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This study aims to explore the reasons for the low level of awareness and knowledge of AAOIFI accounting standards in Nigeria. The data were generated through documentary evidence and semi-structured interviews. The study established the non-integration of AAOIFI accounting standards into the Benchmark Minimum Academic Standards (BMAS) for Nigerian...
أ د فوزي محيريق منـتجات التمويل المبنيـة على البيوع والإجارة في المصارف الإسلامية ملتقى الموثقين2023
Financing products based on sales and “Ijarah” in Islamic banks
Citations
... Not only does this minimize credit risk, but banks can claim assets from defaulting customers when unemployment is high to avoid increased credit risk. In the context of Islamic banks, Isaev and Masih (2017) reported that unemployment is positively related to NPF in Malaysia. The results of this study suggest that unemployment is not related to the NPF of ICBs in Indonesia; this may be due to contradictory empirical evidence on the impact of unemployment on credit risk. ...
This study examines the impact of Islamic board characteristics (SB) and macroeconomic factors on the Non-performing financing (NPF) of Islamic commercial banks (ICB). The sample of this study consisted of 14 ICBs in Indonesia from 2010 to 2021. In this study, data estimation used a one-step GMM System model. SB features such as SB Size and SB Woman were found to have a detrimental impact on NPF. GDP per capita, for example, negatively affects NPF, while inflation has a positive impact. However, this study could not show the impact of SB characteristics such as expertise and proximity of SB to NPF. The study also found that macroeconomic factors such as annual open unemployment and interest rates showed an insignificant negative influence on NFP. The findings of this study help regulators, investors, and management of Islamic banks better understand the impact of SB characteristics and macroeconomic factors on Non-performing financing (NPF) of Islamic banks, especially in the context of ICB in Indonesia. In addition, it is expected to inspire similar research in the future.
... To demonstrate the detrimental effect of credit risk, Isaev and Masih (2017) concluded that it could prohibit commercial banks from performing their crucial financing role, making them less capable of facilitating a nation's economic growth. Given the paramount importance of credit risk reduction, all three Basel Accords have given special attention to minimising NPLs for the soundness of the banking sector. ...
Purpose
This paper makes a novel attempt to estimate the potential impact of credit risk on foreign direct investment (FDI hereafter), thereby focusing on a completely unexplored area in the existing empirical literature.
Design/methodology/approach
To provide a comprehensive understanding of the relationship between credit risk and FDI inflows, the study incorporates all the eight-member economies of the South Asian Association of Regional Cooperation (SAARC hereafter) and analyzes a panel data set, over the period 2011 to 2019, extracted from the World Development Indicators, using the suitable econometric techniques for the efficient estimations of the specified models.
Findings
The results indicate a negative and statistically significant relationship between the credit risk of the banking sectors and FDI inflows. Similarly, market size and inflation rate appear to be the two other main factors behind the increasing FDI inflows in the SAARC member economies. Interestingly, the size of the market became irrelevant in attracting FDI inflows when the Indian economy is excluded from the sample due to its higher economic weight. On the other hand, FDI inflows are not dependent on the level of trade openness, with most of the specifications showing either an insignificant or negative coefficient of the variable.
Practical implications
The obtained results are unique and robust to alternative methodologies, and hence, the SAARC economies could consider them as the critical inputs in formulating the appropriate policies on FDI inflows.
Originality/value
The findings are unique and original. The authors have established a relationship between credit risk and FDI for the first time in the SAARC context.
... Although very few trials did, there are discrepancies in the results of these investigations. Isaev and Masih (2017), for example, divided credit risk into mortgage, business, and retail categories. They have found that the determinants affect them differently. ...
... Although very few trials did, there are discrepancies in the results of these investigations. Isaev & Masih (2017), for example, divided credit risk into mortgage, business, and retail categories. They have found that the determinants affect them differently. ...
