Credit Growth Rate Research Articles

Determinant Influencing Non-Performing Loans: A Story of Vietnamese Commercial Banks

This study aims to analyze the factors influencing non-performing loans (NPLs) in commercial banks during the period 2016-2022. The study utilized a sample of 16 joint-stock commercial banks in Vietnam. The authors employed three regression models: Pooled OLS, Fixed Effects Model (FEM), and Random Effects Model (REM), ultimately selecting REM as the most appropriate model. The results show that out of 5 variables, GDP and bank size have a negative impact on bad debt ratio. However, credit growth rate, credit loss provision and loan to total assets ratio have the same direction on NLPs.

Determinants of Liquidity Risk in Vietnamese Commercial Banks

Liquidity risk, which tends to compound other risks such as credit and market risks, has become one of the principal risks in banks. Thus, this study examined the determinants of liquidity risk measured by the loan deposit ratio (LDR). The sample included 30 commercial banks in Vietnam based on secondary data coverage from 2017-2021. Descriptive statistics were used to determine the general situation of the banks' assets, liabilities, and business performance. The random effects model (REM) was chosen to determine factors affecting liquidity risk. The results show the huge gap in the business performance of the four state-owned banks and the rest of the joint-stock commercial banks, and the state-owned banks always accounted for over 50% of the total credit, assets, and deposits of the whole banking system. The average banks’ credit and profit growth rates were around 17% and 30%, respectively, and the bad debt ratio was about 2%. Increasing a bank’s credit growth rate and profitability would push up its liquidity risk. On the other hand, holding several liquid securities that banks could sell immediately to meet solvency requirements and maintaining a high capital adequacy ratio (CAR) would reduce their liquidity risk. These findings are valuable to the banks in understanding how to minimize liquidity risk, such as controlling the credit growth rate and CAR, setting appropriate profit targets, and investing in liquid securities. Additionally, by conducting monetary policies, the State Bank should regulate market liquidity and bank liquidity for the safe operation of the financial system.

The transmission of targeted monetary policy to bank credit supply

In this paper I estimate the impact of Targeted Longer-Term Refinancing Operations (TLTRO) on the evolution of lending amounts and rates in Slovenia, with a specific focus on distinct effects of TLTRO-I and II. I use a combination of difference-in-differences and instrumental variable approach, which together with detail credit register data enable the identification of supply side effects of the TLTRO policy. The results show a supporting impact of targeted operations on bank loan supply, resulting in higher credit growth and lower rates. I find that the TLTRO-I was supportive through both the quantity and price channels, whereas the TLTRO-II only shows a significant impact on the credit amount. Further, I find the transmission of TLTRO-I was higher through better capitalized banks, whereas both policy waves supported lending to safe and stable firms with higher credit ratings.

Yếu tố tác động đến tỷ lệ nợ xấu của nhóm ngân hàng thương mại có cổ phiếu giao dịch trên sàn chứng khoán Việt Nam

This study explores micro and macro factors affecting the NPL ratio of Vietnamese commercial banks in 2015- 2022, including the period negatively affected by the COVID-19 pandemic. The research data was collected from 25 commercial banks whose shares were traded on all three stock exchanges in Vietnam. This dataset helps readers have a more comprehensive view of the factors affecting non performing loan ratio of the group of banks, with total assets accounting for nearly 80% of the total assets of 32 commercial banks operating in Vietnam. Based on the development and testing of a linear regression model, the study has contributed to demonstrating the positive impact of marginal interest income ratio, credit risk provision on lousy debt ratio, and the negative impact of return on equity and credit growth rates on non-performing loans of commercial banks studied in the period 2015- 2022

The effects of the monetary transmission mechanisms on inflation in Türkiye

The goal of this paper is to examine the impacts of the monetary transmission mechanisms on inflation in Türkiye using monthly data over the period 2006:M01-2021:M11. To this end, the paper considers the interest rate channel, the exchange rate channel, and the credit channel as the main monetary transmission channels. For unit root and cointegration analyses, the paper relaxes the assumption of linearity and employs time series methods based on nonlinear models. Besides, the paper performs a causality test based on the bootstrapping procedure. The findings indicate that the inflation rate is positively related to the interest rate, the exchange rate, and the credit growth rate and that all these variables have predictive power in forecasting future inflation rates in Türkiye. These results imply the existence of efficient monetary transmission channels in Türkiye. Theoretical and practical implications are discussed.

Monetary policy in practice: do central banks respond to movements in exchange rate and credit growth?

