Total Loans Research Articles

The Effect of Financial Performance Indicators on the Degree of Credit Risk in Jordanian Islamic Banks

Background: Credit risk management has become a critical concept that defines the survival, growth, and profitability of banks, and more recently, financial institutions and banks have played an essential role in the economic growth and development of any country. Objective: This study examines the impact of financial performance indicators on the degree of credit risk in Jordanian Islamic banks. Utilizing a dataset spanning from 2018 to 2022, the research focuses on key independent variables: liquidity risk, pricing risk, collateral erosion risk, and the non-performing loan (NPL) ratio relative to total loans. The dependent variable is the degree of credit risk, measured through a composite risk score. Method: The study employs a quantitative approach, collecting data from annual reports of Jordanian Islamic banks and publications by the Central Bank of Jordan. Descriptive statistics, correlation analysis, and multiple regression models are utilized to analyze the relationships between the independent variables and credit risk. Results: The findings reveal that liquidity risk and NPL ratio have a significant positive impact on credit risk, indicating that higher liquidity issues and a greater proportion of non-performing loans elevate credit risk levels. Conclusion: Effective pricing strategies and robust collateral management are associated with reduced credit risk. These results underscore the importance of comprehensive risk management practices in enhancing the financial stability of Jordanian Islamic banks.

Liquidity vs. Sustainability Dilemma: Do Loan Ratios Hinder Social Transparency in Banks of Emerging Asia-Pacific?

The aim of this study is to analyze the fundamental dilemma in banking concerning the trade-off between liquidity management and sustainability commitments, with a focus on the banking sector in emerging Asia-Pacific economies. The findings reveal that banks with higher Total Loans to Total Deposits (TLTD) ratios tend to exhibit stronger Social Disclosure Scores (SDS), driven by stricter regulatory oversight. In contrast, banks with higher Total Loans to Total Assets (TLTA) ratios demonstrate weaker sustainability disclosures, prioritizing financial performance over ESG commitments. This study highlights the crucial role of regulatory pressure in encouraging banks to improve ESG transparency, even when short-term financial gains are prioritized. The findings underscore the need for policymakers to develop regulatory frameworks that not only enforce sustainability disclosures for high-risk banks but also incentivize asset-heavy institutions to integrate ESG principles into their core financial strategies, ensuring a balanced approach to sustainability and financial stability.

Loan Loss Provisioning and Profitability of the Private Commercial Banks of Bangladesh

Loan Loss Provisioning is a major regulatory requirement for banks to maintain the stability of financial performance. In Bangladesh, non-performing loans (NPLs), are considered as the biggest challenge of the banking sector. Thus, loan loss provisioning has been an obligatory as well as financial risk management tool for the banks. This study aims to find out the impact of loan loss provisioning on the banks’ profitability measured in terms of ROA and ROE. The study covers twenty private commercial banks operating in Bangladesh. The study concentrated the bank specific variables such as bank size, the proportion of total loans and advances disbursed of total assets, current liabilities to total assets, total deposits to total assets. Besides, the control variables include the governance index and the inflation level. The findings demonstrate loan loss provision has significant impact on the banks’ profitability in Bangladesh.

Mudharabah, musyarakah, financing risk, and performance of Islamic banks: Empirical evidence from Indonesia

Purpose – This study examines the effects and thresholds of mudharabah and musyarakah on the financing risk and performance of Indonesian Islamic banks. Methodology – Using panel data and quadratic regression analysis, we explore the nonlinear relationships among mudharabah, musyarakah, financing risk, and performance of Islamic banks in Indonesia using a sample of 14 Indonesian Islamic banks during the period to 2008-2020.Findings – We find that mudharabah is negatively related to financing risk and positively (in the initial stage) linked to Islamic bank performance. Mudharabah will reduce financing risk if the proportion of mudharabah to total loans is in the range of 5.5-12.6%. A proportion of mudharabah below 5.5% or above 12.6% worsens non-performing financing (NFP), loan loss provision (LLP), and Z-score. In contrast, musyarakah is found to be positively (although marginally) related to financing risk and negatively and weakly associated with the performance of Indonesian Islamic banks. Implications – Our findings have consequential implications for both practitioners and policymakers. Understanding the dual effects of mudharabah and musyarakah can help to implement strategies that optimize investment portfolios, enhance profitability, and minimize risk. For policymakers, these results highlight the need for regulatory frameworks that encourage optimum thresholds of mudharabah financing to mitigate risk while spurring performance. Originality – This study contributes to the literature by identifying a turning point in mudharabah financing that minimizes financing risk, a realm previously underexplored in Islamic finance. By incorporating this nuanced insight, our study provides a novel perspective on how Islamic banks can attain strategic equilibrium between risk management and performance improvement.

