PROFITABILITY AND RISK IN RELATION TO CREDIT MONITORING AND RECOVERY STRATEGIES OF PALESTINIAN COMMERCIAL BANKING SYSTEM

Main Article Content

Omar Alaeddin
Wael M. Thabet
Ahmed A.S. Thabet
Bakhodir Nurmukhamedov

Keywords

Commercial banks, Credit risk management, Credit monitoring, Profitability

Abstract

Purpose of Study: This study implemented an empirical investigation for the relationship between credit risk management and profitability of commercial banks in Palestine over the period of 3years (2015-2018), ten commercial banks were selected.


Methodology: The financial theory was employed to create the research model; Return on Asset (ROA) is defined as proxies of profitability while credit monitoring (LLPI) is defined as proxies of credit risk management.  Panel model analysis was used to estimate the determination of the profit function.


Results: Statistical results revealed that the relationship between the credit monitoring and commercial banks profitability is negative significant (β= -3.419, P ˂ 0.05). Therefore, the results improve that LLPI has a significant effect on Palestinian commercial banks profitability's.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...
Abstract 80 | PDF Downloads 45 XML Downloads 1

References

Ahmad, F., H.S. Tahir and B. Aziz, 2015. Impact of loan loss provision on bank profitability in Pakistan. Research Journal of Social Science and Management, 3.
Ahmed, A.S., C. Takeda and S. Thomas, 2013. Bank loan loss provisions: A re-examination of capital management, earnings management and signalling effects. Journal of Accounting and Economics, 28(1): 1-25.
Basel Committee on Banking Supervision, 1999. Amendment to the capital accord to incorporate market risks. BCBS Basel Committee Publications, 24.
Beck, T., K. Demirg¨uc and V. Maksimovic, 2004. Financial and legal constraints to firm growth: Does firm size matter? Journal of Finance, 60: 137–177.
Berger, A.N., L.F. Kappler and G.F. Udell, 2001. The ability of banks to lend to informationally opaque small businesses. Journal of Banking and Finance, 25: 2127–2167.
Berger, A.N. and G.F. Udell, 2006. A more complete conceptual framework for SME finance. Journal of Banking and Finance, 30: 2945–2966.
Bessis, J., 2009. Risk management in banking. 2nd Edn., Wiley. United Kingdom. pp: 522.
Bhattacharya, S. and A. Thakor, 1993. Contemporary banking theory. Journal of Financial Intermediation.
Bonin, J. and M. Kosak, 2013. Loan loss provisioning in emerging Europe: Precautionary or pro-cyclical? (No. 2013-010). Wesleyan University, Department of Economics.
Bouvatier, V., L. Lepetit and F. Strobel, 2014. Bank income smoothing, ownership concentration and the regulatory environment. Journal of Banking & Finance, 41: 253-270.
Curcio, D. and I. Hasan, 2015. Earnings and capital management and signaling: The use of loan-loss provisions by European banks. The European Journal of Finance, 21(1): 26-50.
Donaldson, T.H., 1994. Credit control in boom & recession. Basingstoke: The McMillan Press.
Ekanayake, E.M. and W.D. Fernando, 2015. Do commercial banks use loan loss provisions to smooth their income? Empirical evidence from Sri Lankan commercial banks. Journal of Finance and Bank Management, 3(1): 167-179.
El Sood, H.A., 2012. Loan loss provisions and income smoothing in US banks pre and post the financial crisis. International Review of Financial Analysis, 25: 64-72.
Farook, S., M.K. Hassan and G. Clinch, 2014. Islamic bank incentives and discretionary loan loss provisions. Pacific-Basin Finance Journal, 28: 152-174.
Greuning, V.H. and B.S. Bratanovic, 2009. Analysing banking risk. 3rd Edn., pp: 187 & 188.
Heikal, M., M. Khaddafi and A. Ummah, 2014. Influence analysis of return on assets (ROA), return on equity (ROE), net profit margin (NPM), debt to equity ratio (DER), and current ratio (CR), against corporate profit growth in automotive In Indonesia stock exchange. International Journal of Academic Research in Business and Social Sciences, 4(12).
Hurka, R., 2017. The impact of credit risk management on profitability of Nordic commercial banks.
Kilic, E., G.J. Lobo, T. Ranasinghe and K. Sivaramakrishnan, 2012. The impact of SFAS 133 on income smoothing by banks through loan loss provisions. The Accounting Review, 88(1): 233-260.
Koford, K. and A.D. Tschoegl, 1997. Problems of banking lending in Bulgaria: Information asymmetry and institutional learning, financial institutions center. Philadelphia, P. A: The Wharton School University of Pennsylvania.
Leventis, S., P.E. Dimitropoulos and A. Anandarajan, 2011. Loan loss provisions, earnings management and capital management under IFRS: The case of EU commercial banks. Journal of Financial Services Research, 40(1-2): 103-122.
Montana, D., 2012. Strategies for debt recovery: Improve bank debt collection success.
Mustafa, H.M., F.B. Tourkia and R.M. Ramadan, 2017. An overview on evaluation of e-learning/training response time considering artificial neural networks modeling. Journal of Education and e-Learning Research, 4(2): 46-62.
Muzurura, J., 2018. Firm-level investment decisions under uncertainty and irreversibility in Zimbabwe's private firms. International Journal of Business, Economics and Management, 5(6): 201-218.
Nasir, N.F.M., Z.A. Zainol and S. Suhor, 2018. Mediating family disputes involving violence in Malaysia. International Journal of Asian Social Science, 8(12): 1120-1129.
Nazal, A.I., 2017. Financial tables reports gaps in Jordanian Islamic Banks. The Economics and Finance Letters, 4(2): 9-15.
Negrut, V., 2017. Overview of the most common types of maladministration raised at EU level. International Journal of Public Policy and Administration Research, 4(2): 35-40.
Ozili, P.K., 2017. Discretionary provisioning practices among Western European banks. Journal of Financial Economic Policy, 9(1).
Seppala, J., 2000. The term structure of real interest rates: Theory and evidence from U.K. Index-Linked Bonds; Department of Economics, University of Illinois at Urban Champaign.
Stein, J.C., 2002. Information production and capital allocation: Decentralized versus hierarchical firms. The Journal of Finance, 57(5): 1891921.
Stiglitz, J. and A. Weiss, 1981. Credit rationing in markets with imperfect information. The American Economic Review, 71: 393–410.
Thomas, R., M. Mcleay and A. Radia, 2014. Money creation in the modern economy.