Do board characteristics and ownership structure matter for bank non-performing loans? Empirical evidence from US commercial banks

Tarchouna, Ameni; Jarraya, Bilel; Bouri, Abdelfettah

doi:10.1007/s10997-020-09558-2

Cited by 13 publications

(20 citation statements)

References 77 publications

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“…Whether these borrowers can repay the loans in the future will be a huge question mark. For commercial banks, the probability that these loans will become nonperforming loans in the future is greater than ordinary loans, and the probability of personal credit risk default of borrowers will be greater [15][16][17][18].…”

Section: Introductionmentioning

confidence: 99%

Research on Commercial Bank Risk Early Warning Model Based on Dynamic Parameter Optimization Neural Network

Wang

2022

Journal of Mathematics

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Based on the background of big data, it is necessary to study the dynamic parameter optimization of the commercial bank risk model neural network. Several customer information attribute groups that have an impact on loan customer rating are selected, and the existing customer data are used to train the network model of the attribute group and customer default rate, so that it can predict the customer’s default rate according to the newly entered loan customer information and then predict whether the customer defaults. Based on a neural network model, this article constructs the credit risk early warning model of science and technology bank, makes an empirical test, and puts forward relevant countermeasures and suggestions to control the credit risk of bank. This article establishes a warning model of commercial banks by using a neural network. Taking the bank as an empirical sample, the constructed neural network model is used. Finally, the error of the model is small and the early warning results are satisfactory. The experimental results show that the proposed risk early warning model can accurately predict the customer default rate, so as to warn the defaulting customers. In the whole process, there are few human intervention factors and a high degree of intelligence, which reduces the operational risk.

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Section: Introductionmentioning

confidence: 99%

Research on Commercial Bank Risk Early Warning Model Based on Dynamic Parameter Optimization Neural Network

Wang

2022

Journal of Mathematics

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“…However, taking decision about the unwillingness to pay loans by the borrowers is complex due to the existence of social, psychological, and political issues in this tendency (Ghosh et al 2020). Hence, we demand for an appropriate governance and control framework, recommended in many literature (such as, Chowdhury 2012;Prakash et al 2021;Tarchouna et al 2021a), in controlling NPLs arising from unwillingness to pay, mostly classified as a white collar crime. Therefore, this paper explores the impact of audit committee independence, director ownership, CEO power, audit quality and bank size along with several bank-specific and macroeconomic control variables on the NPLs.…”

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confidence: 99%

“…Therefore, this paper explores the impact of audit committee independence, director ownership, CEO power, audit quality and bank size along with several bank-specific and macroeconomic control variables on the NPLs. This paper assumes that NPLs, arising from unwillingness to pay, can be controlled by establishing internal and external independent control and supervisory mechanisms through audit committee independence and external audit quality (Chowdhury 2012;Tarchouna et al 2021a;Fiador & Sarpong-Kumankoma 2021). Next, ownership effect can reduce the conflict of interest between management and shareholder, encouraging directors to work more and take more care when taking risks (Fahlenbrach & Stulz 2011;Tarchouna et al 2021a).…”

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confidence: 99%

“…This paper assumes that NPLs, arising from unwillingness to pay, can be controlled by establishing internal and external independent control and supervisory mechanisms through audit committee independence and external audit quality (Chowdhury 2012;Tarchouna et al 2021a;Fiador & Sarpong-Kumankoma 2021). Next, ownership effect can reduce the conflict of interest between management and shareholder, encouraging directors to work more and take more care when taking risks (Fahlenbrach & Stulz 2011;Tarchouna et al 2021a). Further, powerful CEOs (power concentration) have dominance over board actions and perhaps become risk averse, leading them to undertake in less risky projects particularly during crises (Pathan 2009).…”

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confidence: 99%

“…Further, powerful CEOs (power concentration) have dominance over board actions and perhaps become risk averse, leading them to undertake in less risky projects particularly during crises (Pathan 2009). Lastly, bank size has a significant impact on NPLs (Stern & Feldman 2004;Pop et al 2018;Tarchouna et al 2021a). Therefore, this paper assumes that a functional and effective governance framework, director ownership and CEO power are central to controlling the tunnel of white collar crime, NPLs in banks.…”

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confidence: 99%

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Audit Committee Independence, Director Ownership, Audit Quality and Non-Performing Loans

2022

AJAG

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The rising trend of Non-Performing Loans (NPLs) in the banking sector of Bangladesh epitomises a common phenomena of loan default that mostly arises from unwillingness to repay tendency of the borrowers who usually fit into the defined higher class of the society. An appropriate governance and control framework can effectively control this growing trend of NPLs, supplemented by the loan default culture. In view of this setting, this paper looks for the impact of audit committee independence, director ownership, external audit quality, CEO power, and bank size to control NPLs. After identifying two endogenous variables in a system of linear equations, this paper employs the system generalized method of moment (GMM) approach of regression analysis. This paper finds the significance of audit committee independence, director ownership, and external audit quality in controlling NPLs. However, this paper finds no significant impact of CEO power on lowering NPLs. Bank Size, measured in relative sense, has non-linear impact on NPLs. This paper recommends that the existing governance guidelines and BASEL-II accords fail to boost up the asset quality that controls NPLs and ensures capital adequacy.

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Development model of bank personal consumption credit business with blockchain technology under the carbon neutralization background

Yan,

2023

Int J Syst Assur Eng Manag

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Do board characteristics and ownership structure matter for bank non-performing loans? Empirical evidence from US commercial banks

Cited by 13 publications

References 77 publications

Research on Commercial Bank Risk Early Warning Model Based on Dynamic Parameter Optimization Neural Network

Research on Commercial Bank Risk Early Warning Model Based on Dynamic Parameter Optimization Neural Network

Audit Committee Independence, Director Ownership, Audit Quality and Non-Performing Loans

Development model of bank personal consumption credit business with blockchain technology under the carbon neutralization background

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