Does Excess Bank Liquidity Impact Non-Performing Loan? A Study on Bangladeshi Economy

Md. Khaled Amir

MPRA Paper from University Library of Munich, Germany

Abstract: This study endeavored to find out the impact of excess bank liquidity on non-performing loans (NPL) by using both technical and empirical analysis. The paper found that explanatory variable (excess bank liquidity) has moderate influence on the dependent variable (NPL), suggesting some other hypothetical and psychological aspects such as the intention to fraud, immoral lending, lack of loan monitoring, capital injection and nepotism, etc. which may affect the current economic and banking system in Bangladesh. The study conducts simple linear regression analysis where the beta coefficient of excess bank liquidity is -0.435 clearly indicates, the inverse movement of both the variables which supports the real banking system. The model equation supports an economical relation between excess bank liquidity and non-performing loan (NPL) because loan recovery is the meaning of reducing non-performing loan (NPL) amount and boosts up the bank liquidity of any bank again.

Keywords: Bank Liquidity; Bank Run; Inflation; Investment; OLS; Interest Rates; Loanable Funds. (search for similar items in EconPapers)
JEL-codes: A1 E5 L6 (search for similar items in EconPapers)
Date: 2019-04-06, Revised 2019-08-10
New Economics Papers: this item is included in nep-ban and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in International Journal of Business and Technopreneurship 3.9(2019): pp. 1-12

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101150

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