Impact Of Credit Risk Research Articles

The impact of Credit Risk on the credit unions in Ghana: What are the financial lessons to be learned?

The impact of Credit Risk on the credit unions in Ghana: What are the financial lessons to be learned?

The impact of credit risks on capital adequacy according to Basel (Ш) a comparative study of a sample of Iraqi private commercial banks

The impact of credit risks on capital adequacy according to Basel (Ш) a comparative study of a sample of Iraqi private commercial banks

Impact of Credit Risks on Profitability of the Systematically Important Licensed Commercial Banks in Sri Lanka

Impact of Credit Risks on Profitability of the Systematically Important Licensed Commercial Banks in Sri Lanka

Impact of Credit Risk and Macroeconomic Variables on the Profitability of Commercial Banks in Nepal

This study was conducted to examine the impact of credit risk and macroeconomic variables on the profitability of commercial banks in Nepal. Return on assets and earnings per share of the banks were taken as regrassands. Whereas, as regressors, non-performing loan, capital adequacy ratio and credit to deposit ratio were taken as the proxies of credit risk, and GDP growth rate, consumer price index and base rate were studied as indicators of macroeconomic variables. Following simple random sampling techniques, 14 commercial banks were selected as sample for the study. The required quantitative data were retrived from annual financial reports of the banks. Data were analyzed on Gretl software. The Pearson correlation and Ordinary Lease Square model for regression resulted that the GDP growth rate was insignificant in defining the variation on return on assets. Likely, inflation and base rate were not significant in defining the variation on earning per share. Result of this study provided sufficient scope to bankers in developing their growth strategies.

The impact of credit risk on labor investment efficiency

Labor investment inefficiency has become a primary focus of academic attention and research. However, existing research has given little attention to the causes of labour investment inefficiency, especially the lack of in-depth research on what key factors inhibit the labour investment efficiency of enterprises and what measures can be effectively taken to improve investment efficiency. Based on a responsibility perspective and empirical evidence from listed companies from 2010 to 2022, the paper empirically shows that credit risk significantly reduces firms' labour investment efficiency and social trust can inhibit such negative effects. Our findings present clear policy implication for the regulators and managers.

The Impact of Credit Risk and Bank-Specific Variables on Financial Performance of the Listed Commercial Banks in Bangladesh

The Impact of Credit Risk and Bank-Specific Variables on Financial Performance of the Listed Commercial Banks in Bangladesh

Effect of Liquidity and Credit Risk on Bank Financial Performance: A Case of Afghanistan’s Commercial Banks

Aim: The aim of this study was to examine the impacts of liquidity risk and credit risk on financial performance of commercial banks in Afghanistan.
 Methods: Panel data from six commercial banks was collected from their official website for the period 2010 – 2014. The data was analyzed by Gretel software using Ordinary Least Square (OLS) model. Dependent variable (financial performance) was measured by return on assets (ROA) while independent variables liquidity and credit risks were measured by current and leverage ratios respectively.
 Results: It was found that liquidity risk and credit risk have negative impact on financial performance of selected commercial banks in Afghanistan. The impact of credit risk on financial performance was less than the impact of the liquidity risk on financial performance. The correlation between return on asset and leverage ratio was weak (23 percent) and the correlation of current ratio with leverage ratio and return on asset is as low as minus 6 percent and minus 37 percent respectively.
 Conclusion: This study detected the negative relationship between commercial banks’ financial performance and liquidity and credit risks. So there is a negative significant impact of liquidity and credit risks on selected commercial banks’ financial performance in Afghanistan
 Recommendations: The Study recommend that CBs in Afghanistan should not unnecessarily keep cash amount in idle form because it decrease return in asset. Cash is a valuable asset which should be invested for fruitful investment results. In addition, CBs should not refrain from advancing loans since it has minor effects on return on asset and reduces unfavorable liquidity.

