scholarly journals An Incentive for Risk Taking: The Case of Banks in ASEAN 6

2020 ◽  
Vol 11 (5) ◽  
pp. 129
Author(s):  
Thanh Phu Ngo
Keyword(s):  
Credit Risk ◽  
Technical Efficiency ◽  
Risk Taking ◽  
Commercial Banks ◽  
Small Banks ◽  
Bank Risks

Incorporating credit risk into technical efficiency to investigate possible effects of the risk on efficiency for a sample of 276 unique ASEAN commercial banks over the period 2000 -2015, we find a striking U-shaped effect of credit risk on both risk-free efficiency and risk-adjusted efficiency. The U-shaped relationship exists in both large banks and small banks. This finding is new and raises a concern for bank regulators in monitoring and controlling bank risks since banks have an incentive to become more efficient by following greater risk-taking strategies.

scholarly journals Research on the Impact of Financing Liquidity on Risk-taking of Commercial Banks

2019 ◽  
Vol 267 ◽  
pp. 04012
Author(s):  
Yumeng Bu
Keyword(s):  
Risk Taking ◽  
Financial Crises ◽  
Commercial Banks ◽  
Mutual Influence ◽  
Risk Exposure ◽  
External Financing ◽  
Internal Financing ◽  
The Impact ◽  
The Relationship ◽  
Bank Risks

Insufficient liquidity and maturity mismatches lead to bank risks and financial crises. After Basel III included the net stable funding ratio into regulatory indicators, the relationship between the liquidity indicators represented by the net stable capital ratio and the bank's risk exposure triggered discussions among domestic and foreign scholars. This paper uses the data of China's commercial banks, mainly discussing the mutual influence of internal financing liquidity and external financing liquidity on the risk exposure of banks, and then putting forward some suggestions on how to reduce bank risks through financing liquidity.

The Impact of Credit Risk on Performance: A Case of South African Commercial Banks

2020 ◽  
pp. 097215092096992
Author(s):  
Babatunde Lawrence ◽  
Mishelle Doorasamy ◽  
Prince Sarpong
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Gender Diversity ◽  
Capital Adequacy ◽  
Financial Reports ◽  
Return On Equity ◽  
Leverage Ratio ◽  
Small Banks ◽  
Board Gender Diversity ◽  
The Impact

The objective of the study was to comparatively assess the impact of credit risk on the performance of big and small banks in South Africa. Data from audited financial reports of 14 commercial banks were obtained and divided into two panel data sets and analysed using the R-Studio software version 3.5.1 to assess the impact of capital adequacy ratio (CAR), non-performing loan to gross loan (NPLGL), loan-to-deposit ratio (LTDR), leverage ratio (LR), board gender diversity (BGD), with bank size (total asset) and AGE as control variables, on performance, (return on asset [ROA] and return on equity [ROE]). The findings of the study revealed that non-performing loan (NPL), CAR, LR, LTDR and age of banks all have significant and greater impact on performance, as measured by ROA, of small banks when compared with big banks. Surprisingly, NPL was revealed to have a lesser impact on the ROE of small banks as compared to the ROE of big banks but showed no impact on the ROA of big banks during the period of 2008–2017.

scholarly journals The Bank Specific Determinants of Loan Growth and Stability: Evidence from Indonesia

2021 ◽  
Vol 36 (2) ◽  
pp. 93-123
Author(s):  
Pananda Pasaribu ◽  
Bonnie Mindosa
Keyword(s):  
Economic Growth ◽  
Credit Risk ◽  
Research Methods ◽  
Commercial Banks ◽  
Comprehensive Analysis ◽  
Bank Loans ◽  
Bank Stability ◽  
Small Banks ◽  
Loan Growth

Introduction/Main Objectives: This study aims to examine the specific determinants of loan growth and the consequences of excessive loan growth on bank stability. Background Problems: Bank loans play an important role in economic growth, but previous studies indicate that excessive loans lead to bank instability. Novelty: This study undertakes a comprehensive analysis, as it will discuss both the loan determinants and excessive loans simultaneously. Research Methods: This study covers more than 89% of the total loans of commercial banks (listed and non-listed banks) between 2002 and 2018 and it employs GMM in order to obtain robust estimations. Finding/Results: The growth of customers’ deposits and gross NPL are the most important factors in explaining loan growth in Indonesia. Banks with excessive loans tend to have high levels of credit risk. Conclusion: Banks’ liquidity and credit risk have important roles in explaining banks’ loans. However, excessive loans could lead to bank instability, particularly for small banks.

scholarly journals Loan Loss Provision and Risk-Taking Behavior of Commercial Banks in Pakistan: A Dynamic GMM Approach

2019 ◽  
Vol 11 (19) ◽  
pp. 5209 ◽  
Author(s):  
Changjun Zheng ◽  
Shumaila Meer Perhiar ◽  
Naeem Gul Gilal ◽  
Faheem Gul Gilal
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Risk Taking ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Capital Adequacy Ratio ◽  
Risk Taking Behavior

