scholarly journals Does Monetary Policy Influence the Profitability of Banks in New Zealand?

2020 ◽  
Vol 8 (2) ◽  
pp. 35 ◽  
Author(s):  
Vijay Kumar ◽  
Sanjeev Acharya ◽  
Ly T. H. Ho
Keyword(s):  
Monetary Policy ◽  
New Zealand ◽  
Interest Rates ◽  
Negative Impact ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Capital Adequacy ◽  
Bank Profitability ◽  
Capital Adequacy Ratio ◽  
Income Ratio

The study investigates the relationship between monetary policy and bank profitability in New Zealand using the generalized method of moments (GMM) estimator. Our sample comprises 19 banks from New Zealand over the period 2006–2018. Our results suggest that an increase in short-term rate leads to an increase in the profitability of banks, while an increase in long-term interest rates reduces bank profitability. In addition to monetary policy variables, capital adequacy ratio, non-performing loan ratio, and cost to income ratio are also important determinants of the profitability of banks in New Zealand. Capital adequacy ratio has a positive impact on bank profitability, while non-performing loan ratio and cost to income ratio have a negative impact on bank profitability.

scholarly journals Impact of Monetary Policy on Economic Growth: Empirical Evidence in Vietnam

2019 ◽  
Vol 5 (10) ◽  
Author(s):  
Tang My Sang
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rates ◽  
Empirical Evidence ◽  
Money Supply ◽  
Negative Impact ◽  
Positive Impact ◽  
Secondary Data ◽  
The Impact

Through the secondary data collected from 2009 to 2018, the research used Var method to test the impact of monetary policy on economic growth in Vietnam. The results show that there is a relationship between the variables of monetary policy and economic growth, in which the money supply has a positive impact at a high significant level, interest rates have a negative impact on Vietnam economic growth. From the results obtained, the research proposed solutions for operating monetary policy.

scholarly journals The impact of credit risk management on the financial performance of United Arab Emirates commercial banks

2021 ◽  
Vol 10 (3) ◽  
pp. 303-319
Author(s):  
Jamil Salem Al Zaidanin ◽  
Omar Jamil Al Zaidanin
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
United Arab Emirates ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Income Ratio ◽  
The Impact

The main purpose of this study is to measure up to what extent the independent factors defined by capital adequacy ratio, non-performing loans ratio, cost-income ratio, liquidity ratio, and loans-to-deposits ratio impact the financial performance of sixteen commercial banks operating in the United Arab Emirates using panel data for the period of 2013-2019. The secondary data was collected from banks and examined by applying standard descriptive statistics and the random effect model for hypothesis testing. It is concluded from the regression outcomes that non-performing loans ratio and cost-income ratio have a significant negative impact on commercial banks profitability in the United Arab Emirates, while capital adequacy ratio, liquidity ratio, and loans -to-deposits ratio all have a very weak positive relationship on the return on assets but they are not determinants of bank’s profitability due to the insignificant statistical impact on it. It is therefore suggested that to enhance financial performance and minimize the risk of non-performing loans in the future, banks must watch very carefully the loans’ performance and analyze thoroughly the clients’ credit history and ability to pay back their debts prior to any approval of loan applications. Furthermore, banks should continuously improve their assets utilization, liquidity, and techniques of managing operating costs, improve the impact of capital adequacy, and the use of deposits for lending activities from a weak positive impact to a significant positive impact on their profitability. The researchers recommend that future studies on credit risk management influence on banks’ financial performance should consider more independent variables and longer periods of study such as twenty or thirty years to have more accuracy and generalized results.  

scholarly journals The Impact of Financial Ratios, Operational Efficiency and Non-Performing Loan Towards Commercial Bank Profitability

2016 ◽  
Vol 1 (1) ◽  
pp. 43-50
Author(s):  
Fiola Christaria ◽  
Ratnawati Kurnia
Keyword(s):  
Banking Sector ◽  
Operational Efficiency ◽  
Capital Adequacy ◽  
Public Confidence ◽  
Return On Assets ◽  
Bank Profitability ◽  
Operating Income ◽  
Capital Adequacy Ratio ◽  
Income Ratio ◽  
The Impact

