scholarly journals Impacts of Financial Inclusion on Non-Performing Loans of Commercial Banks: Evidence from China

2018 ◽  
Vol 10 (9) ◽  
pp. 3084 ◽  
Author(s):  
Feng-Wen Chen ◽  
Yuan Feng ◽  
Wei Wang
Keyword(s):  
Financial Crisis ◽  
Credit Risk ◽  
Commercial Banks ◽  
Local Governments ◽  
Banking Sector ◽  
Negative Impact ◽  
Financial Inclusion ◽  
Financial Industry ◽  
Asset Quality ◽  
The Impact

Non-performing loans of commercial banks have long hampered the development of the banking sector, and directly reflect the credit risk and asset quality. With the continuous development of the financial industry, the introduction of financial inclusion has greatly eased the shortage of funds, and narrowed the gap between poor and rich. However, whether the promotion of financial inclusion in the financial industry could affect the non-performing loans of commercial banks has not been verified. Therefore, this paper discusses the possible associations between financial inclusion and non-performing loans of commercial banks on the regional level, constructs a panel data model by selecting the data of 31 provinces (including 4 municipalities) in China from 2005 to 2016, and uses the fixed effect model for empirical test. The empirical results (from an overall national sample) reveal a negative impact of the financial inclusion on non-performing loans. Moreover, the development of the banking sector and the regional consumption could enhance the impact of financial inclusion, while government intervention and unemployment could reduce the impact of financial inclusion. From the analysis of the regional sample, when the development of financial inclusion reaches a high level, the lagged financial inclusion promote the non-performing loans of commercial banks; however, when the financial inclusion is underdeveloped, the development of commercial banks act as a disincentive to non-performing loans. Therefore, the local governments should pay more attention to the influences of financial inclusion on the financial industry, in order to maintain the stability of banking asset quality. In addition, the negative impact of financial inclusion on non-performing loans of commercial banks is significant in China central region, while its impacts in China eastern and western regions are not significant. This indicates that the development of the financial industry and economy can hamper the effects of financial inclusion. It is necessary to adjust the financial resource allocation according to the characteristics of different regions in China, so that the financial inclusion can effectively promote the regional financial industry upgrade, improve regional capital flow efficiency, and fundamentally reduce the non-performing loans of commercial banks. According to the sample analysis by time, there is a significant negative impact relationship between inclusive finance and commercial banks’ non-performing loans after the financial crisis, while the impacts before and during the financial crisis are not significant. This demonstrates that the impact of the global financial crisis on China’s regional economy has further enhanced the inefficiency of the inclusive financial system on credit risk, which in turn, helps commercial banks better maintain asset quality stability.

scholarly journals The impact of risk factors on the financial performance of the commercial banking sector in Barbados

2018 ◽  
Vol 7 (1) ◽  
pp. 76-93 ◽  
Author(s):  
Anthony Wood ◽  
Shanise McConney
Keyword(s):  
Risk Factors ◽  
Credit Risk ◽  
Financial Performance ◽  
Banking Sector ◽  
Negative Impact ◽  
Interest Rate Risk ◽  
Commercial Banking ◽  
Country Risk ◽  
Risk Variable ◽  
The Impact

The objective of this paper is to determine the impact of risk factors on the financial performance of the commercial banking sector in Barbados using quarterly data for the period 2000 to 2015. The empirical results indicate that Capital Risk, Credit Risk, Liquidity Risk, Interest Rate Risk and Operational Risk have statistically significant impacts on financial performance. The only risk variable which does not derive this result is Country Risk. In addition, of those variables which proxy external factors, only GDP Growth has a statistically insignificant influence on financial performance. Credit risk exerted a negative impact on the banks’ financial performance, thus the banks must ensure they adopt appropriate measures to minimise the impact of this risk. Higher levels of capital impacted positively on the banking sector’s profitability. This paper is the first effort employing such an extensive dataset based on Barbados’ commercial banking sector and shows the main factors that influence commercial banks’ financial performance in this developing economy.

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 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 The The Impact of Liquidity, Credit, and Financial Leverage Risks on Financial Performance of Islamic Banks: A Case of Sudanese Banking Sector

2020 ◽  
Vol 2 (2) ◽  
pp. p59
Author(s):  
Ahmed Nourrein Ahmed Mennawi
Keyword(s):  
Credit Risk ◽  
Financial Performance ◽  
Banking Sector ◽  
Negative Impact ◽  
Liquidity Risk ◽  
Positive Influence ◽  
Islamic Banks ◽  
Financial Leverage ◽  
Loan Financing ◽  
The Impact