Impact of Bank Specific Factors on Credit Risk: Evidence from Islamic and Conventional Banks of Pakistan

The impact of credit risk (CR) on bank-specific factors (BSF’s) and banks in the event of conventional and Islamic banks of Pakistan is an essential motivation behind this learning. These banks are chosen by their value commitment. The financial explanation investigation of chosen Islamic and conventional banks is contemplated from 2007 to 2017. Relapse examination of non-performing loan (NPL) proportion and Z-Score is utilized to discover the connections of BSF’s on chosen banks. The Islamic banking system consists of (return on equity (ROE), ROA, liquidity, spread and bank size) having a significant relationship toward credit risk. Therefore, the impact of the Z-score is less for Islamic banks relatively compared to conventional banks. The increased risk of bank debt reflects a strong NPL. In this examination bank, certain factors, for instance, efficiency, return on assets (ROA) and bank dimension, have a significant liaison through credit card risk in the conventional selected banking system, and this process affects overall banking performance. These findings provide valuable insights for policymakers, regulators, and banking professionals to manage credit risk effectively in the context of Pakistan's banking system. The originality of this study lies in its focus on the comparison between conventional and Islamic banks in Pakistan, which has yet to be extensively explored in the literature.

Deviations from covered interest parity in the emerging markets after the global financial crisis

In this paper, we focus on six emerging market economies to study the magnitude of systemic and persistent deviations from covered interest parity (CIP) using daily data between January 2010 and July 2018. We show the significant role of local factors, particularly credit and liquidity risk, in explaining sustained CIP deviations in these markets. Our findings suggest that the impact of credit risk on CIP deviations in emerging market economies may take two forms. In low-carry currencies, the well-known mechanism for credit risk operates so that the increase in credit risk exacerbates CIP deviations. Conversely, in high-carry currencies, the high usage of foreign exchange swaps makes swap rates react more than domestic rates, which causes CIP to decrease. We also present evidence that cost of illiquidity is an important driver to explain CIP deviations. We demonstrate that increased liquidity in emerging market currencies is not as large to prevent CIP deviations.

The Impact of Credit Risk on the Profitability of Selected Commercial Banks of Bangladesh

The objective of the study is to find out the impact of credit risk on the profitability of selected commercial banks of Bangladesh. To perform this study, we have selected 10 commercial banks from 61 scheduled commercial banks. The selected banks consist of four categories. Among them, three are state owned banks, three are private owned non Islamic banks, three are private owned Islamic banks and one is specialized commercial bank. To show the impact of credit risk on profitability, we have selected ten variables which are calculated using data collected from 2009 to 2018. Among the ten variables, two variables have been used as dependent variables which include Return on Equity (ROE) and Return on Assets (ROA), and among the independent variables include seven bank specific variables and one macroeconomic variable. To find out the result, multiple-regression model has been used and shown the effects of independent variables on ROE & ROA separately. Besides this, an attempt has been made to find out the effect of Basel III on profitability. To show the effect, we have used three years data before Basel III and three years data after Basel III and showed the individual effect on ROE and ROA. The regression result shows that non-performing loan ratio (NPLR), Loan Loss Provision Ratio (LLPR) and macroeconomic variable GDP has a significant negative impact on profitability ratio ROE. The result also shows that Non-performing loan ratio (NPLR), Loan and advance to total deposits ratio (LATD) have a significant impact on profitability ratio Return on Assets(ROA). The regression result for Basel III effect represented that Nonperforming loan has a significant negative impact on Return on Equity (ROE) but this impact is less than that of before Basel III.

The Impact of Credit Risk and Bank-Specific Drivers on Banks’ Performance: Evidence from the UAE Region

The COVID-19 pandemic has induced a series of credit risk problems for most commercial banks in the GCC region. Thus, the current paper aims to examine the impact of both credit risk and bank-specific drivers on commercial banks’ financial performance in the UAE from the period 2017 - 2021. The study used NPLs, LLP, and DR as credit risk indicators while CER, LR, and NPLs were used as bank-specific drivers and ROA as financial performance measures. The Random Effect model was used for data analysis. The findings revealed that NPLs and LLP had a negative and significant effect on ROA while CER, LR, and, NPLs were found to have a negative and significant relationship with ROA. This paper implies that banks need remain prudent in their credit risk management and adopt the best strategies to manage and control bank-specific drivers to improve their performance

