Sensitivity of Non-Performing Loan to Macroeconomic Variables: Empirical Evidence from Banking Industry of Bangladesh

Sensitivity of Non-Performing Loan to Macroeconomic Variables: Empirical Evidence from Banking Industry of Bangladesh

Tandra Mondal

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University of Barishal

Sensitivity of Non-Performing Loan to Macroeconomic Variables: Empirical Evidence from Banking Industry of Bangladesh

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Abstract

This paper attempts to examine the potential effect of macroeconomic variables on the downfall of loans. The data used in this study range from 2005 to 2014 and cover 22 commercial banks operating in Bangladesh. Failure of credit policy is measured with the rate of nonperforming loan (NPL) which indicates vulnerability of credit system in banking and financial industry. Several researches have been conducted in many countries where mix pattern of relationships has been found. In this research paper, four macroeconomic variables named GDP growth rate, inflation rate, interest rate spread of banking sector and rate of unemployment are tested with NPL ratio in order to ascertain significant relationship for commercial banks of Bangladesh. The result of econometric analysis revealed that NPL is negatively sensitive to inflation rate and interest rate spread and positively sensitive to GDP and unemployment rate.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

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Not applicable for this article.

How to Cite This Article

Tandra Mondal. 2016. \u201cSensitivity of Non-Performing Loan to Macroeconomic Variables: Empirical Evidence from Banking Industry of Bangladesh\u201d. Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 16 (GJMBR Volume 16 Issue C4).

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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Classification

GJMBR-C Classification JEL Code: B22

Submission ReceivedDecember 13, 2015
Peer Review Double Blind
Handling Editor
Accepted January 5, 2016
Published January 15, 2016

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v1.2

Issue date

April 28, 2016

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Article Matrices

Total Score: 101

Country: Bangladesh

Subject: Global Journal of Management and Business Research - C: Finance

Authors: Tandra Mondal (PhD/Dr. count: 0)

View Count (all-time): 195

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Publish Date: 2016 04, Thu

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Total Views: 3807

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