Risk Premium and Its Effect on Bank’s Non-Performing Loans

Hafiz Waqas Karman and Shameer Malik
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Hafiz Waqas Karman: University of Central Punjab
Shameer Malik: University of Central Punjab

International Journal of Innovation and Economic Development, 2016, vol. 1, issue 6, 79-89

Abstract: The present outcomes of risk premium have started the discussion over the Bank’s nonperforming loans and its determinants. Banking sector is taking active part in different fields of life such as financing, business transactions and loan provisions. Therefore, it is very important for the management to make good decisions relating to the non-performing loans of the bank. In the current study, we have conducted an analysis in order to examine the risk premium and its effect on bank’s non–performing loans in 8 western countries of the world based on GDP over a period from 1998 to 2010. A conceptual model has been developed for this purpose and panel data analysis has been performed. Key finding have been explained for the financial expert to make the future decisions. Our result shows that there is significant relationship between risk premium and bank’s non-performing loans.

Keywords: Risk premium; Bank non-performing loans; GDP growth rate (search for similar items in EconPapers)
JEL-codes: M00 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:mgs:ijoied:v:1:y:2016:i:6:p:79-89

DOI: 10.18775/ijied.1849-7551-7020.2015.16.2005

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