The impact of credit risk on cash-bullwhip in supply chain

Because cash flow is a critical issue for companies, it is important to effectively operate cash flow to mitigate liquidity risks. However, compared with research on the bullwhip effect, few studies have analyzed the effects and causes of the cash-flow bullwhip in the supply chain. None has considered the influence of credit risk on the cash-flow bullwhip effect from downstream to upstream throughout the supply chain. Thus, this study develops a mathematical model to investigate the influence of credit risk on the cash-flow bullwhip. To achieve this, it analyzes the variability of each member’s account receivable, account payable, and cash level along with three financial performance measures: account receivable turnover, account payable turnover, and cash conversion cycle. The excessive inventory level created by the bullwhip effect is known to cause the cash-bullwhip effect, which leads to supply chain members experiencing liquidity problems. However, the results of this study demonstrate that a consideration of credit risk increases the amounts of account receivable, account payable, and cash from downstream members to upstream members. In addition, this study demonstrates that when considering the credit risk, the account receivable turnover index accurately illustrates the cash-bullwhip effect of each member throughout the supply chain.

The Impact of Credit Risk on The Profitability With Characteristics Bank as Control Variables

The role of a bank cannot be separated from the existence of credit loans. On the other hand, credit loans will be profitable for banks but have the risk of default. In order to determine the extent of the influence of bad loans on return on assets with the characteristics of the bank as a controller in the banking sector listed on the Indonesia Stock Exchange in 2015-2019, this research is aimed at. Puposive sampling was chosen as a sampling technique where the data obtained were 23 companies with a 5-year observation period. The process of data analysis was carried out through multiple linear regression analysis. The statistical application used is the SPSS Statistic 25 application. The results found from this study, simultaneously bad loans have an influence on return on assets. Partially, net performing loans have a negative and significant effect on return on assets. Then, the Loan to Deposit Ratio has a positive and significant effect on the return on assets. The existence of the characteristics of the bank as a controller in this study has an influence on the relationship between the independent variable and the dependent variable.

ANALYSIS OF DEBTOR'S EFFORTS IN SETTLEMENT OR IMPLEMENTING CREDIT OBLIGATIONS DURING THE NON-NATURAL NATIONAL DISASTERS OF THE COVID-19 PANDEMIC

Due to Covid-19 pandemic many debtors unable to fulfill their obligations to creditors in a credit agreement. Such conditions rising the opinion and/or use the Covid-19 Pandemic as an excuse for debtor not to fulfill their obligations to creditors in a credit agreement on the grounds of forced circumstances (overmacht). This study aims to find out the debtor's efforts in settlement or implementing credit obligations during the non-natural national disasters of the covid-19 pandemic. The type of research used is normative legal studies, which are conducted through a process of legislation and regulatory evaluation. In terms of technique, scientifically normative legal science disclosure methods are constrained by deductive logic criteria. This study employed normative legal research methods. This method investigates law from an internal juridical standpoint, examining legal norms, legal conceptions, legal principles, and legal doctrines. The technique taken in this research is a legal and conceptual one, with primary and secondary legal material sources. The technique for collecting legal materials is to assess all books relevant to the subject of the research, and then compile them in a quantifiable and systematic manner. The findings highlight that with the prevailing laws and regulations due to the Covid-19 Pandemic, business actors are given legal certainty for business loans made in this case debtors, both individual debtors and business entity debtors, so that the impact of credit risk caused by the Covid-19 pandemic can be overcome properly and does not cause a debate over credit conditions during the Covid-19 Pandemic.

Credit Decision Problems of MSMEs (Medium, Small and Micro-sized Enterprises)

Micro, small and medium enterprises (MSMEs) have become an important force in driving the country’s market economy in the 21st century. However, because of the following drawbacks: i.e. single enterprise capital chain, unstable economy, high risk, etc., banks will take many risks if they lend to MSMEs. Therefore, it is necessary to build a sound bank credit decision system to promote the development of MSMEs. The analytic hierarchy process (AHP) is employed to classify the importance level such as credit rating and enterprise strength are used as first-grade indexes, and six indicators in terms of total sales and total profits are used as the second-grade indexes. Then, the eigenvalue method is used to obtain the importance weights of each level of indicators, and the weights of each influencing factor at each level are then calculated to achieve a quantitative analysis of credit risk and rating of each enterprise’s credit risk. This paper combines the existing loan pricing and loan interest rates to give preferential interest rates and higher loan amounts to enterprises with excellent credit risk ratings, and to give certain risky interest rates and lower loan amounts to enterprises with medium credit risk ratings.Based on the model, a quantitative analysis of the credit risk of 302 non-credit record enterprises is carried out and the bank’ credit strategy is provided when the total annual credit is 100 million yuan. Finally, this paper comprehensively considers the impact of credit risk and unexpected factors (e.g., the COVID-19) on enterprises, and provides the bank’s credit adjustment strategy when the total annual credit is 100 million yuan.