Objective - The objective of this paper is to determine the impact of Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), Operational Efficiency proxies by Operational Expense to Operating Income Ratio (BOPO)and Non-Performing Loan (NPL) towards bank profitability proxies by Return on Assets (ROA). Methodology/Technique - Purpose samplingis applied to gather samples of the banking sector that was listed on the Indonesia Stock Exchange for the period of 2012 - 2014. Multiple regression analysis was used to analyse data. Findings - The F test result shows that CAR, LDR, BOPO, and NPL simultaneously, have a significant impact towards ROA. This means that the model can be used to predict bank profitability. It is also deduced that Operational Efficiency proxies by Operational Expense to Operating Income Ratio has a significant impact towards banking profitability. Novelty - This paper suggests that banks perform lending selectively and banks maintain the level of non-performing loans to be low in order to manage the risks and to improve their profitability as a means of increasing public confidence level. Type of Paper Empirical Keywords: Capital Adequacy Ratio; Loan to Deposit Ratio; Non-performing Loan; Operating Expense to Operating Income; Return on Assets. JEL Classification: D81, G21.

scholarly journals Low Interest Rates and Bank Risk-Taking: Has the Crisis Changed Anything? Evidence from the Eurozone

2015 ◽  
Vol 8 (1) ◽  
pp. 125-148 ◽  
Author(s):  
Alin Marius Andries ◽  
Vasile Cocriş ◽  
Ioana Pleşcău
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Risk Taking ◽  
Fixed Effects ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Bank Risk ◽  
Fixed Effects Model ◽  
Loan Loss ◽  
The Impact

AbstractThis paper examines the impact of monetary policy on bank risk-taking and the influence of the recent financial crisis on this relation. We use a dataset of 571 commercial banks from Eurozone and analyze the relation on the period from 1999 to 2011, with emphasize on the period 2008 to 2011. We use non-performing loans, loan loss provisions and Z-score as measures for bank risk-taking, while for monetary policy the proxies are short-term interest rates (computed using a Taylor rule) and long-term interest rates. We determine the relation between the two by taking into account some specific control variables and analyze it using an entity fixed-effects model and Generalized Method of Moments, alternatively. Empirical results point to a negative relation between interest rates and bank risk-taking. In addition to this, results show that the crisis has led to an additional negative impact on the relation between interest rates and bank risk-taking for the turmoil period 2008-2011.

scholarly journals The Effect of Capital Adequacy on Returns of Assets of Commercial Banks in Kosovo

2019 ◽  
Vol 8 (2) ◽  
pp. 201
Author(s):  
Halit Shabani ◽  
Fisnik Morina ◽  
Valdrin Misiri
Keyword(s):  
Commercial Banks ◽  
Fixed Effects ◽  
Banking Sector ◽  
Negative Impact ◽  
Positive Impact ◽  
Financial Institution ◽  
Banking System ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Capital Adequacy Ratio

The purpose of this study is to analyze the effects of capital adequacy on the return of assets to the banking sector in Kosovo. The capital adequacy ratio measures the ability of a financial institution to meet its liabilities by comparing its capital with its assets. As the banking system is one of the strongest points of our country's economy, it is understood that the capital adequacy ratio is used by banks to determine the adequacy of their capital holdings while taking their risk exposures into account.This study will provide empirical evidence of the relationship between capital adequacy and return on commercial bank assets in Kosovo during 2008-2017. It will be using secondary data obtained from audited reports of domestic banks and reports from the Central Bank of Kosovo. To measure the empirical results during this research, these econometric methods have been used: the linear regression model, the model of the fixed effects, and the random model and the GMM model. Based on the results we can conclude that capital adequacy has a positive impact on asset returns and has a significant relationship. In addition, other factors have had a positive and negative impact on the return of commercial banks' assets in Kosovo. Keywords: capital adequacy, return on assets, loans, deposits, interest rates.JEL Classification: G21, G31, G32

scholarly journals ASSESSMENT OF CREDIT RISK IN NEPALI COMMERCIAL BANKS

2018 ◽  
Vol 3 (3) ◽  
pp. 65 ◽  
Author(s):  
Shiva Raj Poudel
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Negative Impact ◽  
Positive Impact ◽  
Panel Data Analysis ◽  
Fixed Effect Model ◽  
Capital Adequacy ◽  
Gdp Growth ◽  
Capital Adequacy Ratio