Trends and Patterns of Accumulation of Non-Performing Loans in the Banking Sector of Uzbekistan

This article provides a comprehensive overview of the banking sector in Uzbekistan, with a particular focus on the trend and patterns of non-performing loans (NPLs) accumulation. The data in the article offer insights into the share of NPLs in total loans across banks over several periods, underscoring the importance of assessing asset quality and risk management practices of banks in order to support policy decisions and investment strategies. The analysis reveals that banks generally exhibit a slightly higher ratio of NPLs to total loans compared to the pre-pandemic period, highlighting the fluctuation of NPL ratios over time, particularly during the pandemic. Furthermore, it provides a breakdown of NPL accumulation by sector, indicating the industrial sector as the largest contributor to NPLs, followed by the agricultural sector. Especially, the mean of quarterly NPL ratios for Uzbek banks from 2017 to 2023 is discussed, revealing an increase in the NPL ratios in 2021 as compared to the previous year. The data in the article describe the relationship between quarterly outstanding loans and NPLs for banks over the same period. The analysis particularly focuses on NPL accumulation trends and sector-specific contributions, which are of significant concern. The study's findings are of paramount importance for stakeholders, policymakers, and investors, as they offer crucial insights into the credit risk, asset quality, and performance of banks in Uzbekistan.

Assessment of credit risk using value at risk (VAR).

The purpose of this study is to assess the credit risk of a group of Iraqi banks between (2005 and 2018). The quantitative analysis was carried out by looking at a scale, one of which is the closest to modern indicators (VAR). Then an effective comparison of the study sample banks was made. The main ratios that were employed focus specifically on the interest received to the total loans, and each bank risk was classified through the use of statistical analysis based on the value-at-risk model, as this type of analysis was used to summarize the performance of each bank based on two criteria: variance and general stability to perform each bank. The results showed that the Bank of Baghdad performed reasonably well during the period covered by the study, while the Bank of Mosul was the worst performer among the banks of the study sample, as the performance levels were low for the Bank of Mosul, while the Bank of Baghdad benefited from obtaining a higher degree of performance in general. The political conditions of the country affected the Mosul Bank after the year (2014), which led to work on improving its performance better compared to the banks of the study sample. It was among the most important characteristics of the Bank of Baghdad, and the reason is that the Central Bank chose this bank from among several banks (Ahli, Baghdad, Tejari Al-Iraqi, Assyria, the Middle East and Development) after the year (2016) to contribute to the electronic payment system for employee salaries with all their allocations and benefits for all state departments and institutions This led to a high rate of variance and, accordingly, a high rate of risk for this bank.

The Impact of Pre and Post-Mergers and Acquisitions on the Financial Performance of Selected Banks in Pakistan

The purpose of this study is to investigate the financial performance of merging banks in Pakistan in a pre and post-scenario to identify the impact of key indicators on the performance of acquirer company. For this purpose, data for 4 banking companies have been taken from financial year 2005 to 2022. Banking companies include Meezan Bank Limited (MBL) Muslim Commercial Bank Limited (MCB) Al Baraka Bank (Pakistan) Limited (ABPL) and Bank Islami Pakistan Limited (BIPL). Paired sample t-tests and regression analysis was used to identify significant differences and impact on pre and post-merger. Results revealed that there were significant positive differences in specific financial indicators as Return on Assets on MCB only. However, results indicated in pair sample t-test that Net Interest Margin was significant for MCB and ABPL, whereas Debt to Equity was significant for all banks. Further Capital Adequacy Ratio revealed significant results for MBL and ABPL but Total Loan to Total Deposit has significant outcome for BIPL only. It is important that results for Non-Performing Loans to Total Loans were significant for MBL, MCB and BIPL but Earning per Share has been found significant for MBL. The key important indicators of Market Price per Share is found significant for all banks. Dividend per share has significant outcome for ABPL only. Regression results revealed that in post-merger capital adequacy ratio, earning per share has positive but dividend per share and market price per share has significance negative impact on return on assets at (p<0.05) but no significant impact was found pre-merger context. The findings provide valuable insights for policymakers to strategically focus on future corporate restructuring and to ensure financial stability.

