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The Moderating Role of Loan Monitoring on the Relationship between Macroeconomic Variables and Non-performing Loans in Association of Southeast Asian Nations Countries

Author

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  • Ismail Tijjani Idris

    (Faculty of Administration, Ahmadu Bello University Zaria, Nigeria)

  • Sabri Nayan

    (School of Economics, Finance and Banking, Universiti Utara Malaysia, Malaysia.)

Abstract

The lending banks' function of loan monitoring plays an important role in sustaining quality loan portfolios and protects risk assets against deterioration thereby keeping non-performing loans (NPLs) within acceptable standards. The aim of this paper is to propose a conceptual model/framework of investigating the moderating role of loan monitoring on the relationship between macroeconomic variables and NPLs among Association of Southeast Asian Nations Economic Community (AEC) countries. The global problem of NPLs has been persistent and on the rise. Many attempts have been made to investigate the determinant of NPLs yet the problem has remained unexplained. Most of the previous studies have focused on macroeconomic and other environmental variables, industry-specific and bank-specific determinants of NPLs but gave less attention to the moderating role of loan monitoring functions of the lending banks. This paper proposes a framework by adding a moderator of loan monitoring to the existing models of the macroeconomic determinants of NPLs with special attention to the AEC countries that mostly were once heavily confronted with severe banking and financial crises in the late 90s. It is expected that the outcome will assist policymakers in protecting and/or improving the current state of NPLs among AEC member countries.

Suggested Citation

  • Ismail Tijjani Idris & Sabri Nayan, 2016. "The Moderating Role of Loan Monitoring on the Relationship between Macroeconomic Variables and Non-performing Loans in Association of Southeast Asian Nations Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 402-408.
    • Handle: RePEc:eco:journ1:2016-02-5
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    3. Maria Czech & Blandyna Puszer, 2021. "Impact of the COVID-19 Pandemic on the Consumer Credit Market in V4 Countries," Risks, MDPI, vol. 9(12), pages 1-19, December.

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    More about this item

    Keywords

    Loan Monitoring; Macroeconomic Variables; Non-performing Loans;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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