scholarly journals The determinants of liquidity risk of commercial banks in Vietnam

2019 ◽  
Vol 14 (1) ◽  
pp. 94-110
Author(s):  
Tu T. T. Tran ◽  
Yen T. Nguyen ◽  
Thuy T.H. Nguyen ◽  
Long Tran
Keyword(s):  
Risk Management ◽  
Commercial Banks ◽  
Positive Impact ◽  
Banking System ◽  
Liquidity Risk ◽  
Credit Risk Management ◽  
Policy Makers ◽  
The Government ◽  
Loan Size

This research identifies factors that explain the liquidity of commercial banks in the Vietnam banking system from 2010 to 2015. Using the OLS regression method for analysis, it was found that: the interbank market helps commercial banks improve their liquidity; the larger the loan size, the higher the liquidity risk; good credit risk management has a positive impact on liquidity risk management; and long-term interest rate is negatively related to the liquidity of commercial banks. The research also makes recommendations on liquidity risk management policies to banks and policy-makers from the Government and the State Bank of Vietnam.

Does the deposit structure affect Islamic bank’s maturity transformation activities? The implications of IFSB liquidity guidelines

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Wassim Ben Ayed ◽  
Rim Ammar Lamouchi ◽  
Suha M. Alawi
Keyword(s):  
Risk Management ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Banking System ◽  
Liquidity Risk ◽  
Profit Sharing ◽  
Arab Countries ◽  
Mena Region ◽  
Content Type ◽  
Deposit Structure

Purpose The purpose of this study is to investigate factors influencing the net stable funding ratio (NSFR) in the Islamic banking system. More specifically, the authors analyze the impact of the deposit structure on the liquidity ratio using the two-step generalized method of moments approach during the 2000–2014 period. Design/methodology/approach Based on IFSB-12 and the GN-6, the authors calculated the NSFR for 35 Islamic banks operating in the Middle East and North Africa (MENA) region. Findings The findings of this study show the following: first, ratio of profit-sharing investment accounts have a positive impact on the NSFR, while ratio of non profit-sharing investment accounts increase the maturity transformation risk; second, the results highlight that asset risk, bank capital and the business cycle have a positive impact on the liquidity ratio, while the returns on assets, bank size and market concentration have a negative impact; and third, these results support the IFSB’s efforts in developing guidelines for modifying the NSFR to enhance the liquidity risk management of institutions offering Islamic financial services. Research limitations/implications The most prominent limitation of this research is the availability of data. Practical implications These results will be useful for authorities and policy makers seeking to clarify the implications of adopting the liquidity requirement for banking behavior. Originality/value This study contributes to the knowledge in this area by improving our understanding of liquidity risk management during liquidity stress periods. It analyzes the modified NSFR that was adopted by the IFSB. Besides, this study fills a gap in the literature. Previous studies have used the conventional ratios to determinate the main factors of the maturity transformation risk in a full-fledged Islamic bank based on an early version of NSFR. Finally, most studies focus on the NSFR as proposed by the Basel Committee, whereas the authors investigate the case of the dual-banking system in the emerging economies of seven Arab countries in the MENA region.

scholarly journals The impact of credit risk management on the financial performance of United Arab Emirates commercial banks

2021 ◽  
Vol 10 (3) ◽  
pp. 303-319
Author(s):  
Jamil Salem Al Zaidanin ◽  
Omar Jamil Al Zaidanin
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
United Arab Emirates ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Income Ratio ◽  
The Impact

The main purpose of this study is to measure up to what extent the independent factors defined by capital adequacy ratio, non-performing loans ratio, cost-income ratio, liquidity ratio, and loans-to-deposits ratio impact the financial performance of sixteen commercial banks operating in the United Arab Emirates using panel data for the period of 2013-2019. The secondary data was collected from banks and examined by applying standard descriptive statistics and the random effect model for hypothesis testing. It is concluded from the regression outcomes that non-performing loans ratio and cost-income ratio have a significant negative impact on commercial banks profitability in the United Arab Emirates, while capital adequacy ratio, liquidity ratio, and loans -to-deposits ratio all have a very weak positive relationship on the return on assets but they are not determinants of bank’s profitability due to the insignificant statistical impact on it. It is therefore suggested that to enhance financial performance and minimize the risk of non-performing loans in the future, banks must watch very carefully the loans’ performance and analyze thoroughly the clients’ credit history and ability to pay back their debts prior to any approval of loan applications. Furthermore, banks should continuously improve their assets utilization, liquidity, and techniques of managing operating costs, improve the impact of capital adequacy, and the use of deposits for lending activities from a weak positive impact to a significant positive impact on their profitability. The researchers recommend that future studies on credit risk management influence on banks’ financial performance should consider more independent variables and longer periods of study such as twenty or thirty years to have more accuracy and generalized results.  