The main objective of the study is to identify the major indicators of credit risk among the Nepali commercial banks. The study is conducted using the sample of 15 commercial banks operated in Nepali economy. One way Fixed Effect Model (FEM) of panel data analysis is used as a major tool of analysis. All the data for the study were obtained from the database of Nepal Rastra Bank for bank specific variables and database of World Bank for macroeconomic variables for the year 2002/03 to 2014/15. The credit risk among the commercial banks in Nepal was regressed on bank specific variables such as liquidity, capital adequacy ratio, bank size, and interest spread. Similarly, the effects of macro-economic variables such as GDP growth, rate of inflation and interbank interest rate were also examined along with bank specific variables in identifying credit risk in Nepali commercial banks. The study reveals that liquidity has the significant positive impact on credit risk in Nepali commercial banks. In contrast, capital adequacy ratio and interest spread have the significant negative impact on credit risk. The analysis further confirmed that bank size and interest spread both have no any clear direction of impact on credit risk. Moving towards the GDP growth, credit risk in Nepali commercial banks is negatively fluctuates with GDP growth, however, the statistics show the coefficients are insignificant at 5% level. Contrarily, Inter-bank interest rate has insignificant negative impact on credit risk in Nepali commercial banks.

scholarly journals NON-PERFORMING LOANS, CAPITAL ADEQUACY, LOAN LOSS PROVISION, AND BANK PROFITABILITY: A CASE OF LICENSED GHANAIAN BANKS

2020 ◽  
pp. 8-16
Author(s):  
Shuibin Gu ◽  
Ofori Charles ◽  
Takyi Kwabena Nsiah ◽  
Eric Dwomoh ◽  
Weveh-Wilson Benjamin
Keyword(s):  
Method Of Moments ◽  
Generalized Method Of Moments ◽  
Independent Study ◽  
Capital Adequacy ◽  
Least Squares Regression ◽  
Loan Loss ◽  
Bank Profitability ◽  
Loan Loss Provision ◽  
Capital Adequacy Ratio ◽  
Method Of Moments Estimator

This article explored the affiliation between a non-performing loan, capital adequacy ratio, loan loss provision, and bank profitability. The study was conducted on the licensed commercial banks in Ghana for the era 2014-2019. The two-step system generalized method of moments estimator was utilized to test the hypothesis developed for the study. The independent study variables altogether demonstrated a negative and immaterial association with the bank's profitability as proxied by ROA. A robustness test was conducted utilizing the Three-Stage Least-Squares Regression (3SLS); the outcome was analogous to that of the Two-Step System Generalized Method of Moments estimator. The study suggests that the Central Bank fortifies the capital requirement and keenly monitors banks' risk-taking conduct and banks undertaking due diligence procedures to moderate the shock of non-performing loans and loan loss provision in other to augment the profitability of universal banks. KEYWORDS: Non-Performing Loans, Capital Adequacy, Loan Loss Provision, Bank Profitability, GMM JEL Codes: E58, G21, G32

Does Bank Profitability Stimulate Economic Growth in the Arab Region?

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Omar Ghazy Aziz
Keyword(s):  
Financial Development ◽  
Method Of Moments ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Arab Countries ◽  
Return On Assets ◽  
Bank Profitability ◽  
Arab Region ◽  
Return On Equity ◽  
The Impact

AbstractThis study empirically investigates the impact of bank profitability, as a complementary measure of financial development, on growth in the Arab countries between 1985 and 2016. Using a generalized method of moments (GMM) estimation to test the impact of the bank profitability on growth, this study utilises two variables in the econometric model which are return on assets and return on equity. This study reveals that both variables of bank profitability are positive and significant. This confirms that the bank profitability, beside other financial development variables, has positive impact on the growth. This study points out some important implications based on this result.

Relationship between Budget Deficit and Economic Growth: Evidence from Ethiopia

2021 ◽  
Vol 2 (2) ◽  
pp. 10-15
Author(s):  
Desalegn Emana
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Budget Deficit ◽  
Time Series Data ◽  
Negative Impact ◽  
Positive Impact ◽  
Negative Relationship ◽  
Nominal Exchange Rate ◽  
Series Data ◽  
Long Run

This study examined the relationship between budget deficit and economic growth in Ethiopia using time series data for the period 1991 to 2019 by applying the ARDL bounds testing approach. The empirical results indicate that budget deficit and economic growth in Ethiopia have a negative relationship in the long run, and have a weak positive association in the short run. In line with this, in the long run, a one percent increase in the budget deficit causes a 1.43 percent decline in the economic growth of the country. This result is consistent with the neoclassical view which says budget deficits are bad for economic growth during stimulating periods. Moreover, in the long run, the variables trade openness and inflation have a positive impact on Ethiopian economic growth, and on the other hand, the economic growth of Ethiopia is negatively affected by the nominal exchange rate in the long run. Apart from this, in the long run, gross capital formation and lending interest rates have no significant impact on the economic growth of the country. Therefore, the study recommends the government should manage its expenditure and mobilize the resources to generate more revenue to address the negative impact of the budget deficit on economic growth.

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