Bank Efficiency and Non-Performing Loans: Evidence from Malaysia and Singapore

Karim, Mohd Zaini Abd; Chan, Sok-Gee; Hassan, Sallahudin

doi:10.18267/j.pep.367

Cited by 128 publications

(118 citation statements)

References 23 publications

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“…Implementation of good corporate governance (GCG) may lead to improved quality of financing given by a bank and may result in reduced NPF. Poor GCG indicates poor management and poor management leads to low credit quality (Karim, Chan, & Hassan, 2010). Reduced NPF may lead to improved profit-sharing income from distributed financing and reduce allowance for bad debt.…”

Section: Discussionmentioning

confidence: 99%

“…The novelty of this research is that the researcher used more comprehensive GCG measurement (as a complement to the GCG mechanism). The reason is that poor GCG implementation indicates poor management, bad management causes low credit quality (Karim, Chan, & Hassan, 2010). Moreover, the researcher would develop new variables that were supposed to be able to affect NPF, namely the temporary syirkah fund ratio (TSFR) variable.…”

Section: |mentioning

confidence: 99%

“…The amount of NPF indicates the amount of non-productive or bad financing. The NPF may reduce cost efficiency (Karim, Chan, & Hassan, 2010), from now on, NPF negatively influences profitability (Said & Ali, 2016). Thus, the following hypothesis may be developed as follows:…”

Section: Financial Performance Determinant Of Islamic Banking In Indomentioning

confidence: 99%

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Financial Performance Determinant of Islamic Banking in Indonesia

Mukhibad

Khafid

2018

Jurnal Keuangan Dan Perbankan

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The rapid growth of Islamic banks also occured in Indonesia. The high growth of Islamic banks' assets gave opportunities to increase bad debt (non-performing financing). We examined the impact of good corporate governance (GCG), number of sharia supervisory board (SSB), financing to deposit ratio (FDR), profit and loss sharing (PLS) financing ratio, profit sharing rate of financing, and temporary syirkah fund ratio on the performance of non-performance financing (NPF) and return on assets (ROA). This research also tested the influence of NPF on ROA. The population of this research was Islamic commercial banks in Indonesia with the observation ranged from 2009-2016. The samples were determined by using a purposive sampling method. Data analysis used a structural equation model with WarpPLS. We proved that empirically GCG disclosure did not affect NPF. NPF bank was influenced by PLS financing and temporary syirkah fund ratio. PLS financing income and FDR financing did not affect the NPF. Moreover, GCG, SSB, temporary syirkah fund, and NPF disclosures influenced profitability AbstrakPesatnya pertumbuhan bank syariah juga terjadi di Indonesia. Pertumbuhan aset bank syariah yang tinggi memberikan peluang terjadinya peningkatan kredit macet (nonperforming financing). Kami menguji pengaruh Good Corporate Governance (GCG), jumlah dewan pengawas syariah (DPS), Financing to Deposit Ratio (FDR), rasio pembiayaan Profit and Loss Sharing (PLS), tingkat pendapatan bagi hasil pembiayaan, dan rasio dana syirkah temporer terhadap kinerja Non Perfomance Financing (NPF) dan Return On Assets (ROA). Selain itu, penelitian ini juga menguji pengaruh NPF terhadap ROA. Populasi penelitian adalah bank umum syariah di Indonesia dengan tingkat pengamatan dari tahun 2009-2016. Sampel ditentukan dengan metode purposive sampling. Analisis data yang digunakan adalah structural equation model dengan WarpPLS. Kami membuktikan secara empiris bahwa pengungkapan GCG tidak memengaruhi NPF. NPF bank dipengaruhi oleh PLS financing dan syirkah dana temporer ratio. Pendapatan dari pembiayaan PLS dan FDR tidak mempengaruhi NPF. Pengungkapan GCG, SSB, dana syirkah temporer dan NPF memengaruhi profitabilitas.

