In 1983, the public was given its first opportunity to review bank asset quality in the form of n... more In 1983, the public was given its first opportunity to review bank asset quality in the form of non-performaing asset information. The purpose of this study is to evaluate that information. A regression analysis comparing the non-performing asset statistics with examiner classifications of assets suggests that the non-performing asset information can be useful aid in analyzing the asset quality of banks, particularly when the information is timely.
In this article, we model the effect of the non-performing loans on the cost structure of the com... more In this article, we model the effect of the non-performing loans on the cost structure of the commercial banking system. With this aim, we comment on an increase in the non-performing loans by studying the consequences of such a change on the cost function and compute the probability of failure of maintaining a performing loan as such. In doing so, we are convinced that geography does matter and evaluate the risk propensity of the bank towards the non-performing loans accordingly. We finally stress that traditional efficiency indicators of cost elasticity do not fit properly with such a problem and propose a measure based on the costs for managing and monitoring the loans which, according to the related density function, will reveal effectively as non performing.
Keywords: Non-performing loans Greek banking system Macroeconomic determinants Bank specific dete... more Keywords: Non-performing loans Greek banking system Macroeconomic determinants Bank specific determinants Dynamic panel data a b s t r a c t This paper uses dynamic panel data methods to examine the determinants of non-performing loans (NPLs) in the Greek banking sector, separately for each loan category (consumer loans, business loans and mortgages). The study is motivated by the hypothesis that both macroeconomic and bank-specific variables have an effect on loan quality and that these effects vary between different loan categories. The results show that, for all loan categories, NPLs in the Greek banking system can be explained mainly by macroeconomic variables (GDP, unemployment, interest rates, public debt) and management quality. Differences in the quantitative impact of macroeconomic factors among loan categories are evident, with non-performing mortgages being the least responsive to changes in the macroeconomic conditions.
The existing Chinese banking system was born out of a state-planning framework focussed on the fu... more The existing Chinese banking system was born out of a state-planning framework focussed on the funding of state-owned enterprises. Despite the development of a modern banking system, numerous studies of Chinese banking point to its high level of average inefficiency. Much of this inefficiency relates to the high level of non-performing loans held on the banks books. This study argues that a significant component of inefficiency relates to a defunct bureaucratic incentive structure. Using bootstrap non-parametric techniques the paper decomposes cost-inefficiency into X -inefficiency and rational inefficiency caused by bureaucratic rent seeking. In contrast to other studies of the Chinese banking sector, the paper argues that a change in the incentive structure and the competitive threat of the opening up of the banking market in 2007 has produced reduced inefficiency and improved performance.
Many countries are suffering from Non Performing Loans (NPLs), which are defaulted loans that ban... more Many countries are suffering from Non Performing Loans (NPLs), which are defaulted loans that banks are unable to profit from. There are two general ways to secure NPLs. One is for banks to handle them themselves, which is common in Sweden where the NPL market is not so widespread. The alternative is for banks to auction them in public to Asset Management Companies (AMCs), which purpose is to dispose of the assets as profitably as possible. This procedure is used at the vast Italian NPL market.
In 1983, the public was given its first opportunity to review bank asset quality in the form of n... more In 1983, the public was given its first opportunity to review bank asset quality in the form of non-performaing asset information. The purpose of this study is to evaluate that information. A regression analysis comparing the non-performing asset statistics with examiner classifications of assets suggests that the non-performing asset information can be useful aid in analyzing the asset quality of banks, particularly when the information is timely.
In this article, we model the effect of the non-performing loans on the cost structure of the com... more In this article, we model the effect of the non-performing loans on the cost structure of the commercial banking system. With this aim, we comment on an increase in the non-performing loans by studying the consequences of such a change on the cost function and compute the probability of failure of maintaining a performing loan as such. In doing so, we are convinced that geography does matter and evaluate the risk propensity of the bank towards the non-performing loans accordingly. We finally stress that traditional efficiency indicators of cost elasticity do not fit properly with such a problem and propose a measure based on the costs for managing and monitoring the loans which, according to the related density function, will reveal effectively as non performing.
Keywords: Non-performing loans Greek banking system Macroeconomic determinants Bank specific dete... more Keywords: Non-performing loans Greek banking system Macroeconomic determinants Bank specific determinants Dynamic panel data a b s t r a c t This paper uses dynamic panel data methods to examine the determinants of non-performing loans (NPLs) in the Greek banking sector, separately for each loan category (consumer loans, business loans and mortgages). The study is motivated by the hypothesis that both macroeconomic and bank-specific variables have an effect on loan quality and that these effects vary between different loan categories. The results show that, for all loan categories, NPLs in the Greek banking system can be explained mainly by macroeconomic variables (GDP, unemployment, interest rates, public debt) and management quality. Differences in the quantitative impact of macroeconomic factors among loan categories are evident, with non-performing mortgages being the least responsive to changes in the macroeconomic conditions.
The existing Chinese banking system was born out of a state-planning framework focussed on the fu... more The existing Chinese banking system was born out of a state-planning framework focussed on the funding of state-owned enterprises. Despite the development of a modern banking system, numerous studies of Chinese banking point to its high level of average inefficiency. Much of this inefficiency relates to the high level of non-performing loans held on the banks books. This study argues that a significant component of inefficiency relates to a defunct bureaucratic incentive structure. Using bootstrap non-parametric techniques the paper decomposes cost-inefficiency into X -inefficiency and rational inefficiency caused by bureaucratic rent seeking. In contrast to other studies of the Chinese banking sector, the paper argues that a change in the incentive structure and the competitive threat of the opening up of the banking market in 2007 has produced reduced inefficiency and improved performance.
Many countries are suffering from Non Performing Loans (NPLs), which are defaulted loans that ban... more Many countries are suffering from Non Performing Loans (NPLs), which are defaulted loans that banks are unable to profit from. There are two general ways to secure NPLs. One is for banks to handle them themselves, which is common in Sweden where the NPL market is not so widespread. The alternative is for banks to auction them in public to Asset Management Companies (AMCs), which purpose is to dispose of the assets as profitably as possible. This procedure is used at the vast Italian NPL market.
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