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Quantitative study of bank-specific and social factors of non-performing loans of Pakistani banking sector
[journal article]
Abstract The Non-Performing loans presented picture of a distorted and slow-paced economy. This issue became more critical when it was observed that NPLs were declining in South East countries except for Pakistan. This study has dual purposes: Firstly to build up a model clarifying the relationship between b... view more
The Non-Performing loans presented picture of a distorted and slow-paced economy. This issue became more critical when it was observed that NPLs were declining in South East countries except for Pakistan. This study has dual purposes: Firstly to build up a model clarifying the relationship between bank-specific, social factors and non-performing loans. Secondly, to investigate this model in the setting of Pakistani Banking sector as limited interest has been given in existing literature in defining the relationship between bank specific, social factors and non-performing loans. The quantitative methodology is used as it is the most suitable for fulfillment of the study objectives. The results show that various bank-specific factors like credit assessment, credit monitoring and rapid credit growth have significant affect on Non-Performing Loans, whereas interest has a weak significance on NPLs. The social factors including political interference and bankers' incompetence have significant affects on NPLs and these have been important factors in explaining the Non-Performing Loans. This ground-breaking work on Non-Performing Loans and its factors will not only help the entire Pakistani banking sector to control Non-Performing Loans but also its results can be generalized on other countries as well.... view less
Keywords
Pakistan; banking; credit system; social factors; credit policy
Classification
Economic Sectors
Economic Policy
Document language
English
Publication Year
2015
Page/Pages
p. 192-213
Journal
International Letters of Social and Humanistic Sciences (2015) 43
DOI
https://doi.org/10.18052/www.scipress.com/ILSHS.43.192
ISSN
2300-2697
Status
Published Version; peer reviewed