Factors that increase credit risk of Azerbaijani banks

Mukhtarov, Shahriyar; Yüksel, Serhat; Mammadov, Elvin

doi:10.14254/2071-8330.2018/11-2/5

Cited by 20 publications

(13 citation statements)

References 36 publications

(32 reference statements)

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“…This is the single most striking observation to emerge from the data. Theoretically, this relationship should be negative, as previous comprehensive cross-sectional studies guide that increases in the Consumer confidence index disclose improvements in consumer real estate buying patterns along with expanding financial strength to comply with a future mortgage payment plan (Gibler & Nelson, 2003;Koklic & Vida, 2011;Ma et al, 2017;Kłopocka, 2017;Mukhtarov et al, 2018). The obtained research results lead to the conclusion that, despite the anticipated increase in bank lending activity and mortgage applications, as a result of consumer confidence grows, the dominating overoptimism raises the probability of the trust crisis in the European Central Bank.…”

Section: Logit Regression Results For Model Imentioning

confidence: 99%

Does the real estate market behavior predict the trust crisis in the financial sector? The case of the ECB and the Euro

Brychko

Vasilyeva

Rowland

et al. 2021

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Research background: Based on the history of financial crises, real estate market behavior could be thought of as a key benchmark of trust shifts in the financial sector of the economy. Plunging real estate asset prices accompanied by the financial "bubbles" explosion could be viewed as the harbinger ? even the cause ? of the public trust crash in the financial sector. Purpose of the article: This study intends to assess the extent to which the real estate market behavior determinants, along with financial sector consumers' feelings, are able to predict trust crises in the financial sector, namely to its primary institutions ? European Central Bank and the Euro. Methods: In order to estimate the probability of a trust crisis in the financial sector, two logistic regression logit models were developed based on two types of dependent variables as they reflect trust violations in the financial system primary institutions ? net trust in European Central Bank (Model I) and net support for the Euro (Model II). The research was conducted on quarterly panel data of the EU countries from the euro area covering the period from 2000 to 2019. Logit regressions employed for data processing and analysis were performed in the computational system STATISTICA. Findings & value added: The logit-modeling results show that determinants of irrational real estate buyers' behavior are powerless in predicting the escalation of the trust crisis in the Euro. However, binary models of real estate market behavior could be successfully used to predict the probability of the trust crisis in the European Central Bank. The results show that real house price indices, price to income ratio, price to rent ratio, and rent prices accompanied by the financial sector consumers' feelings are statistically significant, providing the best distribution between the normal times and periods of trust crisis in the European Central Bank. Irrational real estate market behavior may indicate serious problems in the trust violations in the European Central Bank, and it should be a signal for policymakers to take actions towards more efficient financial and real estate market regulation following the behavioral approach.

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Section: Logit Regression Results For Model Imentioning

confidence: 99%

Does the real estate market behavior predict the trust crisis in the financial sector? The case of the ECB and the Euro

Brychko

Vasilyeva

Rowland

et al. 2021

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“…Bank size has been examined as a determinant of credit risk by Mukhtarov et al (2018), Waqas et al (2017), Kasana and Naveed (2016), Rajha (2016), Al-Wesabi and Ahmad (2013), Al-Abedallat and AL-Shubiri (2013), and Zribi and Boujelbène (2011). It is tempting to think that large banks are associated with lower credit risk as they have more capabilities to hold more diversifiable portfolios.…”

Section: Bank Sizementioning

confidence: 99%

Determinants of Banks’ Credit Risk: Evidence from Jordanian Banks Listed on Amman Stock Exchange

Bsoul

Milhem²,

Odat³

2022

Acad. J. Interdiscip. Stud.

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This paper aims to identify the determinants of credit risk in Jordanian banks. The sample consist of all banks listed on Amman Stock Exchange (ASE); which include 13 conventional banks and 2 Islamic banks, with the data covering the period from 2012 - 2019. Credit risk is represented by the percentage of non-performing loans over total loans given by the bank. Both bank-specific variables and macroeconomic variables that are likely to influence credit risk are examined. Based on the multiple regression analysis, the results indicate that the level of credit risk faced by Jordanian banks is negatively related to each of the banks’ profitability, interest income earned by the bank, the size of the bank, and the type of the bank. The results also show that there is a significant positive relationship between the banks’ loans quality and the unemployment rate in Jordan with the level of credit risk. The results, however, indicate that there is no a significant relationship between liquidity, inflation, and gross domestic products with credit risk faced by Jordanian banks. Received: 27 June 2022 / Accepted: 28 August 2022 / Published: 2 September 2022

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“…Capital adequacy is a key concept regarding business particularly in banking business because of its role in providing cover for its risky assets. Capital adequacy measures how much of a bank's capital represented by its net worth can allay the unfavorable effects of its risky loans (Economic Times Bureau, 2010), it mitigates widespread distress in the banking industry and spurs business exertion and performance (Ezike & Oke, 2013) and increases credit risk when it is low (Mukhtarov & Mammadov, 2018). In the banking sector, capital is composed of two types which are first-tier capital and second tier capital (Basel Committee on Banking Supervision, 2015).…”

Section: Capital Adequacy Ratiomentioning

confidence: 99%

Capital Adequacy and Deposit Money Bank's Return on Asset (Roa) in Nigeria

Adeoti¹,

Akinroluyo²

2022

Financ. account. res. j.

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This study investigated capital adequacy and Deposit Money Bank's (DMB) Return on Asset (ROA) in Nigeria in which the effect of capital to asset ratio on bank's profit margin and the relationship between solvency and asset turnover was examined. The study population of the study comprised Nigeria deposit money banks listed on the floor of Nigeria Stock Exchange as at 2021. Sample of bank selected was Zenith Plc, Guaranty Trust Bank Plc (GTB), First Bank Nigeria Limited, Access Bank Plc, and United Bank for Africa Plc based on global ranking order and the fact that they are listed on Nigeria Stock Exchange. To determine the effect of capital adequacy on banks performance, Ordinary Least Square (OLS) regression model was employed the data collected within the period of 2006-2020. The findings of this study revealed coefficient of 0.080034 implies 1% change in capital to asset ratio would lead to 8% increase change in profit margin ratio and p-value of 0.042223 shows that CTA has statistical significant effect on profit margin of the selected banks within the period under study; coefficient of 0.04587 implies 1% change in solvency would lead to 4.58% change in asset turnover of the selected DMBs under the period studied, p-value of 0.0000611 shows that SOLV has statistical significant relationship with ATU of the selected banks within the period under study. The study recommends bank decision makers should give consideration for its solvency status and capital to asset ratio when investigating factors affecting bank’s actualization objective. In addition, DMBs in Nigeria should ensure that they maintain above minimum capital to asset ratio level in order to guarantee an efficient profit margin. Also, the ability of DMBs to meet their short and medium term financial obligations must be fortified in order to keep the performance at per. Keywords: Capital Adequacy, Return on Asset, Capital to Asset Ratio, Solvency, Profit Margin and Asset Turnover.

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Factors that increase credit risk of Azerbaijani banks

Cited by 20 publications

References 36 publications

Does the real estate market behavior predict the trust crisis in the financial sector? The case of the ECB and the Euro

Does the real estate market behavior predict the trust crisis in the financial sector? The case of the ECB and the Euro

Determinants of Banks’ Credit Risk: Evidence from Jordanian Banks Listed on Amman Stock Exchange

Capital Adequacy and Deposit Money Bank's Return on Asset (Roa) in Nigeria

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