...ASIAN JOURNAL OF MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research © Copyright 2010 All rights reserved Integrated Publishing association Review Article ISSN 2229 – 3795 Non performing assets: Issues, Causes and remedial Solution Poongavanam.S H.O.D., Department of Management studies, Ranippettai Engineering College, Thenkaddapanthangal, Walaja Taluk, Vellore District. -632513 Tamil Nadu. s.poongavanam@gmailo.com ABSTRACT The banking industry has undergone a sea change after the first phase of economic liberalization in 1991 and hence credit management. While the primary function of banks is to lend funds as loans to various sectors such as agriculture, industry, personal loans, housing loans etc., in recent times the banks have become very cautious in extending loans, this is due to mounting nonperforming assets (NPAs). Therefore, an NPA account not only reduces profitability of banks by provisioning in the profit and loss account, but their carrying cost is also increased which results in excess & avoidable management attention. Apart from this, a high level of NPA also puts strain on a banks net worth because banks are under pressure to maintain a desired level of Capital Adequacy and in the absence of comfortable profit level, banks eventually look towards their internal financial strength to fulfill the norms thereby slowly eroding the net worth. Considering all the above facts banking industry has to give more importance to...
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...eurojournals.com A Synthesis of the Critical Factors Affecting Performance of the Nigerian Banking System Godwin Chigozie Okpara Department of Banking and Finance, Abia State University, Uturu E-mail godgozie@yahoo.com Abstract This paper is set out to determine the factors impacting most on the performance of the banking system in Nigeria. To do this, factor analysis technique was used on the factors identified by the collaborative study of the CBN/NDIC. The result revealed that factors such as undue interference from board members, political crises, undercapitalization and fraudulent practices are the most critical factors inhibiting the efficient performance of the Nigerian financial institutions. The author therefore contends that the just concluded N25billion recapitalization exercise of the central bank was a necessary but not a sufficient measure in the right direction. The sufficient measure must be one that controls all the identified critical factors at the same time. 1.0. Introduction Banks in most economies are the principal depositories of the public's financial savings, the nerve centre of the payment system, the vessel endowed with the ability of money creation and allocation of financial resources and conduit through which monetary and credit policies are implemented. The success of monetary policy, to a large extent, depends on the health of the banking institutions through which the policies are implemented. As a result of this central role of banks in the economy...
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...Netherlands Abstract Purpose – The purpose of this paper is to show how some of the assumptions about the current financial crisis are wrong because they misunderstand what takes place in the mortgage market. Design/methodology/approach – The paper discusses four wrong assumptions: one related to regulation, one to leveraging, one to subprime lending and one to predatory lending. It briefly discusses some policy implications. Findings – The role of the state in the mortgage market is more complex than suggested by those who blame the state for not doing anything. The concept of leveraging can explain, at least in part, why the losses in financial markets are bigger than the losses in the housing market. Many subprime loans were sold to prime borrowers. Subprime lending was not designed to increase homeownership rates, but to fuel profits by exploiting vulnerable borrowers. Practical implications – It is too easy to argue that everyone made mistakes; most borrowers cannot be blamed for being sold risky, overpriced loans. A rescue plan is needed for defaulting borrowers and those already in foreclosure. Originality/value – The paper does not present new research, but brings together research that demonstrates that the roots of the crisis in the mortgage market are in many ways different from what is suggested by professionals and journalists alike. Keywords Recession, Credit, Mortgage default, Loans, Regulation, United States of America Paper type Viewpoint 94 critical perspectives...
