scholarly journals Non-Performing Loan in Bangladesh: A Comparative Study on the Islamic Banks and Conventional Banks

2020 ◽  
Vol 4 (1) ◽  
pp. 76-83
Author(s):  
Sonia Rezina ◽  
Rubaiyat Shaimom Chowdhury ◽  
Nusrat Jahan
Keyword(s):  
Interest Rates ◽  
Negative Influence ◽  
Capital Adequacy ◽  
Capital Adequacy Ratio ◽  
Banking Business ◽  
The Difference ◽  
Conventional Banks ◽  
The Impact ◽  
Reserve Ratio ◽  
Operational Modes

The banking business is one of the booming businesses in Bangladesh. But at present, the sector is struggling to be on the growth path due to the growing proportion of Non-Performing Loan (NPL). The NPL has instigated a negative influence on the growth of Banking Business. This study has compared the severity of the impact of operational modes between two mainstream banking systems, traditional banking and Islamic banking, which may affect Non-performing loans. Other variables such as governance of the banks, bureaucracy, and size of the banks, the difference in reserve ratio, capital adequacy ratio, and interest rates have different impacts on NPL. We have explained the impact of the variables on the bank performance as per mainstream banking operational model. Finally, we have proposed some evocative measures through which the Non-performing loan can be minimized.

scholarly journals Kecukupan Modal, Risiko Kredit, Rasio BOPO, dan Likuiditas pada Profitabilitas Bank

2021 ◽  
Vol 31 (7) ◽  
pp. 1692
Author(s):  
Anak Agung Istri Vita Wisaputri ◽  
I Wayan Ramantha
Keyword(s):  
Credit Risk ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Financial Reports ◽  
Operating Income ◽  
Analysis Technique ◽  
Capital Adequacy Ratio ◽  
Banking Institutions ◽  
Conventional Banks ◽  
The Impact

Profitability is the ability of a bank to make a profit through the use of its assets. The health and stability of a bank is very important for the country's economy as well as for the business sector and for its customers. Banking financial ratios can be used to assess a bank's soundness. The purpose of this research is to gather empirical evidence about the impact of Capital Adequacy Ratio (CAR), Non-Performing Loans (NPL), Operational Cost of Operating Income (BOPO), and Loan to Deposit Ratio (LDR) on the profitability of conventional banks listed on the Indonesia Stock Exchange from 2017 to 2019. The research was carried out by examining the annual financial reports available on the IDX website. Purposive sampling was used as the sampling method. This study's sample consisted of 40 banking institutions. Multiple linear regression is used in the data analysis technique. Better capital adequacy and liquidity increased banking companies' ability to generate profits, according to the findings. Meanwhile, higher credit risk and BOPO ratios can limit a bank's ability to generate profits. Keywords: Capital Adequacy; Credit Risk; BOPO; Liquidity; Profitability.

scholarly journals Risk Management and Performance of Conventional Banks in Pakistan

2021 ◽  
Vol 2 (2) ◽  
pp. 169-177
Author(s):  
ALAM REHMAN ◽  
YASIR KHAN ◽  
ARIF HUSSAIN
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Sampling Technique ◽  
Organizational Structures ◽  
Capital Adequacy ◽  
Capital Adequacy Ratio ◽  
And Performance ◽  
Conventional Banks ◽  
Level Of Understanding ◽  
Reserve Ratio

The study examines the relationship between risk management and performance of conventional banks in Pakistan. The study has been conducted using Capital adequacy ratio, non-performing loan ratio, Cost per loan ratio, Cash reserve ratio and Z-scoring ratio as the proxies of risk management and Return on asset has been used as the proxy of the bank financial performance. The study has used random sampling technique for the 20 conventional banks for the period 2010 to 2016. The study uses correlation and simple OLS to test the hypothesis. The results reveal that capital adequacy ratio and Z-scoring have positive significant impact on the conventional banks, financial performance, where as Non-performing ratio, cost per loan ratio and cash reserve ratio predicting negative affect on the financial performance of the conventional banks in Pakistan. The study has practical as well as theoretical implications. The results are expected to help policy makers to rehash their policies by encompassing the approaches that facilitate the risk management of banks in Pakistan. The study will also help researchers in strengthening their level of understanding of these relationships. Replication of the study may help to validate the hypothesized model and their consequent application in the organizations that share somewhat similar organizational structures.

