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1
Sanjoy, Kumar Sarker. "A COMPARATIVE ANALYSIS ON NON-PERFORMING LOANS (NPLs) IN THE BANKING SECTORS OF BANGLADESH." International Journal of Research - Granthaalayah 7, no. 1 (2019): 297–314. https://doi.org/10.5281/zenodo.2555325.
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The aims of this study is to be analyzed the comparative position of all the fours banking categories on non-performing loans in Bangladesh and also investigate what are the different causes of nonperforming loans in banking sectors of Bangladesh. This study will cover based on secondary data, which has been collected from the annual reports of the Bangladesh Bank during the 2006-2017 for 12 years and total NPL, NPL to Total Loans ratio and Trends of net NPL to total loans ratio are taken as variables of the study. The data are analyzed by using descriptive Statistics, ANOVA Test and the Test of Homogeneity of Variances. In this paper it is found that there is significant difference at the performances of four categories of banks on the Non-performing loans and there is no Homogeneity of Variances of total NPL, NPL to Total Loans ratio and Trends of net NPL to total loans ratio among all the banking categories. The SCBs and DFIs have continues maintain the high level of NPL and NPLs ratio to total loans then PCBs and FCBs and the NPLs recovery record during the study period has witnessed some sign or signal for improvement, due to number of step are taken with regard to internal restructuring for strengthen the loan recovery mechanism and initiative taken for written off measurement in recent time for all the banking categories. The suggestions and recommendation have been given for improve the present situation of nonperforming loans in the banking sectors in Bangladesh.
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Kumar Sarker, Sanjoy. "A COMPARATIVE ANALYSIS ON NON-PERFORMING LOANS (NPLs) IN THE BANKING SECTORS OF BANGLADESH." International Journal of Research -GRANTHAALAYAH 7, no. 1 (2019): 297–314. http://dx.doi.org/10.29121/granthaalayah.v7.i1.2019.1056.
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The aims of this study is to be analyzed the comparative position of all the fours banking categories on non-performing loans in Bangladesh and also investigate what are the different causes of non-performing loans in banking sectors of Bangladesh. This study will cover based on secondary data, which has been collected from the annual reports of the Bangladesh Bank during the 2006-2017 for 12 years and total NPL, NPL to Total Loans ratio and Trends of net NPL to total loans ratio are taken as variables of the study. The data are analyzed by using descriptive Statistics, ANOVA Test and the Test of Homogeneity of Variances. In this paper it is found that there is significant difference at the performances of four categories of banks on the Non-performing loans and there is no Homogeneity of Variances of total NPL, NPL to Total Loans ratio and Trends of net NPL to total loans ratio among all the banking categories. The SCBs and DFIs have continues maintain the high level of NPL and NPLs ratio to total loans then PCBs and FCBs and the NPLs recovery record during the study period has witnessed some sign or signal for improvement, due to number of step are taken with regard to internal restructuring for strengthen the loan recovery mechanism and initiative taken for written off measurement in recent time for all the banking categories. The suggestions and recommendation have been given for improve the present situation of non-performing loans in the banking sectors in Bangladesh.
3
Nugroho, Irfan Setyo, and Endri Endri. "Determinants of Non-Performing Bank Loans Listed on The Indonesia Stock Exchange For The 2016-2020 Period." Journal of Social Science 3, no. 6 (2022): 1214–32. http://dx.doi.org/10.46799/jss.v3i6.470.
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This study aims to analyse the effect of BOPO, Loan to Deposit Ratio (LDR), Capital Adequacy Ratio (CAR), Net Interest Margin, Oil Price, inflation, and Interest Rate on Non-performing Loans (NPL) of banks listed on the Indonesia Stock Exchange during 2016-2020. The total population of banks listed on the IDX is 46 banks. In contrast, the sample in this study is part of the population, which is 32 banks. This study is quantitative, so the data analysis method used is a statistical method—the analysis of these data using Econometric Views (Eviews) software version 12.0. The results showed that BOPO has a positive and significant effect on bank NPLs, LDR has a positive but not significant effect on NPLs, CAR has a negative and significant effect on NPLs, NIM has a negative and significant effect on NPLs, Oil Price has a positive and significant effect on NPLs, inflation has a negative but not significant effect on NPLs, and Interest Rate has a positive and significant effect on NPLs. Banks must pay attention to the reference and rules of the regulator, the Financial Services Authority, as a guideline where the maximum limit for the NPL ratio is 5% so that the quality of banking credit can be maintained. Investors it is expected to be able to make considerations in investing by analyzing the company's condition through financial statements published by banks by looking at the ratio of Non-Performing Loans as a crucial consideration.
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Suradi, Didi, Hermanto Siregar, and Bagus Sartono. "Non-Performing Loan Determinants during COVID-19 Pandemic (Case Study at Bank XYZ)." International Journal of Research and Review 8, no. 12 (2021): 301–10. http://dx.doi.org/10.52403/ijrr.20211237.
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Non-Performing Loans (NPL) is a financial ratio that shows the credit risk faced as a result of granting credit and investment funds on different portfolios. This study aimed to analyze the determinants of Non-Performing Loans (NPL) before and during the Covid 19 pandemic at Bank XYZ. NPL can be caused by internal or external factors from Bank XYZ. The analytical method used is the Mixed method which combines quantitative and qualitative analysis. Data analysis used multiple linear regression method using time series data for the 1st quarter of 2013- 4th quarter of 2020. The analysis method used multiple linear regression to see the influence of internal factors are total credit, Return on Equity, Loan to Deposit Ratio, Net Interest Margin, total assets, BOPO, condition dummy before after transformation and external factors are Benchmark Interest Rate, exchange rate (exchange rate), Inflation, Industry Production Index, dummy conditions before and during the Covid 19 pandemic on Bank XYZ's NPL. The estimated regressions are the overall NPL, the Small Medium Enterprise (SME) Business Segment NPL, the Small Medium Enterprise (SME) Business Segment for the wholesales business sector, and the Small Medium Enterprise (SME) Business Segment NPL for the Retailer business sector. Data processing using E-views software version 9.0. The result of this research are factors that affect the overall NPL: Dummy Transformation, Net Interest Margin, and total assets, for the NPL for the Small and Medium Enterprises (SME) segment: total assets, dummy transformation and Net Interest Margin (NIM), NPL for the Small and Medium Enterprises (SME) business sector Wholesales: BOPO NIM, Lending growth, total assets, ROE and Dummy Transformation, for the NPL segment of Small and Medium Enterprises (SMEs) Retailer business sector: Net Interest Margin (NIM) and total assets. The impact of the COVID-19 pandemic on NPLs was most felt by the NPL all, SME business segment credit and the wholesales business sector. Keywords: covid-19 pandemic, NPL, NPL SME, retailer, wholesales.
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Jagirani, Tahir Saeed, Lim Chee Chee, and Zunarni Binti Kosim. "Determinants of the firm value of listed banks in Pakistan: A panel data approach." Asian Economic and Financial Review 13, no. 4 (2023): 241–50. http://dx.doi.org/10.55493/5002.v13i4.4764.
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The aim of this study is to examine the determinants of firm value for listed banks in Pakistan. This study is based on secondary data extracted from the annual reports of listed banks in Pakistan with quarterly data comprising 512 sample observations from 2015 to 2021. Panel data estimation techniques were employed for the analysis. The findings of the study revealed that all determinants influence firm value except liquid assets to total assets (LATA). The stock price of listed banks in Pakistan is continuously falling, which causes the stock's value to change from being overpriced to being undervalued. Nonperforming loans (NPLs) and the cost-to-income ratio (CIR) reduce firm value, while increases in the net interest margin (NIM) and capital adequacy ratio (CAR) enhance firm value. Further, NPLs and the CIR have a negative relationship with firm value. However, CAR, LATA, and NIM have positive associations with the firm value. The study concluded that the average capital adequacy ratio of listed banks in Pakistan is 10.5%, which is higher than the minimum requirement set by the regulator. This indicates that CAR helps to increase firm value in listed banks in Pakistan. The study will be useful to policymakers, regulators, and the banking sector in evaluating the major determinants that affect firm value.
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Jyoti, Nair, Mallawat Harish, and Konreddy Nikhita. "Performance Analysis of Banks in India- Discriminant Analysis with CAMELS Framework." RESEARCH REVIEW International Journal of Multidisciplinary 03, no. 10 (2018): 39–45. https://doi.org/10.5281/zenodo.1455635.
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India’s banking sector is facing the toughest challenge in recent times in terms of distressed loans. Higher write offs and provisioning has adversely affected growth in advances.Poor earnings growth by companies, slow pace of investments, risk aversion of banks due to rising bad loans, and availability of alternative funding sources for corporates pulled down credit growth during the year. A high and rising proportion of banks stressed loans, particularly those of public sector banks (PSBs) and the resulting increase in NPAs provisioning has weighed down credit growth. Hence it becomes important to analyse the banking sectors performance through appropriate criteria. This paper is an attempt to do a comparative evaluation of the performance of selected public sector and private sector banks in India using CAMELS framework. The paper also attempts to identify the ratios discriminating private sector and public sector banks. Four factors viz: D/E, Tier I capital ratio, Sensitive sector loans to total loans and net NPA ratio have emerged as significant discriminators between private sector and public sector banks.
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Sari, Indah Putri, M. Rimawan, and Puji Muniarty. "Analysis of the Influence of NPL and DER on ROA at PT Artha Graha International Bank Tbk." Jurnal Ilmu Manajemen Profitability 9, no. 1 (2025): 26–33. https://doi.org/10.26618/profitability.v9i1.15372.
