Credit Risk Of Commercial Banks Research Articles

Does digital inclusive finance affect the credit risk of commercial banks?

This paper adopts the data of commercial banks from 2011 to 2021 to carry out the research on the impact of digital inclusive finance on the credit risk of commercial banks. The results show that, first, digital inclusive finance reduces credit risk of commercial banks, and has a greater mitigating effect on credit risk of national banks than regional banks. Second, economic policy uncertainty makes banks' credit risk rise. Compared with national commercial banks, economic policy uncertainty increases the credit risk of regional commercial banks more significantly. Third, the higher the profitability of banks, the more beneficial digital inclusive finance is to reduce the credit risk of commercial banks.

An analysis of the effect of asset securitization on the credit risk of Chinese commercial banks

An analysis of the effect of asset securitization on the credit risk of Chinese commercial banks

Factors Affecting Credit Risk in Nepalese Commercial Banks

This study analyzes the factors affecting credit risk in Nepalese commercial banks. The study comprises data from 27 commercial banks from 2002 to 2020 A.D. For analysis, the Least Square Dummy Variable (LSDV) Regression for model I and Random Effect (RE) Regression Analysis for model II were performed. The effect of the independent variables on credit risk, using loan loss provision and non-performing loans, as proxies of it was examined. While comparing both models, the loan loss provisioning was found to better explain the credit risk. The growth rate of GDP, a macroeconomic variable, had a significant and positive effect on credit risk, which was unexpected whereas the control variable, the interbank interest rate, had a negative and significant effect on credit risk. Furthermore, the year dummy showed a relatively high requirement for loan loss provision, especially in the years 2019 and 2020, which may be due to COVID-19. The bank-specific variables like size, and government banks had significant and positive effects on credit risk. This implied that the merging of banks was not fruitful as it caused an increase in the total assets of banks, which would lead to an increase in the size of commercial banks. That increase in the size of commercial banks was found to increase credit risk. In addition, government-owned banks were found to have higher credit risk than other banks. The government should think about reforms through private sector participation in government-owned banks as another alternative to reduce credit risk.

ASSESSMENT OF CREDIT RISK OF A COMMERCIAL BANK

This article presents a method for assessing the risks of commercial banks, mainly analyzing the credit risk, interest rate risk and capital risk faced by commercial banks. A model for assessing the credit risk of commercial banks in Uzbekistan is also reviewed.

Credit risk of Vietnamese commercial banks: does capital structure matter?

Credit risk of Vietnamese commercial banks: does capital structure matter?

Research on Factors Affecting Credit Risk of Joint Stock Commercial Banks on Vietnam Stock Market

Design/methodology/approach: The article aims at identifying factors affecting credit risk of commercial banks in Vietnam. The study uses data collected from financial statements of 15 typical joint stock commercial banks out of a total of 27 joint stock commercial banks listed on the Vietnam stock exchange from 2012 to 2022 with panel data of 15 joint stock commercial banks for the period 2012 - 2022. The banks in the research data are the those with the largest total assets in the banking system. After collecting and processing data, research sample includes 165 observations and the study uses E-view software in quantitative analysis to build a regression model to determine the relationship and level of influence of Internal factors to credit risk of listed joint stock commercial banks.
 
 Findings: Research results indicate that factors affecting credit risk of listed joint stock commercial banks include: Ratio of equity to total assets, capital structure of the bank, and operational performance of the banks.
 
 Research, Practical & Social impications: These results confirm the importance of taking into account micro finance factors when making financing. Understanding the impact of these factors and relationships contributes to decision and risk management.
 
 Originality/value: In order to limit credit risk it is necessary to focus on: Ensuring reasonable equity; Stricter control over loan capital; Optimal use of resources.