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...ASSIGNMENTS Table of Contents Graded Assignments 2 Unit 1 Assignment 1: It Takes Courage 2 Unit 2 Assignment 1: Left in the Lurch 3 Unit 3 Assignment 1: Gratitude Journal 4 Unit 4 Assignment 1: Create a Business Letter 5 Unit 5 Presentation 1: Small Group Presentation: Leadership, Conflict Resolution, and Teamwork 7 Unit 5 Assignment 1: Compare and Contrast Effective and Ineffective Leaders 8 Unit 6 Assignment 1: Create a Long-Term Financial Plan 10 Unit 7 Assignment 1: Calculating Credit Scores 11 Unit 8 Assignment 1: Writing a Prospective Schedule 12 Unit 9 Assignment 1: Using Social Media for Job Searches 14 Unit 10 Assignment 1: Putting the Finishing Touches on Your ePortfolio 15 Laboratory Assignments 17 Unit 1 Lab 1: Personal Persistence Narrative 17 Unit 1 Lab 2: Grit Test 21 Unit 2 Lab 1: Optimism 24 Unit 2 Lab 2: Self-Control 25 Unit 3 Lab 1: Curiosity in Modern Times 27 Unit 3 Lab 2: Integrity Matters 28 Unit 4 Lab 1: Create a Research Summary Memorandum 29 Unit 5 Lab 1: Resolving Systemic Conflict: Scenario Analysis 31 Unit 6 Lab 1: Time Value of Money 32 Unit 6 Lab 2: Budget Exercise 33 Unit 7 Lab 1: Calculating House Cost 35 Unit 7 Lab 2: Delayed Gratification 37 Unit 8 Lab 1: Initiative Reflection 39 Unit 8 Lab 2: Time Management Reflection 40 Unit 9 Lab 1: Creating a Professional Profile 41 Unit 10 Lab 1: Creating a Personal and Professional Development Plan 43 Graded Assignments Unit 1 Assignment 1:...
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...FACTORS AFFECTING PERFORMANCE OF COMMERCIAL BANKS IN KENYA BY MAURICE MUIRURI KAARIUKI A RESEARCH PROPOSAL SUBMITTED TO THE SCHOOL OF BUSINESS IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTERS IN BUSINESS ADMINISTRATION, DEGREE OF KENYATTA UNIVERSITY. JULY, 2014 DECLARATION Declaration by the Researcher This research is my original work and has not been presented for a degree in any other University. No part of this study may be reproduced without prior authority of the author and/or Kenyatta University. Signature……………………………………………………… Date………………………. Maurice Muiruri Kariuki Declaration by the Supervisor This research proposal has been submitted for examination with my approval as the university supervisor. Signature……………………………………………………… Date………………………. Name (PhD.) School of Business ACKNOWLEDGEMENT I take this opportunity to express my gratitude and regards to Professor name (PhD.) for his guidance. I am indebted to all the persons and institutions that offered support, encouragement and prayers to me during the entire research. Lastly, I thank almighty, my parents, brother, sisters and friends for their constant encouragement without which this assignment would not be possible. ABSTRACT The study seeks to investigate the factors affecting performance of commercial banks in Kenya. The Background of the study reveals that there has been continued globalization and economic cooperation among the...
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...AN INVESTIGATION OF THE RELATIONSHIP BETWEEN NON-PERFORMING LOANS, MACROECONOMIC FACTORS, AND FINANCIAL FACTORS IN CONTEXT OF PRIVATE COMMERCIAL BANKS IN BANGLADESH by Syeda Zabeen Ahmed ID # 0120269 An Internship Report Presented in Partial Fulfillment of the Requirements for the Degree Bachelor of Business Administration INDEPENDENT UNIVERSITY, BANGLADESH April 2006 An investigation of the relationship between Non-performing Loans, Macroeconomic Factors, and Financial Factors in context of Private Commercial Banks in Bangladesh by Syeda Zabeen Ahmed ID # 0120269 has been approved April, 2006 _________________ Shubhankar Shil Lecturer School of Business Independent University, Bangladesh TABLE OF CONTENTS Page List of Tables Abstract 1. Introduction 2. Problem Statement 3. Purpose of the Study 4. Limitations of the Study 5. Research Timeline 6. Review of Literature 6.1 Non-performing Loans 6.2 Development of hypotheses 6.3 Macroeconomic factors and NPLs 6.4 Bank specific indicators and NPLs 6.5 Terms of Credit and NPLs 7. Methodology 7.1 Research Approach 7.2 Sampling Method 7.3 Measure of variables 7.4 Data Collection Procedure 7.5 Data Analysis 8. Results 8.1 Descriptive 8.2 Correlations 8.3 Regression 9. Significant of the Study 11. Conclusion Reference Appendix 1 I 1 1 2 2 3 3 3 4 5 6 7 7 8 8 8 8 9 9 10 10 11 12 13 13 14 16 List of Tables Page 1. Demographics of respondents 2. Occupational experience of respondents 3. Responsibility statements 4. Reliability...