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This study aims to analyze the effect of Non-Performing Loans (NPL) and Debt to Equity Ratio (DER) on Return on Assets (ROA) at PT. Bank Artha Graha Internasional, Tbk. The research employs an associative approach using quantitative data from the bank's financial statements over a ten-year period from 2013 to 2022. The dataset includes total non-performing loans, total credit, total debt, total equity, net profit, and total assets. The research population spans 32 years, while the sample consists of 10 years selected through a purposive sampling technique. The study utilizes secondary data collected through documentation and literature review. Data analysis includes classical assumption tests, multiple linear regression analysis, correlation coefficients, determination tests, t-tests, and F-tests, conducted using SPSS version 24. These statistical methods are applied to examine the relationship between NPL, DER, and ROA and to determine the significance of their impact. The findings indicate that NPL and DER do not have a significant effect on ROA, either partially or simultaneously, at PT. Bank Artha Graha Internasional, Tbk. Although the relationship between these variables is of moderate strength, it suggests that other financial or external factors may play a more influential role in determining the bank’s profitability. These results highlight the need for further research to explore additional determinants of financial performance in the banking sector, considering aspects such as operational efficiency, risk management, and macroeconomic conditions that may influence profitability.
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Supeno, Wangsit, and Aam Aminudin. "ANALISIS PENGARUH NPL, NIM DAN CAR TERHADAP ROA PADA PERUSAHAAN PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA." Jurnal Ekonomi Pembangunan STIE Muhammadiyah Palopo 9, no. 2 (2023): 315. http://dx.doi.org/10.35906/jep.v9i2.1629.
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ABSTRAKDengan memperoleh profit yang berkesinambungan dan terus meningkat, bank dapat terus mengembangkan bisnisnya untuk memberikan kepuasan kepada pihak yang berkepentingan yaitu para pemegang saham, manajemen, karyawan dan nasabah. Di sisi lain, profitabilitas menunjukkan bank telah beroperasi secara efektif dan efisien dalam menggunakan aset yang dimilikinya. Profitabilitas diukur dengan rasio Return On Assets (ROA) menggunakan indikator laba sebelum pajak dan total aset. Beberapa faktor yang dapat berkontribusi terhadap ROA di antaranya yaitu Non Performing Loan (NPL), Net Interest Margin (NIM) dan Capital Adequacy Ratio (CAR). Tujuan penelitian ini adalah untuk mengetahui sejauhmana NPL, NIM dan CAR berpengaruh signifikan secara parsial maupun bersama-sama terhadap ROA. Sampel penelitian ini adalah 8 perusahaan perbankan baik BUMN maupun Swasta yang terdaftar di Bursa Efek Indonesia periode 2018-2022. Metode penelitian yang digunakan adalah deskriptif kuantitatif dengan pengolahan data menggunakan SPSS versi 26. Data penelitian yang digunakan bersumber dari laporan keuangan tahunan berupa laporan kinerja keuangan yang diunduh pada laman website masing-masing bank. Penelitian ini menggunakan metode dokumentasi dan melakukan analisa deskriptif statistik, uji asumsi klasik, uji regresi berganda, uji koefisien determinasi, uji t (parsial) dan uji F (Simultan). Kesimpulan yang diperoleh dari hasil penelitian dan uji hipotesis yang telah dilakukan menunjukkan bahwa NPL, NIM dan CAR secara parsial maupun simultan memiliki pengaruh yang signifikan terhadap ROA pada periode 2018-2022.Kata Kunci: NPL, NIM, CAR, ROAABSTRACTBy obtaining sustainable and increasing profits, banks can continue to develop their business to provide satisfaction to interested parties, namely shareholders, management, employees and customers. On the other hand, profitability shows that the bank has operated effectively and efficiently in using the assets it owns. Profitability is measured by the Return On Assets (ROA) ratio using indicators of profit before tax and total assets. Several factors that can contribute to ROA include Non Performing Loans (NPL), Net Interest Margin (NIM) and Capital Adequacy Ratio (CAR). The aim of this research is to determine the extent to which NPL, NIM and CAR have a significant effect, partially or jointly, on ROA. The sample for this research is 8 banking companies, both state-owned and private, listed on the Indonesia Stock Exchange for the 2018-2022 period. The research method used is quantitative descriptive with data processing using SPSS version 26. The research data used comes from annual financial reports in the form of financial performance reports downloaded on each bank's website. This research uses the documentation method and carries out descriptive statistical analysis, classical assumption test, multiple regression test, coefficient of determination test, t test (partial) and F test (simultaneous). The conclusions obtained from the results of research and hypothesis testing that have been carried out show that NPL, NIM and CAR partially or simultaneously have a significant influence on ROA in the 2018-2022 period.Keywords: NPL, NIM, CAR, ROA
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Towhid, ASM, Shinta Amalina Hazrati Havidz, and Mohammed Ameen Qasem Ahmed Alnawah. "BANK-SPECIFIC AND MACROECONOMIC DETERMINANTS OF NON-PERFORMING LOANS OF COMMERCIAL BANKS IN BANGLADESH." Dinasti International Journal of Management Science 1, no. 1 (2019): 86–101. http://dx.doi.org/10.31933/dijms.v1i1.28.
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The prime objective of this research is to identify the main determinants of non-performing loans in the commercial banking system of Bangladesh for the period 2011-2016 using panel data modeling. This paper uses balanced panel data method to examine both bank-specific (return on average assets, net loans to deposit ratio, bank size, cost-to-income ratio, and capital adequacy ratio) and macroeconomic (real GDP growth rate and inflation rate) variables. To attain the objectives, the present research analyzed historical data and panel data model using secondary data. To examine panel data modeling, the researcher considers 16 private commercial banks in Bangladesh and executed pooled OLS model, fixed effect model, random effect model and random effect with the robust standard error. The researcher found a negative significant relationship for return on average assets, net loans to deposit ratio and inflation rate in relation to NPLs and results are supporting the previous researcher. Based on the findings, the study offers some valuable strategies to the management to improve return on average assets, net loans to deposit ratio and inflation rate to reduce the NPLs at least under the tolerance level. The study also delineates the limitations of this work and direction for future research.
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Alawiyah, Miryam, Dedy Wijaya Kusuma, and Fetri Setyo Liyundira. "IMPRESSION OF NON-PERFORMING LOAN, LOAN TO DEPOSIT RATIO, AND NET INTEREST MARGIN AGAINST PROFITABILITY." Assets : Jurnal Ilmiah Ilmu Akuntansi, Keuangan dan Pajak 4, no. 1 (2020): 27–31. http://dx.doi.org/10.30741/assets.v4i1.562.
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This study aims to determine the effect of Net Performing Loans, Loan to Deposit Ratio, and Net Interest Margin on profitability. Profitability is proxied by Return On Assets (ROA). Whereas the factor for the existence of Net Performing Loans (NPL) is proxied by non-performing loans, the Loan to Deposit Ratio (LDR) factor is proxied by third-party fund distribution, and the Net Interest Margin (NIM) factor is net interest income proxied. The population in this study amounted to 25 Rural Banks (BPR) in the Jember Regency, and for the study, the sample was 19 People's Credit Banks (BPR) in the Jember Regency, which were selected using the purposive sampling method for the 2017-2018 period. Data were analyzed using multiple linear regression. Based on the test results, it was concluded that the components of the Net Performing Loan (NPL), Loan to Deposit Ratio (LDR), and Net Interest Margin (NIM) affect the profitability using the Return on Assets (ROA) ratio. This proves that Non-Performing Loans (NPLs), Loans to Deposit Ratio (LDR), and Net Interest Margin (NIM) can be used to measure how much income the Bank earns.
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Akter, Rozina, and Jewel Kumar Roy. "The Impacts of Non-Performing Loan on Profitability: An Empirical Study on Banking Sector of Dhaka Stock Exchange." International Journal of Economics and Finance 9, no. 3 (2017): 126. http://dx.doi.org/10.5539/ijef.v9n3p126.
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The Banking sector of Bangladesh is trapped in a gridlock of non-performing loans (NPLs) so much so that NPL accounts for 11.60 percent of the total volume of classified loans. This problem has started to be widening with an evil trend of loan embezzlement among the industrial borrowers in our country. Frequent scam series in banking industry is surely a red light and unfortunately the commercial banks are highly surrounded by it. The goal of the study is to analyze the impact of non-performing loan (NPL) on profitability where in this study considered net interest margin (NIM). This paper attempts to find out the time series scenario of non-performing loans (NPLs), its growth, provisions and relation with banks profitability by using some ratios and a linear regression model of econometric technique. The empirical results represent that non-performing loan (NPL) as percentage of total loans on listed banks in Dhaka Stock Exchange (DSE) is very high and they holds more than 50 % of total non-performing loans (NPLs) of the listed 30 banks in Dhaka Stock Exchange (DSE) for year 2008 to 2013. Moreover it is one of the major factors of influencing banks profitability and it has statistically significant negative impact on net profit margin (NPM) of listed banks for the study periods.
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Zaid, Mohammed, and Mohammed Farooque Khan. "Non-Performing Loans Effects on Profitability and Lending Behavior of Commercial Banks: Evidence from Yemeni Commercial Banks Sector." Studies in Economics and Business Relations 3, no. 2 (2023): 28–35. http://dx.doi.org/10.48185/sebr.v3i2.737.
