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A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries

This paper revisits the work of Idris and Nayan (2016a) on the joint effects of oil price volatility and environmental risks on non-performing loans (NPLs). Therefore, the current paper uses evidence from 13 Organisation of the petroleum exporting countries spanning 1996-2015. The present situation...

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Main Authors: Idris, Isma’il Tijjani, Nayan, Sabri
Format: Article
Language:English
Published: EconJournals 2017
Subjects:
HC Economic History and Conditions
Online Access:http://repo.uum.edu.my/26555/1/IJEEP%207%203%202019%20345%20351.pdf
http://repo.uum.edu.my/26555/
http://econjournals.com/index.php/ijeep/article/view/5072
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spelling my.uum.repo.265552019-11-18T02:59:37Z http://repo.uum.edu.my/26555/ A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries Idris, Isma’il Tijjani Nayan, Sabri HC Economic History and Conditions This paper revisits the work of Idris and Nayan (2016a) on the joint effects of oil price volatility and environmental risks on non-performing loans (NPLs). Therefore, the current paper uses evidence from 13 Organisation of the petroleum exporting countries spanning 1996-2015. The present situation of worldwide NPLs is persistent and on the rise which indicates a global deterioration of loans qualities. The NPLs is more pronounced amongst the OPEC countries whose average ratio of NPLs is on the verge of the banking crisis. This directly affects further loan creation, banks’ liquidity, investment and productivity. Notwithstanding, the different measures put in place by regulatory authorities in OPEC countries to tackle the situation, the problem persists. The motivation of this paper is to examine the impact of systematic risks factors of oil price changes and environmental risks on NPLs by employing Pooled Mean Group methods. The results reveal that oil price changes significantly but inversely affect NPLs while environmental risks factor is found to be significantly and positively affecting NPLs. The policy implications of the findings are that for the OPEC countries to achieve financial stability they should reduce the impact of systematic risks on their financial systems. Therefore, for a continuous minimization of bad loans, the OPEC economies should efficiently increase their earnings from the oil exportation or alternatively through increased diversification of the OPEC economies from the monoculture economic activity of oil exportation. Furthermore, environmental risks should be mitigated through strong legislation for all businesses and economic units in the countries to be covered by adequate insurance covers against these calamities. Finally, OPEC governments should ensure that their prudential guidelines cover lending to business activities that are prone to such systematic risks. EconJournals 2017 Article PeerReviewed application/pdf en http://repo.uum.edu.my/26555/1/IJEEP%207%203%202019%20345%20351.pdf Idris, Isma’il Tijjani and Nayan, Sabri (2017) A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries. International Journal of Energy Economics and Policy, 7 (3). pp. 345-351. ISSN 2146-4553 http://econjournals.com/index.php/ijeep/article/view/5072
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HC Economic History and Conditions
spellingShingle HC Economic History and Conditions
Idris, Isma’il Tijjani
Nayan, Sabri
A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries
description This paper revisits the work of Idris and Nayan (2016a) on the joint effects of oil price volatility and environmental risks on non-performing loans (NPLs). Therefore, the current paper uses evidence from 13 Organisation of the petroleum exporting countries spanning 1996-2015. The present situation of worldwide NPLs is persistent and on the rise which indicates a global deterioration of loans qualities. The NPLs is more pronounced amongst the OPEC countries whose average ratio of NPLs is on the verge of the banking crisis. This directly affects further loan creation, banks’ liquidity, investment and productivity. Notwithstanding, the different measures put in place by regulatory authorities in OPEC countries to tackle the situation, the problem persists. The motivation of this paper is to examine the impact of systematic risks factors of oil price changes and environmental risks on NPLs by employing Pooled Mean Group methods. The results reveal that oil price changes significantly but inversely affect NPLs while environmental risks factor is found to be significantly and positively affecting NPLs. The policy implications of the findings are that for the OPEC countries to achieve financial stability they should reduce the impact of systematic risks on their financial systems. Therefore, for a continuous minimization of bad loans, the OPEC economies should efficiently increase their earnings from the oil exportation or alternatively through increased diversification of the OPEC economies from the monoculture economic activity of oil exportation. Furthermore, environmental risks should be mitigated through strong legislation for all businesses and economic units in the countries to be covered by adequate insurance covers against these calamities. Finally, OPEC governments should ensure that their prudential guidelines cover lending to business activities that are prone to such systematic risks.
format Article
author Idris, Isma’il Tijjani
Nayan, Sabri
author_facet Idris, Isma’il Tijjani
Nayan, Sabri
author_sort Idris, Isma’il Tijjani
title A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries
title_short A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries
title_full A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries
title_fullStr A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries
title_full_unstemmed A pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries
title_sort pooled mean group approach to the joint effects of oil price changes and environmental risks on non-performing loans: evidence from organisation of the petroleum exporting the countries
publisher EconJournals
publishDate 2017
url http://repo.uum.edu.my/26555/1/IJEEP%207%203%202019%20345%20351.pdf
http://repo.uum.edu.my/26555/
http://econjournals.com/index.php/ijeep/article/view/5072
_version_ 1651870660169826304
score 13.211869

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