Banks’ credit risk, systematic determinants and specific factors: recent evidence from emerging markets

Naili, Maryem; Lahrichi, Younès

doi:10.1016/j.heliyon.2022.e08960

Cited by 57 publications

(76 citation statements)

References 107 publications

(181 reference statements)

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“…On the one hand, an increase in NPL signals a deterioration in the local credit market in which the co‐operative operates; on the other hand, increased bad loans would hinder bank intermediation activity given the CCBs' capital‐raising constraints. However, the effect is statistically significant only in the TSD models for LOANS , with the ex post credit quality measure (i.e., NPL ) never affecting SERVICES , in line with Khan et al (2020) and Naili and Lahrichi (2022).…”

Section: Empirical Results and Discussionsupporting

confidence: 77%

“…(5) LOANS, with the ex post credit quality measure (i.e., NPL) never affecting SERVICES, in line with Khan et al (2020) and Naili and Lahrichi (2022).…”

Section: Loansmentioning

confidence: 99%

“…One strand of literature has highlighted the “dark sides” of adopting a diversification strategy, as engaging in new types of business may lead to higher risk‐taking due to a lack of expertise (BenLahouel et al, 2022; Louzis et al, 2012; Stiroh & Rumble, 2006). However, another strand of the literature has found no significant relationship between nonperforming loans and bank diversification (Khan et al, 2020; Naili & Lahrichi, 2022). Therefore, although it is necessary to account for the effects of bad loans, we cannot make robust predictions about the relationship between NPL and the bank diversification proxy.…”

Section: Data and Equationmentioning

confidence: 99%

See 2 more Smart Citations

Do spatial dependence and market power matter in the diversification of cooperative banks?

2022

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This study examines the determinants of cooperative banks' diversification proclivity, with consideration of the spatial dependence effect. The empirical analysis demonstrates that Italian cooperative banks operate as a network with significant spillover effects that should not be ignored. Indeed, local banks compete in the same market segment, and any shift in their diversification strategy has a cascading effect on neighbouring cooperative banks as a result of customer migration. Finally, we observe that an increase in bank market power results in a decline in local bank lending activity.

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Section: Empirical Results and Discussionsupporting

confidence: 77%

“…(5) LOANS, with the ex post credit quality measure (i.e., NPL) never affecting SERVICES, in line with Khan et al (2020) and Naili and Lahrichi (2022).…”

Section: Loansmentioning

confidence: 99%

Section: Data and Equationmentioning

confidence: 99%

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Do spatial dependence and market power matter in the diversification of cooperative banks?

2022

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“…These results corroborate the results from Table 5 on the long-run relationship between bank factors and agriculture production factors. Furthermore, as agricultural production plays an important role in the GDP growth in Sub-Saharan Africa, especially in western countries (Gollin, 2020;Suri & Udry, 2022), it is normal to expect that agricultural production also would sustain the banking system, similar to the GDP (Naili & Lahrichi, 2022a, 2022b. For the overall findings; the first finding is from cointegration analysis (results1 in table4):…”

Section: Agro-production Effect On Bank Risk and Profit (Gmm Results)mentioning

confidence: 94%

The impact of African agriculture production on bank stability through bank risk and profit

Jean-Petit¹,

Zheng²

2022

IJRBS

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The African farming sector suffers from insufficient finance. Climate changes and socio-political issues hold down the required production level while food on the continent is still inadequate, with more vulnerable people on the one side. On the other side, credit institutions need reasons and guarantees to raise their risk-taking level (financial benefits). Then, this study tries to conciliate those two sides with new shreds of evidence by demonstrating the short and long-run effects of agricultural production on bank sustainability in 40 Sub-Saharan African countries. The study used different agro-production factors (Food and Cereal production factors), bank stability proxies (Liquidity Ratio, NPLs, LLRs), and bank profitability proxies (ROA and ROE). The GMM, DFE, and FMOLS models were used for short (with the 2010-2019 dataset) and long-run analysis (with the 1970-2018 dataset). The results demonstrated that agricultural production increases bank stability and profitability but reduces bank risks. The study concludes that farming finance increases agro-production and stabilizes banks (win-win). Governments, via central banks, should encourage commercial banks to increase bank risk-taking levels to sustain their banking system, increase farming production, and improve food security.

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“…Furthermore, Hafez (2015) revealed that Islamic and conventional banks in Egypt facing often two types of risks which were credit risk and liquidity risk. Credit risk refers to an announcement of eroding the profitability of the bank and the beginning of a crisis inside the bank because of the increased amount of non-performing loans which is considered a red flag for critical problems, i.e., credit risk reflects an outstanding threat of stability of banks' performance (Naili and Lahrichi, 2022). While liquidity risk happens as a normal reaction resulting from the nature of banking activities since banks give funding to the borrowers for the medium and long-term compared to the duration of depositors which is commonly shorter than the lending duration (Gafrej and Boujelbéne, 2022).…”

Section: Introductionmentioning

confidence: 99%

Business Diversification and Banks’ Performance: The Moderating Role of Credit and Liquidity Risk (Empirical Study)

Alsayed

Amirhom

Azzam

2022

المجلة العلمیة للدراسات والبحوث المالیة والإداریة‎

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The major objective of this study is to explore the moderating role of credit risk and liquidity risk on business diversification and banks' performance relationship, i.e., investigating the interaction relationship between banks' risks and business diversification on banks' performance. In light of this, the study also aims to examine the impact of credit risk and liquidity risk on banks' performance, especially in emerging countries like Egypt. Moreover, it seeks to test the effect of business diversification, through revenue diversification, asset diversification, and funding diversification, on banks' performance. This study depends on a sample consisting of 10 banks over the period from 2012 to 2021. The findings indicate that credit risk has a negative impact on banks' performance, whereas liquidity risk has a positive impact on banks' performance. Also, revenue diversification and asset diversification have a positive effect on credit risk, and only asset diversification has a positive effect on liquidity risk. Furthermore, all activities of diversification have an insignificant impact on banks' performance. The most important result is that credit risk and liquidity risk moderate business diversification and banks' performance relationship as credit risk changes the effect from an insignificant negative impact to a significant positive effect. Also, credit risk adjusts the impact of asset diversification from an insignificant positive impact on banks' performance to a significant positive impact. Furthermore, liquidity risk is able to convert the impact of revenue diversification on banks' performance from an insignificant negative impact to a significant negative impact.

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Banks’ credit risk, systematic determinants and specific factors: recent evidence from emerging markets

Cited by 57 publications

References 107 publications

Do spatial dependence and market power matter in the diversification of cooperative banks?

Do spatial dependence and market power matter in the diversification of cooperative banks?

The impact of African agriculture production on bank stability through bank risk and profit

Business Diversification and Banks’ Performance: The Moderating Role of Credit and Liquidity Risk (Empirical Study)

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