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This study aimed to examine the effects of non-performing loans on the profitability and lending behavior of commercial banks in Yemen. The study used a descriptive-analytical approach. The data of the study were obtained from the annual financial reports (2010 -2018) of 6 commercial banks operating in Yemen. A panel data model was used in this study. The independent variable of the study was non-performing loans as measured by non-performing loans to total loans and advances ratio (NPLS) while the dependent variables of the study were profitability (ROA and ROE) and lending behavior as measured by loans and advances growth (LAG) of the commercial banks in Yemen. To test the hypotheses of the study, regression analysis was used. The results of the study showed that there is a positive and significant effect of the non-performing loans ratio (NPLs) on the return on equity (ROE) of commercial banks in Yemen. Whereas the study found no effect of (NPLs) on the return on assets (ROA) and loans and advances growth (LAG) of commercial banks in Yemen.
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Rokhayati, Isnaeni. "ANALISIS RASIO INETERNAL PERUSAHAAN YANG BERPENGARUH TERHADAP PROFITABILITAS PADA PERUSAHAAN SUB SEKTOR PERBANKAN KONVENSIONAL." Monex Journal Research Accounting Politeknik Tegal 9, no. 2 (2020): 178–89. http://dx.doi.org/10.30591/monex.v9i2.1981.
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The bank's financial performance can be assessed from several indicators, one of the main indicators used as the basis for the assessment is the bank's financial statements. Based on the financial statements, a number of financial ratios can be calculated which are commonly used as a basis for assessing the soundness of a bank. Financial ratios are the results of calculations of bank financial data, which are used to explain the relationship between financial data. Financial ratios that can measure financial performance, can be referred to as internal ratios. The purpose of this study was to determine the effect of Net Interest Margin (NIM), Net Performing Loans (NPL), Loan to Deposit Ratio (LDR), and Capital Adequacy Ratio (CAR) on Return on Assets (ROA). The study uses quantitative methods by taking samples of conventional commercial banking companies listed on the Indonesia Stock Exchange from 2016 to 2018. The sampling technique in this study was purposive sampling with a sample of 19 banking companies. Data analysis techniques used descriptive analysis with panel data regression models using eviews 10. The results showed that the Net Interest Margin (NIM) had a significant positive effect on Return On Assets (ROA), so that banking companies had to keep NIM at a high ratio by maintaining loan asset quality and operating expense efficiency; Non Performing Loans (NPLs) have a significant negative effect on profitability (ROA), so as to increase Return On Assets (ROA) banking companies must keep their Net Performing Loans (NPLs) at a low ratio by suppressing the existence of problem loans through loan restructuring; Loan To Deposit Ratio (LDR) has no effect on Return On Assets (ROA), so that banking companies must increase lending so that profits from loan interest obtained will increase, but lending must be done prudentially and compliance so as not to cause non-performing loans; and Capital Adequacy Ratio (CAR) has no effect on profitability (ROA), so banks must improve efficiency and reduce problem financing.
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Islam, Fakir Tajul. "Evaluating Loan Loss Provisioning for Non-Performing Loans and Its Impact on the Profitability of Commercial Banks in Bangladesh." Asian Finance & Banking Review 2, no. 2 (2018): 33–41. http://dx.doi.org/10.46281/asfbr.v2i2.222.
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Through the collection and disbursement of money, banks often face the risk of default of the loan. These Non-Performing loans (NPLs) should be identified and cared for avoiding vulnerability to other risk. Banks may mitigate this risk using loan loss provisioning (LLP). Using the aggregate data of 56 commercial banks in the last 9 years (2009-2017), this study attempts to evaluate the Impacts of LLP maintained for NPLs on profitability, as it may help to take the level of the LLP, and NPLs in the optimum level of business success. The dependent variables used in this study are Non-Interest Income to Total Assets and Net-Interest Income to Total Assets as a representative of the profitability of a bank. The dependent variables are analyzed using Least Square Multiple Regression on three independent variables, which were Gross NPL to Total Loans Outstanding, Loan Loss Provision Maintained, and Surplus/ (Shortfall) resulted from the required loan provisioning. The result showed that the profitability is very significantly influenced by the independent variables. NPLs and LLPs maintained by the commercial banks negatively related with the profitability of the business, especially LLPs shown statistical significance to impact on profitability negatively. it is better to take the LLPs and NPLs in the minimum level for maximum profitability of banks.
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Bhattarai, Bishnu Prasad. "Assessing Banks Internal and Macroeconomic Factors as Determinants of Non- Performing Loans: Evidence from Nepalese Commercial Banks." International Journal of Accounting & Finance Review 3, no. 1 (2018): 13–32. http://dx.doi.org/10.46281/ijafr.v3i1.28.
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This study has attempted to ascertain the factors affecting to non-performing loans in Nepalese commercial banks using a sample of ten commercial banks for the period of 2013-2017 with 50 observations, a balanced set of panel data. The descriptive and causal comparative research designs have been adopted for the study. The dependent variable was non-performing loans, while independent variables included both bank specific factors; bank size, return on assets, total loan and advance to total deposit ratio, capital adequacy ratio and macro-economic factors; real gross domestic product growth rate and inflation. The existence of high levels of NPLs would hinder the benefits to the county through inefficient financial intermediation. Hence, there is a national level responsibility towards banks, to manage the NPL ratio at an acceptable level. Consequently, it is important to identify “what causes NPLs and significance of these factors on NPLs”. Therefore, this study would help to get an insight on the bank specific and macro-economic factors, which affect NPLs in commercial banks and in which magnitude bank specific or macroeconomic factors contribute to NPLs. The estimated ordinary least square (OLS) regression model reveals that the bank specific: ROA, LTD and CAR and macroeconomic factors GDP have significant impact on nonperforming loan in Nepalese commercial banks.
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Bhowmik, Probir Kumar, Karima Khanam, and Mallika Saha. "Bank Competition and Bank Risk: Evidence from an Emerging Economy." Journal of Population and Development 5, no. 1 (2024): 105–26. http://dx.doi.org/10.3126/jpd.v5i1.67568.
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This paper investigates the relationship between banks’ competition and nonperforming loans (NPLs), considering GDP per capita, gross savings, and domestic bank credit to the private sector. The study utilizes comprehensive secondary data from 1994 to 2022, scrutinizing diverse banking environments and revealing significant findings. The analysis reveals a significant positive correlation between the number of banks and the NPL ratio, indicating that increased competition leads to higher NPL. Nonetheless, banks' domestic credit to the private sector has little effect on NPLs. The analysis also reveals a significant positive correlation between gross savings and the NPLs. Furthermore, higher NPLs ratio is linked to reduced commercial bank branches, lower capital adequacy ratios, and diminished bank liquidity reserves, posing potential financial stability risks. Even if large NPLs initially lower inflation rates, their long-term impacts depend on successful policy interventions. Additionally, NPLs significantly impact banks' return on assets and net interest margins, necessitating effective profitability and risk management strategies. The study offers crucial insights for regulators, politicians, and banking professionals to understand the complexities of risk management and competition in the banking industry and create plans to lower NPLs.
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Rustamov, Jonibek. "Trends and Patterns of Accumulation of Non-Performing Loans in the Banking Sector of Uzbekistan." Journal of Eurasian Economies 4, no. 1 (2025): 31–37. https://doi.org/10.36880/j04.1.0144.
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This article provides a comprehensive overview of the banking sector in Uzbekistan, with a particular focus on the trend and patterns of non-performing loans (NPLs) accumulation. The data in the article offer insights into the share of NPLs in total loans across banks over several periods, underscoring the importance of assessing asset quality and risk management practices of banks in order to support policy decisions and investment strategies. The analysis reveals that banks generally exhibit a slightly higher ratio of NPLs to total loans compared to the pre-pandemic period, highlighting the fluctuation of NPL ratios over time, particularly during the pandemic. Furthermore, it provides a breakdown of NPL accumulation by sector, indicating the industrial sector as the largest contributor to NPLs, followed by the agricultural sector. Especially, the mean of quarterly NPL ratios for Uzbek banks from 2017 to 2023 is discussed, revealing an increase in the NPL ratios in 2021 as compared to the previous year. The data in the article describe the relationship between quarterly outstanding loans and NPLs for banks over the same period. The analysis particularly focuses on NPL accumulation trends and sector-specific contributions, which are of significant concern. The study's findings are of paramount importance for stakeholders, policymakers, and investors, as they offer crucial insights into the credit risk, asset quality, and performance of banks in Uzbekistan.
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Shrestha, Purna Man, and Kamal Kumar Khadka. "Impact of Non-Performing Loan on Profitability of Nepalese Commercial Banks." Researcher CAB: A Journal for Research and Development 3, no. 1 (2024): 62–75. http://dx.doi.org/10.3126/rcab.v3i1.68422.
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This paper aims to evaluate the impact of non-performing loan on the profitability of Nepalese commercial banks. For this purpose, this study employed the annual balanced panel data of 10 commercial banks during the period of 2016/17 to 2022/23. This paper used NPLs measured by the ratio of non-performing loans to total loans as an explanatory variable and profitability measured by ROA as a dependent variable. A multiple linear regression model was used to examine the effect of NPLs on the profitability of banks. The empirical results indicated that NPLs play a substantial role in determining profitability. Further, this paper revealed that NPLs have a significant negative impact on profitability. The findings of this paper suggests that bank management should maintain the lower level of NPLs as much as possible to achieve a higher level of profitability. Therefore, bank management should give more attention to minimize the NPL.