PurposeThis study examines the importance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand. To this end, the authors construct a small open economy New Keynesian dynamic stochastic general equilibrium (DSGE) model. The model encompasses several essential characteristics, including incomplete financial markets, incomplete exchange rate pass-through, deviations from the law of one price and a banking sector. The authors consider generalized Taylor rules, in which policymakers adjust policy rates in response to output, inflation, credit growth and exchange rate fluctuations. The marginal likelihoods are then employed to investigate whether the central bank responds to fluctuations in the exchange rate and credit growth.Design/methodology/approach This study constructs a small open economy DSGE model and then estimates the model using Bayesian methods.Findings The authors demonstrate that the monetary authority does target exchange rates, whereas there is no evidence in favor of incorporating credit growth into the policy rules. These findings survive various robustness checks. Furthermore, the authors demonstrate that domestic shocks contribute significantly to domestic business cycles. Although the terms of trade shock plays a minor role in business cycles, it explains the most significant proportion of exchange rate fluctuations, followed by the country risk premium shock.Originality/value This study is the first attempt at exploring the relevance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand.

Factors Influencing the Credit Approval Process at Kien Long Bank

Credit granting is a normal activity of commercial banks in general and Kien Long Bank in particular. Through this activity, the author wants to study the factors affecting credit granting activities of commercial banks in general and Kien Long Bank in particular. The objective of the study is to determine the factors affecting the credit performance of Kien Long Bank. Based on the research database of 30 Kien Long Bank branches with the number of over 263 questionnaires at the branches. With the above research sample, the author chooses the ordinary least squares method (OLS) to test the influence of macro factors and internal factors of banks on credit activities. Through the factors affecting the credit granting process, the author makes some recommendations for Vietnamese commercial banks and Kien Long Bank, including provisioning rate management, controlling credit growth rate, maintaining profitability growth rate, and a reasonable strategy to increase the bank's size in order to ensure safe credit provision.

The Impact of Macroprudential Policy on Credit Growth in Nine Euro Area Economies

Abstract In this paper, we investigate the impact of macroprudential policy measures (bundled together into a macroprudential policy index, MPI) on the non-financial corporate sector credit and household credit growth using a one-step system GMM empirical research method. The goal of our paper is to test whether contractionary macroprudential policy stymies credit growth rate and whether expansionary macroprudential policy spurs credit growth rate in selected Euro Area economies (Austria, Belgium, Finland, Germany, Ireland, Italy, Netherlands, Slovenia, and Spain) over the period 2008Q4–2018Q4. We test two hypotheses: H1: The tightening of macroprudential policy measures reduces the non-financial corporate sector credit growth rate, and H2: The tightening of macroprudential policy measures reduces the growth rate of household credit. Based on our empirical results, we can confirm the first hypothesis. In contrast, the second hypothesis can be neither confirmed nor rejected since the explanatory variable of interest (MPI) is statistically insignificant in the second model.

Bank-specific determinants of non-performing loans in Bhutan: Does business strategy matter?

The study examines bank-specific determinants of Non-Performing Loans (NPLs) of commercial banks in Bhutan using time series data for the quarterly period from 2014 to 2021. Explanatory variables in this study are credit growth, deposit rate, return on equity and capital adequacy ratio. To investigate the relationship between explanatory variables and NPLs, multiple regression analysis is employed. The regression analysis exhibit that credit growth and deposit rate significantly contribute to the growth of NPLs, while return on equity and capital adequacy ratio lowers NPLs. The outcome of this study is relevant to policy makers and regulators, as the findings suggest higher credit growth and increasing cost of funds are more likely to escalate and expose the commercial banks to NPLs. In addition, adherence to regulatory norms reduces the likelihood of default risk. In this regard, investment in productive sectors and business diversification are seen as an alternative to interest income from loans and advances. The outcome of this study is consistent with past studies on the bank-specific determinants of NPLs. The findings from this study will help decision makers and commercials banks in Bhutan to develop an effective credit risk management framework.

Modelling Monetary Policy Mechanism in Driving the Control of Inflation Growth in Nigeria

The study examined Modeling Monetary Policy Mechanism in Driving the Control of Inflation Growth In Nigeria. Multiple Linear Regression Model (MLRM) estimating technique was adopted as a tool in fitting the model where inflation rate serves as response variable and income growth rate, money supply, exchange rate, domestic credit growth rate and government expenditure served as explanatory variables. Data made use of were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin, December 2018, between 1998 to 2018. The R-Statistical software package was adopted to carry out the analysis. The result of the P-value of Money supply, Exchange rate and Domestic credit growth were all statistically significant with 0.00233, 0.0000696 and 0.01131 respectively at (0.05). Though, the real income growth rate and government expenditure do not appreciably contribute to controlling the inflation growth rate. The overall model contributes significantly to controlling the inflation growth rate with a P-value of 1.138 x 10-15. The coefficient of determination (R-square) is very high which implies that the model best captured the control of the inflation growth rate that is being considered. The study however concluded that three of the explanatory variables made much significant impact in controlling inflation growth rate in Nigeria.