Influence of Credit Risk Management on Financial Performance of Commercial Banks in Kenya

The management of credit risk in commercial banks determines the banks' financial performance, which predominantly influences the quality of the loan portfolio and the nature of credit administration programs as a whole. By ensuring that credit risk is effectively managed, the primary objective of credit risk management is to generate a high-quality, stable, large, and growing flow of net interest income for banks. This objective is achieved by ensuring that banks can meet the needs of their customers. This study determined the effect of credit risk management on the financial performance of Kenyan commercial banks. The investigation was founded on the portfolio theory. The paradigm of Positivism served as the philosophical foundation for the investigation. The study incorporated both explanatory and longitudinal research designs into its methodology. The study's target population consisted of 32 Commercial Banks in Kenya. The study utilized panel data consisting of time series and cross-sectional data spanning a decade from 2010 to 2019. Using Eviews, descriptive and inferential statistics were used to analyze the collected data, which was then presented in tables and figures. The study found out that Credit risk management had an insignificant negative relationship with Return on Equity (ROE) (F=87.02884, p<0.05) and Return on Assets (ROA) (F=118.1208, p<0.05). Arising from the study findings, it is observed that credit risk management has a negative effect on financial performance measure either in ROA or ROE, it is recommended that commercial banks should keep this parameter as minimum as possible so as not involve in loss making undertakings.

The Impact of Fintech on Credit Risk of Commercial Banks

The financial sector is undergoing new transformations with high integration and deep su-perposition of science, technology, and industry, just as the world as a whole is going through significant changes that have not been witnessed in a century. Commercial banks must adapt to the new normal of financial technology and use new achievements without forgetting to control risks. This paper starts with the concept of fintech and the advancing fintech technologies. Then summarizes the existing methods of fintech quantification. Af-ter that, collect some influencing factors of bank credit risk. Finally link fintech with bank credit risk, and and review the research in this area. At the end of this paper, the limitation of the previous studies and the possible future research directions are proposed.

THE INFLUENCE OF CAPITAL ADEQUACY, LIQUIDITY, BANK SIZE, AND PROFITABILITY ON CREDIT RISK IN COMMERCIAL BANKS CATEGORY BOOK IV

Banks play a crucial role in the economy of a country, especially in developing nations like Indonesia. Commercial banks classified as BUKU IV are the largest banking group in Indonesia and are known for their strong management. This research aims to analyze the influence of capital adequacy, liquidity, bank size, and profitability on credit risk in Commercial Banks classified as BUKU IV during the period of 2015-2020. The independent variables consist of CAR, LDR, BS, and ROA, while the dependent variable is NPL (Non-Performing Loans). Secondary data collected by the researcher from the annual financial reports of BUKU IV commercial banks are utilized in this study, employing a census sampling technique. The data analysis method applied is panel data regression using E-Views 10 software. The research results indicate that ROA has a negative and significant effect on NPL in BUKU IV Commercial Banks. However, CAR, LDR, and BS do not have a significant impact on NPL in BUKU IV Commercial Banks.

Credit Risk and Profitability Position of Nepalese Private and Joint Venture Commercial Banks

Credit concentrations, credit processes and other externalities have made credit risk more important over the past decade, followed by liquidity issues. This study was conducted to compare the credit risk exposure of various banks in terms of their liquidity, capital ratio, size, operational inefficiency, loan growth rate, and non-performing loans. It also investigated the spontaneous relationship between credit risk and bank profitability. Secondary data of 5 years from ten banks (5 each from joint venture and private banks) have been collected. The descriptive and comparative study designs were employed and SPSS software was used for the analysis of data. The results showed that the private banks surpass joint venture banks in terms of capital ratio and operating efficiency, but joint venture banks lead private banks in terms of liquidity, capital ratio, total assets, loan growth rate, and non-performing loans. However, the independent sample t-test did not show any significant differences on liquidity, capital ratio, size, and loan growth rate. The Pearson’s correlation showed positive associations of capital ratio (moderate and significant), operating inefficiency (weak and insignificant), and loan growth rate (weak and insignificant) with ROA. In contrast, bank size and nonperforming loans have significant moderate negative correlations, but liquidity is not found to be correlated with ROA. The empirical findings of this study are considered helpful in evaluating the comparative credit risk exposure of the banking sector and have both managerial and academic implications.

Speed for Safety: The Establishment of Bankruptcy Courts and Bank Credit Risk in China

Abstract We investigate the effect of bankruptcy court establishment on the credit risk of municipal commercial banks in China from 2013 to 2020. Establishing bankruptcy courts reduces the non-performing loan ratio of municipal commercial banks. The effect is more pronounced in cities with low fiscal transparency and market fragmentation, and a strong rule of law. Furthermore, we argue that the bank’s loan provision and provision coverage ratio is the crucial intermediate variable in the relationship between bankruptcy court establishment and credit risk management. Our findings demonstrate the critical role of judicial system reform in promoting financial stability in China. JEL classification numbers: G21, G32, G33. Keywords: Bankruptcy court, Credit risk, Judicial reform.

