Commercial Bank Loans Research Articles

The Impact of the Issuance of e-CNY on the Business Strategy of Commercial Banks

This article comprehensively analyzes the issuance background, main features, technical architecture, and the impact on commercial banking operations and regulatory systems of China's Digital Currency Electronic Payment (DCEP or e-CNY). E-CNY is a legal digital currency that has the essential functions of money and a centralized two-tier operating system, making it compatible and stable with the current financial system. The article first outlines the main characteristics of e-CNY, reviews in detail the research and development process and pilot situations since 2014, and demonstrates its application progress in various scenarios. Furthermore, the article delves into the profound impact of e-CNY on commercial banks' deposits, loans, and international operations, suggesting that e-CNY may reduce the deposit base of commercial banks while providing Chinas small and medium-sized enterprises (SMEs) with a lower-cost financing channel, thereby promoting the development of the real economy. On the international front, promoting e-CNY is expected to enhance cross-border payments' efficiency and strengthen CNY's international competitiveness. Subsequent analysis of the practice of China Construction Bank (CCB) in the field of e-CNY showcases how commercial banks adapt to the era of digital currency. It also points out the need for further clarification and improvement of the regulatory framework to ensure the sustainable development of e-CNY. Finally, particular attention is given to the regulatory challenges e-CNY poses, especially regarding anonymity management, personal information protection, and delineating regulatory responsibilities.

Effects of Commercial Bank Loans on SME Growth: The Case of Morogoro Municipality, Tanzania

Effects of Commercial Bank Loans on SME Growth: The Case of Morogoro Municipality, Tanzania

Macro-economics and firm-specific factors impacting the non-performing loans of vietnamese commercial banks in the context of COVID-19

The COVID-19 pandemic has created unprecedented economic disruptions worldwide, with the banking sector being one of the most affected industries. This paper aims to explore the impact of various factors on the nonperforming loans (NPLs) of Vietnamese commercial banks during the COVID-19 pandemic by employing a Bayesian hierarchical regression approach. The analysis highlights that the pandemic has led to a significant and positive increase in the NPLs ratio of Vietnamese banks, indicating that the financial health of these institutions has been adversely affected by the crisis. Moreover, the study uncovers that the impact of COVID-19 on NPLs is not uniform across all banks. Specifically, state-owned banks have experienced a more pronounced increase in NPLs compared to their private counterparts. This disparity suggests that state-owned banks may be more vulnerable to economic shocks due to their broader exposure to sectors and enterprises heavily impacted by the pandemic. The findings of this research offer critical insights into the dynamics of the banking sector in Vietnam during a global health crisis and emphasize the need for targeted policy interventions. The results also underscore the importance of understanding the differential impacts of such crises on various types of financial institutions. By identifying the factors that contribute to the increase in NPLs, this study provides valuable information that can inform future strategies aimed at enhancing the resilience of the banking sector against similar economic disruptions. Furthermore, the findings highlight the effectiveness of the policies implemented during the pandemic to support the banking sector, suggesting areas for improvement and further research.

The Development of SME's in Pre and Post-Pandemic Nigeria: The Role of Banks

This research paper explores how banks have impacted the growth of small and medium enterprises (SMEs) in Nigeria from 1991 to 2021. The review of existing literature discussed the challenges faced by SMEs due to the COVID-19 pandemic, which resulted in disruptions to both demand and supply. These disruptions caused revenue losses and a decrease in market confidence, further worsening liquidity constraints. The study employed a pair Granger causality test to investigate if loans from banks to SMEs influenced SME development over the research period. The variables examined included the proportion of SME contribution to GDP as an indicator of SME progress, bank loans extended to SMEs, the inflation rate (INF), and the exchange rate (EXCR). The findings reveal that neither commercial bank loans nor inflation impacted SME development without any evidence of causation. However, there was a relationship between exchange rates and SME growth. These results suggest a lasting connection between the factors studied. These outcomes recommend strengthening collaboration between the government and commercial banks to increase the share of loans directed towards SMEs for their advancement.

