Bank Non-Performing Loans (NPLS): A Dynamic Model and Analysis in China

Zeng, Shihong

doi:10.4236/me.2012.31014

Cited by 59 publications

(47 citation statements)

References 12 publications

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“…Over time, however, the size of the problem grows, especially if banks are allowed to accrue interest on their non-performing loans (NPL). Besides that, (Zeng, 2012), in his paper supports the following hypothesis by considering the situation in China: the equilibrium value of the bank NPL is dependent on micro-economic factors but influenced by macro-economic factors include the degree of openness to the outside world and government policy. Based on the model, to obtain a decrease in the NPLs in China, the banks' internal management effort must be enhanced.…”

Section: The Definition Of Non-performing Loansmentioning

confidence: 69%

Factors Influencing Non-Performing Loans in Commercial Banks: The Case of Banks in Selangor

Murthy¹,

Kamil²,

Mariadas³

et al. 2017

IJBM

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Non-performing loans (NPLs) is a worldwide issue that affects financial markets stability in general and banking industry viability in particular. This study examines the factors influencing non-performing loans in commercial banks in Selangor state of Malaysia. Based on gaps in extant literature, four (4) independent variables comprising standard of living, economy of the country, consumers' income and bank interest rates are hypothesized to exert statistically significant influences on the dependent variable, NPLs. A quantitative research approach was employed in this research. 200 respondents were sampled for this study employing stratified random sampling technique. Employing multiple regression analysis (MRA) using SPSS software, the findings showed that out of the four (4) hypothesized relationships of the research, three (3) were supported whilst one was not. In particular, it was shown that consumers' income, economy of the country and bank interest rates statistically influence non-performing loans in commercial banks in Selangor state of Malaysia. However, there was no enough evidence to support the claim that standard of living can statistically influence non-performing loans in commercial banks in Selangor. Several implications from the research were further discussed.

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Section: The Definition Of Non-performing Loansmentioning

confidence: 69%

Factors Influencing Non-Performing Loans in Commercial Banks: The Case of Banks in Selangor

Murthy¹,

Kamil²,

Mariadas³

et al. 2017

IJBM

View full text Add to dashboard Cite

show abstract

“…They warned that if the authorities will not tackle the issue of NPLs in the formal banking system, it will lead to economic slowdown. Zeng (2012) analyzed NPLs in a Chinese banking system by using utility function based on optimal control theory and concluded that the phenomenon of NPLs was mainly significant in state-owned banks. The study revealed that equilibrium of NPLs in China was dependent on microeconomic factors but was influenced by macroeconomic factors.…”

Section: Studies Regarding Non-performing Loansmentioning

confidence: 99%

“…There are numerous existing studies which explore macroeconomic and banking industry specific determinants of NPLs for different countries and regions, and most of them find an inverse relationship between macroeconomic environment and NPLs (Ghosh 2015;Zhu et al 2014;Skarica 2014;Louzis et al 2012;Zeng 2012;Espinoza and Prasad 2010). Similarly, there are many studies which provided different models and theories regarding bank liquidity creation.…”

mentioning

confidence: 99%

Non-performing loans (NPLs), liquidity creation, and moral hazard: Case of Chinese banks

Umar

Sun

2016

China Financ. and Econ. Rev.

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Background: This study analyzes the impact of non-performing loans (NPLs) on bank liquidity creation to investigate the existence of moral hazard problem in Chinese banks. Methods: It uses data from 197 listed and unlisted Chinese banks, spanning the period 2005 to 2014. Generalized method of moments (GMM) estimation, fixed and random effect model, and pool data techniques have been used for analysis. Results: Total liquidity creation by Chinese banks is declining, and NPLs ratio has started to increase following a continuous decline between 2005 and 2012. We find that liquidity creation by Chinese banks does not depend on NPLs ratio. We repeated the analysis for small and large banks and the results of these subsamples reinforced our findings for the aggregate sample. Conclusions: We did not find the evidence of moral hazard problem in Chinese banks.

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“…Conversely, financial market variables such as the exchange rate and interest rates lower capacity for repayment. In modelling credit, Zeng (2012) views loans to the economy as boosting total consumption and hence yielding a positive social utility, while NPLs are viewed as a source of financial pollution, which negates social utility. He identifies two economic implications of NPLs.…”

Section: Literature Reviewmentioning

confidence: 99%

The Determinants of Non-Performing Loans in the MINT Economies

Morakinyo

Sibanda

2016

JEBS

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This paper investigates the major determinants of non-performing loans in the MINT (Mexico, Indonesia, Nigeria and Turkey) economies. Identifying major determinants of non-performing loans, which are observed to be growing in these countries in recent time, will also guide policy and forecasting future levels that will be useful for pre-emptive policies and actions. It uses static panel data and dynamic panel model analyses. Evidence suggests that in the four economies, capital adequacy ratio, liquidity ratio, total bank credit andreturn on assets are significant bank-specific determinants of non-performing loans. Also, while the return on assets, liquidity ratio and capital adequacy ratioshow a negative and significant relationship with non-performing loans, nominal exchange rate, money supply growth rate, total bank credit and lending rate show positive and very significant relationships with non-performing loans. Finally, corruption, an institutional variable, shows a very strong positive relationship with non-performing loans.

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Bank Non-Performing Loans (NPLS): A Dynamic Model and Analysis in China

Cited by 59 publications

References 12 publications

Factors Influencing Non-Performing Loans in Commercial Banks: The Case of Banks in Selangor

Factors Influencing Non-Performing Loans in Commercial Banks: The Case of Banks in Selangor

Non-performing loans (NPLs), liquidity creation, and moral hazard: Case of Chinese banks

The Determinants of Non-Performing Loans in the MINT Economies

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