Purpose: In early 2018, the corporate non-performing loan ratio began to climb steadily, showing some threats to the financial health of the Egyptian banking system. Therefore, the determinants of corporate and retail credit risks in the banking sector of Egypt during 2013-2020 were studied in the present work to provide better insight into how the macroeconomic and microeconomic determinants affect the level of credit risks. Methodology: the present research utilized the Dickey-Fuller test to assess the stationarity of the panel data and then employed the generalized method of moments (GMM) for data analysis. Findings: it was found that asset size, loans-to-deposits, inflation, gross domestic product (GDP), and lending interest rate were negatively associated with the corporate credit risk, while the capital adequacy ratio, foreign direct investment (FDI), and public debt were positively related. Moreover, the loans-to-deposits ratio was negatively associated with retail credit risk, while the capital adequacy ratio was positively related. Originality/Value: In this context, classifying the credit risk into corporate and retail credit risk was very crucial as it illustrated that the corporate credit risk was more sensitive to the determinants than the retail ones.
... In the literature, several previous studies (see [4], [5], [6], [7], [8], [9], [10] and [11]) had used different econometric methodologies to assess the impact of non-performing loans in both developing and developed economies, with evidence that quality of bank loans are impacted by factors that are both internal and external to banks. The internal factors that determine the level of NPLs are referred to as bank-specific variables, which include corporate governance, the size of banks' assets, loan growth pattern, loan-to-deposit ratio, capital adequacy ratio and some other indicators. ...
Proper management of banks’ assets is the most sought panacea by bank managers in Nigeria. Lower quality of loans in the banking system can lead to higher loan loss provisions and affect banks’ capital adequacy ratios. This study examines how Non-Performing Loans (NPLs) of Nigeria’s Deposit Money Banks (DMBs) respond to selected macroeconomic and bank-specific determinants. Using the data within the sample period of 1981-2019 with Autoregressive Distributed Lag (ARDL) model, the study establishes that in the short-run, the level of NPLs in Nigeria is affected by these macroeconomic determinants namely, the unemployment rate (UNEMP), gross domestic products growth rate (GDPG) and exchange rate (EXRT) as well as bank-specific determinant (loan-to-deposit) ratio (LDR). However, in the long-run, GDPG and EXRT have a positive and significant influence on NPLs. The variables respond in line with our apriori expectation, however, unemployment, inflation and loans to deposits ratio are insignificant and appear not to affect NPLs in Nigeria in the long-run. The study recommends that government should ensure that the naira is properly managed as deterioration in its value portends a grave impact on the rate of non-performing loans. Also, improved infrastructures like good roads, water and power would enable the borrowers to fulfil repayment plans on time. A robust economy is important for borrowers to redeem their loan obligations in due time. This can be achieved by ensuring that loans assessed are channeled to more productive sectors of the economy.
... As a result, some studies have demonstrated the effect of leverage on NPLs in the banking system in the normal economic situation (Radivojevic & Jovovic, 2017;Muratbek, 2017;Waqas et al., 2017;Isaev & Masih, 2017;Pham & Nguyen, 2018;Nguyen, 2019;. While Hardiyanti and Aziz (2021); Žunić et al. (2021) explore the effect of COVID-19 on NPLs in Malaysia; Bosnia and Herzegovina, respectively. ...
The study aims to estimate the effect of leverage on non-performing loans in Vietnamese commercial banks from 2010 to 2020. This article uses qualitative (expert interviews, namely senior credit officers’ and credit managers’ surveys to find out the expert consensus coefficient) and quantitative research methods (Generalized Method of Moments to solve the endogeneity). The findings show that leverage is a statistically significant factor and negatively affects non-performing loans. In line with corporate governance theories, such as agency theory and stakeholder theory, this study emphasizes the significant role of the leverage ratio in dealing with non-performing loans at commercial banks in Vietnam during the COVID-19 pandemic. Besides, the study also highlights effective mechanisms to control and mitigate non-performing loans in the credit granting process.
... The results made it evident that macroeconomic variables, particularly the unemployment rate, had a powerful influence on the level of non-performing financing. However, when bank-specific variables were added to the base models, GDP growth and the real lending rate could not explain the change in financial problem [38]. Contrarily most studies showed a negative effect. ...
