Factors Influencing Non-Performing Loans in Commercial Banks: The Case of Banks in Selangor

Uma Murthy, Naail Mohammed Kamil, Paul Anthony Mariadas and Dilashenyi Devi

International Journal of Business and Management, 2017, vol. 12, issue 2, 246

Abstract: Non-performing loans (NPLs) is a worldwide issue that affects financial markets stability in general and banking industry viability in particular. This study examines the factors influencing non-performing loans in commercial banks in Selangor state of Malaysia. Based on gaps in extant literature, four (4) independent variables comprising standard of living, economy of the country, consumers’ income and bank interest rates are hypothesized to exert statistically significant influences on the dependent variable, NPLs. A quantitative research approach was employed in this research. 200 respondents were sampled for this study employing stratified random sampling technique. Employing multiple regression analysis (MRA) using SPSS software, the findings showed that out of the four (4) hypothesized relationships of the research, three (3) were supported whilst one was not. In particular, it was shown that consumers’ income, economy of the country and bank interest rates statistically influence non-performing loans in commercial banks in Selangor state of Malaysia. However, there was no enough evidence to support the claim that standard of living can statistically influence non-performing loans in commercial banks in Selangor. Several implications from the research were further discussed.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijbmjn:v:12:y:2017:i:2:p:246

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