Determinants of credit risk in the banking system in Sub-Saharan Africa

Mpofu, Trust R.; Nikolaidou, Eftychia

doi:10.1016/j.rdf.2018.08.001

Cited by 58 publications

(47 citation statements)

References 22 publications

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“…The banks in question were selected using the purposeful sampling method premised on the availability of complete and required information on the variables under consideration. According to Mpofu and Nikolaidou (2018), SSA countries (inclusive of the countries examined) were unique as they possess the same economic and banking features—most importantly, they all face the challenge of huge NPLs in their banking sectors. Thus, the data was collected using the extraction method from the IMF database and Bank Scope/Orbis‐bank focus database.…”

Section: Methodsmentioning

confidence: 99%

Investigating the factors affecting nonperforming loans in commercial banks: The case of African lower middle‐income countries

Olarewaju

2020

African Development Review

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A nonperforming loan refers to a loan that is not paid as and when due, and it is a significant issue that banks need to keenly consider for them to exist and be stable. There are several factors accountable for nonperforming loans; some are firm-specific, while others are macroeconomic factors. The study of banking sector stability is a foundation of modern macroeconomic policy of a bank-based economy. In this view, this study aims to investigate the determining factors from both perspectives. This study used the dynamic panel regression analysis on 110 commercial banks from nine countries for the years 2010-2017 and a total of 880 observations were examined. The system generalized method of moments found that lagged nonperforming loan, lending rate, capital adequacy, credit growth, cost income ratio, as well as real interest rate, were the significant factors affecting nonperforming loans in lower middle-income countries' banking sector. Hence, it is recommended that commercial banks ought to establish regulations to amend their policies regarding credit advancement in alignment with the factors highlighted above. Also, banks need to ensure their loaned-out funds are dedicated to the envisioned purpose via improved credit monitoring that would spur economic sustainability.

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Section: Methodsmentioning

confidence: 99%

Investigating the factors affecting nonperforming loans in commercial banks: The case of African lower middle‐income countries

Olarewaju

2020

African Development Review

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“…Perceivably, NPF was impacted by internal and external elements. Research by [42,43,44] demonstrated that macro and microeconomic aspects (GDP and inflation rate) potentially influenced bank NPF. Additionally, internal bank-specific factors (higher capitalisation and inadequate operation) impacted bank NPF [45,46,47].…”

Section: Asset Qualitymentioning

confidence: 99%

Protection of Bank's Wealth: How is Islamic Banks's Financial Performance Affected by Asset Quality and Operational Efficiency

Ali¹,

Shuib²,

Nor³

2021

ujaf

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Islamic banks are recognised as entities which support social objectives as well as economic development of the country. Financial performance of the global Islamic banking and finance has shown promising growth as equal to well-established conventional banks. The study aims to investigate the effect of asset quality and operational efficiency on the financial performance of Islamic banks in Malaysia. The study uses panel data analysis, whereby the annual reports of 16 Islamic banks in Malaysia are analysed over a ten-year period from 2010 to 2019. The independent variables of the study are asset quality and operational efficiency. The dependent variable of the study is financial performance proxied by Return on Asset (ROA) and Return on Equity (ROE). Multiple regression models consisting of random-effect model and fixed-effect model are employed to analyse the data of the study. The findings of the study show that both asset quality and operational efficiency of Islamic banks have a significant influence on the financial performance proxied by ROA and ROE. Hence, the findings of the study evince the importance of proper management practices in protecting the wealth, as well as the financial performance of the Islamic banks.

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“…Credit risk is the probability that a credit is not paid in time or the established form, compromising the financial institution's profitability (Karimi, 2014;Million et al, 2015;Mpofu and Nikolaidou, 2018). To estimate the financial performance of an accredited SME is basic/primordial in the credit evaluation.…”

Section: Credit Riskmentioning

confidence: 99%

“…Source: Own Elaboration. (2015), Mpofu and Nikolaidou (2018), Trejo García et al (2017), Waemustafa and Sukri (2015), Perez and Fernandez (2007), Gila-gourgoura and Nikolaidou (2018), Gai and Lelasi (2014), Ozili and Outa (2017), Gómez and Checo (2014) Credit risk is the probability that a payment is paid neither in time nor in the established form Probability of default Perez and Fernandez (2007), Leal, Aranguiz, &Mardones (2018), Gai and Lelasi (2014), Navaretti et al (2015), Trejo García et al (2017), Gómez and Checo (2014)…”

Section: Research Proposalmentioning

confidence: 99%

Untitled

2020

Int. J. Bus. Financ. Manage. Res.

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All over the world, small and medium-sized enterprises (SMEs) are a crucial source of employment and nation development. Diverse and exhaustive research has been done to describe and understand the characteristics of SME as well as the factors that hit them, affecting their market's permanence. Within the success factors of SMEs are their competitiveness, their management of resources, and activities, also called chain value management. The SME sector has been generally known to have limited access to bank financing. SME manufacture sector in Puebla City México is affected by the same factors than SMEs all over the world. This research looked at defining whether there is a correlation between SME competitiveness and chain value management, as well as a correlation with credit risk. Data were collected through questionnaires, approximately 65 questionnaires answered by small business entrepreneurs of the manufacturing sector in the City of Puebla, Mexico. The results obtained indicate that competitiveness, value chain management and credit risk are related.

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Determinants of credit risk in the banking system in Sub-Saharan Africa

Cited by 58 publications

References 22 publications

Investigating the factors affecting nonperforming loans in commercial banks: The case of African lower middle‐income countries

Investigating the factors affecting nonperforming loans in commercial banks: The case of African lower middle‐income countries

Protection of Bank's Wealth: How is Islamic Banks's Financial Performance Affected by Asset Quality and Operational Efficiency

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