This study aims to investigate the impact of liquidity, credit, and financial leverage risks on the financial performance of Islam banks in Sudan during the period of 2008 - 2018. Panel dataset of 143 observations from (13) banks has been used in this study. Two models of ROA and NPM have been constructed using robust random effects estimates for testing the study hypotheses. The independent variables consist of liquidity and credit risks plus the financial Leverage ratio. Credit risk that measured by nonperformance of loan (financing) and provision of loan (financing) loss ratios; while the liquidity risk measured by cash to deposits ratio, liquid assets to total assets ratio and total loan (financing) to total deposits ratio. The financial performance of Islamic banks in Sudan measured by the ratios of return on assets and net profit margin. The results reveal that the credit risk and financial leverage have significant and negative impact on the financial performance of Islamic banks in Sudan, whereas the liquidity risk generally found to be insignificant. Despite that, the liquidity risk in term of liquid assets to total assets ratio provides a significant and positive influence on the financial performance of Sudanese banks. Finally, the importance of this study is that it touches the most significant types of risks that Sudanese Islamic banks face during their operational cycles.

scholarly journals Financial performance after the Spanish banking reforms: A comparative study of 19 commercial banks

2014 ◽  
Vol 4 (2) ◽  
pp. 70-82 ◽  
Author(s):  
Pison F. Irene ◽  
Cibrán F. Pilar ◽  
Lious Agbor Tabot Ntoung
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Research Database ◽  
Banking Reforms ◽  
The 2008 Financial Crisis ◽  
Asset Quality ◽  
The Impact

A diagnostic review of the Spanish financial system during the 2008 financial crisis reveals the emergency need for banking reform in the sector. In an attempt to evaluate the impact of the Spanish reform, the present study examines the bank´s performance before/after the reform was adopted, using data of 19 Spanish commercial banks extracted from the Global Vantage research database (Standard and Poor’s) over the period 2006 to 2013. This study uses multivariable regression method to investigate the impact of the CAMELS rating system: capital adequacy, asset quality, management quality, liquidity and sensitivity to market risks on the bank´s performance such as earnings efficiency. The time-line of the study is essential because it helps us to determine the financial performance of Spanish commercial banks before the banking reforms during the financial crisis and an important set in terms of mergers and acquisition in the banking industry. The empirical results have found strong and positive evidence that Capital Adequacy, Management Capacity, Liquidity and Sensitivity to Market Risk are useful predictors of banks performance (earnings efficiency), thus, any reform pilot toward this banking indicators will eventually have a positive impact on banking performance. Base on the present study, the Spanish reform was so vital for better banking performance. Therefore, this study serves not only to academics but also to policy makers.

scholarly journals Effect of Technology Based Financial Innovations on Non-Interest Income of Commercial Banks in Kenya

2018 ◽  
Vol 14 (7) ◽  
pp. 337
Author(s):  
L’souza Boniface Alubisia ◽  
Wainaina Githii ◽  
Mirie Mwangi
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Financial Innovation ◽  
Mobile Banking ◽  
Financial Industry ◽  
Descriptive Research ◽  
Financial Innovations ◽  
Interest Income ◽  
Impact Of Technology ◽  
The Impact

Technology based financial innovation has had a great impact on the financial industry as a whole over the past few decades. It has presented the banking sector with an opportunity to increase the revenue base. This study intended to identify the impact of technology based financial innovation on non-interest income in Kenyan commercial banks. The study investigated how the adoption of ATMs and Cards, Internet and Mobile Banking and use of Funds Transfer Systems such as RTGS and EFT has impacted the non-interest income of commercial banks in Kenya. Descriptive research design was utilised. The study found that technology based financial innovation has significant effect on the non-interest income earned by commercial banks in Kenya. It recommends all stakeholders in commercial banks to take any investments made towards technology based financial innovation products as a strategy to improve non-interest income

scholarly journals Credit Risk Assessments and Firm Value of Listed Commercial Banks in Kenya

2021 ◽  
pp. 68-82
Author(s):  
Mohamed Maalim Issackow ◽  
Felix Mwambia ◽  
Wilson Muema
Keyword(s):  
Credit Risk ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Firm Value ◽  
Equity Capital ◽  
Capital Adequacy ◽  
Risk Assessments ◽  
Asset Quality ◽  
The Impact ◽  
Positive Effect

Despite the various control measures put in place especially the CBK’s prudential laws to ensure that the performance of commercial banks in Kenya is ensured, most commercial banks have been collapsing in the recent past. It is in this light that the current study sought to ascertain the impact of bank liquidity, capital adequacy, asset quality and earnings on the firm value of listed Commercial banks in Kenya. Descriptive research design was employed on a population sample of eleven publicly listed retail banks. Secondary data was collected from CBK and other public financial reports over the 12-year period from 2009 to 2020. The collected data was analysed using1a multivariate panel regression1model to generate the relevant regression tests. The1study established that the capital adequacy has a marginal positive impact on the firm value while earning ability was found to have a statically insignificant positive effect on firm value among Kenyan commercial bank. The study findings indicated that liquidity was insignificantly and negatively correlated with firm value as asset quality had insignificant positive effect on firm value among Kenyan commercial bank. The study recommends that, managers of listed banks should embrace utilization of internally generated equity capital to ultimately promotes credit risk assessments as they maintain optimal levels of liquidity to maximize firm value and maintain high quality of assets as they sustained levels of earnings that boost output. This paper explained a credit risk rating concept that had not been examined in Kenya before.

