The Determinants of Non-performing Loans: Dynamic Panel Evidence from South Asian Countries

Md. Shahidul Islam and Shin-Ichi Nishiyama

No 353, TERG Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: Using the GMM estimator, this paper empirically studies the bank-specific, industry specific and macroeconomics specific determinants of non-performing loans of banks in the South Asian countries (Bangladesh, India, Nepal and Pakistan) for the period of 1997-2012. We found that moral hazard problems between the bank management and the depositors in addition to that between the bank management and the shareholders; and the adverse selection of borrowers by the bank significantly affect the bank credit risk. We also found evidence that bad management, cost inefficiency, income diversification, bank size, industry concentration ratio, inflation and GDP growth rate all significantly explain the levels of bank NPLs. Empirical results show a moderate degree of persistence of NPLs and a late-hit of the global financial crisis in the banking sector of the region.

Pages: 34 pages
Date: 2016-09
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10097/64097

Related works:
Working Paper: The Determinants of Non-performing Loans: Dynamic Panel Evidence from South Asian Countries (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:toh:tergaa:353

Access Statistics for this paper

More papers in TERG Discussion Papers from Graduate School of Economics and Management, Tohoku University Contact information at EDIRC.
Bibliographic data for series maintained by Tohoku University Library ().