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Tanasković, Svetozar, and Maja Jandrić. "Macroeconomic and Institutional Determinants of Non-performing Loans." Journal of Central Banking Theory and Practice 4, no. 1 (2015): 47–62. http://dx.doi.org/10.1515/jcbtp-2015-0004.
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Abstract This paper aims to analyse macroeconomic and institutional empirical determinants of growth of NPL ratios. Research is focused on selected CEEC and SEE countries in the period 2006- 2013. For our analysis we use static panel model approach with the logarithm of share of NPLs to total loans as a dependent variable. As independent variables we used a combination of country-specific macroeconomic and financial indicators which are commonly used in reference literature, as well as relevant institutional variables. Our results show that there is a negative relationship between increases in GDP and rise of the NPL ratio. Along with GDP, foreign currency loans ratio and level of exchange rate are positively related with the increase of NPL ratio. This confirms the expectation that countries where domestic currency is not the main medium of credit placements will have larger problems with the level of NPLs, which is even more pronounced in periods of domestic currency depreciation. In the presented models, the inflation rate is reported as statistically insignificant for sample countries. In the group of institutional variables, only financial market level of development is reported as statistically significant in relation to the level of NPL - with a more developed financial market the level of NPLs should be lower.
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Putri, Weny, Feby Astrid Kesaulya, and Khairunnisa Khairunnisa. "Pengaruh Non-Performing Loan (NPL) dan Loan to Deposit Ratio (LDR) terhadap Kinerja Keuangan Perbankan." Global Financial Accounting Journal 5, no. 2 (2021): 148. http://dx.doi.org/10.37253/gfa.v5i2.6087.
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This study aims to identify whether financial ratios as measured by non-performing loans (NPL) and Loan To Deposit Ratio (LDR) have an effect on financial performance which is proxied by Net Interest Margin (NIM). The results of this study found that the level of bad loans or NPLs had a negative effect on financial performance. This is because the Bank's income does depend on the receipt of loan interest from the Customer. Meanwhile, LDR does not have a positive effect on financial performance with the assumption that a low LDR will cause the company's liquidity to increase and in the end it will also increase the quantity of idle funds which will have a direct impact on financial performance.
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Angel Siti Fatimah, Adik, and Nunung Aini Rahmah. "Pengaruh Nim, Oer, Ldr Dan Npl Terhadap Pertumbuhan Laba." Journal of Comprehensive Science (JCS) 1, no. 3 (2022): 419–38. http://dx.doi.org/10.59188/jcs.v1i3.66.
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Penelitian ini bertujuan untuk menguji pengaruh Net Interest Margin (NIM), Operational Efficiency Ratio (OER), Loan to Deposit Ratio (LDR) dan Non Performing Loan (NPL) terhadap pertumbuhan laba. Populasi dalam penelitian ini adalah Bank Umum Konvensional yang terdaftar di Bursa Efek Indonesia (BEI) tahun 2016-2020. Total sampel dalam penelitian ini adalah 22 Bank Umum Konvensional dengan lima tahun pengamatan menggunakan teknik purposive sampling sehingga diperoleh 110 sampel. Teknik analisis data yang digunakan adalah Analisis Regresi Linier Berganda. Hasil penelitian menunjukkan bahwa secara parsial Net Interest Margin tidak berpengaruh signifikan terhadap pertumbuhan laba, Operational Efficiency Ratio berpengaruh negatif signifikan terhadap pertumbuhan laba, Loan to Deposit Ratio tidak berpengaruh signifikan terhadap pertumbuhan laba dan Non Performing Loan berpengaruh negatif signifikan terhadap pertumbuhan laba. Sedangkan, secara simultan Net Interest Margin, Operational Efficiency Ratio, Loan to Deposit Ratio dan Non Performing Loan berpengaruh signifikan terhadap pertumbuhan laba.
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Shkodra, Jehona, Dimitrios Anastasioub, and Christos Christos Kallandranisc. "THE IMPACT OF NON-PERFORMING LOANS ON COMMERCIAL BANK PROFITABILITY: EVIDENCE FROM THE WESTERN BALKANS." Financial and credit activity problems of theory and practice 3, no. 56 (2024): 49–58. http://dx.doi.org/10.55643/fcaptp.3.56.2024.4355.
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Our results show that there is a clear negative relationship between return on assets and NPLs, suggesting that an increase in NPLs leads to lower bank profitability.The objective of this study is to investigate whether non-performing loans (NPLs) have an impact on the profitability of commercial banks in the Western Balkans Countries (WBC hereafter) namely Albania, Kosovo, Montenegro, Northern Macedonia and Serbia. Our sample includes all commercial banks in the WBCs for the period 2010-2020.We define return on assets (ROA) as a proxy for bank profitability, which is the dependent variable in this study. Our main explanatory variable is the ratio of NPLs to total loans (NPLs). In addition, we consider the following control variables: CAR (Capital to Risk-Weighted Assets); OCE (Operational Cost Efficiency); LIQ (liquidity).Our study suggests that financial institutions and policymakers in general should keep an eye on NPL holdings, as any additional inflow of "dubious" loans into the financial sector increases the likelihood of banks running into profitability problems. Several policy implications arise from the findings of this study, not only for practitioners and bank managers but also for regulators and policymakers. On the one hand, bank managers should thoroughly check customer data before granting credit in order to reduce information asymmetry and minimise potential NPL values. On the other hand, regulators need to closely monitor banks' capital adequacy and profitability ratios to mitigate a potential bank failure due to the accumulation of high NPL values.
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Obeid, Rami. "The Impact of the Over-indebtedness of the Household Sector on the Non-performing Loans in the Banking Sector in the Arab Countries." European Journal of Business and Management Research 7, no. 1 (2022): 51–60. http://dx.doi.org/10.24018/ejbmr.2022.7.1.1229.
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The paper examined the potential relationship between household credit risk and its impact on the non-performing loans ratio (NPLs), in ten Arab countries during the period (2015-2020), using the difference Generalized Method of Moments (GMM), the household credit was measured through the household loans to total credit ratio, in a manner that takes into account the existence of prudential tools that mitigate these risks and limit the systemic risks that may arise from this sector, as variables were used that measure the effect of activating or tightening the Debt-to-Income ratio (DTI) and the Loan to the Value ratio (LTV). The results showed that the increase in the household loans to the total loans ratio has a positive relationship with the bank default rate (NPLs ratio), and the results also showed that the macroprudential policy tools play an important role in reducing these risks. While there was a negative relationship between the rate of return on assets (ROA) and the size of the bank on the one hand, and the default rate on the other. While there was no statistically significant relationship between the interbank interest rate and the default rate, as well as the inflation rate, but regarding the real gross domestic product (GDP) growth rate, the results showed a negative relationship between this variable and credit risk. The paper recommended the need to enhance responsible finance, and the deliberate appetite for lending to individuals based on customer risks, and to benefit from the credit database of credit bureaus or credit information companies to rationalize credit and grant loans based on customer risks.
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Benedicta OWONYE and Godwin OBONOFIEMRO. "DETERMINANTS OF NON-PERFORMING LOANS IN THE NIGERIA BANKING INDUSTRY." International Journal of Management & Entrepreneurship Research 4, no. 11 (2022): 428–40. http://dx.doi.org/10.51594/ijmer.v4i11.402.
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This study examined the determinants of non-performing loans (NPLs) in the Nigeria banking industry between the periods of 2011-2020. The specific objective of the study is to examine the relationship between the measures of bank specific variables [Bank Size (BS), Capital Adequacy (CA), Profitability (PROF), Bank Age (BA), Liquidity (LIQ) and Loan to Total Assets (LTA)] and [NPLs proxy with Non Performing Loans Ratio (NPLR)] in Nigeria. The focus on the banks in Nigeria listed in the Nigeria Stock Exchange and the difficulty in assessing their annual reports and account of 10 banks were drawn out of the 18 deposit money banks (DMBs) for the study. The data for the study was gotten from the annual reports and accounts of the ten (10) banks on the basis of the variables under study and the data was analyzed using descriptive statistics, correlation and multiple regression analysis. The findings revealed that BS, CA and BA have significant effect on NPLR but the effect of BS and BA on NPR are negative while PROF have negative insignificant effect on NPLR of DMBs in Nigeria. This research found that determinants of NPLs have mix effect on NPLR in Nigeria. The findings suggested that BS in relation to total assets should put in consideration when granting loans and also, the DMBs in Nigeria should maintain and implement the capital adequacy policy enacted by the CBN.
 Keywords: Non-Performing Loans, Bank Size, Capital Adequacy, Profitability, Bank Age, and Liquidity.
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Ristić, Kristijan, and Mirjana Jemović. "Analysis of Non-Performing Loans’ Determinants in the Banking Sector of the Republic of Serbia." Economic Themes 59, no. 1 (2021): 133–51. http://dx.doi.org/10.2478/ethemes-2021-0008.
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Abstract After the financial deregulation that marked the last two decades of the 20th century, banks lost their monopolistic position and faced a number of competitors on the financial market. Fighting for their market share, banks began to grant loans under more relaxed terms. This policy increased the share of non-performing loans (NPLs) and ultimately increased credit risk in the banking sector. The share of non-performing loans in total loans indicates the quality of bank assets, so their analysis and trend are an important parameter in assessing the stability of the banking and overall financial sector. The paper aims to analyze the NPL trend in the banking sector of the Republic of Serbia in the period from 2010-2019 and, thus, identify determinants that significantly affect the extent of credit risk. The research uses vector autoregressive model (VAR), and the results confirm that gross domestic product, inflation, unemployment, return on total assets (ROA), cost efficiency, capital adequacy ratio, and income diversification affect NPLs. The analysis shows that the level of non-performing loans depends on a number of factors, both macroeconomic and bank-specific, which regulatory authorities must keep in mind when assessing the credit risk that banks face.
