Non-Performing Loans: Regulatory and Accounting Treatments of Assets

Bholat, David; Lastra, Rosa M.; Markose, Sheri M; Miglionico, Andrea; Sen, Kallol

doi:10.2139/ssrn.2768865

Cited by 11 publications

(4 citation statements)

References 52 publications

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“…Performing Loan (NPL). Bholat, et al (2016) mendefinisikan NPL terjadiketikajumlah yang diharapkan dibayar kembali lebih rendah dari nilai kontrak yang dinyatakan dalam neraca bank. Berdasarkan data Statistik Perbankan Indonesia per Juni 2008-2015, perkembangan rasio NPL Bank Umum Konvensional di Indonesia mengalami peningkatan, terutama pada beberapa periode terakhir.…”

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Analisis Pengaruh Faktor Internal Bank Terhadap Non Performing Loan Berdasarkan Generalized Method of Moment

Maryandi

Yaya

Supriyono

2016

Jurnal Keuangan Dan Perbankan

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This research aims at finding out the effect of bank internal factors towards Non-Performing Loan (NPL). The internal factors of bank used in this study are credit expansion level, operational efficiency level, credit interest level, and the percentage of credit with problems in the previous period as dynamic effect. The research is very importantdue to thecondition that the ratio of NPL owned by the bank group tend to increase.Compared to previous studies (especially thosewhich took the case in Indonesia), this study had some strengths in terms of bigger sample size(using quarterly data of 97 banks during 2013 until 2015)and the use of Generalized Method of Moment(GMM) modelto analyze the effect of bank internal factor towards NPL.Based on theGMM model analysis, it can be concluded that the level of credit expansion, operational efficiency, credit interest and the percentage of credit with problems in aquarterly period ahead would give positive effect towards NPL in the following quarterly period. Meanwhile, the percentage of credit with problems in two quarterly periodsahead would give negative effect towards NPL in the followingquarterly period. PENDAHULUANSebagai lembaga intermediasi, bank sering dihadapkan dengan masalah risiko kredit. Risko ini diakibatkan oleh tidak mampunya debitur melunasi sebagian atau seluruh cicilan pinjaman yang diberikan bankataudisebutdenganterjadinya Non-

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Analisis Pengaruh Faktor Internal Bank Terhadap Non Performing Loan Berdasarkan Generalized Method of Moment

Maryandi

Yaya

Supriyono

2016

Jurnal Keuangan Dan Perbankan

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“…The result may be partly due to the fact that we use impaired loans (instead of non-performing loans) in our regression. As Bankscope notes, “there is no conformity to defining impaired loans, both across country and intra-country” because all accounting standards “are vague in their definition of when a loan is impaired” and because “management discretion can change from one year to the next within a particular bank” (as cited in Bholat et al. , 2016, p. 29).…”

Section: Resultsmentioning

confidence: 99%

The impact of natural disasters on the performance and solvency of US banks

Walker

Gramlich

et al. 2022

IJMF

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PurposeThis paper explores the effect of natural disasters on the profitability and solvency of US banks.Design/methodology/approachEmploying a sample of 187 large-scale natural disasters that occurred in the United States between 2000 and 2014 and a sample of 2,891 banks, we examine whether and how disaster-related damages affect various measures of bank profitability and bank solvency. We differentiate between different types of banks (with local, regional and national operations) based on a breakdown of their state-level deposits and explore the reaction of these banks to damages weighted by the GDP of the states they operate in.FindingsWe find that natural disasters have a pronounced effect on the net-income-to-assets and the net-income-to-equity ratio of banks, as well as the banks' impaired loans and return on average assets. We also observe significant effects on the equity ratio and the tier-1 capital ratio (two solvency measures). Interestingly, the latter are positive for regional banks which appear to benefit from increased customer deposits related to safekeeping, government payments for post-disaster recovery, insurance payouts and decreased withdrawals, while they are significantly negative for banks that operate locally or nationally.Originality/valueWe contribute to the literature by offering various new insights regarding the effects natural disasters have on financial institutions. With climate change-driven natural disasters widely expected to increase both in terms of frequency and severity, their economic fallout is likely to impose an increasing burden on financial institutions. Large, nationally operating banks tend to be well diversified both geographically and in terms of their product offerings. Small, locally operating banks, however, are increasingly at risk – particularly if they operate in disaster-prone areas. Current banking regulations generally do not factor natural disaster risks into their capital requirements. To avoid the next big financial crisis, regulators may want to adjust their reserve requirements by taking this growing risk exposure into consideration.

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“…As pointed out by Goodhart and Schoenmaker (1995), in fact, the effectiveness of governance arrangements may depend on the particular banking structure of a country. Moreover, country fixed effects allow me to account for the potential cross-country differences in accounting standards used to identify loans as non-performing highlighted by Bholat et al (2016) and Baudino et al (2018). I also include year fixed effects to account for changes in NPLs dependent on specific years.…”

Section: Research Design and Empirical Modelmentioning

confidence: 99%

Supervisory Governance, Capture and Non‑Performing Loans

Fraccaroli¹

2019

SSRN Journal

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Scholars have long believed the governance of banking supervision to affect financial stability. Although the literature has identified at length the pros and cons of having either a central bank or a separate agency responsible for microprudential banking supervision, the advantages of having this task shared by both institutions (shared supervision) have received considerably less attention. This paper fills this void by comparing the impact of three supervisory governance models-supervision by the central bank, by an agency or by both of them-on bank non-performing loans. Using a new database on supervisory governance in 116 countries from 1970 to 2016, it finds that supervisory governance per se does not significantly affect non-performing loans. However, it also finds that, where the risk of capture is high, shared supervision is associated with a significant reduction in non-performing loans. This is in line with the supervisory capture theory, whereby it is more costly to capture two supervisors rather than one. Overall, these results provide new evidence in support of the relevance of supervisory governance in hampering supervisory capture from the banking sector.

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Non-Performing Loans: Regulatory and Accounting Treatments of Assets

Cited by 11 publications

References 52 publications

Analisis Pengaruh Faktor Internal Bank Terhadap Non Performing Loan Berdasarkan Generalized Method of Moment

Analisis Pengaruh Faktor Internal Bank Terhadap Non Performing Loan Berdasarkan Generalized Method of Moment

The impact of natural disasters on the performance and solvency of US banks

Supervisory Governance, Capture and Non‑Performing Loans

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