The effect of non-performing loans on profitability of commercial banks: Case of Vietnam

Linh, Hoai; Phung, Quoc Anh

doi:10.5267/j.ac.2020.1.001

Cited by 22 publications

(17 citation statements)

References 14 publications

(17 reference statements)

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“…Some previous studies present that among the crucial factors affecting NPL are economic growth, which negatively correlates with the NPL and NPF. Similar studies have found that macroeconomic factors have a significant relationship with NPL and NPF (Alzoubi, 2017;Do et al, 2020). Khemraj & Pasha (2009) stated GDP with a negative impact, but interest rate, inflation, forex, and excessive lending positively correlate with the increase of NPL and NPF.…”

Section: Introductionmentioning

confidence: 56%

The Relationship of Macro-risk Indicators, Internal Factors, and Risk Profile of Islamic Banking in Indonesia

2020

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This study is essential because of Islamic banks have a level of health with higher NPF than conventional banks and purposes to examines whether macroeconomic indicators (macro-risk), internal factors of banking (GCG-earnings-capital ) and risk profile have correlation in term Indonesian Islamic banking. The method used is the correlation analysis involving four macro-risk variables (Forex; BI rate; Inflation and GDP), three GEC variables (GCG; ROA, and CAR) and two risk profile (FDR and NPF). The number of samples of the ten largest Indonesia sharia commercial banks with the 2011-2018 period. We find that macroeconomic indicator is positively correlated to non-performing financing (NPF), the GEC positively correlated to NPF and FDR; GEC negatively correlated to macro-risk indicators, generally. However, some indicators negatively correlated such as GDP-corporate governance, Forex-profitability, GDP-efficiency, BI rate-capital and profitability-NPF. The study proposed implications for managerial to understand the role of relationship of macroeconomic, internal factors and risk profile in Islamic bank lending.

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Section: Introductionmentioning

confidence: 56%

The Relationship of Macro-risk Indicators, Internal Factors, and Risk Profile of Islamic Banking in Indonesia

2020

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“…In contrast, after controlling for ownership concertation and listing status, Umar and Sun (2018) do not find results comparable to Bashir et al (2017). More recently, Do et al (2020) evaluate the effect of NPLs on the profitability of commercial banks in Vietnam during 2008–2017. Their findings show that, when the NPL rate increases, the ability of banks to profit decreases.…”

Section: Literature Reviewmentioning

confidence: 98%

Nonlinear linkages between bank asset quality and profitability: evidence from dynamic and quantile approaches using a global sample

Alqahtani

Hamdi

Skully

2021

IJMF

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PurposeThe purpose of this study is to examine whether the relationship between asset quality and profitability is linear or nonlinear, using a global dataset containing 2,943 banks from advanced and emerging economies.Design/methodology/approachThe authors use the U-shape test to investigate the existence of a nonlinear relationship between asset quality and profitability. In addition, the dynamic panel generalised method of moments (GMM) and quantile regression are used to examine the nonlinear effect of profitability on nonperforming loans (NPLs).FindingsAfter controlling for macroeconomic and bank internal factors, the authors find empirical evidence supporting the existence of a nonlinear relationship in the form of a U-shape. This is also confirmed through the three-stage U test procedure. After distinguishing between advanced and emerging economies, the authors also find that, in advanced markets, the credit policy responds more rapidly to changes in credit market conditions than in emerging markets, providing insights into credit market dynamics.Research limitations/implicationsFurther research can check the robustness of this study’s findings in different markets and investigate the existence of nonlinearity in other bank variables.Practical implicationsIn a nutshell, the results demonstrate potential implications for policymakers who need to carefully monitor banks' lending behaviour to ensure that banks do not lower lending standards. In addition, banking regulators and supervisors should consider the possible nonlinear relationship in their risk assessments and macrostress tests. Further, these results are important for bank managers, who should monitor the performance of their loan portfolios to ensure that their credit officers do not lower credit standards. Likewise, for banks located in an emerging economy, investing in human capital and advanced technologies can enable them to respond more effectively to changes in the credit market.Originality/valueTo the best of the authors' knowledge, this study is considered the first to provide empirical evidence for the nonlinear relationship between asset quality and profitability.

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“…Peneliti kedepannya disarankan mengambil tambahan variabel bebas layaknya non performing loan dan asset quality agar dapat menguji adanya pengaruh variabel tersebut terhadap variabel profitabilitas bank (Do et al, 2020).…”

Section: Saran Teoritisunclassified

Faktor - Faktor Yang Mempengaruhi Profitabilitas Pada Sektor Perbankan Yang Terdaftar Di Bei

Ardelia

Muchtar

2022

JPK

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Profitabilitas bank mampu membantu bank dalam melihat kinerjanya dalam periode tertentu. ROA bank sempat meningkat meskipun terjadi pandemi covid-19. Diketahui peningkatan ini memperlihatkan kinerja bank yang cukup baik. Tujuan dari dilakukan penelitian ini untuk menganalisis faktor-faktor yang mempengaruhi profitabilitas perbankan. Variabel yang digunakan yaitu ukuran bank, efisiensi operasional, likuiditas, CAR, dan GDP dengan variabel dependen profitabilitas meliputi ROA dan NIM. Sampel sebanyak 39 bank yang tercatat di Bursa Efek Indonesia periode 2017-2021 menggunakan teknik analisis regresi data panel. Kebaruan dilakukannya penelitian ini memasukkan variabel NIM. Penelitian memperlihatkan hasil dimana ukuran bank dan GDP berpengaruh positif dan signifikan terhadap ROA dan NIM. Sementara CAR berpengaruh signifikan dan negatif terhadap NIM. Namun, tidak terdapat pengaruh dari CAR dan likuiditas terhadap ROA. Keywords: CAR, GDP, likuiditas, profitabilitas

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The effect of non-performing loans on profitability of commercial banks: Case of Vietnam

Cited by 22 publications

References 14 publications

The Relationship of Macro-risk Indicators, Internal Factors, and Risk Profile of Islamic Banking in Indonesia

The Relationship of Macro-risk Indicators, Internal Factors, and Risk Profile of Islamic Banking in Indonesia

Nonlinear linkages between bank asset quality and profitability: evidence from dynamic and quantile approaches using a global sample

Faktor - Faktor Yang Mempengaruhi Profitabilitas Pada Sektor Perbankan Yang Terdaftar Di Bei

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