The Factors Affecting the Credit Risk in the Iranian Banks: The Case Study of Mellat Banks.

Author(s)

Dr. Mohammad Hassan Haddadi ,

Download Full PDF Pages: 73-85 | Views: 349 | Downloads: 98 | DOI: 10.5281/zenodo.3466164

Volume 5 - October 2016 (10)

Abstract

This study aimed to identify the factors affecting credit risk of Iranian banks, with special reference to customers of Mellat bank at Gholston province of Iran. By applying "DEMATEL" technique, we could select only 186 document out of 235 for the period five years from, 2011 to 2015. For this purpose, first, Theoretical framework and background related to the issue of research was studied and all of the factors affecting credit risk were identified and the information related to factors affecting the credit risk were collected from bank records of customers who received the credit facility from Mellat Bank of Golestan province at Iran. The results of logistic regression analysis and the results of "DEMATEL" technique showed that among selected variables there is a significant relationship between credit risk of customers and liquidity ratios, Leverage ratios but, in other side there is an inverse relationship between credit risk of customers and Profitability ratios, Activity ratios and Qualitative variables.

Keywords

Credit risk, debt ratio, Qualitative variables, Liquidity ratios, Leverage ratios.

References

  1. aAl-Smadi, M. O., & Ahmed, N. H. (2009). Factors Affecting Banks‟ Credit Risk: Evidence from Jordan. Collage of Business, University Utara Malaysia, Malaysia.
  2. Ayni R. and Moke, N. (2012). Credit Risk and Commercial Banks‟ Performance in Nigeria: A Panel Model Approach, Australian Journal of Business and Management Research, Vol.2 No.02 [31-38] | May-2012 pp 31-38.
  3. Brown, K. and Moles, P. (2012). Credit Risk Management, Edinburgh Business School, Heriot - Watt University, U.K.
  4. Das, A., & Ghosh S. (2007). Determinants of Credit Risk in Indian State-Owned Banks: An Empirical Investigation, Economic Issues, Vol. 12, No. 2 pp. 48-66.
  5. David, K. (2013). Determinants of Credit Risk in the Banking Industry of Ghana, Journal of Development Studies, iste , Vol.3, No.11, 2013, Pp: 64-77.
  6. Demetriades, P. O., & Luintel K.B. (1996). Financial Development, Economic Growth and Banking Sector Controls: Evidence from India, Economic Journal, 106.
  7. Demirguc-Kunt, A. and Huzinga, H. (1999). Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence, The World Bank Economic Review, 13(2), 379-40.
  8. Gonzales-Hermosillo, B., Pazarbasioglu, C. and Billings, R (1997). Determinants of Banking System Fragility: A Case Study of Mexico; IMF Staff Papers Vol. 44, No.3.
  9. Grigori, F. and Igor N. (2011). The Comparative Analysis of Credit Risk Determinants In the Banking Sector of the Baltic States (unpublished paper): http://www.bapress.ca/Journalomparative, Analysis, Credit Risk, Determinants, Banking.
  10. Gup, B. E., Avram, K., Beal, D., Lambert, R., and Kolari, J. W. (2007). Commercial Banking: The Management of Risk (3rd Ed.) Australia: John Wiley and Sons Ltd.
  11. Kurawa, J., (2014). An Evaluation of the Effect of Credit Risk Management (CRM) on the Profitability of Nigerian banks, Journal of Modern Accounting and Auditing, Vol. 10 N0 1, 104-115.
  12. Moses, o., (2013), Credit Risk Mitigation Strategies Adopted By Commercial Banks in Kenya, International Journal of Business and Social Science Vol. 4 No. 6; June 2013 PP 71-78.
  13. Mwirigi, P. Kwagara (2006). An Assessment of Credit Risk Management techniques adopted by micro finance institutions in Kenya. Unpublished MBA research project, University of Nairobi. findings, Economic and Political Weekly, 34,16-23.
  14. Narayan, S., Kalpana S., Sanhita S. (2003). "A Survey of International Financial Risk Management System" issue 4/2013, page 190. E Nawaz, M. and Munir, S. (2012). Credit risk and the performance of Nigerian, Interdisciplinary Journal of Contemporary Research in, 4 (7), pp. 49-63. Available at: http://journalrchieves25.webs.com.
  15. Njanike, K. (2009). The Impact of Effective Credit Risk Management on Bank Survival, Journal of Financial Regulation and Compliance, Working paper, Bindura University, Zimbabwe. Available at: https://ideas.repec.org.
  16. Rose, P. S. & Hudgins, S. C. (2008). Bank Management & Financial Series 7th Edition; McGraw Hill/Irwin.
  17. Saunders, A. and Cornett, M.M. (2002). Financial Institutions Management: A risk management approach (4th edition). McGraw Hill, New York.
  18. Saunders, A., and Cornett, M. M. (2008). Financial Institutions Management, 6th Edition, McGraw-Hill/Irwin, Pp: 183- 184.
  19. Tseganesh, T. (2012). Determinants of Banks Liquidity and their Impact on Financial Performance: empirical study on commercial Banks in Ethiopia.
  20. Wanzenried, G., and Dietrich, A. (2011). “Determinants of Bank profitability before and during the crisis: Evidence from Switzerland”, Journal of International Financial Markets, Institutions and Money, 2, 307-327.

Cite this Article: