ESC
Web of Science
Entrepreneurship and Sustainability Issues Open Access Q1
Scopus - coverage starting with 2017 material
Received: 2019-02-16  |  Accepted: 2019-05-19  |  Published: 2019-06-30

Title

Causes of Non-Performing Loans: the experience of Gulf Cooperation Council countries


Abstract

As financial intermediaries and provider of financial services, banking sector plays a pivotal role in the development of any economy. Performance of loans in banks’ portfolios is a critical issue for this sector. The purpose of this study is to examine the determinants of Non-Performing Loans in Gulf Cooperation Council region. This study investigates the significant factors determining the Non-Performing Loans in banking sector of this region taking into consideration bank specific as well as macroeconomic factors. Two step Generalized Method of Moments approach to study the relationship among the variables was used to examine the determinants of Non-Performing Loans in this region for a period from 2009 to 2015. Four different models employed as a result of the examination of the theories were used to observe and analyse the determinants of these non-performing loans. According to the findings of the model generated from the bad management hypothesis, Non-performing loans are a serious issue requiring due attention, and bank profitability measured by Return on Average Assets has significant and negative effect on Non-Performing Loans. This suggests that banks in this region have more incentive to increase return by using their assets and effectively managing the funds contributed by the shareholders respectively.


Keywords

non-performing loans, GCC banking sector, financial stability


JEL classifications

G21 , E44


URI

http://jssidoi.org/jesi/article/332


DOI


Pages

1955-1974


Funding


This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Farooq, Mohammad Omar
University of Bahrain, Isa Town, Bahrain http://www.uob.edu.bh
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Elseoud, Mohamed Sayed Abou
Sadat Academy for Management Sciences, Cairo, Egypt http://sams.edu.eg
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Turen, Seref
University of Bahrain, Isa Town, Bahrain http://www.uob.edu.bh
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Abdulla, Mohamed
University of Bahrain, Isa Town, Bahrain http://www.uob.edu.bh
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Journal title

Entrepreneurship and Sustainability Issues

Volume

6


Number

4


Issue date

June 2019


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

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References