The paper analyzes the determinants of the loan loss provision (LLP) of 22 commercial banks in Pakistan from 2010 to 2017. The motive of the research is that LLP is a measure of credit risk as a proxy for bank risk-taking behavior profits and banks’ sustainability. Especially after the occurrence of a global financial crisis. The quantitative research method of data collection from Bureau Van Dijk’s BankFocus portal and the World Bank’s World Development Indicators. Other than considering specific bank variables such as capital adequacy ratio, return on average equity, and government securities, the effects of macroeconomic variable inflation and lending interest rates are explicitly studied. The model of pooled ordinary least squares (POLS), fixed effect (FE), panel corrected standard error (PCSE), and panel data estimation in the form of a general method of moments (GMM) two-step system is used to find the risk-taking behavior of banks in Pakistan. The results obtained by the use of inflation (INF) as an instrumental variable of LLP are highly dependable with a negative impact on loan loss provision. Lending interest rate (LIR) has a positive and significant relationship with LLP and contribute in the study of macroeconomic variables for bank risk-taking, excessive amount of interest rate was not beneficial for banks to earn profits especially during the economic crises. Return on average equity (ROAE) significantly moderates LLP with a negative interaction and helped the bank with profitable operations and save bank from solvency. Capital adequacy ratio (CAR) and government securities (GOV) are insignificant to LLP. The result is robust by measure of endogeneity, and highlights the important role of commercial banks’ sustainability to explain risk-taking behavior in Pakistan with the intention to increase profits after the occurrence of financial crises. The study further contributes to future research on managerial policy and decision making. In summary, the paper on loan loss provision has the capacity to forecast commercial banks’ credit risk for risk-taking in an emerging country.

OFF-BALANCE SHEET ACTIVITIES AND BANK RISKS: AN INVESTIGATION OF THE LISTED COMMERCIAL BANKS IN CHINA (1999–2013)

2015 ◽  
Vol 10 (01) ◽  
pp. 1550004 ◽  
Author(s):  
KANGWEI YE
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Balance Sheet ◽  
Test Results ◽  
Bankruptcy Risk ◽  
Risk Characteristics ◽  
The Relationship ◽  
The Empirical Analysis ◽  
Bank Risks ◽  
Overall Risk

Based on a broad set of 16 listed commercial banks in China during the period 1999–2013, this paper makes the empirical analysis of the relationship between the development of off-balance sheet (OBS) activities and the banks' overall risk, bankruptcy risk and credit risk. Innovation of this article is mainly reflected in: (1) Considering different types of risk variables, it gives a more comprehensive disclosure of the bank's risk characteristics. (2) Dividing the research object into joint-stock commercial banks and state-owned commercial banks, and get some new test results: The development of OBS business of state-owned commercial banks increases the overall risk, bankruptcy risk and credit risk significantly. While in joint-stock commercial banks sample, the development of OBS business reduces the overall risk significantly.

Banks’ capital regulation and risk: Does bank vary in size? Empirical evidence from Bangladesh

2017 ◽  
Vol 04 (02n03) ◽  
pp. 1750025 ◽  
Author(s):  
Changjun Zheng ◽  
Syed Moudud-Ul-Huq
Keyword(s):  
Corporate Governance ◽  
Credit Risk ◽  
Empirical Evidence ◽  
Risk Taking ◽  
Commercial Banks ◽  
Think Tanks ◽  
Capital Regulation ◽  
Level Data ◽  
Risk Taking Behavior ◽  
The Stability

This paper primarily examines both causality effect of banks’ capital regulation and risk-taking behavior based on generalized methods of moment (GMM) for a dynamic unbalanced panel observation of 32 commercial banks in Bangladesh over the period 2000–2014. The empirical findings of this study suggest that capital regulation has a significant effect on risk-taking behavior, and excessive risks impede the growth of capital ratio as well as the stability. Moreover, from bank-level data, size does not uniformly affect the quantity of capital and risk. Large banks have poor capital ratio and higher inclination to risk than small size counterpart. Small size banks are well managed in capital ratio and risk-taking that glitter their stability through the periods. Besides these effects, corporate governance notably influenced banks to reduce credit risk and enhance stability. Finally, this paper provides some implications for the think tanks and stakeholders of the country.

THE IMPLEMENTATION OF AN INTEGRATED CREDIT RISK MANAGEMENT IN OPERATING IN POLAND COMMERCIAL BANKS

2015 ◽  
Vol 2 (2) ◽  
pp. 83-95
Author(s):  
Dariusz Prokopowicz
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Analysis Model ◽  
Credit Risk Management ◽  
Loan Portfolio ◽  
Integrated Risk ◽  
Modern Information ◽  
Bank Risks ◽  
Integrated Risk Management

Since the late 90-th the value of an integrated credit risk management in commercial banks operating in Poland has become very actual. In classical terms, the integrated risk management is the identification and valuation of certain categories of bank risks associated with their activities. The using of modern information systems helpes to improve the integration of the various business segments in the banks and develope a model for risk management portfolio. The implementation of integrated risk management in relation to the loan portfolio improved process control assets of banks. Thus, a comprehensive risk management in terms of loan portfolio significantly adds risk analysis model, each credit transaction.

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