Corruption’s impact on non-performing loans of banks in emerging markets: Empirical insights

Q1 Economics, Econometrics and Finance Research in Globalization Pub Date : 2024-07-30 DOI:10.1016/j.resglo.2024.100241

Abdul Rehman , Waqas Mehmood , Ahnaf Ali Alsmady , Arshian Sharif

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Abstract

Purpose

This study investigates the impact of control of corruption (COC) on nonperforming loans (NPLs) in South Asian countries.

Methodology

The present study selected three South Asian countries (Pakistan, India, and Bangladesh) from 2000 to 2019. Further, the current research employed the fixed effect model (FEM) analysis on a sample of 81 conventional banks based in South Asian countries.

Findings

The result reveals that control of corruption has a significant and negative association with NPLs, indicating that weak control of corruption would lead to an increase in NPLs in the sample countries.

Implications

The findings provide insights to the policymakers in making strategic decisions about NPLs regarding control of corruption impact.

Originality

The significant increase in NPLs is worrying as it may undermine banks’ ability to grant credit and support a country’s economic recovery. The increasing trend of NPL rates and limited studies in related literature assessing NPLs in the South Asian region has motivated this study, which examines the external and internal factors that may influence NPLs

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腐败对新兴市场银行不良贷款的影响：经验启示

本研究调查了腐败控制（COC）对南亚国家不良贷款（NPLs）的影响。方法本研究选取了 2000 年至 2019 年的三个南亚国家（巴基斯坦、印度和孟加拉国）。研究结果表明，腐败控制与不良贷款率之间存在显著的负相关关系，表明腐败控制不力会导致样本国家的不良贷款率上升。原创性不良贷款率的大幅上升令人担忧，因为这可能会削弱银行发放贷款和支持国家经济复苏的能力。不良贷款率呈上升趋势，而评估南亚地区不良贷款的相关文献研究有限，这促使本研究探讨可能影响不良贷款的外部和内部因素。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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