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The Impact of Credit Risk on the Financial Performance of Chinese Banks

Author

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  • Juliana Stanley Isanzu

    (School of Management, Wuhan University of Technology, China)

Abstract

The study aim was to empirically examine the impact of credit risk on the financial performance of Chinese banks. Secondary data was collected from five largest commercial banks in the country for the period of 7 years from 2008 to 2014. The study used nonperforming loans, capital adequacy ratio, impaired loan reserve, and loan impairment charges as measures of credit risk and for a measure of financial performance return on asset was used. Data analysis was done using a balanced panel data regression model, and the study findings reveal nonperforming loan and Capital adequacy have a significant impact of on financial performance of Chinese commercial banks; therefore, the need to control credit risk is crucial for bank financial performance.

Suggested Citation

  • Juliana Stanley Isanzu, 2017. "The Impact of Credit Risk on the Financial Performance of Chinese Banks," Journal of International Business Research and Marketing, Inovatus Services Ltd., vol. 2(3), pages 14-17, March.
    • Handle: RePEc:mgs:jibrme:v:2:y:2017:i:3:p:14-17
    DOI: 10.18775/jibrm.1849-8558.2015.23.3002
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    Citations

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    Cited by:

    1. Olajide Solomon Fadun & Diekolola Oye, 2020. "Impacts of Operational Risk Management on Financial Performance:A Case of Commercial Banks in Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(1), pages 22-35, January.
    2. Hari Gopal Risal & Suprima Poudel, 2020. "Role of Credit Risk in Performance difference between A and B Class Banks in Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 32(1), pages 37-53, April.
    3. Nurtika Ekawati & Unggul Purwohedi & Ari Warokka, 2021. "The Influence of Risk Management, Third-Party Funds and Capital Structure on Banking Sector Financial Performance in Indonesia and Thailand with Corporate Governance as Moderating Variable in 2015-201," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 71-80, December.
    4. Hussien Mohsen Ahmed & Sherif Ismail El-Halaby & Hebatallah Ahmed Soliman, 2022. "The consequence of the credit risk on the financial performance in light of COVID-19: Evidence from Islamic versus conventional banks across MEA region," Future Business Journal, Springer, vol. 8(1), pages 1-22, December.
    5. Charles Ayodele JEGEDE & Yusuf Aina SOYEBO & Segun Kamoru FAKUNMOJU & Olajide Idowu OKUNBANJO, 2021. "Financial Risk Management and Financial Performance of International Authorisation Quoted Deposit Money Banks (DMBs) in Nigeria," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 178-185.
    6. Kellen Kiambati, 2020. "Influence of credit risk on shareholder market value of commercial banks listed in Nairobi Securities Exchange," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 107-117, March.
    7. Herry Achmad Buchory, 2023. "Banking Profitability: How do the banking intermediary, secondary reserve, operational efficiency, and credit risk effect?," GATR Journals jfbr214, Global Academy of Training and Research (GATR) Enterprise.
    8. Helen Oluwatoyin Adebayo & Segun Idowu Adeniyi & Miriam Nguavese Nyikyaa & Andrew Jatau Yohanna, 2020. "Credit Risk and Financial Performance of Deposit Money Banks in Nigeria. Case Study of Access Bank Plc," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(3), pages 109-112, September.
    9. Benny Lianto, 2023. "Identifying Key Assessment Factors for a Company’s Innovation Capability Based on Intellectual Capital: An Application of the Fuzzy Delphi Method," Sustainability, MDPI, vol. 15(7), pages 1-21, March.
    10. Munther Al-Nimer & Omar Arabiat & Rana Taha, 2024. "Liquidity Risk Mediation in the Dynamics of Capital Structure and Financial Performance: Evidence from Jordanian Banks," JRFM, MDPI, vol. 17(8), pages 1-19, August.

    More about this item

    Keywords

    China; Credit risk; Financial performance; Banks;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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