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Kong Chantha, Sem Seng, Phon Ratha, and Kol Sovanvatthana. "An integrated analysis of key financial metrics driving commercial bank performance in Cambodia." International Journal of Advanced Economics 6, no. 10 (2024): 517–43. http://dx.doi.org/10.51594/ijae.v6i10.1632.
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This study aims to systematically identify and analyze key financial metrics that influence the performance of commercial banks in Cambodia. Utilizing 2023 data from the National Bank of Cambodia across 59 banks, the research adopts an explanatory framework based on cross-sectional data analysis. Findings reveal a statistically significant positive correlation between Non-Performing Loans (NPLs) and Return on Assets (ROA), suggesting effective NPL risk management by Cambodian banks, contrary to traditional financial theory. Loan Growth (LG) does not significantly impact ROA, indicating that external factors like market conditions and loan quality are more critical. Furthermore, Market Share (MS) has no significant impact on ROA, suggesting that market share may not be a critical determinant of bank performance in Cambodia. A significant negative relationship is observed between the Loan to Deposit Ratio (LDR) and ROA, suggesting that higher LDRs expose banks to liquidity risks and reduced profitability. Both Loan Loss Provision (LLP) and Cost to Income Ratio (CIR) negatively affect ROA, while the Effective Tax Rate (ETR) shows a marginally positive relationship. The Net Interest Margin (NIM) significantly impacts ROA, underscoring the importance of managing interest-earning assets and liabilities. Recommendations include investing in advanced risk management frameworks, enhancing loan quality, maintaining a balanced LDR, utilizing technology for cost efficiency, focusing on effective tax planning, and optimizing NIM through competitive pricing. Future research should explore additional contextual factors that affect profitability dynamics in the Cambodian banking sector.. Keywords: Commercial Banks, Financial Metrics, Return on Assets (ROA), Non-Performing Loans (NPLs), Loan to Deposit Ratio (LDR), Cost to Income Ratio (CIR), Effective Tax Rate (ETR), Net Interest Margin (NIM), Loan Growth (LG), Market Share (MS).
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Tmava, Qazim, Ajtene Avdullahi, and Besë Sadikaj. "Loan portfolio and nonperforming loans in Western Balkan Countries." International Journal of Finance & Banking Studies (2147-4486) 7, no. 4 (2019): 10–20. http://dx.doi.org/10.20525/ijfbs.v7i4.203.
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Non-performing loans (NPLs) present one of the most controversial issues in both developed and developing countries. The main purpose of this paper is to analyze and compare the loan portfolio and NPLs in the Western Balkan countries: Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro, and Serbia for the period 2008-2015. Besides, this research aims to make a comparative analysis of some other macroeconomic indicators and industry factors that affect them such as GDP, banking sector assets, loan portfolio, asset participation in GDP, credit participation in GDP, deposit credit ratio, the NPL report on total loans. The results show that the NPL have had a growing trend in the post-global financial crisis, with different variations. In this regard, the highest rate of NPL reflects Serbia, Albania, followed by Montenegro, B&H, and Macedonia, while the lowest rate is in Kosovo.
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Lafera, Dety. "Analysis of Non-Performing Loans in PT. Bank Rakyat Indonesia (Persero) Tbk, Unit Lubuk Begalung 2019-2020." Journal of Accounting and Finance Management 2, no. 4 (2021): 184–89. http://dx.doi.org/10.38035/jafm.v2i4.139.
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Banks in general, in carrying out their operations to obtain business results, are always faced with a risk. One of the risks experienced by a bank is the large ratio of non-performing loans or what is called Non-Performing Loans/NPLs. Based on Bank Indonesia regulations, a bank has a dangerous potential if the bank has an NPL ratio of more than 5%. This study aims to analyze the level of non-performing loans at PT. Bank Rakyat Indonesia (Persero) Tbk Lubuk Begalung Padang Unit in 2019-2020. This research was conducted using quantitative methods. The data used in this study are the total number of loans (BRIGuna, KUPEDES, KUR) and the number of loans experiencing problems (BRIGuna, KUPEDES, KUR) in 2019-2020. This study uses trend analysis as a data analysis tool. From the results of a partial analysis, BRIGuna's NPL level for 2019-2020 was 0, respectively, in very healthy conditions and 15.62% in unhealthy conditions. BRIGuna's NPL increased by 156% in 2019-2020. The KUPEDES NPL level for 2019-2020 is 5.35% for unhealthy conditions and 2.15% for healthy conditions respectively. KUPEDES's NPL decreased in 2019-2020 by 59.82%. BRIGuna's NPL increased by 156% in 2019-2020. The KUR NPL rate for 2019-2020 was 4.04% each. with fairly healthy conditions and 2.07% with healthy conditions. KUR NPLs decreased in 2019-2020 by 48.74%.
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Fatriawati, Ernita. "Factors Affecting Loan to Deposit Ratio at Regional Development Banks in Indonesia." ProBisnis : Jurnal Manajemen 12, no. 2 (2021): 31–38. http://dx.doi.org/10.35335/probisnis.v12i2.20.
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The purpose of this study was to analyze the effect of Return on Assets (ROA), Capital Adequacy Ratio (CAR), Non-performing loans (NPLs), Net Interest Margin (NIM ), and Operating Expenses to Operating Income (OEOI) of the Loan to Deposit Ratio (LDR) to the Regional Development Bank in Indonesia. Population and sample in this research is the Regional Development Bank (BPD) in Indonesia, which is registered in the Financial Services Authority 2011-2016 period as many as 26 banks. The samples in this study using saturated sampling. The data analysis technique used is descriptive statistical analysis and regression of multiple panel data. Selection of panel data used is the Fixed Effects Model (FEM). The results of this study indicate that the Return on Assets (ROA) significant negative effect on the Loan to Deposit Ratio (LDR), Capital Adequacy Ratio (CAR) has negative and not significant to the Loan to Deposit Ratio (LDR), Non Performing Loans (NPLs) positive and not significant to the Loan to Deposit Ratio (LDR), Net Interest Margin (NIM) negative and not significant to the Loan to Deposit Ratio (LDR), and Operating Expenses to Operating Income (OEOI) negative and not significant to the Loan to Deposit Ratio (LDR). The predictive ability of these five variables against the Loan to Deposit Ratio (LDR) in this study amounted to 20.94%, while the remaining 79.06% influenced other variables not examined in this study. and Operating Expenses to Operating Income (OEOI) negative and not significant to the Loan to Deposit Ratio (LDR). The predictive ability of these five variables against the Loan to Deposit Ratio (LDR) in this study amounted to 20.94%, while the remaining 79.06% influenced other variables not examined in this study. and Operating Expenses to Operating Income (OEOI) negative and not significant to the Loan to Deposit Ratio (LDR). The predictive ability of these five variables against the Loan to Deposit Ratio (LDR) in this study amounted to 20.94%, while the remaining 79.06% influenced other variables not examined in this study.
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Malik, Amina, Babar Zaheer Butt, Shahab Ud Din, and Haroon Aziz. "Regulatory Capital is a Panacea for Efficiency, Credit Growth and Reducing Non-Performing Loans in Commercial Banks." Asia-Pacific Management Accounting Journal 16, no. 2 (2021): 265–87. http://dx.doi.org/10.24191/apmaj.v16i2-10.
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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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Sayed Abbas Ahmed, Mohamed Basil Kalyani, and Safiat Ali Saber Ali. "Asset Quality and Lending Growth of the Top UAE Banks (2019 – 2023): An Empirical Investigation." Journal of Economics, Finance and Accounting Studies 7, no. 2 (2025): 32–43. https://doi.org/10.32996/jefas.2025.7.2.3.
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This study aims to thoroughly analyse the intricate relationship between asset quality and lending growth among the major national banks in the UAE from 2019 to 2023. Utilizing the pooled EGLS method and reviewing annual panel data collected from the financial statements of 10 UAE banks during this timeframe, the findings reveal that return on assets (ROA) positively influences loan growth, while non-performing loans negatively affect it, as expected. Interestingly, the capital adequacy ratio seems to have an unexpected negative impact on loan growth. Regarding the factors influencing non-performing loans, the study confirms that, as anticipated, the capital adequacy ratio (CAR), return on assets (ROA), return on equity (ROE), and the ratio of liquid assets to total assets (LIQ) negatively affect the non-performing loans (NPL) of banks in the UAE. These insights are valuable for policymakers, highlighting the importance of asset quality, addressing Non-Performing Loans (NPLs), and reevaluating capital adequacy requirements.
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Zainuddin, Zainuddin, and Yustiana Djaelani. "APPLYING RISK PROFILE, GOOD CORPORATE GOVERNANCE, EARNING AND CAPITAL (RGEC) METHOD TO PREDICT THE BANK HEALTH (CASE STUDY ON PT. BANK TABUNGAN NEGARA)." ACCOUNTABILITY 7, no. 02 (2018): 16. http://dx.doi.org/10.32400/ja.24570.7.02.2018.16-32.