scholarly journals Pengaruh Credit Risk Management Pada Financial Performance Bank Konvensional Yang Terdaftar di BEI

2021 ◽  
Vol 26 (3) ◽  
pp. 447
Author(s):  
Ervina, Vivi N. Fatimah, H.S.Lestari
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Secondary Data ◽  
Sampling Technique ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Conventional Banks ◽  
The Impact

The purpose of this study is to analyze the impact of credit risk management on the financial performance of Indonesian conventional banks in 2016-2020. The sample in this study was 32 conventional banks from 160 observations using purposive sampling technique and secondary data. The dependent variable in this paper is measured by profitability using the return on assets proxy while credit risk management as an independent variable. From the research results, LDR and NPLR have no effect on financial performance. CAR has a positive influence on financial performance so that bank managers are expected to be able to maintain their capital adequacy ratio in accordance with the provisions set by Bank Indonesia to maintain their financial performance because a high capital adequacy ratio is considered safe and tends to meet its financial obligations, while CIR and LDR negative effect on financial performance. By increasing the ratio of costs to income indicates a low level of efficiency in banking operational costs, and low liquid assets will increase cash reserves to reduce liquidity risk. Investors can invest their funds in banks that have a high capital adequacy ratio, cost of income ratio and liquidity ratio to avoid financial risk.

scholarly journals Characteristics of banks as determinants of profit management for Islamic and conventional banks in ASEAN

Accounting ◽  
2021 ◽  
pp. 1179-1188 ◽  
Author(s):  
Suripto Suripto ◽  
Supriyanto Supriyanto
Keyword(s):  
Discriminant Analysis ◽  
Earnings Management ◽  
Capital Adequacy ◽  
Multiple Discriminant Analysis ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Brunei Darussalam ◽  
Capital Adequacy Ratio ◽  
Asean Countries ◽  
Conventional Banks

This study aims to analyze company characteristics as a determinant of conventional and Islamic bank earnings management in several ASEAN countries (Association of South East Asian Nations). The Multiple Discriminant Analysis was applied to determine the differences between Islamic and Conventional Banks. This test was conducted based on Capital Adequacy Ratio, Income Before Tax and Interest, Non-Performing and Changing Loans, and Company's Size in the banks of Indonesia, Malaysia, and Brunei Darussalam from 2014 to 2018. The data obtained from 200 banking entities were analyzed discriminatively. The results showed that there were simultaneous differences between Capital Adequacy Ratio, Earnings Before Tax, Loan Loss Provision, Non-Performing and Changing Loans, and Company's Size as determinants of earnings management between Islamic and conventional banks. Also, it was found that Company's Size was the dominant variable determining the management differences. Based on Discriminant Analysis, there were significant differences in the determinants of conventional and Islamic earnings management. The Changing Loan variable showed the highest contribution in determining earnings management in Islamic banks. Overall, this study found that conventional banks dominated Islamic system in practicing earnings management.

scholarly journals MONETARY DISCRETION BY FISCAL MEANS: THE CASE OF BULGARIA

2019 ◽  
Vol 7 ◽  
Author(s):  
Preslav Dimitrov ◽  
Ivan Todorov ◽  
Stoyan Tanchev ◽  
Petar Yurukov
Keyword(s):  
Interest Rates ◽  
Balance Sheet ◽  
Liquidity Effect ◽  
Currency Board ◽  
Automatic Adjustment ◽  
Adjustment Mechanism ◽  
Study Results ◽  
National Bank ◽  
The Impact ◽  
Reserve Ratio

The specific design of the Bulgarian currency board arrangement (CBA), which provides an opportunity for the Bulgarian government to conduct discretionary monetary policy by changes in the fiscal reserve, was analyzed. The impact of government deposit fluctuations on the dynamics of reserve money and interbank interest rates was investigated. The hypotheses of an automatic adjustment mechanism and a liquidity effect under the Bulgarian currency board arrangement were tested. The methodology employed was a vector autoregression, which included the following variables: MB – monetary base; BP – the balance of payments; GD – government deposit on the balance sheet of the Issue Department of the Bulgarian National Bank; MRR – minimum required reserve ratio of commercial banks. The target variable was MB. Monthly data for the period of January 1998 - December 2018 were used. The study results did not provide evidence of a statistically significant impact of changes in government deposit on reserve money and interbank interest rates. The hypotheses for the existence of an automatic adjustment mechanism and a liquidity effect did not find an empirical confirmation.

