Impact of Non-Performing Loans on Bank s Profitability: Empirical Evidence from Commercial Banks in Kosovo

Çollaku, Besmir; Aliu, Muhamet

doi:10.32602/jafas.2021.027

Cited by 22 publications

(28 citation statements)

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“…Anggriani and Muniarty (2020) stressed that banks should lower the level of non-performing loan to increase return on assets suggesting a negative relationship between nonperforming loan and financial performance. Çollaku and Aliu (2021) showed a significant negative relationship between non-performing loan and profitability as measured by return on assets. Likewise, Brastama and Yadnya (2020) concluded that non-performing loan is negatively related to financial performance.…”

Section: Non-performing Loanmentioning

confidence: 97%

Effect of working capital management and credit management policy on financial performance of commercial bank in Nepal

Maharjan¹

2023

Lumbini J. Bus. & Econ.

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This study analyzes the impact of working capital management and credit management policy on the financial performance of Nepalese commercial banks. The study uses data from 16 commercial banks, collected from their annual reports, over the period from 2014/15 to 2021/22. The dependent variables considered are return on asset and return on equity, while the independent variables are working capital, loan to deposit ratio, capital adequacy ratio, non-performing loan, cash asset ratio, operating cash flow to total asset, and rate of bank’s ability to return deposits. The study finds that working capital, cash asset ratio, operating cash flow to total assets, and rate of bank’s ability to return deposits have a positive impact on bank return on assets and return on equity. On the other hand, loan to deposit ratio, capital adequacy ratio, and non-performing loan have a negative impact on both return on assets and return on equity. The study provides insights for the management of commercial banks to enhance their financial performance.

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Section: Non-performing Loanmentioning

confidence: 97%

Effect of working capital management and credit management policy on financial performance of commercial bank in Nepal

Maharjan¹

2023

Lumbini J. Bus. & Econ.

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“…In addition, it is a key factor that impacts profitability of the bank and has a noteworthy negative influence on the profitability of banks analyzed during the time frames under study. Aliu & Çollaku (2021) studied the commercial banks of Ghana by employing the OLS econometric model and found that the NPL has a significant adverse influence on bank profitability, while they found that the liquidity risk doesn't have any substantial possessions on the bank's performance.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Given the nature of our time series data, we have used multivariate linear regression to investigate the effects of NPL and other controlling factors. Many scholars of previous studies (Aliu & Çollaku, 2021;Do et al, 2020;Kolapo et al, 2012;Nsobilla, 2016) use the same research approach. The ROA may be expressed as a function of its independent variables and the ordinary least square (OLS) model which is used in this study can be written as follows:…”

Section: The Econometric Modelmentioning

confidence: 99%

Non-performing Loans and Bank Profitability

Karim

Roshid²,

Shamme³

et al. 2023

IJFBS

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This study aims to investigate the association between non-performing loans (NPLs) and the profitability of banks in Bangladesh. The data of twenty-five listed banks for the twelve years spanning from 2010 to 2021 have been analyzed to achieve the research objective. through the use of the ordinary least square (OLS) regression model, we found that the NPL has a negative significant impact on the profitability determined by the return on asset (ROA). In addition, the study revealed that the bank size, which is represented by banks’ total assets, is also inversely related to the profitability of the sample banks used in this research. The study concludes that the stakeholders, particularly the management of the banks, as well as the regulators, should be more cautious about NPLs and should try to lessen the level of NPLs because it can bring devastating results both on the microeconomic as well as on macroeconomic metrics of a developing country like Bangladesh.

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“…The amount of bank loans disbursed is not collected [27]. The higher the NPL collectability, the greater the risk or vice versa [28]. Research by [29] shows a significant relationship between NPL and ROA.…”

Section: Proceeding Bookmentioning

confidence: 99%

Profitability and Financial Factors on The Indonesia Stock Exchange (IDX)

Anggadini

Yasmin

Irawan³

2022

ICOBEST

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This study aims to analyze the influence of Earnings Asset Quality, Non-Performing Loan (NPL), and Capital Adequacy on Return On Assets (ROA) of commercial banks indexed at the Indonesia Stock Exchange (IDX). The method used in this research is the descriptive verification method with a quantitative approach. The type of data used is the annual financial statements of commercial banks for 2019-2021. The results of the study partially show that the variable earnings asset quality and non-performing loans had a significant adverse effect on ROA, which shows that a decrease follows the increasing earnings asset quality and non-performing loans in ROA, the capital adequacy variable has a significant positive effect on ROA means that an increase will follow capital adequacy in ROA. This condition shows that changes in ROA can occur due to factors that influence it, indicated by every increase in the quality of earnings assets will reduce asset returns, every increase in non-performing loans will reduce return on assets and every increase in capital adequacy ratio will increase return on assets. Furthermore, they were expected to solve problems at the level of bank ratios in Return On Assets, Non-Performing Loans, Earnings Asset Quality, and Capital Adequacy. The implications of this research are expected to be complementary to the banking literature in Indonesia. Practitioners and banking regulators are also expected to take advantage of the results of this study to design measures for the management of Non-Performing Loans by paying attention to factors including the management of Asset Quality Earnings, Capital Adequacy Ratio of the impact on bank Profitability.

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Impact of Non-Performing Loans on Bank s Profitability: Empirical Evidence from Commercial Banks in Kosovo

Cited by 22 publications

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Effect of working capital management and credit management policy on financial performance of commercial bank in Nepal

Effect of working capital management and credit management policy on financial performance of commercial bank in Nepal

Non-performing Loans and Bank Profitability

Profitability and Financial Factors on The Indonesia Stock Exchange (IDX)

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