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This study aimed to analyze the health of PT. Bank Tabungan Negara (Persero) Tbk over period of 2013 to 2017 RGEC method approach (Risk Profile, Good Corporate Governance, Earnings, Capital). This research is quantitative descriptive method. The variables in this study include Risk Profile using the ratio of Non Performing Loans (NPLs) and loan to Deposits Ratio (LDR), GCG using Composite Rating GCG, Earnings use ratios Return on Assets (ROA) and Net Interest Margin (NIM) and Last Capital uses Adequacy Capital ratio (CAR). The results showed Bank BTN predicate healthy enough where banks are still quite capable of carrying out risk-based banking management well, so they deserve to be trusted community. However, the calculation of the proportion of Loan to Deposits Ratio (LDR) is below standard bank of Indonesia with the predicate less healthy.
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Nugrahaeni, Ressita, and Harjum Muharam. "The Effect of Green Credit and Other Determinants of Credit Risk Commercial Bank in Indonesia." Journal of Business Social and Technology 4, no. 2 (2023): 135–47. http://dx.doi.org/10.59261/jbt.v4i2.148.
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In order to achieve the Notionally Determined Contribution (NDC) target through reducing greenhouse gas emissions, the Government of Indonesia is trying to develop sustainable finance. Commercial Banks as a financial service institution are required to implement sustainable finance, among others by reporting loans that meet the criteria for Environmentally Friendly Business Activities (KUBL). Credit risk is one of the main risks for banks. Research on the effect of lending that meets KUBL or green loan criteria on bank credit risk as reflected in NPLs has never been carried out. In this study, we analyze the effect of green loans, and the influence of other variables, namely bank performance variables (LDR, CAR, ROA, NIM) and bank size on credit risk of commercial banks in Indonesia. This study uses annual available data from 107 commercial banks in Indonesia for the period from 2019 to 2021. Based on the results of this study, the effect of green loans on NPL is not significant because the percentage of green loans is relatively low compared to the total bank credit portfolio in Indonesia. For this reason, various incentives are needed from both the Authority and the Government to encourage commercial banks to increase green loans.Meanwhilebank performance variables, namely LDR, CAR, NIM and bank size have a significant influence on the credit risk of commercial banks in Indonesia. Bank performance variables namely LDR, CAR have a positive effect on bank NPLs, the NIM ratio and bank size have a negative effect on bank NPLs.
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Osei-Assibey, Eric, and Joseph Kwadwo Asenso. "Regulatory capital and its effect on credit growth, non-performing loans and bank efficiency." Journal of Financial Economic Policy 7, no. 4 (2015): 401–20. http://dx.doi.org/10.1108/jfep-03-2015-0018.
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Purpose – This paper aims to investigate the influence of the central bank’s regulatory capital on commercial banks specific performance outcomes such as credit supply, interest rate spread (as a measure of efficiency) and non-performing loans (NPLs). Design/methodology/approach – Using specific commercial bank-level panel data from 2002-2012, a system of equations was modeled that allows us to apply the system generalized methods of moment approach and estimate the equations, while controlling for specific bank level, industry and macroeconomic variables. Findings – The study finds a positive relationship between a net minimum capital ratio and the net interest margin. Although this is in contrast with the study expectations, the result suggests that a high net minimum capital requirement would widen the spread between the lending and saving rates. The study further finds evidence to support the fact that high minimum capital requirement and excess capital above the minimum required drive credit growth in the banking sector of Ghana. However, high excess capital increases risk-taking activities of the banks, as excess capital is found to be associated with high NPL ratios. Practical implications – Given the economic benefits and costs of sharply increasing bank regulatory capital, our results speak to the ongoing debates on the right level of capital, the effectiveness of the Bank of Ghana policy rate (PR) and the high lending rates that appear to respond only slowly to macroeconomic indicators such as the PR and the inflation rate. The finding also has practical implications for the adoption of the Basel III accord. Originality/value – The empirical literature has not paid enough attention to the impact of regulatory capital on the three specific bank-level outcomes – NPLs, interest rate spread and the nature of interrelationships among these variables, particularly in the African context.
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Alnabulsi, Khalil, Emira Kozarević, and Abdelaziz Hakimi. "Non-Performing Loans and Net Interest Margin in the MENA Region: Linear and Non-Linear Analyses." International Journal of Financial Studies 11, no. 2 (2023): 64. http://dx.doi.org/10.3390/ijfs11020064.
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This paper analyzes the linear and non-linear relationship between non-performing loans and bank profitability measured by the Net Interest Margin for a sample of 74 Middle Eastern and North African banks over the period of 2005–2020. We used the System Generalized Method of Moments (SGMM) as a linear approach and the Panel Smooth Transition Regression (PSTR) model as a non-linear approach. The empirical results of the SGMM approach indicated that the ratio of NPLs negatively affects bank profitability. The findings of the non-linear relationship based on the PSTR model confirmed the existence of a threshold effect. We found that below the threshold of 4.42%, the effect of NPLs is negative but not significant, while after surpassing this threshold, the effect becomes negative and significant. As for bank specifics, we revealed that bank size is positively and significantly associated with bank profitability. For industry factors, we found that more bank concentration decreases bank profitability. Regarding the financial environment, we concluded that the global financial crisis exerted a negative impact on bank profitability. Moreover, we revealed a positive and significant impact of GDP on bank profitability as well as a negative impact of inflation on bank profitability. This study has some limitations regarding the social, economic, and financial differences of the whole sample, which includes banks from the Middle East and others from North Africa. Hence, decomposing the whole sample into two sub-samples could improve the results of this paper.
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Ptasica, Tatjana. "THE IMPACT OF FINANCIAL STABILIZATION POLICIES ON THE LEVEL OF NON-PERFORMING LOANS: PROBLEMS AND CONTRADICTIONS (THE CASE OF CYPRUS)." Baltic Journal of Economic Studies 7, no. 5 (2021): 11–17. http://dx.doi.org/10.30525/2256-0742/2021-7-5-11-17.
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The relevance of the article stems from the current level of non-performing loans (NPLs), which remain very high and pose risks of financial instability in Cyprus. Further reducing the high level of NPLs is one of the main strategic objectives of the Cyprus Stability Program for the period 2019-2022. The purpose of this paper is to identify problems and contradictions in the current financial stabilization policy in the banking sector of Cyprus and to help policy makers of financial policy to trace the problems and contradictions in the course of its implementation. The object of the study is the financial and, in particular, the banking sector of Cyprus, which is largely concentrated within the two systemic banks. The methodology of the study is based on theoretical and methodological analysis of the scientific literature, statistical method, observations, comparative method and analysis, as well as analytical and comparative graphs, comparative and analytical approaches. The results of this study show that the profitability of the banking sector of Cyprus is still negatively affected by a long period of low interest rates, as well as the burden of increasing provisions for bad debts. The adoption of the accounting standard (IFRS9) will lead to a further increase in the amount of provisions for impaired loans and thus have a negative impact on the profitability of banks. In addition, the decrease in the loan-to-deposit ratio was mainly due to a significant reduction in the loan portfolio of Cypriot banks. The significant decline in total lending by banks is due to the high level of non-performing loans in Cyprus, accounting for 31.8% of total loans at the end of November 2018. Moreover, about half of all NPLs are NPLs of households. The ESTIA program was created to address NPLs in Cyprus. Overall, the results of the study also show that the launch of the ESTIA program in 2019 will lead to an increase in moral hazard. Significant growth in demand for real estate in Cyprus is due to government policy and is carried out through the Citizenship for Investment program. Increased demand causes prices to rise and forms a bubble in the real estate market. In turn, the formation of a housing price bubble is one of the pre-crisis conditions.
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Albi, Rachma Utari, Agrianti Komalasari, and Usep Syaipudin. "The Influence of Earnings Quality, Banking Technology, Operational Efficiency, and Non-Performing Loans (NPL) on Firm Value." Jurnal Economic Resource 8, no. 1 (2025): 315–21. https://doi.org/10.57178/jer.v8i1.1339.
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This study examines the influence of earnings quality, banking technology, operational efficiency, and non-performing loans (NPLs) on firm value in the Indonesian banking sector. Employing a quantitative approach, the study analyzes secondary data from conventional banks listed on the Indonesia Stock Exchange (IDX) between 2021 and 2023. Tobin’s Q is used to measure firm value, while independent variables include Net Profit Margin (NPM), mobile banking usage, BOPO (operating expenses to income ratio), and NPLs. The results reveal that earnings quality (NPM) and banking technology (mobile banking) have a significant positive effect on firm value, indicating that profitability and digital adoption enhance investor trust and market valuation. Conversely, operational inefficiency (BOPO) and high NPL levels negatively impact firm value, suggesting that cost control and credit risk management are critical to sustaining financial performance. Firm size also demonstrates a significant positive effect, underscoring its role in reinforcing stability and resilience in dynamic financial environments. This research contributes to the understanding of how financial and technological variables interact to shape firm value, particularly amid the digital transformation of the banking industry. The findings support both signaling and stakeholder theories, indicating that transparent, efficient, and tech-savvy operations serve as credible signals to investors and promote long-term value creation.
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Karamoy, Herman, and Joy Elly Tulung. "The impact of banking risk on regional development banks in Indonesia." Banks and Bank Systems 15, no. 2 (2020): 130–37. http://dx.doi.org/10.21511/bbs.15(2).2020.12.
