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Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham

Non-Performing Loan (NPL) remains as an important element of credit risk in emerging Asia banking. This research theoretically and practically examined the role of macroeconomic cyclical variables in influencing the level of bank's NPL in Asia emerging countries. Theoretically, the procyclical...

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Main Author: Arham, Mohd Shamlie
Format: Thesis
Language:English
Published: 2021
Subjects:
Political science
Public administration
Online Access:https://ir.uitm.edu.my/id/eprint/46557/1/46557.pdf
https://ir.uitm.edu.my/id/eprint/46557/
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spelling my.uitm.ir.465572022-03-25T02:56:08Z https://ir.uitm.edu.my/id/eprint/46557/ Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham Arham, Mohd Shamlie Political science Public administration Non-Performing Loan (NPL) remains as an important element of credit risk in emerging Asia banking. This research theoretically and practically examined the role of macroeconomic cyclical variables in influencing the level of bank's NPL in Asia emerging countries. Theoretically, the procyclical and countercyclical perspectives used as the underlying theory to understand the role of macroeconomic cyclical indicators in influencing bank NPL in Asia. Practically, this research extended the previous studies on the macroeconomic cyclical model by introducing the interaction of macroeconomic cycle indicators with country governance and their influence on bank NPL. The proposed empirical model is used to examine the roles of country governance (i.e. voice and accountability; political stability and absence of violence; government effectiveness; regulatory quality; rule of law and control of corruption) in mitigating the negative effects of macroeconomic cycles on bank credit risk. This study employed panel regression analysis methods to examine the relationships of microeconomics and country governance variables on bank NPL using Principal Component Analysis (PC A) as interaction tools by analyzing 10 countries in emerging Asia from 2010 to 2018 which experienced great and rapid growth during the years namely Philippines, Vietnam, Indonesia, Thailand, Malaysia, Singapore, India, South Korea, Hong Kong and China. The geographical coverage of the research data is limited to 10 emerging Asia countries. Based on this study, it is found that the interaction analysis provides new insights on the role of country governance to mitigate the negative effect of economic cycle shocks. It is found that the country governance has an effect on total gross external debt/GDP, inflation rate, real interest rate, and unemployment rate on bank NPL. Thus, country governance has a significant impact on mitigating bank NPL. This research contributes to the extension of bank NPL research that would be valuable to disseminate theory, practice and policy related to the management of the bank NPLs in selected emerging countries of Asia. It also provides new insights into the interaction role of governance in managing bank credit risk. 2021-02 Thesis NonPeerReviewed text en https://ir.uitm.edu.my/id/eprint/46557/1/46557.pdf (2021) Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham. Masters thesis, thesis, Universiti Teknologi MARA.
institution Universiti Teknologi Mara
building Tun Abdul Razak Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Mara
content_source UiTM Institutional Repository
url_provider http://ir.uitm.edu.my/
language English
topic Political science
Public administration
spellingShingle Political science
Public administration
Arham, Mohd Shamlie
Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham
description Non-Performing Loan (NPL) remains as an important element of credit risk in emerging Asia banking. This research theoretically and practically examined the role of macroeconomic cyclical variables in influencing the level of bank's NPL in Asia emerging countries. Theoretically, the procyclical and countercyclical perspectives used as the underlying theory to understand the role of macroeconomic cyclical indicators in influencing bank NPL in Asia. Practically, this research extended the previous studies on the macroeconomic cyclical model by introducing the interaction of macroeconomic cycle indicators with country governance and their influence on bank NPL. The proposed empirical model is used to examine the roles of country governance (i.e. voice and accountability; political stability and absence of violence; government effectiveness; regulatory quality; rule of law and control of corruption) in mitigating the negative effects of macroeconomic cycles on bank credit risk. This study employed panel regression analysis methods to examine the relationships of microeconomics and country governance variables on bank NPL using Principal Component Analysis (PC A) as interaction tools by analyzing 10 countries in emerging Asia from 2010 to 2018 which experienced great and rapid growth during the years namely Philippines, Vietnam, Indonesia, Thailand, Malaysia, Singapore, India, South Korea, Hong Kong and China. The geographical coverage of the research data is limited to 10 emerging Asia countries. Based on this study, it is found that the interaction analysis provides new insights on the role of country governance to mitigate the negative effect of economic cycle shocks. It is found that the country governance has an effect on total gross external debt/GDP, inflation rate, real interest rate, and unemployment rate on bank NPL. Thus, country governance has a significant impact on mitigating bank NPL. This research contributes to the extension of bank NPL research that would be valuable to disseminate theory, practice and policy related to the management of the bank NPLs in selected emerging countries of Asia. It also provides new insights into the interaction role of governance in managing bank credit risk.
format Thesis
author Arham, Mohd Shamlie
author_facet Arham, Mohd Shamlie
author_sort Arham, Mohd Shamlie
title Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham
title_short Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham
title_full Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham
title_fullStr Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham
title_full_unstemmed Moderation of country governance on macroeconomic cyclical indicator to NPL behavior in emerging asia / Nurfilzah Arham
title_sort moderation of country governance on macroeconomic cyclical indicator to npl behavior in emerging asia / nurfilzah arham
publishDate 2021
url https://ir.uitm.edu.my/id/eprint/46557/1/46557.pdf
https://ir.uitm.edu.my/id/eprint/46557/
_version_ 1729707469847920640
score 13.211869

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