scholarly journals PENGUATAN STRUKTUR MODAL SEBAGAI PEMENUHAN REGULASI DAN PENDUKUNG PENGEMBANGAN BISNIS

2020 ◽  
Vol 12 (1) ◽  
pp. 43-51
Author(s):  
Tedi Setiawan ◽  
Jaja Suteja ◽  
Ellen Rusliati
Keyword(s):  
Capital Structure ◽  
Research Method ◽  
Banking Industry ◽  
Market Competition ◽  
Descriptive Analysis ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Effective Strategies ◽  
Capital Adequacy Ratio ◽  
The Impact

Decision on capital structure have an important role in determinig banking performance.This study aims to find alternative strategies for Bank X in fulfilling the capital requirements and to measure its the effectivities in order to reach the capital requirements of the Bank X to be in accordance with the regulations in 2018. The results of this study are expected to provide useful information related to the importance of strengthening the capital structure of the company, especially in the banking industry in order to maintain the continuity of business and to win in the market competition. The study was conducted at Bank X was located in Bandung. The research method used was survey with qualitative research approaches. While the type of research was explorative descriptive analysis. The results of the study was found three effective strategies to meet the capital needs of Bank X in 2018, namely asset revaluation, reduction in dividend payout ratio (DPR) and the issuance of subordinated bonds. These three strategies could improve Capital Adequacy Ratio (CAR). while alternative simulations need to be carried out to determine the impact of the decision making.

Macroeconomic shocks, fragility and home financing in Malaysia: can rental index be the answer?

2018 ◽  
Vol 9 (1) ◽  
pp. 17-44 ◽  
Author(s):  
Rosylin Mohd Yusof ◽  
Farrell Hazsan Usman ◽  
Akhmad Affandi Mahfudz ◽  
Ahmad Suki Arif
Keyword(s):  
Interest Rates ◽  
Islamic Banks ◽  
Macroeconomic Shocks ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Rental Rate ◽  
Conventional Banks ◽  
The Impact ◽  
Conventional And Islamic Banks

Purpose This study aims to investigate the interactions among macroeconomic variable shocks, banking fragility and home financing provided by conventional and Islamic banks in Malaysia. Identifying the causes of financial instability and the effects of macroeconomic shocks can help to foil the onset of future financial turbulence. Design/methodology/approach The autoregressive distributed lag bound-testing cointegration approach, impulse response functions (IRFs) and forecast error variance decomposition are used in this study to unravel the long-run and short-run dynamics among the selected macroeconomic variables and amount of home financing offered by both conventional and Islamic banks. In addition, the study uses Granger causality tests to investigate the short-run causalities among the selected variables to further understand the impact of one macroeconomic shock to Islamic and conventional home financing. Findings This study provides evidence that macroeconomic shocks have different long-run and short-run effects on amount of home financing offered by conventional and Islamic banks. Both in the long run and short run, home financing provided by Islamic banks is more linked to real sector economy and thus is more stable as compared to home financing provided by conventional banks. The Granger causality test reveals that only gross domestic product (GDP), Kuala Lumpur Syariah Index (KLSI)/Kuala Lumpur Composite Index (KLCI) and house price index (HPI) are found to have a statistically significant causal relationship with home financing offered by both conventional and Islamic banks. Unlike the case of Islamic banks, conventional home financing is found to have a unidirectional causality with interest rates. Research limitations/implications This study has focused on analyzing the macroeconomic shocks on home financing. However, this study does not assess the impact of financial deregulation and enhanced information technology on amount of financing offered by both conventional and Islamic banks. In addition, it is not within the ambit of this present study to examine the effects of agency costs and information asymmetry. Practical implications The analysis of cointegration and IRFs exhibits that in the long run and short run, home financing provided by Islamic banks are more linked to real sector economy like GDP and House Prices (HPI) and therefore more resilient to economic vulnerabilities as compared to home financing provided by conventional banks. However, in the long run, both conventional and Islamic banks are more susceptible to fluctuations in interest rates. The results of the study suggest that monetary policy ramifications to improve banking fragility should focus on stabilizing interest rates or finding an alternative that is free from interest. Social implications Because interest plays a significant role in pricing of home loans, the potential of an alternative such as rental rate is therefore timely and worth the effort to investigate further. Therefore, Islamic banks can explore the possibility of pricing home financing based on rental rate as proposed in this study. Originality/value This paper examines the unresolved issues in Islamic home financing where Islamic banks still benchmark their products especially home financing, to interest rates in dual banking system such as in the case of Malaysia. To the best of the authors’ knowledge, studies conducted in this area are meager and therefore is imperative to be examined.