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Financial performance of a bank represents its financial condition for a certain period of time, either in relation to fund raising or fund allocation, which is usually observed for several indicators, such as capital adequacy, liquidity, and bank profitability. In banking industries, profitability is the most accurate indicator to measure bank performance. Instruments used to measure profitability are Return on Equity (ROE) and Return on Assets (ROA). In this study, the impact of banking risk is analyzed using the ratio of Non-Performing Loans (NPL), Net Interest Margin (NIM), the Loan-to-Deposit ratio (LDR), and the ratio of Operational Cost to Operational Income (OCOI/BOPO) on financial performance of regional development banks in Indonesia. The data used in this study were obtained from the annual reports disseminated on the website of each bank. The number of samples includes 26 Indonesian regional development banks for 2013–2015. The study includes 4 hypotheses for testing. The results show that simultaneously, NPL, NIM, LDR, and OBOI/BOPO are significant to ROA; while NPLs are significant and negatively affect ROA, NIM is significant and positively affects ROA, LDR is not significant and negatively affects ROA, and OCOI/BOPO is significant and negatively affects ROA. This means the banks should minimize the ratio of NPLs, LDR, and BOPO, as they have a negative influence on ROA. Conversely, banks should maximize the ratio of NIM since the latter has a positive effect on ROA.
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Gupta, C. P., and Arushi Jain. "A Study of Banks’ Systemic Importance and Moral Hazard Behaviour: A Panel Threshold Regression Approach." Journal of Risk and Financial Management 15, no. 11 (2022): 537. http://dx.doi.org/10.3390/jrfm15110537.
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This study has two objectives, first, to investigate if the lending behaviour of banks exhibits moral hazard in the Indian Banking Industry, and second, to investigate whether banks’ moral hazard behaviour changes when the systemic importance of the banks is taken into consideration. We studied banks’ moral hazard behaviour by observing the impact of their level of Net Non-Performing Loans (NNPL) on their lending behaviour. This study used threshold panel regression by using 1 year lagged values of NNPL as the threshold variable to find its endogenously determined value that impacts the lending behaviour of the banks. The 1 year lagged value of the NNPL (threshold variable) has been used to depict the level of distress faced by a bank. Assuming that loans may turn bad any year after they are granted, a banks’ lending behaviour has been shown through the relationship between various lags of Loan Growth Rate (LGR) and the contemporaneous values of Net Non-Performing Loans (NNPL). As per our analysis, the loan growth ratio raises NPLs with a relatively higher value when banks are experiencing prior sizable loan losses as compared to when banks are relatively safe, indicating moral hazard behaviour in the Indian banking industry. However, when the systemic importance of the bank is considered, the systemically important banks are found to be engaged in risky lending irrespective of their level of distress, whereas the opposite results are found for the least important banks.
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Kalimashi, Albina, Skender Ahmeti, and Muhamet Aliu. "The Relationship between Liquidity Risk Management and Commercial Bank Performance: Evidence from the Western Balkans." International Journal of Applied Economics, Finance and Accounting 14, no. 2 (2022): 129–36. http://dx.doi.org/10.33094/ijaefa.v14i2.689.
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The current study examines the relationship between liquidity risk management and the performance of commercial banks in the Western Balkans between 2015 to 2020. This relationship is examined by using secondary data from the financial statements. Financial performance is measured by return on assets, equity and net interest margin. Liquidity risk is represented by the quick ratio, current ratio, loan-to-deposits ratio, loan-to-assets ratio, cash and investment-to-deposit ratio, capital adequacy and interest coverage ratio. The Ordinary Least Squares model was used to process the data. The study's findings show that return on assets has a negative relationship with the current ratio but a positive relationship with loans-to-total deposits, cash plus investments-to-total deposits and capital adequacy ratio. Return on equity has a negative relationship with the quick ratio and interest coverage ratio but a positive relationship with the current ratio, loans-to-total assets and cash plus investments-to-deposits ratio. Net interest margin is negatively related to loans-to-total deposits, capital adequacy interest coverage ratio and positively related to loans-to-total assets. These findings have implications for Western Balkan banks’ variables use to manage liquidity risk. The findings of the study are significant as they can be use to enhance liquidity risk management by influencing performance indicators for Western Balkans bank.
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Alalade, Yimka S. A., Ezekiel Oseni, and Olusegun A. Adekunle. "Monetary Policy and Financial Performance of Deposit Money Banks in Nigeria." Asian Social Science 16, no. 11 (2020): 123. http://dx.doi.org/10.5539/ass.v16n11p123.
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This study considered the influence of monetary policy on the financial performance of deposit money banks in Nigeria. The study engaged the use of a time series data for 35 years, from the period 1984 to 2018; all deposit money banks as captured by the Central Bank of Nigeria Statistical Bulletin (2015) were considered. The effect of liquidity ratio, lending rate, loan to deposit ratio and cash reserve ratio were examined on the financial performance of deposit money banks measured by their net worth and total credits. The data was analyzed using descriptive and inferential statistics. Based on the result of stationarity test, the ordinary least square method and the Autoregressive Distributed Lag method were employed. A short run model of net worth and long run model for both the log of net worth and the log of total credits were estimated. The results revealed that the mean of net worth and total credits are 5455.27 and 79608.63 respectively. In the long run, monetary policy variables including liquidity ratio, lending rate, loans to deposit ratio and cash reserve ratio had no significant effect on the log of net worth. However in the short run, variations in the liquidity ratio, loans to deposit ratio and the cash reserve ratio for previous years had significant effect on the log of net worth in the current year. When financial performance is measured as total credits, the liquidity ratio and loans to deposit ratio had positive significant effect in the long run. The cash reserve ratio had a negative significant effect in the long run. The log of lending rate was insignificant in both the long and short run. The study concluded that monetary policy significantly explains the financial performance of deposit money banks both in the short and long run.
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Islam, Mohammad Ebadul, and Shakila Yasmin. "Determinants of Non-Performing Loans (NPLS) of The Commercial Banks in Bangladesh: An Application of Camel Model." Social Science Review 38, no. 2 (2023): 71–89. http://dx.doi.org/10.3329/ssr.v38i2.64461.
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The loan portfolio represents a significant portion of a bank’s total assets. This asset generates interest income, which is a measurement of bank’s financial performance and stability. Non-performing loans (NPLs) are those loans that default on paying interest or principal. Hence, NPL ratio is one of the important indicators of a bank’s performance. In order to ensure good performance, a thorough understanding of NPL ratios and factors that affect NPL are necessary. This research evaluates NPL ratio in the Banking sector of Bangladesh and the relationship among the variables of CAMEL (capital, asset, management, earnings and liquidity) model of performance. Last 24 years (1997-2020) time series data of banking sector have been used in this study. Upon analysis of the time series data VECM model is developed to demonstrate the relationship among the variables. The developed model shows high goodness of fit and reasonable explanatory power. Results of the study will help practitioners and regulators to pin-point policies and operational interventions to manage (reduce) NPL. Social Science Review, Vol. 38(2), December 2021 Page 71-89
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Pranoto, Sarastanto Aulia Heru, Sarbullah Sarbullah, and Kristi Ary Prahmawati. "ANALYSIS OF FINANCIAL RATIO ON INFLUENCING THE GROWTH OF RESIDUAL OPERATING RESULTS IN SAVINGS AND LOAN COOPERATIVES (KSP)." JURNAL STIE SEMARANG (EDISI ELEKTRONIK) 16, no. 2 (2024): 162–80. http://dx.doi.org/10.33747/stiesmg.v16i2.720.
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Abstract. This study aims to analyze and explain the influence of CR (Current Ratio), DAR (Debt to Asset Ratio), TATO ( Total Asset Turnover) and NPM (Net Profit Margin) ratios on the growth of Remaining Business Results (RBR) at the Mitra Sejahtera Blora Sayings and Loans Cooperative (SLC) in 2016-2022. This research aims to test the effect CR, DAR, NPM, and ne profit margins on RBR at the cooperative since 2016. The results show that the current ratio has a significant effect on the overall growth of the remaining business results at the cooperative. The DAR ratio has an important effect on the overall growth of RBR. The current ratio, net profit margin, and total assets turnover have an important influence on growth. The NPM ratio has no significant influence on the total assetss turnover. The net profit margin in significant effect is obcerved in the remaining operating results. This means that the number of liabilities under one year or equal to one year is compared to total current assets. Increasing the remaining business results of a cooperative is very dependent on the activities it carries out. In 2022 the current ratio at the Mitra Sejahtera Blora Savings and Loans Cooperative (KSP) will increase to 0.96%. In 2019 and 2020 the current ratio increased to 0.99%, and fell again in 2021 to 0.90%. The greater the remaining business results obtained indicate better financial performance, because the rate of return is greater. And in 2022 the dept to asset ratio at the Mitra Sejahtera Blora Savings and Loans Cooperative (SLC) will increase to 0.71%.
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Buchory, Herry Achmad, and Jadi Kusmaryadi. "The Effect of Banking Intermediation, Secondary Reserve, Operational Efficiency, and Credit Risk on Banking Profitability (Study at Regional Development Banks in Indonesia Period 2019 – 2022)." 15TH GLOBAL CONFERENCE ON BUSINESS AND SOCIAL SCIENCES ON 14 - 15 SEPTEMBER 2023, NOVOTEL BANGKOK PLATINUM PRATUNAM, THAILAND 15, no. 1 (2023): 58. http://dx.doi.org/10.35609/gcbssproceeding.2023.1(58).
