Related party lending and rural bank risk: Evidence during the Covid-19 period

Setiyono, Bowo; Munawaroh, U’um

doi:10.1016/j.ribaf.2023.102079

Cited by 2 publications

(2 citation statements)

References 40 publications

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“…First, it contributes to the emerging literature on the non-traditional determinants of bank loan loss provision. Prior studies examined some non-traditional determinants of loan loss provision (see, for, example, Basu et al 2020;Biswas et al 2024;Mnif and Slimi 2023;Kilic et al 2013;Ng et al 2020;Danisman et al 2021;Setiyono 2024). The present study complements these studies by examining other non-traditional determinants of loan loss provision that have not been examined in the previous literature.…”

Section: Introductionmentioning

confidence: 70%

“…The existing literature has identified several determinants of loan loss provision. These include loan charge-offs (Basu et al 2020), nonperforming loans (Biswas et al 2024), capital adequacy ratio (Mnif and Slimi 2023), accounting regulation (Kilic et al 2013), economic policy uncertainty (Ng et al 2020;Danisman et al 2021), and bank lending (Setiyono 2024). But the existing literature has paid little attention to the non-traditional determinants that may influence the size of bank loan loss provision, and there is little knowledge on how these non-traditional determinants might affect loan loss provision, especially in non-crisis years.…”

Section: Introductionmentioning

confidence: 99%

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Bank Loan Loss Provision Determinants in Non-Crisis Years: Evidence from African, European, and Asian Countries

Ozili

2024

JRFM

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Loan loss provision is an important accounting accrual in the banking sector. There have been numerous debates about the determinants of loan loss provision in several contexts. This study extends the debate by investigating the determinants of bank loan loss provision in non-crisis years for 28 countries from 2011 to 2018. The non-crisis years cover the periods after the global financial crisis and the periods before the COVID-19 pandemic while the countries consist of African, European, and Asian countries. Using the generalized linear model regression and the quantile regression methodologies, the results show that institutional quality is a significant determinant of bank loan loss provision, indicating that the presence of strong institutions decreases the size of bank loan loss provision in non-crisis years. In the regional analyses, it was found that economic growth is a significant determinant of bank loan loss provisions in African and Asian countries. Loan loss provision is higher in times of economic prosperity in African and Asian countries. Bank overhead cost is a significant determinant of bank loan loss provisions in Asian countries. Meanwhile, bank loan loss provision determinants are insignificant in European countries.

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