Next Article in Journal
Modeling and Predictability of Exchange Rate Changes by the Extended Relative Nelson–Siegel Class of Models
Previous Article in Journal
Technical Efficiency of Banks in Central and Eastern Europe
Article Menu

Export Article

Open AccessArticle
Int. J. Financial Stud. 2018, 6(3), 67; https://doi.org/10.3390/ijfs6030067

Does Banking Management Affect Credit Risk? Evidence from the Indian Banking System

1
Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing 100190, China
2
University of Chinese Academy of Sciences, Beijing 100049, China
3
Public Administration Campus, Tribhuvan University, Kathmandu 44600, Nepal
4
School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China
*
Author to whom correspondence should be addressed.
Received: 26 April 2018 / Revised: 17 July 2018 / Accepted: 18 July 2018 / Published: 23 July 2018
Full-Text   |   PDF [252 KB, uploaded 23 July 2018]

Abstract

This study investigated the impact of banking management on credit risk using a sample of Indian commercial banks. The study employed dynamic panel estimations to evaluate the link between banking management variables and credit risk. The empirical results show that an increase in loan portion over total assets does not necessarily increase problem loans. The findings suggest that high capital requirements and large bank size do not reduce default risk, whereas high profitability and strong income diversification policies lower the likelihood of default risk. The overall empirical results supported the “operating efficiency”, “diversification” and “too big to fail” hypotheses, confirming that credit quality in the banking industry is mainly driven by profitability, banking supervision, high credit standards and strong investment strategies. The findings are relevant to bank managers, investors and bank regulators, in formulating effective credit policies and investment strategies. View Full-Text
Keywords: capitalization; generalized method of moment (GMM); income diversification; non-performing loan; profitability capitalization; generalized method of moment (GMM); income diversification; non-performing loan; profitability
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Koju, L.; Koju, R.; Wang, S. Does Banking Management Affect Credit Risk? Evidence from the Indian Banking System. Int. J. Financial Stud. 2018, 6, 67.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top