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How does total quality management influence the loan quality of the bank?

This paper aims to investigate whether, and to what extent, total quality management (TQM) influences bank loan quality. We propose an approach to measure TQM for evaluating this relationship. The proposed measure is the residual from the Fama–MacBeth regression based on bank efficiency proxied by t...

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Main Authors: Banna, Hasanul, Ahmad, Rubi, Koh, Eric Hsieng Yang
Format: Article
Published: Taylor & Francis 2018
Subjects:
HG Finance
Banking
Online Access:http://eprints.um.edu.my/22357/
https://doi.org/10.1080/14783363.2016.1180954
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spelling my.um.eprints.223572019-09-13T07:46:22Z http://eprints.um.edu.my/22357/ How does total quality management influence the loan quality of the bank? Banna, Hasanul Ahmad, Rubi Koh, Eric Hsieng Yang HG Finance Banking This paper aims to investigate whether, and to what extent, total quality management (TQM) influences bank loan quality. We propose an approach to measure TQM for evaluating this relationship. The proposed measure is the residual from the Fama–MacBeth regression based on bank efficiency proxied by the income-to-cost ratio. Our proposed TQM measure is statistically significant. We obtain data of 581 US commercial banks from the SNL Financial database for the period 1991–2013 with a total of 13,303 bank-year observations. The result shows that TQM is positively related to bank loan quality. This suggests that the implementation of better TQM can help management to monitor borrowers, improve competition and efficiency, manage good-quality loan portfolios, minimise expenses, and generate more revenues. This research has several implications for regulation, TQM implementation, and policy for the banking industry. In sum, an association between TQM and loan quality allows us to expand our knowledge of the specific role of TQM in bank performance, management decision, and managing loan portfolios. Taylor & Francis 2018 Article PeerReviewed Banna, Hasanul and Ahmad, Rubi and Koh, Eric Hsieng Yang (2018) How does total quality management influence the loan quality of the bank? Total Quality Management & Business Excellence, 29 (3-4). pp. 287-300. ISSN 1478-3363 https://doi.org/10.1080/14783363.2016.1180954 doi:10.1080/14783363.2016.1180954
institution Universiti Malaya
building UM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaya
content_source UM Research Repository
url_provider http://eprints.um.edu.my/
topic HG Finance
Banking
spellingShingle HG Finance
Banking
Banna, Hasanul
Ahmad, Rubi
Koh, Eric Hsieng Yang
How does total quality management influence the loan quality of the bank?
description This paper aims to investigate whether, and to what extent, total quality management (TQM) influences bank loan quality. We propose an approach to measure TQM for evaluating this relationship. The proposed measure is the residual from the Fama–MacBeth regression based on bank efficiency proxied by the income-to-cost ratio. Our proposed TQM measure is statistically significant. We obtain data of 581 US commercial banks from the SNL Financial database for the period 1991–2013 with a total of 13,303 bank-year observations. The result shows that TQM is positively related to bank loan quality. This suggests that the implementation of better TQM can help management to monitor borrowers, improve competition and efficiency, manage good-quality loan portfolios, minimise expenses, and generate more revenues. This research has several implications for regulation, TQM implementation, and policy for the banking industry. In sum, an association between TQM and loan quality allows us to expand our knowledge of the specific role of TQM in bank performance, management decision, and managing loan portfolios.
format Article
author Banna, Hasanul
Ahmad, Rubi
Koh, Eric Hsieng Yang
author_facet Banna, Hasanul
Ahmad, Rubi
Koh, Eric Hsieng Yang
author_sort Banna, Hasanul
title How does total quality management influence the loan quality of the bank?
title_short How does total quality management influence the loan quality of the bank?
title_full How does total quality management influence the loan quality of the bank?
title_fullStr How does total quality management influence the loan quality of the bank?
title_full_unstemmed How does total quality management influence the loan quality of the bank?
title_sort how does total quality management influence the loan quality of the bank?
publisher Taylor & Francis
publishDate 2018
url http://eprints.um.edu.my/22357/
https://doi.org/10.1080/14783363.2016.1180954
_version_ 1646210218411950080
score 13.211869

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