Impact of Non-Performing Loans on the Growth of the Banking Sector in Bangladesh
Journal Title: Oblik i finansi - Year 2023, Vol 1, Issue 1
Abstract
The banking system of a country is a predictor of its economic prosperity. However, the financial sector has experienced contradictory reactions. The rise of non-performing loans is a notable feature of the banking industry's financial crisis. According to Bangladesh Bank, state-owned banks are prone to substantial collapses, which have a knock-on effect on the entire commercial banking sector. The aim of the study is to determine the impact of non-performing loans on the growth of the banking system in Bangladesh. The paper is mostly an investigative desk study that prioritizes secondary data. Nonetheless, primary data was used, such as in-person interviews with bank personnel and staff, as well as casual conversations with clients. Secondary sources for this article include Bangladesh Bank bulletins, current newspapers and periodicals, some published and unpublished research reports, various websites, and a large number of peer-reviewed publications. The paper incorporates multiple regression analysis to assess the impact of non-performing loans on banking sector growth from 2012 to 2021. The findings revealed a highly significant inverse correlation among NPL, CRAR, and ROE, as well as a significant but negative relationship among NPL, ROA, NIM, and SLR. However, the alternative hypothesis is accepted, whereas the null hypothesis is rejected. Therefore, NPLs have a severe effect on banking advancement since they worsen banks' liquidity issues, lower profitability, trigger capital constraints, and even jeopardize the financial system’s stability and viability.
Authors and Affiliations
Momtaj Parvin & Merajul Islam & Larysa Vdovenko
Keywords
Related Articles
- EP ID EP715499
- DOI 10.33146/2307-9878-2023-1(99)-79-90
- Views 26
- Downloads 0
Depreciation of Enterprise Assets in Wartime
The war causes dangerous and unpredictable conditions for using property, the impossibility of determining the period of its useful operation. The risks of losing property are considerable. In Ukraine, the property of ag...
Актуальні питання стабільності депозитної бази державних банків
Ефективність функціонування банківської системи будь-якої держави визначається достатністю її ресурсної бази, яка, в основному, сформована з депозитних джерел. Метою статті є оцінка стану та тенденцій розвитку депозитної...
Influence of Access to Finance, Human Resource Competence, Information Systems on the Performance of Small and Medium-Sized Enterprises with Organizational Culture as Study Moderating Variable
The purpose of the study is to find out whether such variables as access to finance, human resource competence and information systems can improve the performance of small and medium-sized enterprises in Palembang (Indon...
The Evolution of Management Accountants’ Digital Skills in Industry 4.0: A Qualitative Approach
The Fourth Industrial Revolution generated changes not only in the accounting and financial activities and processes but also in the set of digital competencies that management accountants must demonstrate. This paper ai...
Борговий тягар фінансової системи України та країн-членів Європейського Союзу
Тенденція до зростання боргового навантаження фінансової системи України простежується упродовж вже декількох останніх років. Вітчизняні методичні положення та рекомендації, які мали призупинити нарощення боргового наван...