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...- In India the magnitude of the problem of bad debts was not taken seriously. Subsequently, following the recommendations of Narasimham committee and Verma committee, some steps have been taken to solve the problem of old NPAs in the balance sheets of the banks. It continues to be expressed from every corner that there has rarely been any systematic evaluation of the best way of tackling the problem. There seems to be no unanimity in the proper policies to be followed in resolving this problem. There is also no consistency in the application of NPA norms, ever since these have been recognized. Non Performing Assets are also called as Non Performing Loans. It is made by a bank or finance company on which repayments or interest payments are not being made on time. A loan is an asset for a bank as the interest payments and the repayment of the principal create a stream of cash flows. It is from the interest payments that a bank makes its profits. The problem of NPA is not limited to only Indian public sector banks, but it prevails in the entire banking industry. Major portion of bad debts in Indian Banks arose out of lending to the priority sector at the dictates of politicians and bureaucrats. If only banks had monitored their loans effectively, the bad debt problem could have been contained if not eliminated. The top management of the banks was forced by politicians and bureaucrats to throw good money after bad in the case of unscrupulous borrowers. Agriculture...
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...Unit 7 Assignment 1: Calculating Credit Scores Course Objectives and Learning Outcomes Identify the factors that determine someone’s credit rating. Calculate the cost of a loan given various ratings of the borrower. Analyze various personal finance scenarios dealing with student loans, personal consumer loans, mortgages, the true cost of bad credit, compound interest, savings, investing in assets, budgeting, and using self-control when spending. Assignment Requirements A credit score needs to be protected and improved. You need to understand the true value of a credit score by researching the causes of bad credit scores and how to improve them. Using the Internet and ITT Tech Virtual Library, you will research how the credit score is calculated and what influences the credit score. Answer the following questions in detail. How is your credit score (FICO) created? Who reports your FICO score? What are the factors in determining the FICO score? What steps could you take to improve your FICO score? Required Resources Skills for Living a Rich Life, Chapter 12 Computer with MS Word and Internet access ITT Tech Virtual Library Printer Submission Requirements Prepare a two- to three-page typed paper, double-spaced, using 12-point Times New Roman font. Please include appropriate references in APA format. This assignment is due at the beginning of Unit 8. GS2745 UNIT 7 ASSIGNMENT 1 How is your credit score (FICO) created? FICO Scores are calculated...
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...LONDON SCHOOL OF BUSINESS AND FINANCE CREDIT RISK MANAGEMENT OF NON-BANKING FINANCIAL INSTITTUTION IN GHANA (A CASE STUDY OF TF FINANCIAL SERVICES) BY STEPHEN KWADWO NTIRI A Thesis Submitted to the London School of Business and Finance in Partial Fulfilment of the Requirement for the MBA Degree in Financial Services MARCH 2010 DECLARATION I Stephen Kwadwo Ntiri hereby declare that except for references to other people’s work, which have duly been acknowledged, the work presented here was carried out by me, MBA student of Financial Servies at the London School of Business and Finance (LSBF), under the supervision of Randolph Metz-Johnson. I also declare that this work has never been submitted partially or wholly to any other institution for the award of a certificate. …………………………………………… ……………... Stephen Kwadwo Ntiri Date (Student) ………………………………………… …………… Randolph Metz-Johnson Date (Supervisor) Dedication This research project is dedicated to Almighty God for His abundant blessings and protection given me throughout this study, and also to my family for the support I received from them. Acknowledgement I am most grateful to Almighty God who through His infinite mercy and love guided me throughout the duration of the programme. I wish to acknowledge the help and encouragement I got from the entire staff of TF Financial Services, especially Mr. Benjamin Turkson, which has enabled me to complete this work. I also want to thank my wife, Esther Yamoaba...