FINANCIAL LITERACY AND FINANCIAL INCLUSION EFFECTS ON STABILITY AND COMPETITIVENESS INDICATORS IN THE BANKING SECTOR: CROSS COUNTRY EVIDENCE FOR AFRICA AND THE WORLD

2021 ◽  
pp. 2150009
Author(s):  
JOÃO JUNGO ◽  
MARA MADALENO ◽  
ANABELA BOTELHO
Keyword(s):  
Credit Risk ◽  
Interest Rates ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Financial Stability ◽  
Banking Sector ◽  
Financial Education ◽  
Financial Inclusion ◽  
The Stability ◽  
The Impact

Financial inclusion has allowed financial products with very high-interest rates and complex conditions to become increasingly affordable. Financial inclusion programs, which aim to reach all social strata, strongly expose financial institutions to risk and particularly credit risk. That said, additional interventions such as financial education of those included are needed. We aim to examine the impact of financial literacy and financial inclusion of households on bank performance. Specifically, we want to examine the impact of financial literacy on credit risk, competitiveness among banks and financial stability. The FGLS estimation results suggest that financial literacy and financial inclusion reduce credit risk and enhance the stability of banks, and regarding competitiveness, our results were inconclusive as they show different effects for each competitiveness indicator, although they point to improved competitiveness in some cases. This research allows policymakers to understand that individual financial attitudes can be reflected in the general welfare of financial institutions and encourages the intensification of programs aimed at improving household financial literacy.

Structure, Conduct and Performance Analysis of Indian Commercial Banks

2016 ◽  
Vol 5 (2) ◽  
pp. 157-185 ◽  
Author(s):  
Ratna Barua ◽  
Malabika Roy ◽  
Ajitava Raychaudhuri
Keyword(s):  
Commercial Banks ◽  
Structural Changes ◽  
Banking Sector ◽  
Negative Relationship ◽  
Market Concentration ◽  
Jel Classification ◽  
And Performance ◽  
Indian Banks ◽  
Asset Quality ◽  
The Impact

The market structure, conducts and performance of the Indian banking sector have changed since the introduction of banking sector reforms. Slower economic growth, coupled with asset quality problems in recent years, has taken a toll on the overall health of the Indian banking sector. Higher statutory capital requirement under Basel III has posed another major challenge to the Indian banks. The purpose of the study is to examine the impact of structural changes and conduct of Indian commercial banks on their profitability in the paradigm of structure–conduct–performance (SCP) framework. Market concentration, bank-specific/macroeconomic variables have been considered as important determinants of the profitability. The regression results find a negative relationship between profitability and market concentration and reject SCP hypotheses. The study found that capitalization, credit risk, leverage and ownership structure are the most important determinants of the profitability of Indian banks. The study also found that financial crisis had no significant impact on the profitability of Indian banks. JEL Classification: C4, G21, G28, L19

scholarly journals Factors may drive the commercial banks lending: evidence from Jordan

2017 ◽  
Vol 12 (2) ◽  
pp. 31-38 ◽  
Author(s):  
Ayman Mansour Khalaf Alkhazaleh
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Negative Impact ◽  
Bank Lending ◽  
Time Frame ◽  
Least Square ◽  
Financial Reports ◽  
Ordinary Least Square ◽  
Statistical Effect ◽  
The Impact

In an attempt to shed more light on the behavior of lending in banks, especially in the environment of developing countries, this study aims at explaining the impact of some factors proposed as determinants of bank lending in Jordanian commercial banks by benefiting from the financial reports of thirteen banks during the period 2010-2016. The study, in order to achieve the objectives and to test the main hypotheses has adopted Ordinary least square model (OLS). The most important results of the study are a statistically significant adverse effect of both credit risk and liquidity on bank lending, while there is a significant positive effect of the return on assets, size of the bank measured by assets, inflation, money supply and growth in gross domestic product in determining the level of lending. In addition, the study does not show a significant statistical effect between investments, the volume of deposits and bank lending in the same time frame. The review points out that because of the negative impact of liquidity and credit risk factors, commercial banks need to focus more on reducing their impact because presence of this impact at the end will decrease the ability of these banks to provide loans and stay in the banking market.

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