The study intends to contribute to a more serious understanding of consumer acceptance of product... more The study intends to contribute to a more serious understanding of consumer acceptance of product placement and its influence on purchase intention of consumers. 168 respondents from different cities of Bangladesh participated in the study. The methodology of the study designed using the true experimental method. Collected data has been analyzed via SPSS windows software version 24. This study is guided by the Theory of Reasoned Action, which recommends that individual consumers' behavior is guided by their purchase intention. the consumer awareness of product placement does not influence the consumer attitude toward product placement significantly. It may have its impact on consumer behavior but it's not a major influence. The study also suggests that consumer attitude toward product placement is the most influential variable than the consumer attitude in shaping consumer purchase decision and product placement may not have a huge impact on consumer purchase decision. Abstract-The study intends to contribute to a more serious understanding of consumer acceptance of product placement and its influence on purchase intention of consumers. 168 respondents from different cities of Bangladesh participated in the study. The methodology of the study designed using the true experimental method. Collected data has been analyzed via SPSS windows software version 24. This study is guided by the Theory of Reasoned Action, which recommends that individual consumers' behavior is guided by their purchase intention. the consumer awareness of product placement does not influence the consumer attitude toward product placement significantly. It may have its impact on consumer behavior but it's not a major influence. The study also suggests that consumer attitude toward product placement is the most influential variable than the consumer attitude in shaping consumer purchase decision and product placement may not have a huge impact on consumer purchase decision. Some recommendations are provided to the marketers and researchers to improve the placement efficiency.
Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversif... more Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversifying its investment from lease financing to housing financing, merchant banking, venture capital financing and equity financing. The aim of this paper is to show the structural development of NBFIs, performance appraisal of NBFIs and their contribution to the economy in line with GDP. This paper reveals that more participation of private firms in non-banking financial sectors makes this sector less concentrated and more competitive. This paper also finds out that cost of fund of NBFIs is decreasing over the period that indicates rising capacity of borrowing low-cost fund of NBFIs. But the reduction in the cost of the fund could not improve the much to increase the ROA & ROE due to increasing in operating expense, lack of investment opportunity and blocked money in the capital market. Further, NBFIs have high non-performing loan rate that is gradually increasing in nature. The whole industry is doing well in terms of collection of total deposits and lending credit although NPL rate is high. A highly positive correlation is found between total assets of NBFIs and GDP of Bangladesh that contents a positive contribution of NBFIs in the economy.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively. Abstract-This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively. Abstract-This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively. Abstract-This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversif... more Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversifying its investment from lease financing to housing financing, merchant banking, venture capital financing and equity financing. The aim of this paper is to show the structural development of NBFIs, performance appraisal of NBFIs and their contribution to the economy in line with GDP. This paper reveals that more participation of private firms in non-banking financial sectors makes this sector less concentrated and more competitive. This paper also finds out that cost of fund of NBFIs is decreasing over the period that indicates rising capacity of borrowing low-cost fund of NBFIs. But the reduction in the cost of the fund could not improve the much to increase the ROA & ROE due to increasing in operating expense, lack of investment opportunity and blocked money in the capital market. Further, NBFIs have high non-performing loan rate that is gradually increasing in nature. The whole industry is doing well in terms of collection of total deposits and lending credit although NPL rate is high. A highly positive correlation is found between total assets of NBFIs and GDP of Bangladesh that contents a positive contribution of NBFIs in the economy.