State‐level economic policy uncertainty and Bank loan pricing

AbstractWe use the state‐level economic policy uncertainty (EPU) index of Baker et al. (Journal of Monetary Economics, 2022, 132, 81) and find that state‐level EPU increases interest income but lowers total loan growth, resulting in higher loan pricing. We show increases in state‐level EPU have a stronger impact on small‐ and medium‐sized commercial banks than their large‐bank counterparts. Finally, we control for nationwide measures of EPU, finding the effects of state‐level EPU are as economically significant as the national‐level policy uncertainty measure. However, controlling for the interaction between economic uncertainty and firm size, we find that national‐level EPU is more economically significant than state‐level EPU.

A Comparative Analysis of Non-Performing Assets in District Cooperative Central Banks: Evidence from Rayalaseema Region

This study examines the trend and pattern of non-performing assets (NPAs) in four District Cooperative Central Banks (DCCBs) in the Rayalaseema region of India over seven years from 2015-16 to 2021-22. The study uses various metrics, including gross NPAs, net NPAs, and NPAs as a percentage of total loans, total assets, and deposits. The results show significant differences in NPA levels between the four banks, with CDDCB exhibiting the lowest NPA levels. The study also finds that NPA levels have declined over the period, indicating an improvement in asset quality. The findings have implications for investors, policymakers, and banking sector stakeholders, highlighting the need for effective credit risk management and recovery mechanisms. Keywords: Non-Performing Assets (NPA), District Cooperative Central Bank (DCCB), Chittoor District Cooperative Central Bank (CDCCB), Kadapa District Cooperative Central Bank (KDCCB), Kurnool District Cooperative Central Bank (KUDCCB), Anantapur District Cooperative Central Bank (ADCCB), Net NPA, Gross NPA.

The Impacts of Credit Risks on the Financial Stability of Jordanian Commercial Banks between 2010 and 2020

Banks are unique establishments that are exposed to both returns and risks across various dimensions. Among the risks they face, credit risk stands out as one of the most critical, stemming from banking transactions with customers and institutions. Risk is an inherent aspect of the banking business, particularly due to factors such as increased competitiveness, technological advancements, larger banking transactions, and the presence of large banks. Today, banks encounter a range of banking risks, varying in their levels of severity across different institutions. To ensure their continued existence in the banking market with reasonable returns and minimal risks, banks must conduct thorough evaluations and analyses while effectively managing all potential risks. These measures contribute to their success. This study specifically examines the influence of credit risk on the financial stability of Jordanian commercial banks during the period of 2010–2020. The study incorporates key drivers of financial stability, including the capital adequacy index, liquidity ratio, return on assets, and costs, which were derived from previous research. The study’s findings indicate that the leverage ratio (expressed as a percentage) of credit risks had no impact on the financial stability of Jordanian commercial banks between 2010 and 2020. However, there was an impact observed in relation to credit risks represented by the ratio of nonperforming loans to total loans (expressed as a percentage), affecting the financial stability of these banks. Based on the final results and discussions of the study, it is recommended to prioritize transparency, as it plays a crucial role in achieving financial stability even in the face of financial, political, and epidemic crises. Additionally, adherence to institutional governance principles in financial markets and establishing a link between economic indicators and banking safety are essential. Overall, this study underscores the significance of effectively managing credit risks and implementing measures to ensure financial stability in the banking sector.

Analysis of Factors Affecting Non-Performing Loan at PT Xyz Financing Company Before and During Covid-19 (2018-2022)

Non-Performing Loan is a situation where the ratio of the volume of non-performing loans (arrears >30 days) to total loans. This study aims to analyse the factors that influence the amount of credit (total loans) and the factors that influence Non-Performing Loan at PT XYZ in the range of 2018-2022. This study aims to analyse the factors that influence the amount of credit (total loans) at PT XYZ measured using multiple linear regression methods, while the factors that influence Non-Performing Loan at PT XYZ are measured using Binary Logistic Regression. The data in this study uses secondary data from PT XYZ in 2018-2022. The results of this study indicate that the factors that affect the amount of credit are Vehicle Price, Effective Rate, Installment Value per month, amount of downpayment (DP), total financing, tenor, age, education, gender, marital status, occupation and unit type, while the factors that affect the chances of customers becoming NPF are inflation, customer area and covid-19 pandemic and the Sumatra area is an area that needs special attention because it has a 121.4% higher chance of becoming an NPL.