Factors affecting the business efficiency of listed joint stock commercial banks in Vietnam

This research is conducted to measure factors affecting the business efficiency of listed joint stock commercial banks. The balanced data was collected from 253 financial statements of 23 listed joint stock commercial banks for the period 2010 – 2020. By analyzing panel data with the fixed effects model (FEM) and random effects model (REM), the research results show that the size of total assets, market share, cost-to-revenue ratio, the ratio of equity to total assets, the ratio of bad debts to outstanding loans, provision expenses for credit risks on outstanding loans, marginal income, and the ratio of non-interest income to interest income affect are statistically significant on the business efficiency of commercial banks listed on Vietnam’s stock market. Although the outstanding loans–to-deposit ratio has a negative effect on ROA and the credit growth rate has a positive influence on ROA, the influence of these two variables is not statistically significant. The independent variables explain the dependent variable ROA by 71.64% and the dependent variable Tobin’s Q by 28.17%. Recommendations are then proposed to improve the efficiency of listed joint stock commercial banks; in particular, including: increasing assets through an increase in capital for development investment, especially in the period after the epidemic has been under control; increasing and developing reasonable mobilization and lending; saving operating costs and strictly controlling not only the provision for general risks but also the provision for specific risks; concerning increasing non-interest income through improving the quality of commercial bank services. The research also shows the limits of the study, which has not yet assessed the business efficiency by using non-financial criteria such as customer satisfaction or banks’ branding. On the other hand, for banks, the financial cycle is very large and depends closely on State Bank’s regulations, but this study has not yet mentioned it.

Credit behavior and financial stability in an emerging economy

One relevant issue for the management of financial stability is the monitoring of the credit market. In this sense, Basel III proposed the credit gap as the most appropriate measure to anticipate financial stability issues. However, the adoption of the credit gap has been criticized, especially for emerging markets. Through panel data analysis, this study investigates the effect of the credit gap and the credit growth rate on financial stability in Brazil, which represents a relevant emerging economy. For this purpose, we use a set of financial stability measures traditionally found in the literature: the z-score, regulatory capital and credit risk. The results suggest that the credit gap and credit growth rates are adequate metrics to indicate the sustainability of credit growth in Brazil. However, credit growth rates are more attractive, since they indicate a threshold for credit growth in the Brazilian economy concerning financial stability.

Research on the Impact of Credit Expansion on the Synergistic Development of Guangdong's Regional Economy

Based on the study and understanding of previous literature and works, this article first collects and calculates and collates data on the gross domestic product of Guangdong Province, regional coordination coefficients and credit inputs in Guangdong Province from 2001 to 2019 , and studies the current economic situation of the Pearl River Delta, Eastern Guangdong, Western Guangdong and Northern Guangdong regions in Guangdong Province from the perspectives of total volume, growth rate and degree of coordinated regional economic development; and analyses the total volume and growth rate of credit in Guangdong Province from the perspectives of Regional differences in bank credit.

Variability in the impacts of partisan conflict: a new perspective from bank credit

The purpose of this article is to analyse the impact of partisan conflict on bank credit, and take the global financial crisis as the time node to analyse the variability of this impact before and after the financial crisis. This article examines the impacts of partisan conflict on the bank credit by employing the US data covering the past 40 years and captures the variability in the effects of partisan conflict based on the rolling sample and time-varying parameter VAR analysis. The full sample results reveal that one standard deviation partisan conflict shock will shrink the bank credit growth rate to nonfinancial sectors, and the negative effects of partisan conflict on bank credit are more substantial after the global financial crisis. The rolling sample and time-varying parameter VAR analysis further confirm that the impacts of partisan conflict shock have varied substantially over time, where bank credit still negatively reacts to the impacts of partisan conflict in recent periods. Additionally, we estimate two extended models and support the intermediate role of economic policy uncertainty in transmitting the partisan conflict and the substitution effect of cross-border bank lending on domestic bank credit. Finally, our major results are unchanged by performing a series of robustness checks. The conclusion of this article is that partisan conflict has a significant impact on bank credit and shows obvious variability, which is more significant after the global financial crisis.