Fintech model performance analysis in credit loans: evidence from China city commercial banks

ABSTRACT The analysis of bank loan performance has consistently been a central issue in banking research. With the impact of the COVID-19 pandemic, we have witnessed a significant increase in online loans. Our study employs fintech models to develop a big data credit analysis system, evaluating model efficiency and the effect of ‘data organization’ on predictive performance for city commercial bank loans. Our results show that training data size, timeliness, and inter-bank ‘data sharing’ significantly affect model predictions. We also find that traditional econometric models (Logit and Probit) have the weakest predictive ability. However, ‘most advanced’ deep learning models perform worse than machine learning models with lower algorithmic complexity, such as Random Forest. Besides, ‘sharing training data’ generally increases model efficiency, but there are exceptions for larger city commercial banks. This paper provides ample empirical evidence for the application of the fintech model in bank loan credit. It highlights several characteristics of training data, such as size and timeliness, which greatly affect model efficiencies. We also provide policy recommendations for fintech transition and collaboration among municipal banks.

The Role of Commercial Bank Loans in Enhancing Financial Performance of Small and Medium-sized Enterprises in Morogoro Municipality, Tanzania

Purpose: This study investigates the role of commercial bank loans on the performance of small and medium-sized enterprises (SMEs) in Morogoro Municipality, Tanzania. It examines how commercial bank loans affect SME financial performance, providing a comprehensive understanding of how financial support from banks influences SME growth and sustainability. Design/Methodology/Approach: The study adopted a quantitative approach. It utilized cross-section data collected from a sample of 92 SMEs in Morogoro municipality. The collected data were descriptively analyzed using SPSS version 25. This analysis aimed to evaluate loan accessibility, determinants of loan choice, and the effect of commercial bank loans on key financial metrics such as profitability, cash flow management, and business growth. Findings: The study reveals that although many SMEs perceive commercial bank loans as easily accessible, others encounter significant barriers, including high interest rates and stringent collateral requirements. The study also reveals that commercial bank loans have mixed effects on SME performance. While they positively impact revenue generation and asset growth, their effects on profitability and business expansion are inconsistent. Originality/Value: This study contributes to the existing literature by providing nuanced insights into the role of commercial bank loans in SME performance within a Tanzanian context. It highlights the challenges SMEs face in accessing financial support and the varying impact of bank loans on their financial outcomes. The study findings are relevant for both policymakers and financial institutions aiming to improve loan accessibility and support SME development. Policy Implications: The study suggests several policy implications, including the need for banks to simplify loan application processes, offer more flexible loan products and address high interest rates that hinder SMEs access to finance. Additionally, it emphasizes the importance of building strong relationships between SMEs and financial institutions and leveraging financial advisory services to enhance loan utilization and overall business performance.

Asset Allocation and Bank Resilience: China Insights

This research is based on the panel data from the annual reports of Chinese commercial banks for the years 2010-2020. A panel data model is constructed to empirically investigate the influence of commercial banks' asset allocation on financial stability. The study innovatively explores the differences between large-scale banks and general-scale banks in this context, as well as the interaction effects between large-scale banks and their methods of capital application. The findings indicate that: firstly, the higher the proportion of corporate loans in commercial banks, the stronger the stability. With the support of national policies, the operating environment for emerging industries has improved, leading to a reduction in bankruptcy risks and further decreasing the credit risk of related banks, which contributes to the enhancement of banks' financial stability. Additionally, compared to securities investments affected by market fluctuations, corporate loans are less susceptible to significant capital changes, and their risks are primarily determined by the operating conditions of the related enterprises, making them relatively controllable. Secondly, the higher the proportion of personal loans in commercial banks, the stronger the stability. The largest part of personal loans consists of housing mortgage loans, which have a low non-performing loan rate and high quality in China. Therefore, an increase in personal loans helps to enhance the financial stability of banks. Thirdly, large-scale banks exhibit lower financial stability. Due to the redundancy in management personnel in large-scale banks, management costs, adjustment costs, and transaction costs are relatively high. Furthermore, it is worth noting that because large-scale banks hold a significant amount of surplus funds, they are prone to excessive securities investments. Fluctuations in the securities market increase external risks and decrease financial stability.

Relationship between Financial Risk Exposure and Non-Performing Loans of Commercial Banks in Kenya