This paper analyzes the relationship of macroeconomic factors to the level of non-performing loans (NPLs) using the econometric models GMM, the Fixed Effect model, and the Random Effect model. This study aims to identify macroeconomic factors at the level of non-performing loans in the Western Balkans, measure their impact on non-performing loans, and thus fill the gap that exists between macroeconomic factors (consisting of economic growth) and those with more impact on NPLs. The methodology used to carry out this research was desk research. We used World Bank data from 2000–2019, processed with STATA software. Results show that macroeconomic factors have an impact on non-performing loans. It also proves that even when interacting with other variables, the level of bad debt has not been completely eliminated, despite economic growth in many countries. Third, throughout the study period, fixed effects estimates show that variables are not significant in a static context. According to the findings, the annual rates of GDP growth, final government consumption, the real interest rate, gross domestic savings, and the unemployment rate all have a favorable impact on NPLs. This research contributes to a deeper understanding of the relationship between macroeconomic factors and non-performing loans in the Western Balkans. Based on this, to help reduce loan risk and bad debt by the proper criteria, we propose a series of policy implications. These implications aim to improve the efficiency of banks in particular and the banking system as a whole.
Doi: 10.28991/ESJ-2022-06-05-08
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... Non-performing financing is a very crucial issue for both conventional and Islamic (Isaev & Masih, 2017). The crisis that increase the NPF is hitting mostly in profit-share based banks. ...
This study aims to investigate the factors that influence non-performing financing (NPF) at Islamic rural banks (BPR) in Indonesia during the Covid-19 pandemic. The data used in this study was taken during the COVID-19 pandemic, namely in 2020. This study uses a data panel consisting of 128 Sharia BPRs throughout Indonesia. The analysis used is panel data analysis by choosing the best model between common effect (CE), fixed effect (FE), and random effect (FE). Data analysis was also carried out on: (1) large and small Sharia BPRs; (2) BPR located on the island of Java and outside the island of Java. The results found that the variable that had a strong influence on NPF during the covid-19 pandemic was economic growth as proxied by Gross Regional Domestic Product (GRDP). Bank size shows a negative and significant effect. FDR shows a positive and significant effect. Operational efficiency ratio (OER/BOPO) has a positive but not significant effect. Based on these results, it is necessary to mitigate financial problems, especially changes in macroeconomic conditions such as economic growth. This study also shows that there are differences in the variables that affect the size of small and large banks, as well as those in Java and those outside Java. This result can be a reference for Sharia BPR in mitigating financing risk.
... Gong, Huizinga, and Laeven, (2018) show that larger banks have a high chance of loan assessment, which results to lower NPLs. Isaev and Masih, (2017) indicate an inverse association between bank size and NPLs and posits that the hypothesis of -too big to fail‖ by banks may end up with greater NPLs due to excessive risk-taking. ...
Nonperforming loans posed a great threat to the performance of banks in emerging economies. This study seeks to examine the effect of nonperforming loans on the banks' performance in Sub-Saharan Africa region. A total of fifty (50) listed banks were drawn across six Sub-Saharan African countries that include Nigeria, Ghana, South Africa, Zambia, Kenya, and Tanzania within 9 years period (2010-2018). The study employs a two-step system generalized method of moment as the technique of analysis and inference. Findings from the study revealed a significant negative association between NPLs and bank performance within the region. Bank management and regulators are advised to work hard toward ensuring that banks keep minimum NPLs in order not to threaten the liquidity position of the banks.
Credit risk is a double-edged sword that banks should wisely and carefully measure and manage to exploit its advantages for better financial results. Otherwise, it could threaten their survival in the market and slacken the growth of the economies. Developing countries need to increase their loans to support economic growth but this wouldn't be effective unless they have efficient credit risk management that is able to lower the non-performing loan (NPL) ratio. In Egypt, the corporate non-performing loan (CNPL) ratio decreased steadily during 2010-2018, but beyond that period, it began to rise, indicating higher credit risk exposure, putting the financial stability of the banking system at risk. In the present work, the generalized methods of moments (GMM) and fixed-effects estimation models were employed to identify the macro and microeconomic determinants of retail and corporate credit risks in the banking sector of Egypt during 2011-2020. More robust and accurate customized estimated models were developed by dividing the NPLs into categories to help credit risk managers better predict the future exposure of the retail and corporate credit risks. The findings revealed that ROA, bank size, income diversification, liquidity, and internal debt are negatively associated with the CNPL while the external debt is positively related. Finally, the Retail NPL ratio is affected only by bank efficiency "Measuring the impact of Macroeconomic and Microeconomic variables on Retail and Corporate Credit Risks in the commercial banks of Egypt during 2011-2020" 2 Emperor International Journal of Finance and Management Research and income diversification, indicating that corporate credit risk is more sensitive to macro and microeconomic determinants than retail ones.