Factors Affecting Credit Growth of Vietnamese Commercial Banks

This research analyzes the factors that affect the credit growthof the Vietnamese commercial banking system. This study usedata from the annual reports and financial statements of 16commercial banks listed on the HOSE, HNX, and UPCOMexchanges that have operated continuously from 2011 to 2020.Two linear regression models were employed with two dependentvariables: the credit growth rate and credit size. The findingsindicate that credit size in the previous period, the annualgrowth rate of capital mobilization, bank size, and return onassets (ROA) positively affect the credit growth of Vietnamesecommercial banks while liquidity ratio negatively affects them.Also, the bad debt ratio’s effect on credit growth is unclear. Hence,some suggestions and recommendations are given for commercialbanks to maintain stable, safe, and sustainable credit growth.JEL Classification: G21, E50, E52

Credit and economic regeneration after the financial crisis in CESEE

The global financial crisis terminated lending growth rates in CESEE countries, and seven years after financial global crisis, bank credit still continues with depression rate. Demand and supply for bank credit are contracted, as a results of various factors. The paper tries to find the level of credit contraction and factors that may have affected it, as well as policy action which are being taken to improve bank performance. Economic activity on the other hand, despite the depressed credit growth rates seem to show a trend of regeneration. This phenomenon of increasing economic activity without the support of the loan seems is happening in this post-crisis period in CESEE countries, although we must say that it remains undesirable phenomenon.

Macroprudential policy efficiency in Russia: Assessment for the uncollateralized consumer loans

We use data regarding Russian banks during the 2015–2019 period to evaluate the effectiveness of the macroprudential measures in curbing the booming consumer lending segment. We find that the measures are successful in reducing overall loan portfolio riskiness and capital cushion accumulation by banks. In the short run of up to 1–2 quarters after the announcement date of a measure, banks tend to reduce both new loan volumes and the average consumer loan portfolio growth rate. Such reductions are more typical with the smallest market players. However, in the longer time horizon of up to one year from the application date of a measure, we observe an increase in average credit growth rates. Such findings correspond to the experience of emerging markets, such as Argentina, Colombia and Thailand. In general, we believe that the observed credit growth that occurs after measure implementation is less than it could have been without the measures in place. We also expect the observed lending growth rate to bring less financial instability risks and reflect the potential for natural loan extension in Russia. The novelty of this paper is in its distinction between macroprudential measurement scales when they produce intended and unintended consequences.

The interaction between domestic monetary policy and macroprudential policy in Israel

The global financial crisis (GFC) triggered the use of macroprudential policies imposed on the banking sector. Using bank-level panel data for Israel for the period 2004–2019, we find that domestic macroprudential measures changed the composition of bank credit growth but did not affect the total credit growth rate. Specifically, we show that macroprudential measures targeted at the housing sector moderated housing credit growth but tended to increase business credit growth. We also find that accommodative monetary policy surprises tended to increase bank credit growth before the GFC. We show that accommodative monetary policy surprises increased consumer credit when interacting with macroprudential policies targeting the housing market. Accommodative monetary policy interacted with nonhousing macroprudential measures to increase total credit.

The Position of Monetary Policy Mechanism in Controlling Inflation Growth in Nigeria Using Standardized Regression Model

This study examined the role of monetary policy mechanism in controlling inflation growth in Nigeria. Standardized Multiple Linear Regression Model (SMLRM) estimating technique was considered as a tool in fitting the model where inflation rate served as response variable and income growth rate, money supply, exchange rate, domestic credit growth rate and government expenditure served as explanatory variables. Data were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin, December 2018 for the period of 1998 to 2018. The R-Statistical software package was adopted to carry out the analysis. The result of the P-value of Money supply, Exchange rate and Domestic credit growth rate were all statistically significant with 0.00165, 0.000038 and 0.00864 respectively at (0.05). Though, the Real income growth rate and Government expenditure do not appreciably contribute in controlling inflation growth rate. The overall model contributes significantly in controlling inflation growth rate with a p-value of 2.2 x 10-16. The coefficient of determination (R-square) is very high, which implies that the model best captured the control of inflation growth rate that is being considered. The study however concluded that three of the explanatory variables made much significant impact in controlling inflation growth in Nigeria.

Internal Liquidity Determinants Analysis of Commercial Banking Industry of Jordan

The study aims to determine the possible internal factors affecting the liquidity position of the commercial banking industry of Jordan. Several possible determinants are taken into account in the study including, profitability, credit growth rate, customer deposits, financial leverage, capital adequacy, and bank size. The secondary data covering the period 2008-2019, of 13 out of 15 listed banks at Amman Stock Exchange, is gathered and analyzed. In total, 1,092 observations are employed in the analysis to achieve the goals of the study. All hypotheses are tested under 95 level of confidence, which means 5 percent coefficient of significance. Descriptive statistics including the mean, standard deviation, and the minimum and maximum values, in addition to correlations, are employed in the analysis of data. Using correlation and regression methods in hypotheses testing, the study declares that profitability, capital adequacy, and bank size, each of which, has a significant positive impact on bank liquidity. In addition, the study finds that financial leverage and customer deposits have a negative significant effect on bank liquidity. Moreover, the study finds no significant impact of credit growth rate on bank liquidity.