Currently, there is a financial crisis affecting commercial banks in Kenya occasioned by high levels of loan loss provision as a result of Non-Performing Loans. The past decade has seen the collapse of major banks like Chase Bank among others. This trend on Non-Performing Loans of the institutions requires urgent measures to reverse failure to which the entire sector is likely to collapse, and customers would lose a significant amount of their deposits. This study sought to investigate the effect of credit risk and liquidity risk on non-performing loans (NPLs) of commercial banks in Kenya and appraise the moderating effect of firm age on the relationship between financial risk exposure on non-performing loans of commercial banks in Kenya. The study was underpinned by liquidity preference theory. The examination adopted a positivist paradigm guided by explanatory research design. The study targeted 40 commercial banks as the unit of analysis while branch managers, operations and risk managers were the units of observation drawn from the banks adding to 120 respondents and census was used. The study collected both primary data using structured questionnaire on the independent variable and secondary data from publications by Central Bank of Kenya (CBK) and respective banks and the same was analyzed through the statistical package for social sciences (SPSS) version 26 in a descriptive and inferential manner. The study established that credit risk (p<0.05) and liquidity risk (p<0.05) were all found to have significant effect on NPLs of commercial banks in Kenya and significantly moderated by their sizes. It was concluded that financial risk exposure has significant effect on NPLs of commercial banks in Kenya. It was recommended that finance manages working in commercial banks in Kenya to balance the investment in short term and long-term assets to maintain operational liquidity levels for better management of liquidity risks. Credit managers working for commercial banks in Kenya need to review the existing credit risk management efforts and mechanisms to minimize exposure to NPLs.

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.

Analysis of the Impact of Commercial Bank Loans on The Gross Domestic Product in Iraq

Analysis of the Impact of Commercial Bank Loans on The Gross Domestic Product in Iraq

THE EFFECT OF BANK-SPECIFIC AND BANK RISK ON BANK STABILITY AS MEASURED BY NPL OF THE BANGLADESHI COMMERCIAL BANK

This paper analyzed the effects of bank-specific and bank-risk drivers on bank stability as measured by non-performing loans(NPL) of commercial banks in Bangladesh from 2011 to 2021.This study used panel linear regression, and panel corrected standard error (PCSEs) to estimate the model. The main objective of the study was to analysed the effects of bank specific and bank risk on bank stability of conventional banks in Bangladesh. Capital adequacy, asset quality, income diversification, bank competition, managerial efficiency, and profitability (ROE) are used as proxies for bank-specific and liquidity risk; Sensitivity to marketing risk is used as proxies for bank risk, while control variable is used as bank size and non-performing loan (NPL) are used as a proxy for measurement of bank stability. The main results show that capital adequacy and profitability (ROE) are negative, but asset quality, income diversification, bank competition, and managerial efficiency are positively related to the NPL. The results further evaluate those determinants of bank risk, liquidity risk, and marketing risk have a positive impact on the NPL. The control variable bank size has a negative impact on the NPL. Based on our results, authorities in Bangladesh may develop rules for managing operations and ensuring bank stability as measured by NPLs.

Credit Risk Game Analysis and Control Model of Rural Small and Micro Enterprises——Based on the perspective of green credit

RMSEs (rural micro and small enterprises) absorb the rural surplus labor force for employment and entrepreneurship, which is an important economic growth point in rural areas in the future. However, RMSEs have narrow financing channels and difficult financing problems, which hinder the development of the rural economy. If RMSEs want to develop sustainably, they need to find effective financing channels. RMSEs no longer use traditional means of financing through commercial bank loans but are looking for newer financing modes, such as online loan platforms, investors, and so on. This paper takes RMSEs as the main body, RMSEs target rural commercial banks, online loans, and investors as funding instruments, and through building a benchmark model of the evolution game between funding instruments and RMSEs, banks, based on the perspective of green credit other investors industry competition and market regulatory mechanisms and to build a control model of credit risk of RMSEs to reduce the credit risk of RMSEs.

Risk culture of banks and corporate innovation: Evidence from Chinese listed companies

The importance of risk culture in the banking sector was highlighted after the 2008 financial crisis. Chinese companies often turn to commercial bank loans, which serve as an important source of financing, to acquire the necessary funds for corporate innovation. Quantitative text analysis of the annual reports of Chinese banks was used to measure their risk culture. By analyzing a firm's loan statement, we were able to identify the bank that provided the loan. This study examines the impact of banks' risk culture on corporate innovation using a fixed-effects model, with Shanghai and Shenzhen A-share listed companies from 2016 to 2020 as the research sample. In addressing the endogenous problem of banks' risk culture, this paper adopts an instrumental variable approach using population migration and dock culture, and tests the robustness through the IV-2SLS method. The study finds that emphasizing the development of risk culture within the bank promotes corporate innovation. Entrepreneurial innovation is influenced by risk culture through debt management, a critical mechanism.

