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Factors Influencing Non-Performing Loans in Commercial Banks: The Case of Banks in Selangor

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  • Uma Murthy
  • Naail Mohammed Kamil
  • Paul Anthony Mariadas
  • Dilashenyi Devi

Abstract

Non-performing loans (NPLs) is a worldwide issue that affects financial markets stability in general and banking industry viability in particular. This study examines the factors influencing non-performing loans in commercial banks in Selangor state of Malaysia. Based on gaps in extant literature, four (4) independent variables comprising standard of living, economy of the country, consumers’ income and bank interest rates are hypothesized to exert statistically significant influences on the dependent variable, NPLs. A quantitative research approach was employed in this research. 200 respondents were sampled for this study employing stratified random sampling technique. Employing multiple regression analysis (MRA) using SPSS software, the findings showed that out of the four (4) hypothesized relationships of the research, three (3) were supported whilst one was not. In particular, it was shown that consumers’ income, economy of the country and bank interest rates statistically influence non-performing loans in commercial banks in Selangor state of Malaysia. However, there was no enough evidence to support the claim that standard of living can statistically influence non-performing loans in commercial banks in Selangor. Several implications from the research were further discussed.

Suggested Citation

  • Uma Murthy & Naail Mohammed Kamil & Paul Anthony Mariadas & Dilashenyi Devi, 2017. "Factors Influencing Non-Performing Loans in Commercial Banks: The Case of Banks in Selangor," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(2), pages 246-246, January.
    • Handle: RePEc:ibn:ijbmjn:v:12:y:2017:i:2:p:246
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    References listed on IDEAS

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    1. Mr. Raphael A Espinoza & Mr. Ananthakrishnan Prasad, 2010. "Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects," IMF Working Papers 2010/224, International Monetary Fund.
    2. Nir Klein, 2013. "Non-Performing Loans in CESEE: Determinants and Impact on Macroeconomic Performance," IMF Working Papers 2013/072, International Monetary Fund.
    3. Ms. Mwanza Nkusu, 2011. "Nonperforming Loans and Macrofinancial Vulnerabilities in Advanced Economies," IMF Working Papers 2011/161, International Monetary Fund.
    4. Ahlem Selma Messai & Fathi Jouini, 2013. "Micro and Macro Determinants of Non-performing Loan," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 852-860.
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    Cited by:

    1. Momtaj Parvin & Merajul Islam & Larysa Vdovenko, 2023. "Impact of Non-Performing Loans on the Growth of the Banking Sector in Bangladesh," Oblik i finansi, Institute of Accounting and Finance, issue 1, pages 79-90, March.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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