The Moderating Role of Loan Monitoring on the Relationship between Macroeconomic Variables and Non-performing Loans in Association of Southeast Asian Nations Countries

Ismail Tijjani Idris and Sabri Nayan
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Ismail Tijjani Idris: Faculty of Administration, Ahmadu Bello University Zaria, Nigeria
Sabri Nayan: School of Economics, Finance and Banking, Universiti Utara Malaysia, Malaysia.

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 2, 402-408

Abstract: The lending banks' function of loan monitoring plays an important role in sustaining quality loan portfolios and protects risk assets against deterioration thereby keeping non-performing loans (NPLs) within acceptable standards. The aim of this paper is to propose a conceptual model/framework of investigating the moderating role of loan monitoring on the relationship between macroeconomic variables and NPLs among Association of Southeast Asian Nations Economic Community (AEC) countries. The global problem of NPLs has been persistent and on the rise. Many attempts have been made to investigate the determinant of NPLs yet the problem has remained unexplained. Most of the previous studies have focused on macroeconomic and other environmental variables, industry-specific and bank-specific determinants of NPLs but gave less attention to the moderating role of loan monitoring functions of the lending banks. This paper proposes a framework by adding a moderator of loan monitoring to the existing models of the macroeconomic determinants of NPLs with special attention to the AEC countries that mostly were once heavily confronted with severe banking and financial crises in the late 90s. It is expected that the outcome will assist policymakers in protecting and/or improving the current state of NPLs among AEC member countries.

Keywords: Loan Monitoring; Macroeconomic Variables; Non-performing Loans (search for similar items in EconPapers)
JEL-codes: E01 G21 G32 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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