Impact of Financial Crisis on Credit Risk: Pre- and Post-financial Crises 
in an Emerging Economy

2020 ◽  
Vol 9 (2) ◽  
pp. 118-132
Author(s):  
Syed Moudud-Ul-Huq ◽  
Rabaka Akter ◽  
Tanmay Biswas
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Credit Risk ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Banking System ◽  
Commercial Banking ◽  
Real Economy ◽  
Credit Risk Management ◽  
The Global Financial Crisis

This aim of the article is to establish a model to discuss the reasons for changing the level of credit risk among the commercial banks of Bangladesh during the global financial crisis (GFC). Credit risk has been remaining as the essential and core risk in commercial banking activities. Multiple regression analysis is used to test the relationship among the level of credit risk as a dependent variable and financial crisis, other bank-level variables and macroeconomic variables. The causes of the GFC revealed not only systematic or structural imbalances but also the necessity to keep and strengthen the principles of credit risk management. We analyse the leading causes of the recent GFC. Moreover, the lessons that must be learnt from the weaknesses of credit risk management systems. Credit risk was found to respond to macroeconomic conditions, which indicate strong feedback effects from the banking system to the real economy. This article represents the analysis of the influence of the financial crisis on credit risk management in commercial banks and summarizes the challenges faced by banks for credit risk improvement. We hope that this reality creates new opportunities for managing credit risk in the future to increase this importance in the banks and the overall economy of Bangladesh.

scholarly journals Legislative Impact on Lending: Credit Risk Management in China

2011 ◽  
Vol 14 (04) ◽  
pp. 617-645 ◽  
Author(s):  
Zhaohua Li
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practice ◽  
Commercial Banking ◽  
Chinese Government ◽  
Credit Risk Management ◽  
Before And After ◽  
The Government ◽  
Policy Lending

The Chinese government established the Act on Commercial Banks 1995 to enforce and regulate commercial banking activities. The government envisaged that the Act, together with other bank reforms, would improve credit risk management practice among commercial banks, hence, prompting the banks to reduce and ultimately stop local government directed policy lending to state-owned enterprises (SOEs). This paper examines the lending behavior of a government-controlled commercial bank before and after the passage of the Act. We find that the bank tightened control of the credit risk of borrowers after the passage of the Act. We also find that SOEs are charged a rate of interest higher than that charged to private firms.

scholarly journals ANALYSIS OF EXISTING APPROACHES ABOUT MANAGEMENT AND MINIMIZATION OF CREDIT RISK

2019 ◽  
pp. 53-63
Author(s):  
S. Pokhylko ◽  
V. Novikov
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Banking System ◽  
Credit Risk Management ◽  
State Of The Economy ◽  
The Government ◽  
Bank Solvency ◽  
Definition Of ◽  
Credit Portfolio ◽  
Banking Credit

The efficiency of banking performance, related to ensuring reliable protection for banks from credit risk by borrowers, requires resolving multiple issues related to the analysis of their creditworthiness and reliability, as well as development of methods and models to predict the consequences of non-repayment or overdue loans from the borrowers‘ side for the further effective functioning of a bank. Taking into account a considerable amount of scientific works devoted to the research of influence of credit risk on banking there is still a necessity in improvement of existing methods of credit risk management. The article is devoted to the research of the influence of credit risk on banking in Ukraine, in regard to the analysis of the domestic and foreign approaches and methods of determining banking credit risk; quality of its management and minimization, analysis of the legislation on the definition of exposure to borrower's credit risk; analytical reviews of indicators of the banking system, in particular, research of the banking credit portfolio structure for revealing the reasons of change of particular indicators. And, consequently, their influence on the financial sustainability and bank solvency. The research pays attention to intermediary organizations as participants of contractual relations between banks and borrowers. The authors give their own vision of the efficiency of measures taken by the government to stabilize banking and assess the introduced models of banking credit risk management from a scientific perspective . The analysis of the indicators showed a growing share of non-performing loans, in particular, the number of overdue assets in the credit portfolio of banks. Which would be caused by the declining production and a decrease in the level of solvency of the population against the background of general political and economic instability in the country. The study identified the lack of effectiveness of the existing legislation related to credit policy and the work with non-performing loans, which would have contributed to the protection of the banking system from the existing credit risk and corresponded to realities of the modern state of the economy. Key words: banking, overdue assets, overdue loans, credit, credit risk, credit portfolio.

scholarly journals PROFITABILITY AND RISK IN RELATION TO CREDIT MONITORING AND RECOVERY STRATEGIES OF PALESTINIAN COMMERCIAL BANKING SYSTEM

