Assessing the Impact of Non-Performing Loans on Economic Growth in Turkey

doi:10.21694/2379-1047.16007

Cited by 4 publications

(4 citation statements)

References 2 publications

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“…A high significance indicates that banks will face a higher accumulation in nonperforming loans when the number of loans increases. It is consistent with a study by (Aylin, 2017). A lower bank's performance in evaluating their customer's quality and lending activities might turn this loan into a loan unperformed.…”

Section: Results / Discussionsupporting

confidence: 91%

Evaluating the Interaction of Bank Characteristics and Unexpected Crises on Nonperforming Loans in Malaysia

Zulkifli¹,

Zainuri²

2023

IJARAFMS

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Over the last few decades, Malaysia has experienced a large number of nonperforming loans, which is accompanied by a significant deterioration in the banking system. The problem also arises when Malaysia's economy has been attacked by the sudden crises, which literally distracts the banking characteristics. Therefore, this study is conducted to investigate the impact of bank characteristics and unexpected crises on nonperforming loans in Malaysia's commercial banks. Data from sixteen (16) commercial banks spanning from 2007 to 2020 are used. Panel data analysis is utilized to examine the impact of the interaction between bank characteristics and unexpected crises on the bank's nonperforming loans. The finding reveals that unexpected crises influence nonperforming loans through the interaction of bank characteristics. It discloses the existence of unexpected crises alongside deterioration in bank characteristics may lead to the problem of nonperforming loans arising in the banking system. The severity of the crises erodes the banking confidence in publicly serving the loans as before and leaves the banks facing a significant burden in the higher accumulation of loans unperformed. Further, this result suggests that a strict and in-depth lending policy based on the current economic environment and conditions must be provided to ensure uniformity in the credit facilities.

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Section: Results / Discussionsupporting

confidence: 91%

Evaluating the Interaction of Bank Characteristics and Unexpected Crises on Nonperforming Loans in Malaysia

Zulkifli¹,

Zainuri²

2023

IJARAFMS

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“…Key stakeholders are concerned about low nonperforming loans, transparent risk management, and balanced interests (Gunningham, 2020), as the former indicates that borrowers are defaulting and increasingly placing financial risks. Minimizing JEBV 4(1) 2024, 217-240 NPLR, like Expected Loss, lowers credit cycle exposure and maximizes banks' profits (Erdoğdu, 2017).…”

Section: Gross Non-performing Loans Ratio (Gnplr) and Bank Performancementioning

confidence: 99%

Venturing into Risk Management: Examining Credit Risk and Performance in Pakistani Commercial Banks through Panel VAR Analysis from a Business Perspective

Ali,

Jameel Ahmed

2024

JEBV

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In Pakistan's dynamic financial sector, effective credit risk management by commercial banks is critical to maintaining financial stability. In this study, we embarked on a unique and comprehensive journey, adopting the Panel Vector Autoregressive (PVAR) analysis, a novel methodology in this context. This approach allowed us to delve into the intricate relationship between credit risk management strategies and the aggregate business performance of commercial banks. The data used in this study spans from 2010Q1 to 2022Q4, investigating the comprehensive nexus of credit risk and macroeconomic indicators using a large dataset encompassing 18 strategically critical commercial banks of Pakistan. Our study uncovers several profound insights, documenting a remarkable increase in credit risk upon increases in the interest rate. The repercussions of the non-performing loans are observed nearly two years after the successive phases of a stern posture of monetary policy have been implemented. Our research findings carry significant weight for the banking industry. We discovered that the levels of credit risk could be reined in due to the protective shield offered by phases of sudden economic booms. This underscores the reinforcing effect of the improving economic conditions on defaults of loans, providing practical and actionable insights for credit risk management strategies.

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“…Moreover, it demonstrated that worsening macroeconomic conditions lead to debt servicing problems and higher non-performing loans. Furthermore, Jordan and Tucker (2017) carried out research in the Bahamas to explore how non-performing loans influence economic growth. By employing the OLS technique and vector error correction (VEC) model with quarterly data from 2002 to 2011, they discovered that economic growth is inversely related to NPLs in the short and long runs.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

The effects of non-performing loans on bank stability and economic performance in Zimbabwe

Katuka

Mudzingiri

Vengesai

2023

5002

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This study explores the impact of non-performing loans (NPLs) on the Zimbabwean banking industry’s stability and economic performance during the dollarization era. The panel vector autoregressive (PVAR) model was applied using annual data from 2009 to 2017. The findings indicated that short-run NPL shocks negatively impact the risk-adjusted return, while the impact on risk-adjusted capitalization is positive but dies off in the long run. The findings from the paper further show that NPLs have a strong negative and significant effect on loan growth and economic performance in the short run but remain muted in the long run. The study results also show a bi-directional causality between banking industry stability and NPLs. In summary, NPLs affect banking industry stability, loan growth and economic performance in Zimbabwe. A possible implication is the formulation of a sound regulatory framework that curbs the increase in NPLs, promotes stability within the banking industry, and improves economic performance. The practical implication is that banks must get it right the first time regarding bank lending policies. Thus, the study recommends that Zimbabwean banks proactively manage their exposure to non-performing loans by implementing rigorous credit risk assessment processes.

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Assessing the Impact of Non-Performing Loans on Economic Growth in Turkey

Abstract: The purpose of this study is to determine the effects of non-performing loans (NPL) in the Turkish banking sector on the economic growth. An econometric model regarding the factors affecting the economic growth was created.

Cited by 4 publications

References 2 publications

Evaluating the Interaction of Bank Characteristics and Unexpected Crises on Nonperforming Loans in Malaysia

Evaluating the Interaction of Bank Characteristics and Unexpected Crises on Nonperforming Loans in Malaysia

Venturing into Risk Management: Examining Credit Risk and Performance in Pakistani Commercial Banks through Panel VAR Analysis from a Business Perspective

The effects of non-performing loans on bank stability and economic performance in Zimbabwe

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