as the only tool to evaluate the Islamic banks performance is considered less suitable, both in terms of the features and the purposes of Islamic banking in general. Therefore, this study aims to evaluate the performance of Islamic banks using the Sharia Maqashid Index, Sharia Conformity and Profitability (SCnP) and CAMELS approaches. The population of this study was all Islamic Commercial Banks listed in Bank Indonesia from 2012-2016, while the data analysis technique used the quantitative research with descriptive approach. The Sharia Maqashid Index approach has three variables; educating people, establishing justice, and achieving public interest. The Sharia Conformity and Profitability (SCnP) approach has two variables; Sharia Conformity and Profitability. Meanwhile, the CAMELS approach has five variables; Capital, Asset Quality, Management, Earning, and Liquidity. The results of the research using the Sharia Maqashid Index approach shows that Bank Muamalat is in the first rank, followed by Bank Syariah Mandiri, BNI Syariah, and Bank Mega Syariah. By using the SCnP approach, the research shows that there are no Islamic banks in the upper right quadrant that has high sharia suitability and high profitability. Moreover, the CAMELS approach shows that all Islamic banks are quite healthy. The application of these performance measurement approaches become a factor that plays a dual role for the achievement of financial performance and sharia conformity.

scholarly journals Determinants of Capital Adequacy of Nigerian Banks

Market Forces ◽  
2020 ◽  
Vol 15 (1) ◽  
Author(s):  
Sanyaolu Wasiu Abiodun ◽  
Alao Adeniyi Abdul-Azeez ◽  
Yunusa Lateef Adewale
Keyword(s):  
Management Practices ◽  
Developing Economies ◽  
Banking System ◽  
Capital Adequacy ◽  
Data Set ◽  
Nonperforming Loans ◽  
Flow Of Funds ◽  
Economic Progress ◽  
The Stability ◽  
Macroeconomic Determinants

A reliable banking system in developing economies like Nigeria is vital for economic progress as it facilitates the flow of funds to productive investment sectors. The capital adequacy requirement of banks is a crucial feature of the stability of the banks globally. Because of its importance, we have examined the antecedents to capital adequacy. We have used the data set of ten leading banks of Nigeria from 2007 to 2017. Our results indicate that ROA and loan to total assets are significantly associated with capital adequacy. However, we found that nonperforming loans and size are negatively associated with the capital adequacy. Our results do not support the association between macroeconomics variables and capital adequacy. Therefore, we recommend that all banking entities should reserve sufficient cash and cash equivalents as a percentage of deposits and apply aggressive risk management practices to reduce the magnitude of nonperforming loans. This study was restricted to one country. Future studies can be carried out in other countries. A comparative data set of more than one country may bring further insight into the phenomenonKeywords: Capital adequacy ratio, banks-specific determinants, macroeconomic determinants, Nigeria.

scholarly journals Antecedents of Financial Performance of Banking Sector: Panel Analysis of Islamic, Conventional and Mix Banks in Pakistan

2015 ◽  
Vol 1 (1) ◽  
pp. 9-30 ◽  
Author(s):  
Irum Saba ◽  
Rabia Kibriya ◽  
Rehana Kouser
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Fixed Effect Model ◽  
Least Square ◽  
Panel Regression ◽  
Internal Factors ◽  
Bank Profitability ◽  
Return On Equity ◽  
Asset Quality ◽  
Macroeconomic Determinants

Objective: This paper analyzes bank-specific, industry-specific and macroeconomic determinants of bank profitability on the sample of 25 banks, 161 observations on the Pakistani banking system in the period between 2006 and 2012. Our dependent variables include Return on Equity, Return on Assets and Earning per Share and independent variables consist of 'bank-specific determinants', industry-specific determinants', and 'macroeconomic determinants'. State Bank of Pakistan provides the data for internal factors on a yearly basis. Methodology: Different statistical techniques are used step by step to empirically test the relationship between the variables and to draw conclusions from the results of the study. Firstly, to analyze the features of the profitability determinants descriptive statistics are used. Secondly, we examine the causal relationship between bank-specific, industry specific, macroeconomic variables and profitability variables, Pearson's coefficient of correlation is used.  Panel data are used in this study so the technique used for regression is a panel regression technique which includes the pooled Ordinary Least Square, Random Effects Model and Fixed Effect Model. Hausman test is used to analyze that which technique for panel regression is more suitable for study. Results: According to the obtained results, among internal factors of bank profitability, firm size are the most important factor. Profitability is influenced by liquidity, asset quality and leverage condition of the banks. Regarding the external variables, inflation and interest rate show significant effect on bank profitability. Islamic banks show significant positive relationship with commercial banks.

scholarly journals Examining Risk-Weighted Assets (RWA) Performance after Recent Financial Crisis in Malaysian Banking System

2018 ◽  
Vol 10 (5) ◽  
pp. 129
Author(s):  
Siti Nor Amira Mohamad ◽  
Mohamad Yazis Ali Basah ◽  
Muhammad Ridhwan Ab Aziz
Keyword(s):  
Financial Crisis ◽  
Annual Report ◽  
Global Financial Crisis ◽  
Secondary Analysis ◽  
Banking System ◽  
Risk Measurement ◽  
Quantitative Approach ◽  
Capital Ratios ◽  
Recent Financial Crisis ◽  
The Stability

Until recently, there has been only muted debate on the stability of RWA and after the recent financial crisis, the new regulatory framework was introduced that will enrich the quality and level of capital ratios for the banking system. However these capital ratios required to be based on specific risk measurement that permits for appropriate comparison as these gives new prominence to the stability of the underlying RWA. The aim of this paper is to examine the RWA performance after recent global financial crisis in Malaysian banking system. The study uses quantitative approach to examine in detail the RWA performance from year 2012 to 2016 using secondary analysis of bank’s annual report.

scholarly journals Macroeconomic Determinants of Automobile Sales in Indonesia: An Empirical Study in 1986-2016

2019 ◽  
Vol 10 (3) ◽  
pp. 159-166
Author(s):  
Suwinto Johan
Keyword(s):  
Social Sciences ◽  
Exchange Rate ◽  
Interest Rate ◽  
Total Sample ◽  
Regression Method ◽  
Gdp Growth ◽  
Research Model ◽  
The Social ◽  
Automobile Sales ◽  
Macroeconomic Determinants

The aim of this research was to study the determinants of automobile sales in Indonesia. The automobile sales were the sales of car and motorcycle during 1986-2016. The research focused on five macroeconomics variables (exchange rate, Gross Domestic Product (GDP), growth of GDP, inflation, and interest rate). The total sample was 30 years of automobile sales in Indonesia. The researcher used the regression method with Statistical Package for the Social Sciences (SPSS) to test the research model. For a few variables, lag t-1 was used. The empirical results show that GDP and the growth of GDP have a significant influence on both car and motorcycle sales in Indonesia. The growth of GDP reaches a significant level at α < 1%. However, the exchange rate of USD to IDR, inflation, and interest rate do not influence automobile sales in Indonesia.

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