2019 ◽  
Vol 7 (2) ◽  
pp. 389-395
Author(s):  
Omar Alaeddin ◽  
Wael M. Thabet ◽  
Ahmed A.S. Thabet ◽  
Bakhodir Nurmukhamedov
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking System ◽  
Commercial Banking ◽  
Credit Risk Management ◽  
Panel Model ◽  
Recovery Strategies ◽  
The Relationship

Purpose of Study: This study implemented an empirical investigation for the relationship between credit risk management and profitability of commercial banks in Palestine over the period of 3years (2015-2018), ten commercial banks were selected. Methodology: The financial theory was employed to create the research model; Return on Asset (ROA) is defined as proxies of profitability while credit monitoring (LLPI) is defined as proxies of credit risk management.  Panel model analysis was used to estimate the determination of the profit function. Results: Statistical results revealed that the relationship between the credit monitoring and commercial banks profitability is negative significant (β= -3.419, P ˂ 0.05). Therefore, the results improve that LLPI has a significant effect on Palestinian commercial banks profitability's.

scholarly journals The Effect of Multiple Large Shareholders on Banks’ Profitability and Risk

2021 ◽  
Vol 13 (4) ◽  
pp. 1888
Author(s):  
Maria Gaia Soana ◽  
Laura Barbieri ◽  
Andrea Lippi ◽  
Simone Rossi
Keyword(s):  
Corporate Governance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Positive Impact ◽  
Corporate Structure ◽  
Academic Literature ◽  
Large Shareholders ◽  
Bank Ownership ◽  
Institutional Shareholders

The wide-ranging academic literature on corporate governance in the banking sector includes only a few studies on bank ownership and, specifically, on the comparative power of shareholders within the corporate structure. This paper reports an investigation into the presence of multiple large shareholders and their influence on profitability and risk in the long-term, considering a sample of 697 U.S. and European listed commercial banks from 2008 to 2018. It was found that the number of large and institutional shareholders has a positive impact on profitability, but no effect on risk. However, long-term ownership by multiple large shareholders contributes to decreasing risk in banks.

Intervention by Outsiders: A Strategic Management Perspective on Government Industrial Policy

1993 ◽  
Vol 13 (1) ◽  
pp. 69-88 ◽  
Author(s):  
Romano Dyerson ◽  
Frank Mueller
Keyword(s):  
Public Policy ◽  
Strategic Management ◽  
Industrial Policy ◽  
Financial Control ◽  
Firm Level ◽  
Policy Makers ◽  
Management Perspective ◽  
British Experience ◽  
The Government

ABSTRACTAs the debate throughout the eighties has concluded, the efforts of governments to intervene at the firm level has largely been disappointing. Using two examples drawn from the British experience, Rover and Inmos, this paper offers an analysis as to why the Government has encountered difficulties when it has sought to intervene in a strategic fashion. Essentially, public policy makers lack adequate mechanisms to intervene effectively in technology-based companies. Locked out of the knowledge base of the firm, inappropriate financial control is imposed which reinforces the ‘outsider’ status of the Government. Having addressed the limitations of strategic intervention, the paper, drawing on the comparative experience of other countries, then goes on to address how this policy boundary might be pushed back in the long term.

An Investigation of Credit Risk Management Strategies of Private Commercial Banks of Bangladesh

2014 ◽  
Vol 2 (2) ◽  
pp. 77-87
Author(s):  
Abu Hanifa Md. Noman ◽  
Md. Amzad Hossain ◽  
Sajeda Pervin
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Management Practice ◽  
Management Strategies ◽  
Third Party ◽  
Primary Data ◽  
Credit Risk Management ◽  
Risk Management Strategies

Objective - The study aims to investigate credit risk management practices and credit risk management strategies of the local private commercial banks in Bangladesh. Methodology -The investigation is conducted based on primary data collected from a set of both closed end and open end questionnaire from 23 out of 39 local private commercial banks in Bangladesh. Descriptive statistics has been used in processing the data and interpreting the results. Findings - The results reveal that credit risk management practice of the sample banks is sound which is attributed to the appropriate implementation of Basel II and credit risk management guidelines the country's central bank. The findings further show that use of Credit risk grading is most popular and effective criteria for measuring the borrowing capacity of the borrowers. In order to control credit risk and preventing losses from credit exposure banks give more focus on collateralization, accurate loan pricing and third party guarantee. Loan is monitored properly and credit reminder is given to the client if principal and interest remain outstanding for three months. The study further reveals that lack of experienced and trained credit officers, lack of genuine market information and Lack of awareness regarding non-genuine borrower are the most important problems of current credit risk management practices in Bangladesh. Novelty - To the best of the knowledge of the authors the study is the first that investigates credit risk management strategies of private commercial banks, especially on Bangladesh. Type of Paper - Empirical Keyword : Bangladesh; Commercial Bank; Credit risk; Credit risk management; Credit risk management strategies.

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