Impact of Macroeconomic and Endogenous Factors on Non-Performing Bank Assets

Swamy, Vighneswara (2012): Impact of Macroeconomic and Endogenous Factors on Non-Performing Bank Assets. Published in: International Journal of Banking and Finance , Vol. 9, No. 1 (5 June 2012): pp. 27-47.

Abstract

Determinants of default risk of banks in emerging economies have so far received inadequate attention in the literature. Using panel data techniques, this paper seeks to examine the impact of macroeconomic and endogenous factors on non-performing assets for the period from 1997-2009. The findings of the study reveal some interesting inferences contrary to the perception of few opinion makers. Lending Rates have been found to be not so significant in affecting the NPAs contrary to the general perception Bank Assets has turned out to be negatively significant indicating that large banks may have better risk management procedures and technology which definitely allows them to finish up with lower levels of NPAs. Further, this study has established that private banks and foreign banks have advantages in terms of their efficiencies in better credit management in containing the NPAs that indicates that bank privatization can lead to better management of default risk.

• Item Type: MPRA Paper
• Language: English
• Keywords: Banks, Risk Management, Ownership Structure, Financial Markets, Non-Performing Assets, Lending Policy, Macro-economy, Central Banks
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill

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