Credit Risk and Performance of Deposit Money Banks in Nigeria

The research focuses on the impact of credit risk on the performance of deposit money banks in Nigeria. It covers the period between 2000 and 2020 .Secondary data sourced from the Central Bank of Nigeria and annual reports of the selected banks were utilized for the study. Ordinary Least Square estimation technique which is compatible with the multiple regression method was also adopted .It was discovered that capital adequacy and non-performing loan were not statistically significant in influencing the changes in bank performance, while loan loss provision as well as loan and advances were significant to changes in bank performances with in the period of the study. It was therefore recommended that the regulatory authority should ensure that banks are focused on their primary role of supplying needed funds for the real sector to finance their investment. Also, Deposit money banks should be encouraged to reduce their service charges. This is the only way their impact can be felt as one of the drivers of economic growth in Nigeria.

CLIENT COMPANIES’ PERCEPTION TOWARDS CREDIT RISK OF PRIVATE SECTOR BANKS WITH REFERENCE TO ICICI, HDFC, AXIS BANK, IDBI, AND YES BANK

The banking sector at present is facing many issues; one among them is credit risk. Credit risk is termed as an estimate or forecast of the default of a borrower failing to recover his interest amount or borrowed amount. Currently, the banker or the lender is at risk of recovering the interest amount and principal amount, increasing their recovery costs. The present study makes an attempt to know the awareness of customers towards credit risk of private sector banks. The research objective is to analyze the significant association between client company’s perceptions with a view to credit risk. The study explains the major variation between client company’s perspectives towards Indian private sector. The study explains about the impact of credit risk on banks profitability. The present study helps banks to prevail over the problem of credit risk. The study analysis the objectives of research, hypothesis formulated, research methodology, findings and conclusions are discussed. The secondary sources for the study are through the websites of banks, Journals and client company’s websites. Primary data has been gathered from 285 client companies using convenience random sampling technique from private sector banks.

The impact of credit risk and liquidity risk on bank margins during economic fluctuations: evidence from MENA countries with a dual banking system

ABSTRACT This study investigates the simultaneous impact of the major sources of bank default, namely credit risk and liquidity risk on price-cost margins during economic fluctuations in the MENA countries with a dual banking system. We use an annually balanced data set including 30 conventional banks and 14 Islamic banks from 9 countries covering the period 2004–2020. Our findings highlight the importance of the two risk factors on determining banks’ cost of intermediation. The most interesting result is that their effects on bank margins are sensitive to economic fluctuations. More specifically, both risk factors have more significant effect on price-cost margins during good economic times. One important implication of our findings is that the authorities and policymakers should pay more attention to liquidity and risks during booms.

Impact of Credit Risk on Bank Performance - Evidence from Scheduled Commercial Banks

Impact of Credit Risk on Bank Performance - Evidence from Scheduled Commercial Banks

The Impact of Credit Risk on the Value of Shareholders of Listed Banks in Nigeria

Credit risk is the weightiest menace that banks encountered during their operations. Various banking crises have prompted banks to focus more on credit risk management activities, as it is critical for banks to maximize the wealth of their shareholders. The primary goal of businesses is to maximize shareholder wealth, as such DMBs are expected to engage in risk management operations if and only if it adds value to both the firm and the shareholders. Thus, this study seeks to establish the influence of credit risks on the profitability of listed Nigerian DMBs. The ex-post facto method was adopted and the researchers sampled eight (8) out of twenty-four (24) quoted DMBs on the Nigerian Group Exchange. Data was sourced from the audited annual accounts of the sampled DMBs for a period of four years, spanning from 2015–2019. OLS regression techniques revealed that non-performing loans (NPL) have an insignificant influence on the profitability of the sampled DMBs (=-0.141; p, 0.797). This implies that a 1% increase in NPL would lead to a 14% decrease in shareholders’ value. Loan and advances (LAD) according to the regression models exert a significant influence on shareholders’ value (=7.341; p, 0.004). This implies that an increase in LAD will leads to an increase in the shareholders’ value. Nigerian banks should keep their loan and advance portfolios because it makes them more valuable to their shareholders.