scholarly journals Capital adequacy ratio and a bank’s financial stability in Vietnam

2021 ◽  
Vol 16 (4) ◽  
pp. 61-71
Author(s):  
Nguyen Minh Sang
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Generalized Method Of Moments ◽  
Capital Adequacy ◽  
Policy Implications ◽  
Ho Chi Minh City ◽  
Loan Loss ◽  
Control Variables ◽  
Capital Adequacy Ratio ◽  
The Impact

The objective of this study is to provide more empirical evidence on the impact of the capital adequacy ratio, as well as control and micro variables, on the financial stability of commercial banks in emerging markets such as Vietnam. The study analyzes the impact of the capital adequacy ratio on the financial stability of 18 Vietnamese commercial banks in the period 2010–2020 using the Generalized method of moments (GMM) model. Empirical research results show that the capital adequacy ratio has a positive correlation with the financial stability of Vietnamese commercial banks during the study period. Besides, the study also uses control variables such as Profitability through ROA and ROE, Bank Size (SIZE), Loans to Assets Ratio (LTA), Deposits to Assets Ratio (DTA), and Loan Loss Ratio (LLR), to analyze their impact on the financial stability of Vietnamese commercial banks. Based on the above results, the study proposes some policy implications to enhance the financial stability of Vietnamese commercial banks using the capital adequacy ratio and the control variables from the GMM model that are statistically significant. The paper also pointed out four limitations of the study in terms of data, research samples, methods and research models, so that further research can be more complete. AcknowledgmentThe author wishes to acknowledge support from the Banking University of Ho Chi Minh City. This research was made possible thanks to all valuable support from relevant stakeholders.

scholarly journals Regulatory Capital is a Panacea for Efficiency, Credit Growth and Reducing Non-Performing Loans in Commercial Banks

2021 ◽  
Vol 16 (2) ◽  
pp. 265-287
Author(s):  
Amina Malik ◽  
◽  
Babar Zaheer Butt ◽  
Shahab Ud Din ◽  
Haroon Aziz ◽  
...  
Keyword(s):  
Commercial Banks ◽  
Financial Statements ◽  
Capital Adequacy ◽  
Regulatory Capital ◽  
Credit Growth ◽  
Minimum Capital ◽  
Capital Adequacy Ratio ◽  
The Impact ◽  
Interest Margin

This study examined the effectiveness of regulatory capital in enhancing efficiency and credit growth and reducing bad loans in commercial banks listed on the Pakistan Stock Exchange (PSX) from 2010 to 2019. Precisely, the impact of capital adequacy ratio (CAR) was studied on net interest margin (NIM), credit growth (CR) and non-performing loans (NPLs). The impact of capital adequacy regulations was assessed by retrieving data from financial statements analysis (FSA), Bank Financial statements and the World Bank website. Panel regression models including ordinary least squares (OLS), fixed and random effects under robust title were applied in this study. Results revealed that the implementation of stringent CAR plays the role of panacea and increases interest margin & credit growth and a reduction of NPL in Pakistani commercial banks. The study provides practical results for regulators to customize regulations on credit growth to reduce non-performing loans and maintain healthy growth of loans by not compromising on interest margins as well as maintenance of minimum capital adequacy ratios. With the high significance of stringent minimum capital adequacy for banks, the findings of the study are valuable for regulators, banks, auditors and investors, as capital adequacy ratio commonly plays the role of Panacea in terms of efficiency, credit growth and reduction in non-performing loans. Keywords: capital adequacy ratio, efficiency, credit growth, non-performing loans

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