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Determinants of Non-Performing Loans: Perception of Bankers in Bangladesh

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  • Md. Kaysher Hamid

    (Department of Business Administration-General, Faculty of Business Studies, Bangladesh University of Professionals, Dhaka, Bangladesh)

Abstract

This study attempts to explore the determinants of non-performing loans in banking sector of Bangladesh based on the perception of bankers. To represent the bank-specific determinants of non-performing loans, bank profitability, lending rate, bank total assets, transparency in loan authorization, credit assessment, bank age, and corporate governance are considered. On the other hand, gross domestic product, inflation rate, unemployment rate, exchange rate, foreign direct investment, and export growth are used to represent macroeconomic determinants. Bankers working in Dhaka city have been considered as the sample of this study. Opinions of 144 bankers regarding the selected determinants of non-performing loans have been collected through a structured questionnaire. Based on the collected data, descriptive analysis, correlation analysis, and regression analysis have been conducted. In the analysis, bank total assets, transparency in loan authorization, bank age, inflation rate, and unemployment rate have depicted a positive impact on non-performing loans where bank profitability, lending rate, credit assessment, corporate governance, gross domestic product, exchange rate, foreign direct investment, and export growth have shown a negative impact. However, among these, significant impact has been identified only for bank total assets, bank age, corporate governance, gross domestic product, inflation rate, and foreign direct investment.

Suggested Citation

  • Md. Kaysher Hamid, 2023. "Determinants of Non-Performing Loans: Perception of Bankers in Bangladesh," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(12), pages 1975-1989, December.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:12:p:1975-1989
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    References listed on IDEAS

    as
    1. Muhammad Ishfaq Ahmad & Wang Guohui & Mudassar Hassan & Muhammad Akram Naseem & Ramiz ur Rehman, 2016. "NPL and Corporate Governance: A Case of Banking Sector of Pakistan," Accounting and Finance Research, Sciedu Press, vol. 5(2), pages 1-32, May.
    2. Ogechi Adeola & Fredrick Ikpesu, 2017. "Macroeconomic Determinants Of Non-Performing Loans In Nigeria: An Empirical Analysis," Journal of Developing Areas, Tennessee State University, College of Business, vol. 51(2), pages 31-43, April-Jun.
    3. Agim Kukeli & Robert C. Forrester & Fitim Deari & John E. Martinez, 2023. "Non-performing loans in Central-East European countries: investigation of macroeconomic, policy, and global risk determinants," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 29(3), pages 265-286.
    4. Nikola Radivojevic & Jelena Jovovic, 2017. "Examining of Determinants of Non-Performing Loans," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(3), pages 300-316.
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