Determinants of Non-Performing Loans (NPLS) of The Commercial Banks in Bangladesh: An Application of Camel Model

IF 0.1 0 RELIGION

Catholic Social Science Review Pub Date : 2023-03-07 DOI:10.3329/ssr.v38i2.64461

Mohammad Ebadul Islam, S. Yasmin

{"title":"Determinants of Non-Performing Loans (NPLS) of The Commercial Banks in Bangladesh: An Application of Camel Model","authors":"Mohammad Ebadul Islam, S. Yasmin","doi":"10.3329/ssr.v38i2.64461","DOIUrl":null,"url":null,"abstract":"The loan portfolio represents a significant portion of a bank’s total assets. This asset generates interest income, which is a measurement of bank’s financial performance and stability. Non-performing loans (NPLs) are those loans that default on paying interest or principal. Hence, NPL ratio is one of the important indicators of a bank’s performance. In order to ensure good performance, a thorough understanding of NPL ratios and factors that affect NPL are necessary. This research evaluates NPL ratio in the Banking sector of Bangladesh and the relationship among the variables of CAMEL (capital, asset, management, earnings and liquidity) model of performance. Last 24 years (1997-2020) time series data of banking sector have been used in this study. Upon analysis of the time series data VECM model is developed to demonstrate the relationship among the variables. The developed model shows high goodness of fit and reasonable explanatory power. Results of the study will help practitioners and regulators to pin-point policies and operational interventions to manage (reduce) NPL.\nSocial Science Review, Vol. 38(2), December 2021 Page 71-89","PeriodicalId":40271,"journal":{"name":"Catholic Social Science Review","volume":"27 Suppl 1 1","pages":""},"PeriodicalIF":0.1000,"publicationDate":"2023-03-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Catholic Social Science Review","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.3329/ssr.v38i2.64461","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"0","JCRName":"RELIGION","Score":null,"Total":0}

引用次数: 0

Abstract

The loan portfolio represents a significant portion of a bank’s total assets. This asset generates interest income, which is a measurement of bank’s financial performance and stability. Non-performing loans (NPLs) are those loans that default on paying interest or principal. Hence, NPL ratio is one of the important indicators of a bank’s performance. In order to ensure good performance, a thorough understanding of NPL ratios and factors that affect NPL are necessary. This research evaluates NPL ratio in the Banking sector of Bangladesh and the relationship among the variables of CAMEL (capital, asset, management, earnings and liquidity) model of performance. Last 24 years (1997-2020) time series data of banking sector have been used in this study. Upon analysis of the time series data VECM model is developed to demonstrate the relationship among the variables. The developed model shows high goodness of fit and reasonable explanatory power. Results of the study will help practitioners and regulators to pin-point policies and operational interventions to manage (reduce) NPL. Social Science Review, Vol. 38(2), December 2021 Page 71-89

查看原文本刊更多论文

孟加拉国商业银行不良贷款的决定因素:骆驼模型的应用

贷款组合占银行总资产的很大一部分。这项资产产生利息收入，这是衡量银行财务业绩和稳定性的一个指标。不良贷款(NPLs)是那些无法支付利息或本金的贷款。因此，不良贷款率是衡量银行业绩的重要指标之一。为了确保良好的业绩，全面了解不良贷款率和影响不良贷款率的因素是必要的。本研究评估了孟加拉国银行业的不良贷款率和CAMEL(资本、资产、管理、收益和流动性)绩效模型变量之间的关系。本研究使用的是银行业近24年(1997-2020)的时间序列数据。通过对时间序列数据的分析，建立了VECM模型来描述变量之间的关系。所建立的模型具有较高的拟合优度和合理的解释力。研究结果将有助于从业者和监管机构确定管理(减少)不良贷款的政策和操作干预措施。社会科学评论，Vol. 38(2)， 2021年12月，第71-89页

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Catholic Social Science Review RELIGION-

自引率

0.00%

发文量

审稿时长

12 weeks