Determinants of Non-Performing Loans in Licensed Commercial Banks: Evidence from Sri Lanka

Ekanayake, Nishani; Azeez, A.A.

doi:10.18488/journal.aefr/2015.5.6/102.6.868.882

Cited by 42 publications

(19 citation statements)

References 11 publications

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“…Using dynamic panel data, Abid et al ( 2014 ) revealed that profitability has a negative significant effect on NPLs while inefficiency positively impacts the NPLs of Tunisian banks. Ekanayake and Azeez ( 2015 ) indicated that size and inefficiency are positively correlated with NPLs in the banking sector in Sri Lanka. Imbierowicz and Rauch ( 2014 ) and Ali et al ( 2015 ) determined a positive relationship between liquidity risk and NPLs of banks in the US and Malaysia, respectively.…”

Section: Literature Reviewmentioning

confidence: 99%

Does country risk impact the banking sectors’ non-performing loans? Evidence from BRICS emerging economies

Saliba

Farmanesh²,

Athari

2023

Financ Innov

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This study aims to fill the gap in the literature by specifically investigating the impact of country risk on the credit risk of the banking sectors operating in Brazil, Russia, India, China, and South Africa (BRICS), emerging countries. More specifically, we explore whether the country-specific risks, namely financial, economic, and political risks significantly impact the BRICS banking sectors’ non-performing loans and also probe which risk has the most outstanding effect on credit risk. To do so, we perform panel data analysis using the quantile estimation approach covering the period 2004–2020. The empirical results reveal that the country risk significantly leads to increasing the banking sector’s credit risk and this effect is prominent in the banking sector of countries with a higher degree of non-performing loans (Q.25 = − 0.105, Q.50 = − 0.131, Q.75 = − 0.153, Q.95 = − 0.175). Furthermore, the results underscore that an emerging country’s political, economic, and financial instabilities are strongly associated with increasing the banking sector’s credit risk and a rise in political risk in particular has the most positive prominent impact on the banking sector of countries with a higher degree of non-performing loans (Q.25 = − 0.122, Q.50 = − 0.141, Q.75 = − 0.163, Q.95 = − 0.172). Moreover, the results suggest that, in addition to the banking sector-specific determinants, credit risk is significantly impacted by the financial market development, lending interest rate, and global risk. The results are robust and have significant policy suggestions for many policymakers, bank executives, researchers, and analysts.

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Section: Literature Reviewmentioning

confidence: 99%

Does country risk impact the banking sectors’ non-performing loans? Evidence from BRICS emerging economies

Saliba

Farmanesh²,

Athari

2023

Financ Innov

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“…Hasil ini sejalan dengan Abid et al, (2014),Chaibi & Ftiti (2015, Gabeshi (2017) dan El-Maude et al, (2017) yang menemukan adanya hubungan positif antara ukuran bank dengan NPL. Sedangkan penelitian ini bertentangan dengan penelitian Swamy (2012), Ekanayake & Azeez (2015), Polodoo et al, (2015), Alexandri & Santoso (2015), serta Sari et al, (2015) yang menemukan adanya hubungan signifikan negatif antara ukuran bank dengan NPL. Sedangkan Fajar & Umanto (2017) tidak menemukan adanya hubungan adanya hubungan signifikan antara ukuran bank dengan NPL.…”

Section: Rasio Kecukupan Modal Terhadap Nplunclassified

“…Oleh karena itu, BOPO berpengaruh signifikan positif terhadap NPL. Hipotesis ini sejalan dengan penelitian Louzis et al, (2012), Ekanayake & Azeez, (2015), Fajar & Umanto, (2017), dan Sari et al, (2015). Akan tetapi hasil tersebut bertentangan dengan penelitian Vatansever & Hepşen (2013) Khan & Ahmad (2017) menyatakan bahwa para pemegang saham di perusahaan sangat memperhatikan rasio laba per lembar saham karena dapat memberikan gambaran keseluruhan terhadap kinerja bank.…”

Section: Rasio Kecukupan Modal Terhadap Nplunclassified

Analisis Faktor Spesifik Bank Terhadap Non Performing Loan Pada Bank Umum Konvensional Yang Terdaftar Di Bursa Efek Indonesia

Juliani

2022

Owner

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The purpose of this research is to analyze the effect of bank specific factors on non-performing loan on public conventional banks. The dependent variable studied was the non-performing loan and independent variables examined were capital adequacy ratio, bank size, loan to deposit ratio, net interest margin, return on equity, operating expenses to operating income, and earning per share. The secondary data obtained from the annual reports submitted in the IDX. Sample consist of 32 public conventional banks listed in IDX in the period of 2012-2017. The result of this study indicate that bank size and net interest margin has a positive and significant impact on non-performing loan. While return on equity showed a negative and significant impact on non-performing loan. The result of this study also showed that capital adequacy ratio, loan to deposit ratio, operating expenses to operating income and earning per share did not have any significant impact on non-performing loan.

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“…According to Ekanayake and Azeez (2015), NPFs are certainly affected by banklevel factors. These factors, according to previous studies are the factors of Financing to Deposit Ratio (FDR), Capital Adequacy Ratio (CAR), and Ratio of Return from Profit Loss Sharing Financing to Total Financing (RR).…”

Section: Determinants Of Non Performing Financing (Npf)mentioning

confidence: 99%

What Causes Non-Performance Financing? Insights From Islamic Commercial Banks in Indonesia and Malaysia

Yuwannita

Mulyany²,

Fahlevi³

2022

muqtasid

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This study aims to assess the determinants of Non-Performing Financing (NPF), particularly in the Islamic Commercial Banks (ICBs) setting. It seeks to test the effect of financing to deposit ratio (FDR), capital adequacy ratio (CAR), and return ratio (RR) on NPF at the ICBs in Indonesia and Malaysia, being the largest Islamic financial hubs in SoutheastAsian region. The whole population were 13 ICBs in Indonesia and 16 ICBs in Malaysia for the observation period from 2014 to 2018, resulting in 142 observations. The period was selected to avoid the effect of COVID-19 pandemic towards the variables tested in this study. This study uses multiple linear analyses of panel data to analyze the data collected. It was found that FDR, CAR, and RR, respectively, have an impact on the level of NPF. At the country-specific level, for ICBs in Indonesia, FDR was found to have a positive effect on the NPF level, while CAR and RR have a negative effect on NPF. Meanwhile for ICBs in Malaysia, all independent variables, namely FDR, CAR, and RR have a positive effect on the NPF level. The slightly variation in the findings may be attributed to the different regulatory settings in the two countries which may need further evidence. The findings of this study imply that NPF determinants may have different influence in two neighboring countries despite they seem to share many similar regional characteristics. The findings also suggest that to maintain low level of NPF the ICB may need to focus on the attributes of FDR, CAR and RR.

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Determinants of Non-Performing Loans in Licensed Commercial Banks: Evidence from Sri Lanka

Cited by 42 publications

References 11 publications

Does country risk impact the banking sectors’ non-performing loans? Evidence from BRICS emerging economies

Does country risk impact the banking sectors’ non-performing loans? Evidence from BRICS emerging economies

Analisis Faktor Spesifik Bank Terhadap Non Performing Loan Pada Bank Umum Konvensional Yang Terdaftar Di Bursa Efek Indonesia

What Causes Non-Performance Financing? Insights From Islamic Commercial Banks in Indonesia and Malaysia

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