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...of the study 3 1.4 Research Questions 3 1.5 Scope of the Study 4 1.6 Significance of the Study 4 1.7 Limitation of the Study 4 2. REVIEW RELATED LITERATURE 5 2.1 Introduction 5 2.2 Credit Assessment 5 2.3 Credit Appraisal 6 2.4 Credit Documentation 6 2.5 Collateral 7 2.6 Interest Rate 7 2.7 Size of Loan 8 2.8 Purpose of Loan 8 2.9 Loan Period 8 2.10 Disbursement 9 2.11 Repayment of Bank Loans 9 2.12 Monitoring and Follow up 9 2.13 Factoring of Debtors through Credit Bureaus 10 2.14 Portfolio Management 10 3. RESEARCH METHODOLOGY 11 3.1 Research Method 11 3.2 Method of Data Collection 11 3.3 Determination of Population Size of the Study 12 3.4 Sample Size 12 3.5 Method Data Analyses 12 4. TIMELINE 12 5. BUDGET BREAKDOWN 13 6. REFERENCES 13 1. INTRODUCTION 1.1 Back Ground of the Study Bank lending is guided by credit policies which are guidelines and procedures put in place to ensure smooth lending operations. Bank lending if not properly assessed, involves the risk that he borrower will not be able or willing to honor their obligations (Feder & Just 1980). In order to lend, banks accept deposits from the public against which they provide loans and other form of advances. Since they bear a cost for carrying these deposits, banks undertake lending activities in order to generate revenue. The major sources of revenue comprise margins, interests, fees and commissions (Odongo, 2004). Beyond the urge to extend credit and generate revenue...
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...Kapil Baheti SUBMITTED TO:- International School of Infomatics & Management CONTENTS Sr.No. Page No. y y y y Chapter I Preface Guide Certificate Declaration Acknowledgement Introduction (Conceptual Framework) y y y y y Chapter II Chapter III Introduction Significance of the study Merchant Banking in India Focus of the Study Conceptualization literature Review Objective &Methodology y y y y Objective of the study Research design Sample size & Technique Data collection (Primary & Secondary) Chapter IV Data Presentation & Analysis Chapter V Implications & Conclusions Chapter VI Bibliography PREFACE The research studies are of a great help in enhancing the knowledge of a person. Practical knowledge is a suffix to theoretical knowledge. Classroom lecturers clarify the fundamental concepts of management. But classroom lectures must be correlated with the practical research situation. It is in this sense that the research project is made compulsory for the curriculum and has a significant role to play in the field of business management. Through this type of project one can understand the application of theory into practical. But it is only difficulties, which makes the success dears. In this project I have put a lot of effort to make it a success. Kapil Baheti...
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...s oНОВИНИ ЗАРУБІЖНОЇ НАУКИ 415 Mian Sajid Nazir1, Aqsa Butt2, Muhammad Musarrat Nawaz3 INTEREST RATE DETERMINANTS OF BANKS IN PAKISTAN This study attempts to investigate determinant factors of interest rate differential on deposits and loan accounts of Pakistani banks. For this purpose 4 year data on 30 banks is included in this research paper. The empirical results based on the correlational analysis of the relationship between weighted average rate of interest and 10 independent variables which are credit risk, amount of deposit, administrative cost, profit margins, bank's liquidity, amount of loan, market share, inflation rate, macroeconomic conditions and bank specific factors. These variables will help to highlight customer reaction towards variation in interest rates which help banks to review their policies regarding interest rates, margins and risk premium. The results shows that credit risk, administrative costs, profit margins and deposit amounts are important factors for the interest rate determination and these are positively related with interest rate. Bank's liquidity and deposit amount have negative relationship with interest rate. Meanwhile, inflation and market share have no significant relationship with interest rate fluctuations. Keywords: interest rate; banking sector; Pakistan; risk; deposits. Міан Саїд Назір, Акса Батт, Мухаммад Музаррат Наваз ЧИННИКИ, ЩО ВИЗНАЧАЮТЬ ВІДСОТКОВІ СТАВКИ У БАНКАХ ПАКИСТАНУ У статті зроблено спробу визначити чинники...
