Factors affecting bank credit risk: An empirical insight
Niluthpaul Sarker and
Journal of Applied Finance & Banking, 2018, vol. 8, issue 2, 3
Credit risk impedes the growth of bankâ€™s performance and position which isÂ largely influenced by a number of factors that should be taken consideration andÂ minimized. The objective of the study is to illustrate the inclusion of valid causesÂ of selecting best model with regard to statistical significance. The study conductedÂ on panel data consisting of 322 observations with 22 commercial banks and 15Â consecutive years. The study finds that profitability, capital and bank size areÂ inversely associated with bank credit risk whereas net interest margin andÂ inefficiency have positive effect. Moreover consecutive addition of each variableÂ is in charge of constructing the accurate model considering the variation andÂ goodness of fit value in the respective model. However, no evidence is found inÂ support of macroeconomic variables used in the model. Last not the least, theÂ sensitivity of the model test argued in favor of baseline model which establishedÂ the cause and effect relationship in a logical manner.JEL classification numbers: C23Keywords: Quantitative research, Panel data, Credit Risk, Bank, Bangladesh.
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