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Section: Discussionmentioning

confidence: 99%

Section: |mentioning

confidence: 99%

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Financial Performance Determinant of Islamic Banking in Indonesia

Mukhibad

Khafid

2018

Jurnal Keuangan Dan Perbankan

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“…Many scholars argue that asset quality measured by the ratio of nonperforming loans to total loans have significant negative impact on bank efficiency. High NPL ratio reveals inadequate credit policy and poor evaluation and monitoring process (Karim et al, 2010;Hughes and Mester, 1993;Altunbas et al, 2000;Girardone et al, 2004).…”

Section: Variables Definitionmentioning

confidence: 99%

Does Ownership Structure Matter for Bank Performance in the MENA Region? An Empirical Evidence

Fathi

ElBannan

2017

AJFA

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The aim of this study is to examine the effect of bank ownership structure on bank performance in Middle East and North Africa (MENA) region using the balanced scorecard (BSC) method. Usinga panel data of 137 commercial banks during the period from 2010 to 2014 across twelve countries in the MENA region, the study highlights the effect of ownership type and concentration on bank performance using the balanced scorecard as a performance measurement technique. The results show that government ownership and foreign ownership have statistically significant positive effect on bank performance measured by BSC index. On the contrary, domestic private ownership and ownership concentration have statistically significant negative effect on bank's BSC index. Additional analysis on each of the BSC perspective separately reveals that ownership concentration is negatively correlated with the customer and learning and growth factors, while positively correlated with the internal process factor. Government ownership shows statistically significant negative effect on the financial factor and the internal process factor while associated with statistically significant positive effect on the customer factor. Foreign ownership has statistically significant positive effect on the financial and the internal process factor but does not have statistically significant effect on the other two perspectives. Finally, Domestic private ownership reveals a statistically significant negative effect on the learning and growth factor.

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“…It will cause the commercial bank to be in trouble if the cases of NPL are getting more because it affects the performances of the bank if the bank has lots of NPL cases, which means lots of debtors are unable to pay back the debts. Besides, the bank will have a lower cost efficiency if the bank has severe NPL problems (Karim, Chan and Hassan, 2010). As a result, a commercial bank shall reserve a specific amount of the profits for loan loss provision to ensure and defend their different kinds of situations.…”

Section: Introductionmentioning

confidence: 99%

Determinants of Non-Performing Loans: Evidence From Conventional Banks in Malaysia

Zain

Ghazali

Daud

2020

HSSR

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Purpose of the study: This paper attempts to determine the determinants of non-performing loans in commercial banks in Malaysia. This study attempts to explore the specific bank factors as well as macroeconomics factors that are contributing to the non-performing loans.Methodology: This paper analyzes the data using eight local commercial banks in Malaysia. The data collected from the annual report and Data Streams database for the year 2009 to 2018. A panel data approach has been used to analyze the data. All the determinants regressed against non-performing loans by using STATA 14 as a tool. Main Findings:The results of this study present that capitalization had a significant negative relationship with nonperforming loans, while the real effective exchange rate had a significant positive correlation with non-performing loans. Applications of this study:This study highlights the crucial factors of the non-performing loans that can be used by the bank or financial institutions. Novelty/Originality of this study:This study includes one new variable for the macroeconomics factors, which is the real effective exchange rate, and the result shows it is significant towards non-performing loans. Therefore, this study enhances the existing model with the new variable that can be used to find what is affecting the non-performing loans.

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Bank Efficiency and Non-Performing Loans: Evidence from Malaysia and Singapore

Cited by 128 publications

References 23 publications

Financial Performance Determinant of Islamic Banking in Indonesia

Financial Performance Determinant of Islamic Banking in Indonesia

Does Ownership Structure Matter for Bank Performance in the MENA Region? An Empirical Evidence

Determinants of Non-Performing Loans: Evidence From Conventional Banks in Malaysia

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