Impact of Non-Performing Loans on Saudi Bank Profitability
- 30 November 2022
- journal article
- Published by Lattice Science Publication (LSP) in Indian Journal of Economics and Finance
- Vol. 2 (2), 21-24
- https://doi.org/10.54105/ijef.d2521.111422
Abstract
Non-performing loans (NPLs) have become increasingly worrying to the Saudi banking sector. Sanctioned loans have a repayment schedule, including principal and interest amounts. Excessive defaults on loans leads to a liquidity crisis throughout the banking sector, and can even cause bank failure. As a result, banks have to cover non-performing loans and maintain reserves under the instructions of the Saudi Arabia Central Bank, which severely affects profitability. This study analyzes the comparative position of non-performing loans in the Saudi banking sector over the period 2009-2017 to determine causes and impacts on bank profitability, using data from annual reports. The study variables are profitability (ROA and ROE) as the dependent variable, and non-performing loans ratio (NPLR) as the independent variable. The data was analyzed by correlation, regression, and analysis of variance (ANOVA) using SPSS. The empirical results represent that NBLR has a negative influence on the dependent variable.Keywords
This publication has 15 references indexed in Scilit:
- Macroeconomic and Institutional Determinants of Non-performing LoansJournal of Central Banking Theory and Practice, 2015
- The Impact of Macroeconomic Variables on the Non Performing Loans in the Albanian Banking System During 2005 - 2012Academic Journal of Interdisciplinary Studies, 2013
- Loan growth and bank risk: new evidenceFinancial Markets and Portfolio Management, 2013
- Nonperforming Loans and Macrofinancial Vulnerabilities in Advanced EconomiesIMF Working Papers, 2011
- Short Term Effect of Consolidation on Profitability of Nigerian BanksAfrican Research Review, 2010
- Differential impact of Korean banking system reforms on bank productivityJournal of Banking & Finance, 2010
- Nonperforming Loans in the GCC Banking System and their Macroeconomic EffectsIMF Working Papers, 2010
- Credit Losses in Australasian BankingEconomic Record, 2009
- Determining management behaviour in European bankingJournal of Banking & Finance, 2004
- Problem loans and cost efficiency in commercial banksJournal of Banking & Finance, 1997