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Banks are intermediary financial institutions that collect and distribute funds to the public with the aim of obtaining profitability. The occurrence of the Covid-19 pandemic has affected the economic sector, especially the banking sector. The intermediation function is not running optimally, increasing investment in the form of secondary reserves, decreasing operational efficiency, increasing credit risk, and decreasing bank profitability. This research was conducted with the aim of knowing the effect of Banking Intermediation, Secondary Reserves, Operational Efficiency, and Credit Risk on Profitability at Regional Development Banks in Indonesia for the 2019 – 2022 period both partially and simultaneously. Banking Intermediation is measured by the ratio of credit to total third-party funds (Loan to Deposit Ratio/LDR), Secondary Reserve is measured by the ratio of securities held to third-party funds (TPF), Operational Efficiency is measured by the ratio of operating expenses to operating income (OEOI), Credit Risk is measured by Non-performing Loans (NPLs) and Profitability is measured by Return on Assets (ROA). The research method used is a descriptive method and a verification method with a quantitative approach with secondary data types sourced from published financial reports from 22 Regional Development Banks in Indonesia. The data analysis technique used is multiple linear regression with the classical assumption test first. As for testing the hypothesis used by T-Test and F-Test. The results of the study show that partially LDR has a positive and significant effect on ROA; Secondary reserve has a positive but not significant effect on ROA; OEOI and NPLs ratios have a negative and significant effect on ROA. While simultaneously LDR, Secondary Reserve, OEOI Ratio, and NPLs have a significant effect on ROA. Keywords: Banking Intermediation, Credit Risk, Operational Efficiency, Return on Assets, Secondary Reserve.
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Agustuty, Lasty, Riza Praditha, Robert Jao, and Andi Ruslan. "The Influence of Internal and External Factors on Non-Performing Loans In Indonesia's Largest Banking Industry." SENTRALISASI 11, no. 2 (2022): 99–117. http://dx.doi.org/10.33506/sl.v11i2.1699.
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This study aims to measure the effectiveness of internal factor proxies from the aspect of efficiency as measured by the ratio of operating costs and operating income (BOPO), liquidity as measured by the loan-deposit ratio (LDR), bank size as measured by total assets, and aspects of bank capital that measured by the capital buffer and external factors using the Repo Rate, and inflation on non-performing loans in the ten largest banking industries in Indonesia. The sample consists of the 10 largest banks in Indonesia with the criteria of having total bank assets of the total national banking assets above 2%. The data used are annual data from 2011 to 2020. The results show that from the bank's internal factors, BOPO has a positive and significant effect on the NPL. LDR, and variable capital buffer, a negative and significant on NPL. While the size of the bank obtained results that are not significant to the NPL. From external factors, the results obtained where interest rates have a significant negative effect on NPLs while inflation is not significant for increasing NPL.
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SMIRNOV, Valerii V. "The limit of money multiplication in modern Russia." Economic Analysis: Theory and Practice 24, no. 5 (2025): 181–99. https://doi.org/10.24891/ea.24.5.181.
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Subject. The article deals with multiplication of money in modern Russia. Objectives. The purpose is to determine the limit of money multiplication in Russia. Methods. The study draws on methods of data analysis and synthesis, correlation and regression analysis. Results. The paper shows the growth of funds of credit institutions on deposit accounts with the Bank of Russia and an increase in the ratio of standing overnight deposits to these funds, reveals an increase in net requirements to public administration bodies, with a stable level of requirements to other sectors in the context of an increasing gap between other items (net) and net foreign assets. The study established an increase in the ratio of household loans and borrowings to quoted shares of Russian issuers traded on the domestic market in the context of a decrease in the ratio of household loans and borrowings to debt securities issued on the domestic market to the ratio of household loans and borrowings to quoted shares of Russian issuers. Conclusions. The revealed limit of money multiplication in modern Russia demonstrates to the expert community the uncertainty of Russian banks in their ability to manage risks and maintain liquidity in the face of rising net requirements to government authorities, outstripping the growth of loans and borrowings relative to debt securities and stocks, despite a sharp increase in the total amount of money owned by the State, firms and households, and an increase in the ratio of the key rate to inflation.
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Jibril, Mohammed. "Effect Of Firms Attributes On Non-Performing Loans Of Listed Deposit Money Banks In Nigeria." Journal of Corporate Finance Management and Banking System, no. 11 (August 17, 2021): 26–41. http://dx.doi.org/10.55529/jcfmbs11.26.41.
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This study investigates the effect of firm’s attributes on non-performing loans of listed deposit money banks in Nigeria. Firm attributes was proxied by (firms size, liquidity and capital adequacy) while non-performing loans was proxied by (the ratio of non-performing loans to total loan). 2010-2019 were the period under review. The study adopts the ex-postfacto research design. Annual data used in the study were sourced from the fact books of the Nigerian stock exchange and the financial statement of the banks. Descriptive statistics, correlation matrix and the ordinary least square (OLS) multiple regression techniques were the main statistical tools used in the analysis of data. Additionally, the study conducted hausman test to choose between the fixed and random effect model which will be acceptable. The anticipated income theory was relied on as it provides the most useful theoretical explanation for the study. The result of the regression reveals that, firm size and liquidity has no significant effect of non-performing loan, while capital adequacy has significant effect on non-performing loans. Based on the findings, the study concludes that the CBN should raise capital adequacy ratio from10% since increasing CAR reduces NPLs base on the findings of this study. Banks should also sure up their capital based because it serve as a buffer and it will enables them absorb the challenges that may arise from the volume of non-performing loan they may encounter..
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K Ozili, Peterson. "BANK PROFITABILITY DETERMINANTS: COMPARING THE UNITED STATES, NIGERIA AND SOUTH AFRICA." Vol. 16, Number 1, 2021 16, Number 1 (2021): 55–78. http://dx.doi.org/10.32890/ijbf2021.16.1.4.
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This study investigates the determinants of banking sector profitability in South Africa, Nigeria and the United States. The findings reveal that cost efficiency, the size of non-performing loans and overhead cost to total asset ratio are significant determinants of the banking sector profitability. In the comparative analysis, the findings from South Africa show that the cost efficiency ratio, overhead cost to total asset ratio and non-performing loans are significant determinants of the banking sector profitability. In the United States, capital adequacy ratio and the size of non-performing loans are significant determinants of its banking sector profitability. In Nigeria, the overhead cost to total asset ratio and cost efficiency ratio are significant determinants of the banking sector profitability. The descriptive analysis reveal that bank net interest margin and return on asset are higher in Nigeria and lowest in the United States which suggests that the Nigerian banking sector is more profitable than the US banking sector. Return on equity is higher in South Africa and lowest in the United States.
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Lalon, Raad Mozib, and Farhana Morshada. "Impact of Credit Risk Management on Profitability of Commercial Banks in Bangladesh: An estimation of Dynamic Panel Data Model." International Journal of Finance & Banking Studies (2147-4486) 9, no. 3 (2020): 131–47. http://dx.doi.org/10.20525/ijfbs.v9i3.874.
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This paper attempts to reveal how several credit risk factors are affecting the profitability of commercial banks considering the econometric models estimated with Random effect, Fixed effect, Pooled OLS and Cross-sectional Generalized least square (GLS) method followed by dynamic panel data model estimated with one-step GMM (generalized methods of moments) approach to incorporate the issue of endogeneity, unobserved heterogeneity and profit persistence of data set collected from annual report of banks covering from year 2010 to 2019 in Bangladesh. We have also adopted several diagnostic checks such as Model specification test, test of heteroskedasticty, cross sectional dependence test followed by test of autocorrelation and unit root test to examine the validity of the models selected for this study. The first part of our empirical investigation of the estimated models considering all methods reveals that out of all the independent credit risk factors such as Total loans to total assets ratio, Total loans to equity ratio, NPL to total loans, NPL to Total equity ratio, Provision for loan losses to total equity, total equity to total assets ratio, Total loans to total deposits ratio and provision for loan losses to NPL ratio, only provision for loan losses to NPL ratio is significantly affecting the dependent variable measured with NIM (Net interest margin) ratio of banks under fixed effect method. The next part of our empirical results of estimated models considering same methods divulges that NPL to total loans ratio, NPL to Total equity ratio and Provision for loan losses to total equity are also significantly affecting the dependent variable measured with ROE (Return on equity) of banks. The third segment of our empirical findings of estimated models considering same approaches shows that only NPL to total loans ratio is statistically significant under all methods but the NPL to total equity ratio is significant under fixed effect and GLS method and Provision for loan losses to total equity is significant under GLS method only in explaining the changes in ROA (Return on equity) measuring profitability of banks. Further investigation reveals that the dynamic impact of the said credit risk factors on profitability measured with ROE of banks has been successfully adopted by one-step system GMM approach considering all conditions required for estimation.
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Hamza, Ali. "The Impact of Selected Economic Variables on Financial Stability in Iraq: An Applied Study on the Ratio of Non-Performing Loans to Total Credit for the Period (2016-2024)." International Journal of Financial, Administrative, and Economic Sciences 4, no. 2 (2025): 38–52. https://doi.org/10.59992/ijfaes.2025.v4n2p2.
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This study aimed to examine the impact of certain economic variables on the ratio of non-performing loans (NPLs) in Iraq. The NPL ratio to total credit is considered a key indicator of financial and banking stability and one of the most prominent global measures of banking asset quality and the strength of the financial system. A high NPL ratio indicates increased financial risks as it reduces bank profitability and liquidity, undermining investor and depositor confidence, which ultimately negatively impacts the country’s macroeconomy. The study utilized quarterly data spanning the period 2016–2024 and applied the Autoregressive Distributed Lag (ARDL) model to analyze the short- and long-term relationships between the variables. The findings revealed that an improvement in the parallel exchange rate and economic growth rate reduces the NPL ratio, while an increase in public debt and inflation rate raises it. This underscores the need for decision-makers to adopt more realistic and effective fiscal and monetary policies to enhance banking sector stability and achieve sustainable economic growth.