THE IMPACT OF HOUSEHOLD DEPOSITS ON BANK CREDIT ACTIVITIES: EVIDENCE FROM SELECTED WESTERN BALKAN COUNTRIES

Credit activities of banks are significantly conditioned by the level of bank deposits as the main source of bank financing, especially for banks operating in underdeveloped financial markets. A notably significant part of the bank deposit base comprises household deposits, which in the banking sectors of the Western Balkan countries have a considerable share of total deposits. This paper investigates the dependence of bank lending activities on the total household deposits in the banking sectors of the Western Balkan countries. The research was conducted for the period from 2000 to 2021 for the banking sectors in Republika Srpska and the Federation of Bosnia and Herzegovina, for the period from 2002 to 2021 for the banking sector in Montenegro and for the period from 2003 to 2019 for the banking sector in Serbia. The level of total loans in banks represents the dependent variable, while household deposits in the observed banking sectors represent independent variables. This research has also opened some new directions in research work in terms of the intensity of the factors that can contribute to the growth of household deposits as a source of financing bank lending activities in the Western Balkan countries.

The Impact of Sociodemographic Characteristics and Information Behavior of Public Library Staff on E-Book Circulation in Digital Lending Services. The Case of GaliciaLe

ABSTRACT E-books constitute a small percentage of the total loans at public libraries. To determine the factors affecting this poor adoption, we analyzed GaliciaLe, the digital platform of public libraries in Galicia (Spain). Results from a staff survey, as well as circulation and population statistics, show that the sociodemographic characteristics of the municipality served by the library, along with staff habits, expertise, and self-perception of digital reading and e-lending, influence e-book loans. Together with staff opinions, these are reliable indicators for determining circulation among library members. Our research highlights the need for more worker training and investment from the public administration.

Factors Influencing the Capacity to Repay Loans on Time of Tea Growing Households

Tea is the main crop of Thai Nguyen province, Vietnam. Tea is a crop that helps eliminate hunger and reduce poverty, and is a crop that enriches over 91 thousand farming households with many products certified by OCOP (One Commune One Product) and VietGAP (Vietnamese Good Agricultural Practices). In particular, tea-growing households have proactively sought loans to finance organic tea growing activities, aiming at sustainable development. This study aims to analyze the factors affecting the ability to repay debts on time of tea-growing households in Thai Nguyen, Vietnam. The research data is based on a survey of 350 tea-growing households in this area. Heckman's two-step model is used to estimate the influencing factors. The study has shown that the factors affecting the capacity to repay loans on time of tea growing households in Thai Nguyen, Vietnam include 6 factors: Number of dependents, Total loan amount, Number of harvests, Total assets, Purpose of loan use; and Tea growing experience. In addition, there are 5 factors affecting the amount of loan repayment on time of tea growing households including: Education level, total assets, number of maturity periods and tea growing area of the household. Based on the survey data, the study proposes solutions to improve the efficiency of loan use, contributing to better timely loan repayment of tea growing households.

How Does Loan Loss Accounting Influence Bank Lending? Evidence from the Current Expected Credit Loss (CECL) Model

ABSTRACT I explore the real effects of an update in loan loss accounting, the current expected credit loss (CECL) model. Although CECL’s predecessor only required banks to recognize losses after an event that made a loan uncollectible, CECL requires banks to recognize expected lifetime credit losses when originating loans. CECL’s earlier recognition of loan losses increases the cost of reserving regulatory capital for loans, decreasing banks’ willingness to lend. Empirically, I find that, following CECL’s approval, capital-constrained banks reduce their growth of total loans and residential loans. I also find that, for the residential loans banks continue to make, they choose to sell more shortly after origination, increasing the size of their originate-to-distribute (OTD) business. The increase in OTD mortgages is more pronounced for public banks, implying that their need to adopt CECL earlier than private banks outweighs the fact that they have better access to additional capital. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G21; M40; M41.

Can We Use Financial Data to Predict Bank Failure in 2009?

This study seeks to answer the question of whether we could use a bank’s past financial data to predict the bank failure in 2009 and proposes three new empirical proxies for loan quality (LQ), interest margins (IntMag), and earnings efficiency (OIOE) to forecast bank failure. Using the bank failure list from the Federal Deposit Insurance Corporation (FDIC) database, I match the banks that failed in 2009 with a control sample based on geography, size, the ratio of total loans to total assets, and the age of banks. The model suggested by this paper could predict correctly up to 94.44% (97.15%) for the failure (and non-failure) of banks, with an overall 96.43% prediction accuracy, (p = 0.5). Specifically, the stepwise logistic regression suggests some proxies for capital adequacy, assets/loan risk, profit efficiency, earnings, and liquidity risk to be the predictors of bank failure. These results partially agree with previous studies regarding the importance of certain variables, while offering new findings that the three proposed proxies for LQ, IntMag, and OIOE statistically and economically significantly impact the probability of bank failure.