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...University of Nottingham Credit Risk Management in Major British Banks By Xiuzhu Zhao 2007 A Dissertation presented in part consideration for the degree of “MA Finance and Investment” Acknowledgement I would like to express my special thanks to my supervisor Mrs. Margaret Woods, who has given me strong support and encouragement during the whole research, and I am very appreciate of the expert guidance and inspiration she brought me. I am very grateful to my parents for their love and encouragement during my whole education period. The academic suggestions my father has given help me a lot in designing the dissertation. Last but not least, I would like to thank all my friends especially those in Melton Hall. I will never forget the help they have offered, which raises my confidence in completing this dissertation. i Abstract Credit risk is always treated as the major risk inherent in a bank’s banking and trading activities. And if not well managed, this kind of risk may drag a bank into great trouble or even bankruptcy, which can be proved by various bank failure cases. For banks, managing credit risk is not a simple task since comprehensive considerations and practices are needed for identifying, measuring, controlling and minimizing credit risk. In this dissertation, the credit risk management practices of major British banks are examined through the quantitative research on all Major British Banking Group members and qualitative analysis on the four sample banks....
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...DETERMINING CREDIT WORTHINESS OF A COMPANY; A CASE OF NATIONAL FABRICATORS I. Introduction/background a. What is the case about? b. What are the issues to be analysed? - What are the options? - What are the decisions to be made? II. Analysis of the issues III. Recommendations with reasons IV. Executive Summary INTRODUCTION/ BACKGROUND What is the case about? In July 1994, the president of National Fabricators Inc Mr. Tom Kruger called his bank manager of the confederation Bank of Canada, Mr.Jim Kashmar to ask that the bank continue to extend a temporary line of credit of $ 1,000,000 for a period of sixty days. They needed this extension because there had been some delays in the collection of the company’s holdbacks for that period. After the sixty days they hoped to have collected their holdbacks and other receivables so they would return to their normal line of credit which was $800,00. In the month before however, national fabricators had asked for the same extension in credit as a result of delays in the collection of some payments for locker room installations done. The bank had reluctantly extended the credit on the basis of the confidence in the new president of the company, relations with client and the company’s impact on community. They however stated that, nothing in the application warranted the extension of further credit. As such this new appeal for an extension had to be...
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...Index | S/N | Topics | Page No. | 1 | ACKNOWLEDGEMENT | 00 | 2 | Initialization | 01 | 3 | Managerial Decision | 02 | 4 | Z- Score Analyze | 03 | 5 | Z – Score from Financial Statement | 03-09 | 6 | Result Verification | 10 | 7 | Reference | 00 | Initialization Bangladesh Development Bank Limited (BDBL) Bangladesh Development Bank Limited (BDBL) is fully state owned Commercial Bank of Bangladesh. In addition commercial banking, BDBL provides financial and technical assistance to broaden the private as well as public sector industrial base of the country. It prioritizes, especially, Export Oriented/Export Linkage industrial units, Efficient Import Substitution, Joint Ventures, Commercialization of local technology and promotion of agro-based industry. Vision, Mission, Values of the Bank: Vision: To emerge as the country’s prime Financial Institution for supporting private sector industrial and other projects of great significance to the country’s economic development. Also be active participant in commercial banking by introducing new lines of product and providing excellent services to the customers. Mission: * To be competitive with other Banks and Financial Institutions in rendering services ; * To contribute to the country’s socio-economic development by identifying new and profitable areas for investment ; * To mobilize deposit for productive investment ; * To expand branch network in commercially and geographically important places...
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