This paper attempts to have an empirical analysis of the performance, growth, and potentiality of... more This paper attempts to have an empirical analysis of the performance, growth, and potentiality of the Islamic Banking across the world with a particular reference to Bangladesh. To achieve its aim and objectives, initially, this paper reviewed the existing knowledge-followed by a qualitative method of documentation analysis of 8 Islamic banks in performance with 965 branches, 9 conventional banks with 20 branches of Islamic banking facilities and 7 conventional banks with 25 Islamic banking windows are providing Islamic banking services in Bangladesh. Comments are derived from the analysis of the findings of these banks. The findings revealed that Islamic Banking system becomes a popular term of banking to the people of Bangladesh. Abstract-This paper attempts to have an empirical analysis of the performance, growth, and potentiality of the Islamic Banking across the world with a particular reference to
Loans and advances are the major components of the asset composition of all commercial banks. The... more Loans and advances are the major components of the asset composition of all commercial banks. The high concentration of loans and advances increases the vulnerability of assets to credit risk. The most important indicator to identify the asset quality in the loan portfolio is the ratio of gross non-performing loans (NPLs) to total loans and net NPLs to net total loans. At the end of December 2014, PCBs had the lowest and DFIs had the highest ratio of gross NPLs to total loans. PCBs' gross NPLs to total loans ratio was 5.0%, whereas that of SCBs, FCBs and DFIs were 22.2, 7.3 and 32.8% respectively in 2014 (Table 5.3). The gross NPL ratios to total loans for the SCBs, PCBs, FCBs and DFIs were recorded as 21.9, 5.7, 8.2 and 25.5% respectively at end of June 2015. Nonperforming loans (“NPLs”) refer to those financial assets from which banks no longer receive interest and/or installment payments as scheduled. They are known as non-performing because the loan ceases to “perform” or generate income for the bank. Choudhury et al. (2002: 21-54) state that the nonperforming loan is not a “uniclass” but rather a “multiclass” concept, which means that NPLs can be classified into different varieties usually based on the “length of overdue” of the said loans. NPLs are viewed as a typical byproduct of financial crisis: they are not a main product of the lending function but rather an accidental occurrence of the lending process, one that has enormous potential to deepen the severity and duration of financial crisis and to complicate macro economic management (Woo, 2000: 2). This is because NPLs can bring down investors’ confidence in the banking system, piling up unproductive economic resources even though depreciations are taken care of, and impeding the resource allocation process. In a bank-centered financial system, NPLs can further thwart economic recovery by shrinking operating margin and eroding the capital base of the banks to advance new loans. This is sometimes referred to as “credit crunch” (Bernanke et al., 1991: 204-248). In addition, NPLs, if created by the borrowers willingly and left unresolved, might act as a contagious financial malaise by driving good borrowers out of the financial market.1 Further, Muniappan (2002: 25-26) argues that a bank with high level of NPLs is forced to incur carrying costs on non-income yielding assets that not only strike at profitability but also at the capital adequacy of a bank, and in consequence, the bank faces difficulties in augmenting capital resources. Bonin and Huang (2001: 197-214) also state that the probability of banking crises increases if financial risk is not eliminated quickly. Such crises not only lower living standards but can also eliminate many of the achievements of economic reform overnight. The economic and financial implications of NPLs in a bank-centered financial economy can be best explained by the following diagram:
The study intends to contribute to a more serious understanding of consumer acceptance of product... more The study intends to contribute to a more serious understanding of consumer acceptance of product placement and its influence on purchase intention of consumers. 168 respondents from different cities of Bangladesh participated in the study. The methodology of the study designed using the true experimental method. Collected data has been analyzed via SPSS windows software version 24. This study is guided by the Theory of Reasoned Action, which recommends that individual consumers' behavior is guided by their purchase intention. the consumer awareness of product placement does not influence the consumer attitude toward product placement significantly. It may have its impact on consumer behavior but it's not a major influence. The study also suggests that consumer attitude toward product placement is the most influential variable than the consumer attitude in shaping consumer purchase decision and product placement may not have a huge impact on consumer purchase decision. Abstract-The study intends to contribute to a more serious understanding of consumer acceptance of product placement and its influence on purchase intention of consumers. 168 respondents from different cities of Bangladesh participated in the study. The methodology of the study designed using the true experimental method. Collected data has been analyzed via SPSS windows software version 24. This study is guided by the Theory of Reasoned Action, which recommends that individual consumers' behavior is guided by their purchase intention. the consumer awareness of product placement does not influence the consumer attitude toward product placement significantly. It may have its impact on consumer behavior but it's not a major influence. The study also suggests that consumer attitude toward product placement is the most influential variable than the consumer attitude in shaping consumer purchase decision and product placement may not have a huge impact on consumer purchase decision. Some recommendations are provided to the marketers and researchers to improve the placement efficiency.
Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversif... more Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversifying its investment from lease financing to housing financing, merchant banking, venture capital financing and equity financing. The aim of this paper is to show the structural development of NBFIs, performance appraisal of NBFIs and their contribution to the economy in line with GDP. This paper reveals that more participation of private firms in non-banking financial sectors makes this sector less concentrated and more competitive. This paper also finds out that cost of fund of NBFIs is decreasing over the period that indicates rising capacity of borrowing low-cost fund of NBFIs. But the reduction in the cost of the fund could not improve the much to increase the ROA & ROE due to increasing in operating expense, lack of investment opportunity and blocked money in the capital market. Further, NBFIs have high non-performing loan rate that is gradually increasing in nature. The whole industry is doing well in terms of collection of total deposits and lending credit although NPL rate is high. A highly positive correlation is found between total assets of NBFIs and GDP of Bangladesh that contents a positive contribution of NBFIs in the economy.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively. Abstract-This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively. Abstract-This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
This study aims at looking into consumer perception towards green values created by the green mar... more This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively. Abstract-This study aims at looking into consumer perception towards green values created by the green marketing efforts by the promoters and its impact on their purchasing behavior of eco-friendly sustainable products. This study also highlights the resolution of the efforts set by marketers in promoting green brand awareness in the consumer's mind relative to the non-green products. It further highlights the consumer perception and the impact of green marketing communication to see how consumers are influenced to opt for green products. The study includes the result of a consumer product and green marketing survey using a questionnaire devised by the authors on the basis of several types of research carried in the field. This study holds that despite there is a lot of scope in Bangladeshi market for green products to be utilized more within consumer groups that have pro-environmental preferences, green product marketing communication isn't revealing enough to consumers. The study urges that the greater use of marketing and brands to promote and sell products that are environmentally favorable and function effectively.
Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversif... more Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversifying its investment from lease financing to housing financing, merchant banking, venture capital financing and equity financing. The aim of this paper is to show the structural development of NBFIs, performance appraisal of NBFIs and their contribution to the economy in line with GDP. This paper reveals that more participation of private firms in non-banking financial sectors makes this sector less concentrated and more competitive. This paper also finds out that cost of fund of NBFIs is decreasing over the period that indicates rising capacity of borrowing low-cost fund of NBFIs. But the reduction in the cost of the fund could not improve the much to increase the ROA & ROE due to increasing in operating expense, lack of investment opportunity and blocked money in the capital market. Further, NBFIs have high non-performing loan rate that is gradually increasing in nature. The whole industry is doing well in terms of collection of total deposits and lending credit although NPL rate is high. A highly positive correlation is found between total assets of NBFIs and GDP of Bangladesh that contents a positive contribution of NBFIs in the economy.
This paper attempts to have an empirical analysis of the performance, growth, and potentiality of... more This paper attempts to have an empirical analysis of the performance, growth, and potentiality of the Islamic Banking across the world with a particular reference to Bangladesh. To achieve its aim and objectives, initially, this paper reviewed the existing knowledge-followed by a qualitative method of documentation analysis of 8 Islamic banks in performance with 965 branches, 9 conventional banks with 20 branches of Islamic banking facilities and 7 conventional banks with 25 Islamic banking windows are providing Islamic banking services in Bangladesh. Comments are derived from the analysis of the findings of these banks. The findings revealed that Islamic Banking system becomes a popular term of banking to the people of Bangladesh. Abstract-This paper attempts to have an empirical analysis of the performance, growth, and potentiality of the Islamic Banking across the world with a particular reference to
Loans and advances are the major components of the asset composition of all commercial banks. The... more Loans and advances are the major components of the asset composition of all commercial banks. The high concentration of loans and advances increases the vulnerability of assets to credit risk. The most important indicator to identify the asset quality in the loan portfolio is the ratio of gross non-performing loans (NPLs) to total loans and net NPLs to net total loans. At the end of December 2014, PCBs had the lowest and DFIs had the highest ratio of gross NPLs to total loans. PCBs' gross NPLs to total loans ratio was 5.0%, whereas that of SCBs, FCBs and DFIs were 22.2, 7.3 and 32.8% respectively in 2014 (Table 5.3). The gross NPL ratios to total loans for the SCBs, PCBs, FCBs and DFIs were recorded as 21.9, 5.7, 8.2 and 25.5% respectively at end of June 2015. Nonperforming loans (“NPLs”) refer to those financial assets from which banks no longer receive interest and/or installment payments as scheduled. They are known as non-performing because the loan ceases to “perform” or generate income for the bank. Choudhury et al. (2002: 21-54) state that the nonperforming loan is not a “uniclass” but rather a “multiclass” concept, which means that NPLs can be classified into different varieties usually based on the “length of overdue” of the said loans. NPLs are viewed as a typical byproduct of financial crisis: they are not a main product of the lending function but rather an accidental occurrence of the lending process, one that has enormous potential to deepen the severity and duration of financial crisis and to complicate macro economic management (Woo, 2000: 2). This is because NPLs can bring down investors’ confidence in the banking system, piling up unproductive economic resources even though depreciations are taken care of, and impeding the resource allocation process. In a bank-centered financial system, NPLs can further thwart economic recovery by shrinking operating margin and eroding the capital base of the banks to advance new loans. This is sometimes referred to as “credit crunch” (Bernanke et al., 1991: 204-248). In addition, NPLs, if created by the borrowers willingly and left unresolved, might act as a contagious financial malaise by driving good borrowers out of the financial market.1 Further, Muniappan (2002: 25-26) argues that a bank with high level of NPLs is forced to incur carrying costs on non-income yielding assets that not only strike at profitability but also at the capital adequacy of a bank, and in consequence, the bank faces difficulties in augmenting capital resources. Bonin and Huang (2001: 197-214) also state that the probability of banking crises increases if financial risk is not eliminated quickly. Such crises not only lower living standards but can also eliminate many of the achievements of economic reform overnight. The economic and financial implications of NPLs in a bank-centered financial economy can be best explained by the following diagram:
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The most important indicator to identify the asset quality in the loan portfolio is the ratio of gross non-performing loans (NPLs) to total loans and net NPLs to net total loans. At the end of December 2014, PCBs had the lowest and DFIs had the highest ratio of gross NPLs to total loans. PCBs' gross NPLs to total loans ratio was 5.0%, whereas that of SCBs, FCBs and DFIs were 22.2, 7.3 and 32.8% respectively in 2014 (Table 5.3). The gross NPL ratios to total loans for the SCBs, PCBs, FCBs and DFIs were recorded as 21.9, 5.7, 8.2 and 25.5% respectively at end of June 2015.