Growth and Performance of Self Help Group’s - An Exploratory Study

Today there are Mainstream Micro Finance Institutions like National Agricultural Bank for Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) etc., which are creating micro credit, in rural areas by extending micro finance to Self Help Group (SHG’s) with the help of formal credit institutions, making it an effective poverty reducing strategy and simultaneously promoting rural development. SHG’s were initiated to empower the economically disadvantaged people, who were neglected by formal credit and savings institutions. Micro finance has shown that poor people, when given access to timely and responsive financial assistance, use the proceeds to not only increase their assets and income, but also repay their debts. NABARD, through its Micro Credit Innovations, is the facilitator and mentor of microfinance initiatives in the country. The model of Self help group- bank linage programme (SBLP) has evolved as a cost-effective mechanism for providing financial services to the unreached and deserving poor households. The initiative started as a pilot to link around 500 SHGs of poor to the formal financial institutions during the year 1992-93.The success of the pilot program has shown that Micro Finance can go beyond poverty reduction, to addresses issues of health, education, gender and over all development The present paper is a comparative study of the agency wise i.e. commercial banks, regional rural banks, and cooperative banks, performance in the SHG’s - bank linkage program in Telangana, from2014-18,. The paper also presents an in-depth, analysis of the number of self-help groups, Amount of savings outstanding, amount of loan outstanding of the SHGs, , and total loans disbursed to them through SBLP, generating micro credit to reduce poverty and boost rural development. Key words: NABARD, Micro Finance, SHG’s, SBLP, poverty reduction, rural Development,

Interest Rate Channel and Market Rates in Case of Uzbekistan – Svar Approach

In this scientific work, is studied the influence of the interest rate channel of the transmission mechanism on market rates. The analysis was carried out in case of Uzbekistan, using statistical data of 36 commercial banks for the period 2019M01-2024M06. According to the results of the analysis, it was found that the influence of the Central Bank key interest rate on the short-term interest rates on total time deposits and the short-term interest rates on total loans of legal entities is strong.

Analisis Multidisipliner terhadap Fenomena Pemberian Pinjaman Online pada Anak Muda: Dampak, Penyebab, dan Solusi

The presence of online loans provides new hope for economic development in Indonesia. Online loans is a way for business owners to obtain capital. Online loans offer various simplicity for MSMEs who want to apply for loans, they can get loans quickly using easy conditions, disbursement of funds quickly, and a flexible repayment process. One of the conditions that are not provide in the banking industry is easy terms and loans without collateral. This is a good news for MSME owner who need capital and do not have valuable assets to use as collateral. It is not only the general public who use online loan services but also young people, apart from not requiring administrative requirements and guarantees like banks in general, the process is also fast. However, you need to be careful in using this online loan, because it has two sides. Do not let what is expected is a profit in the form of fund assistance, even a loss due to payment or even pressure from collectors when it is due. According to data from the Financial Services Authority (OJK) there are around 219,824 youth under 19 who are active loan borrowers. The circulation of loan money is also quite large with a total loan of IDR 206.9 billion. Young online borrowers, who are considered to still not have many urgent needs already had the power to borrow from this loan, this is considered very harm. The phenomenon of the rise of this loan is increasingly troubling the community. This system is considered to be damaging the financial digitalization ecosystem which previously benefited the community, instead it has lost tens or even hundreds of millions of rupiah.

A Comparative Study On Financial Performance Of Sbi In The Pre And Post Merger Periods Using Camels Rating Model

The core objective of the study aims to compare the performance of State Bank of India through CAMELS model during the pre and post merger periods with five of its associates. The study period covers 2012 to 2022. Data from secondary sources were used in this study. The comparison is made on the basis of the parameters like capital adequacy, asset quality, management quality, earning quality, liquidity and sensitivity to market risk. Data is analysed by using Paired sample t-test and also CAMELS ratings in the present study. The outcomes of the study reveals that SBI’s financial competency is improving post merger periods. But attention is required in liquidity quality in terms of total loans to total deposits (L1). Liquidity quality in terms of circulating assets to total assets (L2) and sensitivity to market are excellent in CAMELS ranking. Out of six parameters in CAMELS, management quality and liquidity quality in terms of total loans to total deposits (L1) are found to be significant in the post merger period. The study concluded that post-merger SBI's earnings quality is improved but liquidity did not. So management should be meticulous with managing liquid assets.