The Effect of Green Credit and Other Determinants of Credit Risk Commercial Bank in Indonesia

In order to achieve the Notionally Determined Contribution (NDC) target through reducing greenhouse gas emissions, the Government of Indonesia is trying to develop sustainable finance. Commercial Banks as a financial service institution are required to implement sustainable finance, among others by reporting loans that meet the criteria for Environmentally Friendly Business Activities (KUBL). Credit risk is one of the main risks for banks. Research on the effect of lending that meets KUBL or green loan criteria on bank credit risk as reflected in NPLs has never been carried out. In this study, we analyze the effect of green loans, and the influence of other variables, namely bank performance variables (LDR, CAR, ROA, NIM) and bank size on credit risk of commercial banks in Indonesia. This study uses annual available data from 107 commercial banks in Indonesia for the period from 2019 to 2021. Based on the results of this study, the effect of green loans on NPL is not significant because the percentage of green loans is relatively low compared to the total bank credit portfolio in Indonesia. For this reason, various incentives are needed from both the Authority and the Government to encourage commercial banks to increase green loans.Meanwhilebank performance variables, namely LDR, CAR, NIM and bank size have a significant influence on the credit risk of commercial banks in Indonesia. Bank performance variables namely LDR, CAR have a positive effect on bank NPLs, the NIM ratio and bank size have a negative effect on bank NPLs.

The effect of the disposal of non-performing loans on interbank liquidity risk in China: A cash flow network-based analysis

The scale of non-performing loans (NPLs) directly affects the credit risk of commercial banks, and a large range of loan defaults will also lead to the liquidity crisis. Furthermore, liquidity risk will transmit to other banks through the interbank network. A reasonable disposal mode of NPLs is not only of great significance to commercial banks themselves, but is also related to the liquidity risk of the whole banking system. This paper fully considers the characteristics of China's banking system and constructs a dynamic bank-centered multi-agent model (DBMM) to explore how the disposal of non-performing loans (NPLs) affects interbank liquidity risk based on the interbank cash flow network. The results indicate that the increase in the number of small and medium-sized commercial banks improve the whole banking system stability, however, the increase in NPLs from low-income debtors increases the liquidity risk. The disposal of NPLs plays an important role in maintaining the stability of interbank networks, and the stock-plus-loan mode can more effectively alleviate liquidity risk in China than the entrusted settlement mode. Liquidation repayment ratio of commercial banks has the most significant effect on the interbank network in China, and adjusting this proportion is an effective method to prevent liquidity risk. Moreover, compared with small commercial banks, large commercial banks have a stronger ability to resist liquidity risk, as they are established with capital injection by the government in China.

Effect of Bank Ownership on the Relationship between Credit Risk and Financial Performance of Commercial Banks in Kenya

Commercial banks in Kenya have faced daunting challenges that touch on various key financial performance indicators and therefore impacting on performance. Credit risk affects the key financial indicators that are likely to impact performance of any lending institution. The main goal of this study was to ascertain the moderating effect of ownership structure on the relationship between credit risk and financial performance of Commercial banks in Kenya. Longitudinal research design was utilized on data from 41 licensed banks in the country. The study relied on secondary panel data and multiple regression was used and analysis was through STATA analytical tool. The study established that bank ownership has a significant effect on the financial performance. The outcome of the study demonstrates that a more diversified ownership structure is helpful in improving bank’s financial performance. Introduction of ownership structure has added knowledge by demonstrating that the link between credit risk and financial performance cannot be studied in isolation.

The impact of treasury operations and off-balance-sheet credit business on commercial bank credit risk

Current research on commercial bank credit risk mainly focuses on the risk of loans and advances without considering the treasury operations and off-balance-sheet credit business that also carry credit risk. Ignoring the correlation between diverse risk factors results in the biased integration of credit risk. In this work, we aggregate the credit risk of commercial banks based on three risk factors using a vine copula. Our empirical results show that banks that are not global systemically important banks are confronted with higher credit risk than global systemically important banks. In addition, the risk of loans-and-advances business is positively correlated with treasury operations risk and negatively correlated with off-balance-sheet credit business. While the risk of loans-and-advances business is significant, the risks of treasury operations and off-balance-sheet credit business still play an indispensable role in (and contain vital information about) credit risk. In addition, banking as a system can achieve lower credit risk, but this effect is weakened under the extreme lower-tail risk.

