The impact of non-performing loans on bank lending behaviour: Evidence from the capital channel mechanism in Chinese commercial banks

Bank-Specific and Macroeconomic Determinants of Profitability: Evidence from Private Commercial Banks in Bangladesh

This paper re-examines the determinants of profitability in Bangladeshi private commercial banks, using a panel-corrected standard errors (PCSE) analysis of ten listed banks over 2014–2023 (n = 100 bank-year observations), together with a post-sample assessment of the sector's extraordinary deterioration through 2024–2025. Profitability is measured by return on assets (ROA), with return on equity (ROE) and net interest margin (NIM) used as robustness checks. Results show that capital adequacy and management efficiency significantly enhance profitability, while asset-quality deterioration and non-performing loans (NPLs) exert strong negative effects; liquidity management and bank size are largely insignificant, pointing to inefficiencies in deployment and scale. GDP growth is statistically negligible within-sample and inflation shows mixed effects, underscoring structural weaknesses in financial intermediation. A winsorization check (1st/99th percentiles) confirms that the capital-adequacy and NPL effects are stable to outlier treatment, while the management-efficiency effect is more sensitive. Extending the analysis with Bangladesh Bank, IMF, and World Bank data through 2025 shows that the sector-wide NPL ratio rose from below 10 percent in 2023 to more than 30 percent by late 2025, alongside a collapse in aggregate capital adequacy   a trajectory consistent with, and considerably amplifying, the credit-quality channel identified in the panel results. The study contributes methodologically by applying PCSE in a South Asian context, and offers policy implications for strengthening credit discipline, addressing regulatory forbearance, and improving banking efficiency.

Impact of Bank-Specific Determinants on Non-Performing Assets in Indian Public Sector Banks: An Empirical Analysis

Cointegration and Error Correction Analysis of Non-Performing Loans and Return on Equity of Deposit Money Banks in Nigeria (2000-2025)

This research investigated the impact of non-performing loan ratio (NPLR), loan loss provision ratio (LLPR), and capital adequacy ratio (CAR) on the financial performance of Deposit Money Banks in Nigeria from 2000 to 2024, using return on equity (ROE) as a performance indicator. Employing an ex-post facto research design, secondary data were collected from the annual reports of selected banks. The analysis utilized the Augmented Dickey-Fuller (ADF) unit root test, Johansen cointegration test, and Error Correction Model (ECM) to evaluate both short- and long term relationships among the variables. Findings indicate the existence of a long-run equilibrium relationship among the variables, as evidenced by the error correction term ECM (-1), which recorded a coefficient of -0.964289 and a significant p-value of 0.0066. This implies that approximately 96.43% of short-run disequilibrium is corrected annually. In the short run, NPLR (coefficient = 0.200765, p = 0.7856), LLPR (coefficient = 0.508688, p = 0.3621), and CAR (coefficient = 0.260466, p = 0.9269) exerted positive but statistically insignificant effects on ROE. The study concludes that although NPLR, LLPR, and CAR do not significantly influence bank performance in the short run, a stable long-run equilibrium relationship exists among the variables. The study therefore recommends strengthening loan monitoring and recovery practices, improving loan loss provisioning policies, and maintaining adequate capital levels to support sustainable profitability and financial resilience.

THE IMPACT OF BANK SIZE, RETURN ON EQUITY AND CAPITAL ADEQUACY RATIO ON NON PERFORMING LOANS

This study aims to examine the effects of Bank Size, Return on Equity (ROE), and Capital Adequacy Ratio (CAR) on Non-Performing Loans (NPL) in conventional banking companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2025 period. NPL is one of the key indicators used to assess loan quality and the level of credit risk faced by banks. A high NPL ratio may weaken banking stability, reduce profitability, and undermine public confidence in the banking sector. Therefore, identifying the determinants of NPL is essential for maintaining sound banking performance and financial stability. The independent variables employed in this study are Bank Size, Return on Equity (ROE),  and Capital Adequacy Ratio (CAR), while  NPL serves as the dependent variable. This research adopts a quantitative approach using secondary data obtained from the annual financial statements of conventional banks for the period 2021–2025. The data were measured using a ratio scale, and the sample was selected through a purposive sampling technique. A total of 42 conventional banking companies listed on the Indonesia Stock Exchange were included in the study. Panel data regression analysis was used EViews 13 software. The most appropriate estimation model was determined through the Chow test, Hausman test, and Lagrange Multiplier test. The findings reveal that Bank Size, ROE, and CAR also significantly affects NPL. These results suggest that bank size, Return on Equity (ROE), and and Capital Adequacy Ratio (CAR) are important factors influencing credit quality and should be carefully managed to control banking credit risk.

Non-performing loans and profitability in municipal savings and credit banks: Monthly panel evidence for 2024

This study examines the relationship between non-performing loans (NPL) and profitability in Peruvian municipal savings and credit banks (cajas municipales de ahorro y crédito [CMAC]) using monthly supervisory panel data for 2024. Grounded in the credit-risk and microfinance literature, we construct a balanced panel of 10 CMAC institutions observed over 12 monthly periods (N = 10, t = 12; 120 observations) (Berger & DeYoung, 1997; Mersland & Strøm, 2009). Return on assets (ROA) and return on equity (ROE) are modelled as functions of the NPL ratio, loan-loss provision coverage, operating expenses relative to assets, leverage, and institutional size, with entity and time fixed effects (FE). Panel regressions yield a statistically significant negative coefficient for NPL on both ROA (β = -0.094, p < 0.05) and ROE (β = -0.464, p < 0.05), confirming that deteriorating asset quality erodes financial performance. Provision coverage mitigates this effect, while high operating expenses and excessive leverage amplify vulnerability to NPL shocks. The findings contribute to the evidence base for CMAC regulation and inform policy priorities for credit-risk management, dynamic provisioning and efficiency-enhancing investment in Peru’s microfinance sector.

An Empirical Study on the Profit Effectiveness of Indian Public Sector Banks Due to Imposition of Priority Sector Lending Norms: A Panel Data Modelling Approach

This paper examines the impact of Priority Sector Lending (PSL) norms on both the profitability and the Indian Public Sector Banks (PSBs) with the help of panel data modelling. Based on an equal sample of 15 large PSBs between the years 2010-2024, this empirical study provides an estimate of the relationship between PSL exposure and profitability factors, Return on Assets (ROA) and Return on Equity (ROE). The analysis uses Fixed Effects, Random Effects, and Dynamic Panel Generalized Method of Moments (GMM) models to be able to capture short and long-run effects, endogeneity and bank specific heterogeneity. The simulated outcomes show that increased PSL ratios have been linked to a slight reduction in profitability which implies that the social mandate of PSL has opportunity costs on the performance of the banks. There are however adverse effects that are cushioned by diversification in PSL sub-sectors and regulatory support mechanisms. The results provide policy implications on the balance between the financial inclusion objectives and the stability of the banking sector in India.