Preventing the deterioration of bank loan portfolio quality: a focus on unlikely-to-pay loans

Cucinelli, Doriana; Gai, Lorenzo; Ielasi, Federica; Patarnello, Arturo

doi:10.1080/1351847x.2020.1830143

Cited by 8 publications

(5 citation statements)

References 48 publications

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“…Specifically, similar to past studies dealing with Italian cooperative banks (e.g. Affinito and Meucci, 2021;Bolognesi et al, 2020;Cucinelli et al, 2021), we use three measures: bad, UTP and past-due loans. Coop is a dummy variable that takes the value 1 for cooperative banks and 0 for commercial banks.…”

Section: Empirical Strategymentioning

confidence: 99%

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The Beauty of Being Involved: The Case of Cooperative Banks

Fiordelisi

Grimaldi²,

Lopez

et al. 2022

British J of Management

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Is greater stakeholder engagement associated with greater stability? We provide readers with novel empirical evidence that this is indeed the case. Cooperative banks (where stakeholders are involved in the business by law) are an excellent case to study the association between stakeholder engagement and stability. Focusing on Italy, we show that cooperative banks differ substantially in risk-taking from each other, and these differences are mostly related to the engagement of stakeholders. A greater overlap between shareholders, borrowers and depositors is associated with lower non-performing loans, suggesting that greater stakeholder engagement reduces problems of asymmetric information and bank risk appetite.

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Section: Empirical Strategymentioning

confidence: 99%

“…, 2020; Cucinelli et al. , 2021), we use three measures: bad, UTP and past‐due loans. Coop is a dummy variable that takes the value 1 for cooperative banks and 0 for commercial banks.…”

Section: Empirical Strategymentioning

confidence: 99%

The Beauty of Being Involved: The Case of Cooperative Banks

Fiordelisi

Grimaldi²,

Lopez

et al. 2022

British J of Management

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show abstract

“…non-interest income) and will result in increasing the profit. [ 42 ] concluded that banks should increase non-performing loans provisions and banks must build sound and proactive units to efficiently manage non-performing loans to become performing loans. [ 43 ] found that non-performing loans increase the chance of bank distress and thus, building enough provisions can be a good action to mitigate this distress probability.…”

Section: Literature Reviewmentioning

confidence: 99%

Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks

AL-Najjar

Assous

2021

PLoS ONE

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CAMEL is considered one of the well-known banking rating systems used to build a proper bank ranking. In our paper, we investigate the CAMEL rating for Saudi banks, which is considered the second largest banking sector in GCC. The Saudi banking sector consists of 11 banks and is the leading sector in the Saudi stock index (TASI). In this research, we aim to determine the ranking of Saudi banks according to CAMEL composite and CAMEL overall ratings and explore the effects of these ratings on banks’ total deposits for the period from 2014 to 2018. The methodology involves four phases. In the first phase, we calculate the key financial ratios of CAMEL’s composites for each bank. In the second phase, we rank the banks from 1 to 11 to each one of CAMEL’s composites for each bank per year. In the third phase, we rank Saudi banks according to CAMEL composite and CAMEL overall. Finally, in the fourth phase, we run a regression model using CAMEL financial ratios rank as independent variable and banks’ total deposits as a dependent variable. Using the stepwise regression method, the results indicated that the best regression model has an adjusted R2 of 73.4% and a standard error of around 0.58. The results further indicated that capital measured by CAR, management as an efficiency ratio, earning with ROE proxy, and liquidity as loans to deposits have positive effects on banks’ total deposits. Meanwhile, earnings as net interest income to net revenue and liquidity calculated by CASA have a negative effect on banks’ total deposits. Finally, asset quality ratios and the rest of the ratios have no significant effect on banks’ total deposits.

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“…In 2008, the US banking system lowered the threshold for home loans to stimulate demand for housing among a significant number of people with low incomes or little financial credit, and the subprime mortgage market bubble intensified, which eventually burst, causing subprime mortgage lenders to go bankrupt and, in turn, forcing investment funds to close and the stock market to shake violently [1][2]. It fully exposed the instability of the global financial system and the fragility of financial regulation, revealing the banking system's inherent externalities and public nature [3][4].…”

Section: Introductionmentioning

confidence: 99%

A Study on Risk Management of Commercial Banks’ Home Mortgage Loans Based on Risk Management Framework

Zhao

2023

Applied Mathematics and Nonlinear Sciences

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In the wave of global urbanization, the rapid development of the real estate industry has greatly driven the growth of personal housing loans of commercial banks, and personal housing loans have become a very important part of the loan business of commercial banks, especially in the business operations of many smaller urban commercial banks, where personal housing loan business is an important source of profit. However, the personal housing loan business is facing increasing risk management challenges against the multiple backgrounds of the current epidemic environment, the overall tightening of mortgage policies, and the accelerated advancement of market-based interest rates. For most urban commercial banks, personal housing loan risk control should be based on the local market, combined with the actual development of the enterprise itself, comprehensive internal and external environmental conditions to establish a perfect risk control mechanism and timely improvement of the existing management problems is a top priority. This paper takes Bank H as an example to study the risk management of personal housing loans, exploring the basic performance of Bank H in terms of personal housing loan risks, analyzing the factors affecting its housing loan risks, and the current problems in the management of personal housing loan risks. A linear regression model is also constructed to analyze the causes of Bank H’s housing loan risk, the factors affecting personal housing loan risk, and the characteristics of Bank H’s housing loan risk. The experimental results of this paper show that through risk control management of the 10 indicators selected, Bank H’s annual housing non-performing loan ratio declined by 19.392% and was effectively curbed. It is inferred that effective financial risk management decisions can be an important tool for risk management in averting the risks associated with commercial bank housing loans. Therefore, a sound post-loan risk management mechanism for personal housing loans is essential and the only way to improve the resilience of commercial banks.

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Preventing the deterioration of bank loan portfolio quality: a focus on unlikely-to-pay loans

Cited by 8 publications

References 48 publications

The Beauty of Being Involved: The Case of Cooperative Banks

The Beauty of Being Involved: The Case of Cooperative Banks

Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks

A Study on Risk Management of Commercial Banks’ Home Mortgage Loans Based on Risk Management Framework

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