Impact of fintech on the loan structure of urban commercial banks in China

The emergence of financial technology has created both opportunities and disruption in commercial banking. Commercial banks loans remain the primary source of finance for Chinese enterprises. Therefore, it is imperative to investigate the impact of financial technology on Commercial banks loan structures. This study uses relevant data from Chinese urban commercial banks from 2011 to 2019 and adopts empirical research methods to analyze the mechanism underlying the impact of fintech on the loan structure of urban commercial banks. The results indicate that the fintech is associated with improving credit and guaranteed loans, reduces mortgages and pledged loans, and promotes the optimization of loan structure of urban commercial banks. Fintech has a significant impact on the credit loan structures of urban commercial banks in the Eastern region, whereas its impact on urban commercial banks in the Central and Western regions is relatively small.

A Study of the Effect of the Treasury Single Account on Commercial Banks Deposits and Lending in Zambia

The implementation of the Treasury Single Account (TSA) in Zambia brought about drastic changes in the management of public funds. The Bank of Zambia assumed custodianship of public funds while Commercial Banks remain revenue collection agents throughout the country. This study investigated the effect of the TSA on Commercial Banks Deposit Mobilization and Lending in Zambia. Secondary and Time series data were collected from the Bank of Zambia (BOZ) annual reports covering the pre- and post-TSA implementation eras, over a ten-year period (2010-2019). The independent variable was represented by Government Deposits (representing the TSA), while aggregate Commercial Banks Deposits and Loans and Advances were the dependent variables. The data were analysed using descriptive, regression and correlation analysis, with the aid of IBM SPSS Statistics version 28. The findings of the study revealed that Government Deposits have a significant positive effect on Commercial Banks Deposit Mobilization [(P-value 0.001; (CI: 95%)]. The study also revealed that Government Deposits have significant positive effect on Commercial Banks Loans and Advances [(P-value 0.001; (CI: 95%)]. The trend analysis on Government Deposits further revealed a slow growth in Government Deposits after TSA implementation compared to the pre-TSA period. The trend analysis on Loans and Advances also revealed a slower growth in Loans and Advances during the post –TSA era. The study therefore concluded that the TSA which aims to withdraw Government Deposits from Commercial Banks has a negative effect on Commercial Bank Deposits and their lending ability. The study recommended that banks should develop strategies to attract private sector deposits, to fill the void created by the implementation of the TSA. Banks should come up with innovative solutions to tap into the unbanked population. It is important that banks develop attractive savings products to encourage the culture of saving among citizens. The study further recommended that the Ministry of Finance should consider allowing Commercial Banks involved in revenue collection, a few days float before revenue is remitted to the main TSA account at Bank of Zambia (BOZ).

Small and medium scale enterprises and economic growth in Nigeria

Due to the inconclusive situation of empirical studies on Small and Medium Enterprises ( SMEs) and economic growth in Nigeria and the need to promote growth accompanied by poverty alleviation, this study examined SMEs financing and economic growth in Nigeria from 1999 to 2021. The hypotheses formulated and tested in the study included that there is no significant relationship between commercial bank loans, total credit to the private sector (which captures other means of financing SMEs) and lending rate. Annual data was collected from the Central Bank Statistical Bulletin. The augmented Dickey-Fuller unit root test revealed that the variables were stationary at the first difference, while the Johansen co-integration test indicated a long-run relationship among the variables. The Vector Error Correction Mechanism (VECM) indicated commercial bank loans have a weak negative effect on economic growth. Total credit to the private sector has a positive effect on economic growth, while lending rates have a significant negative effect on economic growth. It was concluded that SMEs financing has significant positive effects on economic growth in Nigeria. It was recommended that the government encourage more commercial bank loans to SMEs by guaranteeing such loans, more development bank branches should be established; and the lending rate should be lowered.

Improving household well‐being through entrepreneurship and inclusive finance in the context of the Next‐11 countries

AbstractScholarship brainstorming on household welfare enablers abounds in academic literature. Nonetheless, the perspective of entrepreneurship, particularly for the Next‐11 countries, is underreported. Likewise, prior literature failed to investigate the influence of categorical (gender‐specific) entrepreneurship on household welfare. Thus, this investigation covers this lacuna by examining the predictive effects of aggregate, male and female entrepreneurship and financial inclusiveness on household welfare. With panel series spanning 2004–2021, both the Westerlund and Banerjee & Carrion‐i‐Silvestre cointegration procedures confirmed long‐term convergence among the series. The estimates of the augmented mean group (AMG) and the cross‐sectional autoregressive distributed lag (CSARDL) techniques revealed that entrepreneurship enhances household well‐being. This outcome validates the self‐determination theory since entrepreneurial engagements enhance household welfare. By extension, policies targeting entrepreneurship empowerment are critical for economic prosperity in these countries. In terms of gender variations, it is established that female entrepreneurship, much more than male, enhances household well‐being significantly. Furthermore, although automated teller machine availability promotes subjective well‐being, the number of commercial bank branches enhances only objective well‐being. Meanwhile, commercial bank loans failed to enhance both aspects of welfare at all times. Hence, we have provided relevant policy options that would ensure the maximization of households’ well‐being in these countries and other emerging economies.

