COVID-19, nonperforming loans, and cross-border bank lending

Park, Cyn‐Young; Shin, Kwanho

doi:10.1016/j.jbankfin.2021.106233

Cited by 53 publications

(31 citation statements)

References 29 publications

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“…Due to the significant expansion of their cross-border financial activities via global financial networks, an adverse shock to a major global or regional financial system might swiftly spread to local banking systems in emerging market nations as a result of advanced economies’ deleveraging of internationally active banks ( Park and Shin (2021) ).…”

Section: Resultsmentioning

confidence: 99%

Analysis of connectivity between the world’s banking markets: The COVID-19 global pandemic shock

Tabak

Silva

2022

The Quarterly Review of Economics and Finance

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Section: Resultsmentioning

confidence: 99%

Analysis of connectivity between the world’s banking markets: The COVID-19 global pandemic shock

Tabak

Silva

2022

The Quarterly Review of Economics and Finance

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“…The real gross domestic product output has an element of global economic performance. Financial growth reasons increase in income level beyond advanced employment opportunities which decrease economic anguish on debtors, facilitate and to analyze the diminish banks of NPLs (Elyassi, 2021;Park, & Shin, 2021;Makri, et al, 2014;McCann, & O'Malley, 2021)).…”

Section: Relationship Between Growth Of Gross Domestic Product On Nplsmentioning

confidence: 99%

Determinants of Non-Performing Loans (NPLs); Evidence from Banking Sector of Pakistan

Hassan

Sheikh

Rahman

2022

ASSAP

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The main aim of the current study is to theorize an inclusive assessment of the factors of non-performing loans from banking sector in the setting of Pakistan. In this connection, adequate criticism of contemporary literature is being provided in context of relevant macroeconomic indicators which might aggravate the level of Non-Performing Loans (NPLs) in the conventional commercial banks of Pakistan as well as other regions. As per the study of literature, it has been found that corruption, political stability, accountability, investment profile, credit bank to private area and energy crisis affects the NPLs of conventional banks. In addition, factors like lending interest rate, unemployment, GDP and inflation do explain the variation in NPLs of the banking sector. Political stability, lack of capital capability, lack of efficiency, nominal emphasis on NPLs and lack of efficiency are the present issues being faced by the country. On the other hand, an increase in NPLs affects the internal factors including efficiency, profitability, bank size and capital. It has also been found that NPLs surge through inaccurate decisions by the organizations and political intervention in the banking sector. As per the outcomes of the studies, it has been observed that operational productivity and effectiveness have an adverse and significant relationship with NPLs. The lawmakers should accomplish a vigorous financial state of banks through manufacturing extra revenues. In this way banks will be in a better position to explore the credit worthiness of the creditors which will be ultimately helpful for better loan management. Once the key factors for increase in NPLs are determined, the banks will establish stable and efficient policies for loan management. The purpose behind determining these internal as well as external factors is not mere to highlight their significance but to chalk out measures and directions to control the stability of banking sector and the financial structure.

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“…This crisis is comparable to the ongoing COVID-19 pandemic because both have generated large-scale economic problems (Tan et al, 2021). In the pandemic, business earnings are falling and unemployment is rising (Park and Shin, 2021). In the financial industry, a sizeable tail of banks is expected to be pushed below minimum capital requirements (International Monetary Fund, 2020).…”

Section: Introductionmentioning

confidence: 99%

“…, 2021). In the pandemic, business earnings are falling and unemployment is rising (Park and Shin, 2021). In the financial industry, a sizeable tail of banks is expected to be pushed below minimum capital requirements (International Monetary Fund, 2020).…”

Section: Introductionmentioning

confidence: 99%

Does the market discipline banks? Evidence from Balkan states

Afzal

Firdousi

2022

JRF

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PurposeThis research is designed to investigate the presence of market discipline in the banking sector, across Balkan states in Europe. Specifically, the effects of CAMEL variables on the cost of funds and deposit-switching have been assessed.Design/methodology/approachThe CAMEL method of bank evaluation has been applied as well as two measures for market discipline (costs of funds and deposit-switching behaviour). Data have been obtained for 10 Balkan states for the 2006–2019 period. For data analysis, ordinary least squares (OLS) and fixed effects models have been utilized. The generalized method of moments (GMM) method has been deployed as well as a dynamic panel model.FindingsEvidence of market discipline has been found, in the form of a higher cost of funds in the context of capital adequacy (but not for other CAMEL variables). Evidence of market discipline in the form of deposit-switching, however, has not been found. In addition, it has been discovered that bank size and gross domestic product (GDP) growth lower the costs of funds for banks.Originality/valueIn the wake of the pandemic, banks need to prepare themselves for very difficult situations and relevant studies can provide help. Therefore, this research has contributed to the developing literature on this topic. In addition, the findings have important practical implications. Results show that banks should maintain adequate levels of capital if they want to control their costs of funds. Results also show that market discipline, in the form of higher costs of funds, can be imposed on banks to discourage excessive risk-taking. Findings highlight the value of appropriate policies and strong supervision of the financial industry. Findings also underline the importance of offering financial incentives to banks. For example, if banks know they will be able to avoid higher costs of funds by controlling their risk levels, they will avoid unrestrained risk-taking.

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COVID-19, nonperforming loans, and cross-border bank lending

Cited by 53 publications

References 29 publications

Analysis of connectivity between the world’s banking markets: The COVID-19 global pandemic shock

Analysis of connectivity between the world’s banking markets: The COVID-19 global pandemic shock

Determinants of Non-Performing Loans (NPLs); Evidence from Banking Sector of Pakistan

Does the market discipline banks? Evidence from Balkan states

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