Abstract
If the borrower, refuses to returning all or part of the loan, unreturned amount, is called nonperforming assets. Nonperforming assets of the banks is the result of the economic conditions and high levels of inflation and reflects poor performance banks in the management of resources and expenditure.Inceasing the nonperforming assets of banks, will bring decreasing banks facilities, inflation and the underground economy. In this study, to reduce the nonperforming assets of banks in the sixth development plan, for instance, factors affecting nonperforming assets of Melli banks of Markazi Province will be investigated. Independent variables impact ,the number of warnings, time of the facilities repayment, amount of credit facilities, interest and inflation rates and dummy variables of collateral, bank supervision and education of borrowers on dependent variable (the amount of nonperforming assets) between the years 1368 to 1388 were investigated using SPSS and by OLS method . Among the above variables , time of the facilities repayment and amount of credit facilities have positive and significant effect on nonperforming assets of Melli Banks and it means the nonperforming assets will increase by its increase. DOI: 10.5901/mjss.2016.v7n4S2p223
Highlights
Recognizing different economic activities and matching any of those activities to engage the banks for granting credit facilities are the main factors in identifying credit priorities to proper implementation of monetary policy and necessity of accuracy of the practice of the low of banking operations without usury
Mentioned priorities in long-term, medium-term and short-term economic plans of the country will be approved by policymakers and what is related to banking system, will be notified to the banks to apply through the money and credit council and the central bank of the Islamic Republic of Iran every year in the form of monetary policy and banks are obliged to take action only "within the limits specified in each economic sector, to pay the credit facility"
To investigate factors affecting nonperforming assets, according to mentioned literature and prior theoretical models provided in this area,a semi-logarithmic model has been applied: (1) LnY=Į1+Į2N+Į3T+Į4CR+Į5PP+Į6K+Į7D1+Į8D2+Į9D3+Vi In which Y is the amount of non-performing loans, N is the number of warnings, T is the time of repayment of the loan, CR is the amount of granted facilities,PP is rate of interest, K is the rate of inflation, D1 is the type of receiving pledge from the borrower
Summary
Recognizing different economic activities and matching any of those activities to engage the banks for granting credit facilities are the main factors in identifying credit priorities to proper implementation of monetary policy and necessity of accuracy of the practice of the low of banking operations without usury. Macroeconomic conditions and central bank and government intervention in the economy that take shape along with business cycles in the context of the global economy, can stimulate the profitability of companies and individual borrowers of the banks and can affect total facilities and non-performing loans of the banking system. In these circumstances, estimating an appropriate economic model which uses previous information helps a better understanding the relationship between macroeconomic conditions on bank nonperforming assets and credit risk(Heidari et al,2011: 4366. The conclusions and recommendations to reduce non-performing loans of the banks will be investigated
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