Navigating Risks: How External Environments Shape Non-Performing Loans in Vietnam's Commercial Banks

Objectives: The primary objective of this study is to analyze the factors influencing Non-Performing Loans (NPLs) in Vietnam's banking sector. It aims to shift the focus from traditional perspectives centered on macroeconomic indicators towards considering external environmental factors, such as global economic shifts, digital transformation, and industry-specific changes. Moreover, it seeks to examine the impact of the COVID-19 pandemic on NPL dynamics in Vietnamese commercial banks. Methods: The study employs empirical data collected from various Vietnamese commercial banks. Robust statistical methods are applied to analyze the data and explore the relationships between external environmental factors and NPLs. The research challenges conventional risk assessment models by advocating for a more comprehensive approach that integrates a broader spectrum of external influences beyond internal and macroeconomic variables. Results: The findings of the study suggest that external environmental factors, including global economic shifts, digital transformation, and industry-specific changes, significantly affect NPLs in Vietnam's banking sector. The analysis reveals the intricate dynamics of NPLs, especially under the influence of the COVID-19 pandemic. Contrary to traditional perspectives, the research underscores the importance of considering a wider range of factors in assessing and managing NPL risk. Conclusion: In conclusion, this study contributes significantly to the understanding of NPL dynamics in Vietnam's banking sector. The research highlights the need for banking executives and policymakers to adopt dynamic risk management strategies that account for external environmental factors. By recognizing the influence of global economic shifts, digital transformation, and industry-specific changes, stakeholders can enhance banking resilience and stability in emerging markets like Vietnam. The study underscores the importance of embracing a holistic approach to risk management in an era characterized by rapid global changes and uncertainties.

The Impact of Credit Policy Environment on Poultry Production in Nigeria

The research gave empirical data on the correlation between poultry production index and the credit policy environment in Nigeria. An autoregressive distributed lag (ARDL) bound test approach was employed to establish co-integration between series. The estimated long and short-run models parameters demonstrated stability, best quality, efficiency, and unbiased. The findings showed that in the long run, the commercial bank loan to the agricultural sector and domestic credit to the private sector had a significant positive influence on poultry production index while agricultural credit guarantee scheme loan to poultry subunit and lending interest rate exhibited negative relationships. In the short run, the current year coefficient of lending interest rate, the agricultural credit guarantee scheme loan to poultry subunit and domestic credit to the private sector had significant negative correlation with the poultry production index. However, the commercial bank credit to the agricultural sector showed positive effect on poultry production in the short run. The implication of the finding justifies the need to increase the commercial bank credit to the agricultural sector and domestic credit to private sector as a strategy to boost poultry production. Also, the agricultural credit guarantee scheme fund should be reassessed and modify to render it initial objectives. The lending rate should be deliberately lowered to increase credit access by the poultry farmers.

The implementation of long-term prudent valuation models across the UK and Mainland Europe for financial regulation purposes

ABSTRACT The Basel 3 guidance on bank regulation includes a new definition of real estate valuation which differs from existing bases. Prudently conservative valuation or prudent value includes four criteria which include the exclusion of ‘expectations of price increases’ and it must be ‘adjusted to take into account the potential for the current market price to be significantly above the value that would be sustainable over the life of the loan’. ‘National supervisors should provide guidance’ and ‘If a market value can be determined, the valuation should not be higher than the market value’. Prudent value has synergies with existing post Global Financial Crisis (GFC) debates concerning long-term valuations for commercial real estate bank loan origination and monitoring purposes. This paper outlines the concepts of long-term and prudent values in more detail, reviews the literature on long-term valuation and develops a framework for prudent value. It also puts that literature into a wider perspective on the analysis of market cycles and portfolio disaggregation within performance measurement, and suggests ways in which the property industry could implement the current Basel 3 prudent value proposals.