The effect of credit risk on the financial performance of commercial banks in Balkan countries

This study aims to examine the effect of credit risk on the profitability of financial institutions. For research, we have collected secondary data from the relevant institutions of the Western Balkan states such as Kosovo, Albania, North Macedonia, Serbia, Croatia, Montenegro, and Bosnia and Herzegovina. In total, there are 26 commercial banks from 2010 to 2022 that serve in these countries. We consider information from three panels that categorize state-owned banks, private banks, or multinational banks according to their ownership structure. Return on assets (ROA) or return on equity (ROE) were used as surrogates for financial performance measures, while the percentage of bad loans was used to measure credit risk (Furhmann, 2022). Where the research objective was to explore the relationship between credit risk and financial performance in commercial banks operating in the Balkan countries, to understand the factors that affect credit risk, and to suggest measures to increase the financial performance of banks in the region (Gbadamosi & Olaleke, 2019). From the evaluation results, we can see that both ROA and ROE are inversely related to credit risk (Al-Malkawi, 2019). The profitability of commercial banks in the Balkan countries from 2010 to 2022 has been shown to be related to credit risk management. As a result, financial institutions should pay more attention to credit risk management, especially bad debt prevention and investigation. Therefore, managers should pay more attention to the latest credit risk management strategies.

Research on the Impact of Green Credit on the Credit Risk of Chinese Commercial Banks

With the rapid growth of my country's economy, the threat of environmental problems to social problems is becoming more and more serious. After the concept of "green credit" was proposed, green credit has been highly valued and may become the mainstream of future financial development and promote the sustainable development of society. With the development of green finance, what impact will it have on the credit risk of commercial banks? Will green credit affect banks' own risks? Impact on its business performance?

Research on Audit Supervision of Credit Risk of Rural Commercial Banks

Under the financial environment of in-depth innovation, commercial banks are facing systematic risk prevention, and rural commercial banks are the main force of financial services for rural revitalization, but their limited service level and unsound credit system are still the main factors restricting the development of "agriculture, rural areas and farmers" in China. Based on the annual report data of Taizhou Rural Commercial Bank in Jiangsu Province and the credit risk faced by rural commercial banks, this paper puts forward corresponding countermeasures and suggestions from both the perspective of audit supervision and the essential causes of credit risk.

Commercial Bank Credit Grading Model Using Genetic Optimization Neural Network and Cluster Analysis.

Commercial banks are facing unprecedented credit risk challenges as the financial market becomes more volatile. Based on this, this study proposes and builds a credit risk assessment model for commercial banks based on GANN from the standpoint of commercial banks. In order to provide commercial banks with an effective and dependable credit risk assessment method, the indicators in this study are classified using cluster analysis, and then various representative indicators are chosen using a factor model, which takes into account the comprehensiveness of the information and reduces the complexity of the subsequent empirical analysis. On this basis, the network structure, learning parameters, and learning algorithm of commercial banks' credit risk assessment models are determined. Furthermore, advancements in data preprocessing and genetic operation have been made. According to simulation results, the highest accuracy rate of this method is 94.17 percent, which is higher than the BPNN algorithm 89.46 percent and the immune algorithm 90.14 percent. The optimization algorithm presented in this study improves the convergence speed and search efficiency of traditional algorithms, and the final experimental results show that the scheme is feasible and effective and can be used for commercial bank credit risk assessment.

Revisiting credit risk and banks performance of China's commercial banks before and after Covid 19 pandemic

The effectiveness of the financial market is reflected in the financial crisis which mostly results in credit risk. The impact of credit risk in China is likely to affect the global economy since China is the fastest‐growing economy as well as the second‐best economy in the world in terms of gross domestic product. Using panel data for twenty‐eight listed commercial banks in China from 1990 to 2020, the study explored the relationship between credit risk and business performance. The authors utilized the Generalized Methods of Moments (GMM) as the primary estimator while the Pooled Mean Group (PMG) was used as a robust estimator. A negative and statistically significant relationship was found between non‐performing loan and return on equity, as well as loan loss provision and profitability of the bank. On the contrary, capital adequacy ratio revealed a positive and statistically significant relationship with bank performance. Credit growth on the other hand recorded positive but insignificant relationship with performance of banks. The findings will add up to existing literature on credit risk and business performance of commercial banks.