Regulatory capital and its effect on credit growth, non-performing loans and bank efficiency

Osei‐Assibey, Eric; Asenso, Joseph Kwadwo

doi:10.1108/jfep-03-2015-0018

Cited by 40 publications

(25 citation statements)

References 30 publications

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“…It could be concluded that the variable return on assets has a significant effect on stock returns. This finding supported the results of researches conducted by Rottke and Gentgen (2008), Boudriga et al (2009), Laryea et al (2016), and Assibey and Asenso (2015).…”

Section: Effect Of Non-performing Loan On Stock Returnsupporting

confidence: 91%

The Effects of Roa, Roe, Npl, and Operating Expenses to Operating Revenues on Stock Return at Commercial Banks in Indonesia

Iskandar

2020

JAM

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Stock return is one indicator to show the performance of banks in Indonesia. This study aimed to empirically examine the effect of return on assets (ROA), return on equity (ROE), non-performing loans (NPL), and operating expenses to operating revenues on stock returns on commercial banks listed on the Indonesia Stock Exchange (IDX) years 2016-2018. For this reason, as many as 15 banks that meet the criteria were taken as samples in this study. The collected data were then analyzed using multiple regression analysis to test the proposed hypotheses. Several findings in this study indicated that each element, namely returns on assets, return on equity, non-performing loans, and operating expenses to operating revenues, respectively, had a significant effect on stock returns. Based on these findings, it was recommended that banking companies could manage financial ratios optimally to maximize stock return.

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Section: Effect Of Non-performing Loan On Stock Returnsupporting

confidence: 91%

The Effects of Roa, Roe, Npl, and Operating Expenses to Operating Revenues on Stock Return at Commercial Banks in Indonesia

Iskandar

2020

JAM

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“…Therefore, we expected a positive relationship between BPR and NPL. This is also supported by an earlier study (Osei-Assibey & Asenso, 2015).…”

Section: Controlling For Macro-economic Variablessupporting

confidence: 90%

“…Therefore, a regulatory framework was devised by implementing minimum regulatory capital requirements in the shape of Basel Accords. Likewise, minimum capital requirements are extremely essential, whereas, overly stringent capital adequacy requirements can also hamper credit expansion (Osei-Assibey & Asenso, 2015). Karim et al (2014) conducted a study in 14 organizations of Islamic Conference (OIC) countries from the year 1999 to 2009 and found a positive relationship between capital adequacy requirements and loan growth in Islamic and conventional banks.…”

Section: Regulatory Capital and Credit Growthmentioning

confidence: 99%

Regulatory Capital is a Panacea for Efficiency, Credit Growth and Reducing Non-Performing Loans in Commercial Banks

Malik¹,

Butt²,

Din³

et al. 2021

APMAJ

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This study examined the effectiveness of regulatory capital in enhancing efficiency and credit growth and reducing bad loans in commercial banks listed on the Pakistan Stock Exchange (PSX) from 2010 to 2019. Precisely, the impact of capital adequacy ratio (CAR) was studied on net interest margin (NIM), credit growth (CR) and non-performing loans (NPLs). The impact of capital adequacy regulations was assessed by retrieving data from financial statements analysis (FSA), Bank Financial statements and the World Bank website. Panel regression models including ordinary least squares (OLS), fixed and random effects under robust title were applied in this study. Results revealed that the implementation of stringent CAR plays the role of panacea and increases interest margin & credit growth and a reduction of NPL in Pakistani commercial banks. The study provides practical results for regulators to customize regulations on credit growth to reduce non-performing loans and maintain healthy growth of loans by not compromising on interest margins as well as maintenance of minimum capital adequacy ratios. With the high significance of stringent minimum capital adequacy for banks, the findings of the study are valuable for regulators, banks, auditors and investors, as capital adequacy ratio commonly plays the role of Panacea in terms of efficiency, credit growth and reduction in non-performing loans. Keywords: capital adequacy ratio, efficiency, credit growth, non-performing loans

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“…It shows that the higher the capital owned by banks the higher lending given to the borrowers by banks. Banks with higher capital than the capital requirements by the government tend to give a higher lending as stated in [14] that found the same result of banking in Ghana and in line with [13] that there is relationship between capital and bank lending. The lacking of banks' capital will affect the lending decision of banks because it will cause the obstacle for the banks liquidity.…”

Section: Resultssupporting

confidence: 68%

Lending Behavior of Indonesian Banks

Isthika

Pratiwi

2017

adv sci lett

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The main banking activity basically is taking deposits from the surplus unit and lends it to deficit units, or in other words banks will act as financial intermediaries. In lending activities banks are faced with credit risks. Thus, this paper is examining the determinants of lending behavior in Indonesian banks. This paper uses lagged loans, deposits, capital, non-performing loans, and bank size as determinant variables on lending behavior of Indonesian banks. The data are taken from financial performance of 30 Indonesian banks listed on the Indonesia Stock Exchange from the year of 2011, 2012 and 2013. The model developed in this research is an ordinary least squares method using SPSS software. The result proved that there is no empirical evidence shows that lending behavior of Indonesian banks is influenced by the amount of deposits, non-performing loans, and bank size. Whereas, there is significant evidence shows that lagged loans and capital do influence the lending behavior of Indonesian banks. This indicates that Indonesian banks are making the decision of lending activities based on the previous loans and capital owned by the banks. Capital could be used by the banks to cover the unavoidable losses, therefore it affects the decision making by the Indonesian banks in regards to the lending activities.

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Regulatory capital and its effect on credit growth, non-performing loans and bank efficiency

Cited by 40 publications

References 30 publications

The Effects of Roa, Roe, Npl, and Operating Expenses to Operating Revenues on Stock Return at Commercial Banks in Indonesia

The Effects of Roa, Roe, Npl, and Operating Expenses to Operating Revenues on Stock Return at Commercial Banks in Indonesia

Regulatory Capital is a Panacea for Efficiency, Credit Growth and Reducing Non-Performing Loans in Commercial Banks

Lending Behavior of Indonesian Banks

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