The determinants of credit and insolvency risk of European commercial banks: a dynamic panel data analysis

The effect of Economic Policy Uncertainty on the credit risk of US commercial banks

“…A priori, these results support Salas and Saurina (2002) studies, who argued that larger banks take fewer risks. Particularly, these outcomes support the inverse relationship between bank size and credit risk found by Jabra et al (2017) and the moderating effect of bank concentration on the relationship between EPU and banks' non‐performing loans showed by Karadima and Louri (2020). These outcomes support the assertion of Tran et al (2020) regarding the importance of the bank's size in the diversification of income from different activities other than credit interests in the face of high EPU.…”

“…Larger banks tend to be riskier, in general, due to moral hazard (Uhde & Heimeshoff, 2009), but also take less risk because of their efficiency and managerial capacity (Salas & Saurina, 2002). Jabra et al (2017) found an inverse relationship between credit risk and bank size in a study of 280 European banks with panel data for 2003–2013. Specifically, Karadima and Louri (2020), employing a panel dataset of 507 banks from four major euro area countries between 2005 and 2017, demonstrated how a high bank concentration has a significant moderating effect on the positive relationship between EPU and banks' non‐performing loans.…”

“…Most of the literature shows that capitalization and bank risk are inversely related (Baselga‐Pascual et al, 2015). However, high solvency could also lead banks to lower the quality of their loans to compensate for lower leverage and generating a positive relationship between capitalization and credit risk (Jabra et al, 2017). Exploring the impact of EPU on credit risk considering a bank's solvency as an additional determinant should contribute to shed more light on this controversy.…”

Nexus between non‐performing loans and economic growth in emerging countries: Evidence from Turkey with wavelet coherence approach

“…Also, Louzis, Vouldis, and Metaxas (2012), Castro (2013), Chaibi and Ftiti (2015), Abid, Ouertani, and Zouari‐Ghorbel (2014) and Radivojevic et al (2019) examine the relationship between NPLs and interest rate while Torağanlı and Ertuğrul (2016) consider the current account. Moreover, there are other studies that include bank‐specific factors like capital adequacy ratio (Jabra, Mighri, & Mansouri, 2017; Radivojevic et al, 2019), credit growth (Vithessonthi, 2016), profitability (Curak, Pepur, & Poposki, 2013) and total assets (Apan & İslamoğlu, 2019; Ghosh, 2015).…”