Nonperforming loans (“NPLs”) refer to those financial assets from which banks no longer receive interest and/or installment payments as scheduled. They are known as non-performing because the loan ceases to “perform” or generate income for the bank. Choudhury et al. (2002: 21-54) state that the nonperforming loan is not a “uniclass” but rather a “multiclass” concept, which means that NPLs can be classified into different varieties usually based on the “length of overdue” of the said loans. NPLs are viewed as a typical byproduct of financial crisis: they are not a main product of the lending function but rather an accidental occurrence of the lending process, one that has enormous potential to deepen the severity and duration of financial crisis and to complicate macro economic management (Woo, 2000: 2). This is because NPLs can bring down investors’ confidence in the banking system, piling up unproductive economic resources even though depreciations are taken care of, and impeding the resource allocation process.
In a bank-centered financial system, NPLs can further thwart economic recovery by shrinking operating margin and eroding the capital base of the banks to advance new loans. This is sometimes referred to as “credit crunch” (Bernanke et al., 1991: 204-248).
In addition, NPLs, if created by the borrowers willingly and left unresolved, might act as a contagious financial malaise by driving good borrowers out of the financial market.1 Further, Muniappan (2002: 25-26) argues that a bank with high level of NPLs is forced to incur carrying costs on non-income yielding assets that not only strike at profitability but also at the capital adequacy of a bank, and in consequence, the bank faces difficulties in augmenting capital resources. Bonin and Huang (2001: 197-214) also state that the probability of banking crises increases if financial risk is not eliminated quickly. Such crises not only lower living standards but can also eliminate many of the achievements of economic reform overnight. The economic and financial implications of NPLs in a bank-centered financial economy can be best explained by the following diagram:
The most important indicator to identify the asset quality in the loan portfolio is the ratio of gross non-performing loans (NPLs) to total loans and net NPLs to net total loans. At the end of December 2014, PCBs had the lowest and DFIs had the highest ratio of gross NPLs to total loans. PCBs' gross NPLs to total loans ratio was 5.0%, whereas that of SCBs, FCBs and DFIs were 22.2, 7.3 and 32.8% respectively in 2014 (Table 5.3). The gross NPL ratios to total loans for the SCBs, PCBs, FCBs and DFIs were recorded as 21.9, 5.7, 8.2 and 25.5% respectively at end of June 2015.
Nonperforming loans (“NPLs”) refer to those financial assets from which banks no longer receive interest and/or installment payments as scheduled. They are known as non-performing because the loan ceases to “perform” or generate income for the bank. Choudhury et al. (2002: 21-54) state that the nonperforming loan is not a “uniclass” but rather a “multiclass” concept, which means that NPLs can be classified into different varieties usually based on the “length of overdue” of the said loans. NPLs are viewed as a typical byproduct of financial crisis: they are not a main product of the lending function but rather an accidental occurrence of the lending process, one that has enormous potential to deepen the severity and duration of financial crisis and to complicate macro economic management (Woo, 2000: 2). This is because NPLs can bring down investors’ confidence in the banking system, piling up unproductive economic resources even though depreciations are taken care of, and impeding the resource allocation process.
In a bank-centered financial system, NPLs can further thwart economic recovery by shrinking operating margin and eroding the capital base of the banks to advance new loans. This is sometimes referred to as “credit crunch” (Bernanke et al., 1991: 204-248).
In addition, NPLs, if created by the borrowers willingly and left unresolved, might act as a contagious financial malaise by driving good borrowers out of the financial market.1 Further, Muniappan (2002: 25-26) argues that a bank with high level of NPLs is forced to incur carrying costs on non-income yielding assets that not only strike at profitability but also at the capital adequacy of a bank, and in consequence, the bank faces difficulties in augmenting capital resources. Bonin and Huang (2001: 197-214) also state that the probability of banking crises increases if financial risk is not eliminated quickly. Such crises not only lower living standards but can also eliminate many of the achievements of economic reform overnight. The economic and financial implications of NPLs in a bank-centered financial economy can be best explained by the following diagram: