This document summarizes a study that examined the determinants of credit risk in the Tunisian banking sector from 2003-2011. The study found that:
1) Performance, audit opinion, and audit quality were significant determinants of credit risk levels in banks, with higher performance, unqualified audit opinions, and audits by large accounting firms associated with lower credit risk.
2) Information quality, as proxied by discretionary accruals, was not found to be related to credit risk levels.
3) The study tested these relationships using an ordinary least squares regression model with credit risk as the dependent variable and information quality, performance, size, listing status, audit opinion, and audit quality as independent variables
An assessment of factors affecting banks’ risk exposure in north central nigeriaAlexander Decker
The document summarizes a study that assessed factors affecting banks' risk exposure in North Central Nigeria. The study identified five main factors through factor analysis: liquidity and interest, domestic market, international market, business operation, and credit. It recommends that banks consider these factors in developing effective risk management strategies to reduce potential losses.
The relationship between net interest margin and return on assets of listed b...Alexander Decker
This study examined the relationship between net interest margin (NIM) and return on assets (ROA) of listed banks in Ghana from 2005-2011. It found a strong positive correlation between NIM and ROA, with NIM explaining 82.6% of the variation in ROA. Both NIM and ROA generally decreased over the period, though they increased between 2009-2010. The study also found a very strong positive relationship between net interest income and profit before tax, with net interest income explaining 99.8% of the variation in profit before tax. In conclusion, the ability of banks to generate net interest income was highly influential in determining their level of profitability.
Forum Microcredit Interest Rates and their DeterminantsDr Lendy Spires
This document analyzes microcredit interest rates and their determinants from 2004-2011 using data from the Microfinance Information Exchange. It finds that globally, interest rates declined substantially through 2007 but then leveled off. This is partly due to operating costs, which declined long-term but rose in 2008 and 2011. It also examines the components that determine interest rates: cost of funds, loan losses, operating expenses, profits. It reports that average returns on equity have fallen and profits as a percentage of loan payments have dropped dramatically over this period.
Estimation of Net Interest Margin Determinants of the Deposit Banks in Turkey...inventionjournals
Banks, which are the irreplaceable intermediaries of the financial system, are financial institutions that significantly contributeto economic development. The basiccriterion that indicates the efficiency of the intermediation activities of banks is the net interest margins. These costs are assumed to be high for developing countries such as Turkey. The degree to which banks are willing to redeem the funds they collect as credit to the system is directly related to how low their intermediation costs will be. In this paper, it is aimed to estimate the net interest margin determinants of deposit banks in Turkey. Three different panel data models are used for this purpose. These are the Fixed and Random Static models and the GMM (Generalized Moment Models) Dynamic model
The impact of bank specific variables on the non performing loans ratio in th...Alexander Decker
This document analyzes factors that influence non-performing loan (NPL) ratios in the Albanian banking system. It discusses how NPL ratios have grown substantially since the 2008 financial crisis. The study aims to understand how bank-specific variables like capital adequacy, loan levels, loan-to-asset ratios, net interest margins, and returns on equity can explain NPL ratio levels. Regression analysis of quarterly data from 2002-2012 for Albanian banks will test relationships between NPL ratios and these independent variables.
This thesis examines the impact of interest rate liberalization in 1989 and a corporate tax rate reduction in 1996 on bank net interest margins in Jordan from 1982 to 2013. It finds that the 1989 liberalization had no significant impact on margins, while the 1996 tax reduction reduced margins, but margins remained relatively high and increased over time. The study analyzes descriptive statistics and uses regression analysis to assess the effects of various bank-specific and macroeconomic factors on net interest margins. The results provide insight into determinants of margins in Jordan's banking sector and lessons for policies aiming to increase competition and efficiency.
Financial reporting quality has been said to play an important role in reducing information asymmetry. Thus, firms with high financial reporting quality may enhance more investors’ decision. Hence, the basic objective of this study is to determine whether earnings quality influence investors’ decision. The sample consisted of 10 manufacturing companies listed on the Nigerian Stock Exchange Market. The study period is 5 years (2010-2014). Data on accrual quality, volume of investment, Size, age and growth rate and earnings per share were drawn from the published annual report and accounts of the sampled companies. Correlation matrix, Vector auto regressive estimation and Pooled OLS model were employed for the analysis. Diagnostic tests for post estimation were also performed on the model. The result of the Ramsey Reset test shows a p-value of 0.2105, implying that model has no omitted variables. Also, Wooldridge test for autocorrelation in panel data indicates no first-order autocorrelation, showing a p-value of 0.3642. We calculated accruals quality based on the modified accrual model proposed by Mac Nichols in 2002. In this paper, the absolute value of residual error represents the financial reporting quality. This threshold is based on the idea that accruals reduce the smoothing initiated by the change in the cash flow and thus increase the earnings awareness. The study finds evidence of a positive association between investors’ decision and financial reporting quality.
An assessment of factors affecting banks’ risk exposure in north central nigeriaAlexander Decker
The document summarizes a study that assessed factors affecting banks' risk exposure in North Central Nigeria. The study identified five main factors through factor analysis: liquidity and interest, domestic market, international market, business operation, and credit. It recommends that banks consider these factors in developing effective risk management strategies to reduce potential losses.
The relationship between net interest margin and return on assets of listed b...Alexander Decker
This study examined the relationship between net interest margin (NIM) and return on assets (ROA) of listed banks in Ghana from 2005-2011. It found a strong positive correlation between NIM and ROA, with NIM explaining 82.6% of the variation in ROA. Both NIM and ROA generally decreased over the period, though they increased between 2009-2010. The study also found a very strong positive relationship between net interest income and profit before tax, with net interest income explaining 99.8% of the variation in profit before tax. In conclusion, the ability of banks to generate net interest income was highly influential in determining their level of profitability.
Forum Microcredit Interest Rates and their DeterminantsDr Lendy Spires
This document analyzes microcredit interest rates and their determinants from 2004-2011 using data from the Microfinance Information Exchange. It finds that globally, interest rates declined substantially through 2007 but then leveled off. This is partly due to operating costs, which declined long-term but rose in 2008 and 2011. It also examines the components that determine interest rates: cost of funds, loan losses, operating expenses, profits. It reports that average returns on equity have fallen and profits as a percentage of loan payments have dropped dramatically over this period.
Estimation of Net Interest Margin Determinants of the Deposit Banks in Turkey...inventionjournals
Banks, which are the irreplaceable intermediaries of the financial system, are financial institutions that significantly contributeto economic development. The basiccriterion that indicates the efficiency of the intermediation activities of banks is the net interest margins. These costs are assumed to be high for developing countries such as Turkey. The degree to which banks are willing to redeem the funds they collect as credit to the system is directly related to how low their intermediation costs will be. In this paper, it is aimed to estimate the net interest margin determinants of deposit banks in Turkey. Three different panel data models are used for this purpose. These are the Fixed and Random Static models and the GMM (Generalized Moment Models) Dynamic model
The impact of bank specific variables on the non performing loans ratio in th...Alexander Decker
This document analyzes factors that influence non-performing loan (NPL) ratios in the Albanian banking system. It discusses how NPL ratios have grown substantially since the 2008 financial crisis. The study aims to understand how bank-specific variables like capital adequacy, loan levels, loan-to-asset ratios, net interest margins, and returns on equity can explain NPL ratio levels. Regression analysis of quarterly data from 2002-2012 for Albanian banks will test relationships between NPL ratios and these independent variables.
This thesis examines the impact of interest rate liberalization in 1989 and a corporate tax rate reduction in 1996 on bank net interest margins in Jordan from 1982 to 2013. It finds that the 1989 liberalization had no significant impact on margins, while the 1996 tax reduction reduced margins, but margins remained relatively high and increased over time. The study analyzes descriptive statistics and uses regression analysis to assess the effects of various bank-specific and macroeconomic factors on net interest margins. The results provide insight into determinants of margins in Jordan's banking sector and lessons for policies aiming to increase competition and efficiency.
Financial reporting quality has been said to play an important role in reducing information asymmetry. Thus, firms with high financial reporting quality may enhance more investors’ decision. Hence, the basic objective of this study is to determine whether earnings quality influence investors’ decision. The sample consisted of 10 manufacturing companies listed on the Nigerian Stock Exchange Market. The study period is 5 years (2010-2014). Data on accrual quality, volume of investment, Size, age and growth rate and earnings per share were drawn from the published annual report and accounts of the sampled companies. Correlation matrix, Vector auto regressive estimation and Pooled OLS model were employed for the analysis. Diagnostic tests for post estimation were also performed on the model. The result of the Ramsey Reset test shows a p-value of 0.2105, implying that model has no omitted variables. Also, Wooldridge test for autocorrelation in panel data indicates no first-order autocorrelation, showing a p-value of 0.3642. We calculated accruals quality based on the modified accrual model proposed by Mac Nichols in 2002. In this paper, the absolute value of residual error represents the financial reporting quality. This threshold is based on the idea that accruals reduce the smoothing initiated by the change in the cash flow and thus increase the earnings awareness. The study finds evidence of a positive association between investors’ decision and financial reporting quality.
This document summarizes a research paper that examines the effects of country risk factors like political risk, credit ratings, and debt levels on bank efficiency in the Gulf Cooperation Council (GCC) countries. The study uses data from 2007 to 2014 on 75 banks in 6 GCC nations to calculate cost efficiency scores. It then uses these scores in a regression analysis to investigate the influence of country risk variables and concentration levels on bank efficiency. The results suggest that banks in countries with lower country risk and less concentrated banking systems tend to have higher efficiency. The findings provide insights that could help policymakers in the GCC countries improve banking sector performance as they work to form a closer economic union.
Introduction to Risk and Efficiency among CDFIs: A Statistical Evaluation usi...nc_initiative
This introductory essay provides general background information on the institutional differences between regulated CDFIs and mainstream financial institutions.
This document provides an overview of the Chinese shadow banking system, including comparisons to past financial crises. It identifies key risk indicators such as rising house prices and refinancing risk. Scenario analysis highlights inherent risks, and possible solutions are discussed. The shadow banking system has grown rapidly in China in recent years through various products like wealth management programs and local government financing vehicles. There is concern about interconnected risks between banks and shadow banking and a potential crisis if the situation is not monitored closely.
11.the impact of interest rate on profit among the united arab emirates uae s...Alexander Decker
The document summarizes a study that examined the impact of interest rates on the profits of small and medium enterprises (SMEs) in the United Arab Emirates (UAE). A questionnaire was administered to 20 employees of UAE SMEs to understand how interest rates affect company profits. The results showed that interest rates highly impact profits of SMEs in the UAE, with the highest mean scores relating to clear customer information about accounts and accurate advertising. The lowest mean scores related to avoiding increasing debt levels beyond repayment capacity and explicit credit approval policies. In conclusion, the study provides initial evidence that interest rates influence profits of SMEs in the UAE.
This document summarizes research on the impact of debt crisis on corporate firm performance in Slovakia. It finds that 91% of changes in debt ratios of firms with 3000-3999 employees can be explained by changes in variables like profit, assets, and debt to EBITDA. A comparison of 2010 and 2013 data showed an increase in firm assets. The conclusion is that firms need to make timely changes to improve financial performance during a debt crisis.
Through an extensive analysis of theoretical and empirical literature on competition and risk in banking, this document forms the hypothesis that competition and risk are positively correlated. Several factors are discussed that support this hypothesis, including financial liberalization increasing competition and leading banks to take on riskier activities to maintain profits. Deregulation and consolidation in the banking sector are also argued to increase competition and incentivize greater risk-taking by banks. While various perspectives on the relationship between competition and risk are considered, the paper concludes that most evidence favors the view that higher competition induces higher risk in the banking industry.
The document discusses several financial and economic terms:
1) Systemically important financial institutions are large banks or institutions whose failure could threaten the entire financial system.
2) Leading economic indicators predict future trends, while lagging indicators show past trends. The leading index and GDP are examples.
3) Fixed income obligation to income ratio (FOIR) is a debt-to-income ratio used by banks to determine loan eligibility based on monthly payments.
Determinants of profitability of non bank financial institutionsGalibur Rahman
This document examines the determinants of profitability of Non-Bank Financial Institutions (NBFIs) in Bangladesh. It analyzes secondary data from 22 listed NBFIs using statistical techniques like correlation matrices and regression analysis. The study finds that liquidity, operating expenses, total assets, capital structure, and other factors significantly influence NBFI profitability. It highlights the need for strategic financial decisions by NBFIs in Bangladesh to gain competitive advantages in the changing global financial environment.
Given the continued poor performance experienced in the banking sector as indicated by high levels of credit risk, poor quality loans and high incidence of non-performing loans, in spite of the frequent reforms that various governments in Nigeria have embarked upon, there is the need to constantly examine and analyse the factors that could affect bank performance with the aim of providing empirical evidence based on which solutions can be proffered. The paper examined the impact of asset quality management on the performance of deposit money banks in Nigeria. The paper adopted the ECM and co-integration techniques using annual aggregate data sourced from the CBN and the NDIC publications for the period 1990-2013. The findings of the study indicate that the selected measures of asset quality have significant impact on all the three indicators of bank performance namely- return on equity, return on total assets and return on shareholders’ fund respectively. In addition, the results of the impulse response and variance decomposition show that own shocks from the performance indicators ROE, ROTA and ROSF account for a greater proportion of the forecast errors of the variables within the ten-year forecast period. In the light of the above, it is recommended that deposit money banks in Nigeria should intensify their efforts in designing and implementing good asset quality management policies in order to further improve on their performance. This can be through human capacity building for personnel in the form of frequent professional training as well as strict adherence to the prudential guidelines.
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
This document analyzes the influencing factors of corporate debt leverage ratios in China using annual data from 2007 to 2018 for non-financial companies listed on China's A-share market. The empirical results find that:
1) Macroeconomic factors like GDP growth, money supply growth, and real interest rates have a significant impact on corporate debt leverage ratios.
2) Financial market factors such as the scale of social financing, financial institutions' leverage, and non-performing loan ratios also significantly impact corporate debt leverage ratios. Greater financial institution support for the real economy strengthens companies' ability to obtain debt financing.
3) Company-specific factors including profitability, size, growth, and liquidity significantly influence corporate debt
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
1 efficacy-of-credit-risk-management and profitabilityMisker Bizuayehu
This document is a research paper that examines the efficacy of credit risk management on bank performance in Nigeria using Union Bank PLC from 2006-2010 as a case study. The author aims to determine if credit risk affects bank profitability and examine the relationship between interest income and bad debt. Secondary data is used and analyzed using time series, trend, correlation and regression analyses. The study concludes that credit risk negatively impacts Union Bank's performance and high interest income requires effective credit risk management and prudent lending practices. It recommends regularly reviewing loans to assess risk levels and ensuring collateral for loans.
Determinants of Banks’ Financial Performance: A Comparative Study between Nat...inventionjournals
Financial performance is one of the most critical factors having impact on the decision making of the resource providers. And thus to ensure the existence in the ever growing competitive business environment, every institution should be more concerned about the factors affecting their financial performance. This paper specially focuses on identifying the factors having impact on the financial performance of the commercial banks operating in Bangladesh. An effort has also been exerted to determine whether the extent of influence of various factors on financial performance varies with respect to local private and nationalized commercial banks. For this purpose 10 local private commercial banks (PCB) and all nationalized commercial banks (NCB) have been taken covering the period from 2008-2014. Here, data has been collected from the annual reports of the banks under consideration. To draw conclusion a multiple regression has been run by considering financial performance (profitability) as dependent variable and operating efficiency, asset utilization , liquidity, credit risk, capital adequacy and size of the company as independent variables. The study finds that asset utilization and operating efficiency have significant positive impact on banks' financial performance (profitability) whereas credit risk has significant negative impact. However, for PCBs asset utilization is the most critical factor to performance. On the other hand, result shows that in case of NCB 1 taka increase in credit risk is responsible for negative return of 0.968 taka. It is found that financial performance has no significant relationship with size and liquidity of the banks
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a research study about service experience and customer satisfaction in restaurants in Delhi, India. The study had three purposes: 1) To validate an existing instrument for measuring service experience in a restaurant setting, 2) To assess customer service experiences in Delhi restaurants, and 3) To identify areas of customer dissatisfaction that could be improved.
The researchers surveyed 200 customers from one restaurant in Delhi using a validated questionnaire. Statistical analysis identified seven key factors of customer service experience: Ease, Novelty, Learning, Comfort, Personal, Relaxation, and Involvement. The results provide insights into customer satisfaction with restaurant service in Delhi and areas for improvement.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a research study that aimed to identify factors affecting Islamic Social Reporting (ISR) in Syariah (Islamic) banks in Indonesia. The study analyzed annual reports from 18 Syariah banks over 2010-2011 to evaluate their ISR based on content analysis. It hypothesized that company size, profitability, company age, and proportion of independent commissioners would influence ISR levels. Multiple regression analysis found that company size and profitability significantly positively affected ISR levels, while company age and proportion of independent commissioners did not.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a research paper that studied the impact of capital structure on the performance of listed public sector banks in India from 2008 to 2012. The paper seeks to establish a relationship between capital structure and profitability measures like return on equity, return on assets, and earnings per share. Regression analysis was used to analyze the data from the national stock exchange. The findings revealed a positive relationship between short-term debt and the profitability measures. The purpose is to provide empirical evidence on the relationship between capital structure and banking performance to help public sector banks in India select an optimal capital structure to improve profitability.
International Journal of Business and Management Invention (IJBMI)inventionjournals
The document is a research paper that examines customers' post-purchase behavior of retailers' brands. It analyzes a sample of 500 customers through surveys and interviews. The study finds that customers are generally satisfied with retailers' brands and that retailers actively work to solve any product issues for customers. Customers also feel retailers' stores provide a relaxing shopping environment. However, the paper aims to further analyze how customers' demographic characteristics and purchasing experiences affect their post-purchase behavior and relationship with retailers' brands.
This document summarizes an article on Indian shopkeepers' perspectives on foreign direct investment. It discusses both the benefits and criticisms of allowing FDI in India's retail sector. The benefits include modernizing agriculture and retail, increasing employment, and bringing investment and expertise. However, critics argue that small farmers and businesses may not benefit and could be put out of business by larger, foreign-owned companies. The document also outlines the research methodology used in the original article, which included primary data collection from Indian shopkeepers and secondary data collection from various sources on FDI.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document discusses the negative impact of corruption and improper job seeking approaches in India. It notes that many qualified individuals fail to get jobs not due to lack of qualifications but because they do not have connections or are unable to pay bribes. This leads to mental health issues, loss of economic growth, and has cost the Indian economy approximately 450 billion rupees. The document examines several specific cases where unqualified individuals received jobs through connections. It concludes that widespread corruption in hiring is hindering India's development and that citizens must work to establish oversight and use tools like RTI to address these issues and promote fair employment.
This document summarizes a research paper that examines the effects of country risk factors like political risk, credit ratings, and debt levels on bank efficiency in the Gulf Cooperation Council (GCC) countries. The study uses data from 2007 to 2014 on 75 banks in 6 GCC nations to calculate cost efficiency scores. It then uses these scores in a regression analysis to investigate the influence of country risk variables and concentration levels on bank efficiency. The results suggest that banks in countries with lower country risk and less concentrated banking systems tend to have higher efficiency. The findings provide insights that could help policymakers in the GCC countries improve banking sector performance as they work to form a closer economic union.
Introduction to Risk and Efficiency among CDFIs: A Statistical Evaluation usi...nc_initiative
This introductory essay provides general background information on the institutional differences between regulated CDFIs and mainstream financial institutions.
This document provides an overview of the Chinese shadow banking system, including comparisons to past financial crises. It identifies key risk indicators such as rising house prices and refinancing risk. Scenario analysis highlights inherent risks, and possible solutions are discussed. The shadow banking system has grown rapidly in China in recent years through various products like wealth management programs and local government financing vehicles. There is concern about interconnected risks between banks and shadow banking and a potential crisis if the situation is not monitored closely.
11.the impact of interest rate on profit among the united arab emirates uae s...Alexander Decker
The document summarizes a study that examined the impact of interest rates on the profits of small and medium enterprises (SMEs) in the United Arab Emirates (UAE). A questionnaire was administered to 20 employees of UAE SMEs to understand how interest rates affect company profits. The results showed that interest rates highly impact profits of SMEs in the UAE, with the highest mean scores relating to clear customer information about accounts and accurate advertising. The lowest mean scores related to avoiding increasing debt levels beyond repayment capacity and explicit credit approval policies. In conclusion, the study provides initial evidence that interest rates influence profits of SMEs in the UAE.
This document summarizes research on the impact of debt crisis on corporate firm performance in Slovakia. It finds that 91% of changes in debt ratios of firms with 3000-3999 employees can be explained by changes in variables like profit, assets, and debt to EBITDA. A comparison of 2010 and 2013 data showed an increase in firm assets. The conclusion is that firms need to make timely changes to improve financial performance during a debt crisis.
Through an extensive analysis of theoretical and empirical literature on competition and risk in banking, this document forms the hypothesis that competition and risk are positively correlated. Several factors are discussed that support this hypothesis, including financial liberalization increasing competition and leading banks to take on riskier activities to maintain profits. Deregulation and consolidation in the banking sector are also argued to increase competition and incentivize greater risk-taking by banks. While various perspectives on the relationship between competition and risk are considered, the paper concludes that most evidence favors the view that higher competition induces higher risk in the banking industry.
The document discusses several financial and economic terms:
1) Systemically important financial institutions are large banks or institutions whose failure could threaten the entire financial system.
2) Leading economic indicators predict future trends, while lagging indicators show past trends. The leading index and GDP are examples.
3) Fixed income obligation to income ratio (FOIR) is a debt-to-income ratio used by banks to determine loan eligibility based on monthly payments.
Determinants of profitability of non bank financial institutionsGalibur Rahman
This document examines the determinants of profitability of Non-Bank Financial Institutions (NBFIs) in Bangladesh. It analyzes secondary data from 22 listed NBFIs using statistical techniques like correlation matrices and regression analysis. The study finds that liquidity, operating expenses, total assets, capital structure, and other factors significantly influence NBFI profitability. It highlights the need for strategic financial decisions by NBFIs in Bangladesh to gain competitive advantages in the changing global financial environment.
Given the continued poor performance experienced in the banking sector as indicated by high levels of credit risk, poor quality loans and high incidence of non-performing loans, in spite of the frequent reforms that various governments in Nigeria have embarked upon, there is the need to constantly examine and analyse the factors that could affect bank performance with the aim of providing empirical evidence based on which solutions can be proffered. The paper examined the impact of asset quality management on the performance of deposit money banks in Nigeria. The paper adopted the ECM and co-integration techniques using annual aggregate data sourced from the CBN and the NDIC publications for the period 1990-2013. The findings of the study indicate that the selected measures of asset quality have significant impact on all the three indicators of bank performance namely- return on equity, return on total assets and return on shareholders’ fund respectively. In addition, the results of the impulse response and variance decomposition show that own shocks from the performance indicators ROE, ROTA and ROSF account for a greater proportion of the forecast errors of the variables within the ten-year forecast period. In the light of the above, it is recommended that deposit money banks in Nigeria should intensify their efforts in designing and implementing good asset quality management policies in order to further improve on their performance. This can be through human capacity building for personnel in the form of frequent professional training as well as strict adherence to the prudential guidelines.
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
This document analyzes the influencing factors of corporate debt leverage ratios in China using annual data from 2007 to 2018 for non-financial companies listed on China's A-share market. The empirical results find that:
1) Macroeconomic factors like GDP growth, money supply growth, and real interest rates have a significant impact on corporate debt leverage ratios.
2) Financial market factors such as the scale of social financing, financial institutions' leverage, and non-performing loan ratios also significantly impact corporate debt leverage ratios. Greater financial institution support for the real economy strengthens companies' ability to obtain debt financing.
3) Company-specific factors including profitability, size, growth, and liquidity significantly influence corporate debt
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
1 efficacy-of-credit-risk-management and profitabilityMisker Bizuayehu
This document is a research paper that examines the efficacy of credit risk management on bank performance in Nigeria using Union Bank PLC from 2006-2010 as a case study. The author aims to determine if credit risk affects bank profitability and examine the relationship between interest income and bad debt. Secondary data is used and analyzed using time series, trend, correlation and regression analyses. The study concludes that credit risk negatively impacts Union Bank's performance and high interest income requires effective credit risk management and prudent lending practices. It recommends regularly reviewing loans to assess risk levels and ensuring collateral for loans.
Determinants of Banks’ Financial Performance: A Comparative Study between Nat...inventionjournals
Financial performance is one of the most critical factors having impact on the decision making of the resource providers. And thus to ensure the existence in the ever growing competitive business environment, every institution should be more concerned about the factors affecting their financial performance. This paper specially focuses on identifying the factors having impact on the financial performance of the commercial banks operating in Bangladesh. An effort has also been exerted to determine whether the extent of influence of various factors on financial performance varies with respect to local private and nationalized commercial banks. For this purpose 10 local private commercial banks (PCB) and all nationalized commercial banks (NCB) have been taken covering the period from 2008-2014. Here, data has been collected from the annual reports of the banks under consideration. To draw conclusion a multiple regression has been run by considering financial performance (profitability) as dependent variable and operating efficiency, asset utilization , liquidity, credit risk, capital adequacy and size of the company as independent variables. The study finds that asset utilization and operating efficiency have significant positive impact on banks' financial performance (profitability) whereas credit risk has significant negative impact. However, for PCBs asset utilization is the most critical factor to performance. On the other hand, result shows that in case of NCB 1 taka increase in credit risk is responsible for negative return of 0.968 taka. It is found that financial performance has no significant relationship with size and liquidity of the banks
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a research study about service experience and customer satisfaction in restaurants in Delhi, India. The study had three purposes: 1) To validate an existing instrument for measuring service experience in a restaurant setting, 2) To assess customer service experiences in Delhi restaurants, and 3) To identify areas of customer dissatisfaction that could be improved.
The researchers surveyed 200 customers from one restaurant in Delhi using a validated questionnaire. Statistical analysis identified seven key factors of customer service experience: Ease, Novelty, Learning, Comfort, Personal, Relaxation, and Involvement. The results provide insights into customer satisfaction with restaurant service in Delhi and areas for improvement.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a research study that aimed to identify factors affecting Islamic Social Reporting (ISR) in Syariah (Islamic) banks in Indonesia. The study analyzed annual reports from 18 Syariah banks over 2010-2011 to evaluate their ISR based on content analysis. It hypothesized that company size, profitability, company age, and proportion of independent commissioners would influence ISR levels. Multiple regression analysis found that company size and profitability significantly positively affected ISR levels, while company age and proportion of independent commissioners did not.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a research paper that studied the impact of capital structure on the performance of listed public sector banks in India from 2008 to 2012. The paper seeks to establish a relationship between capital structure and profitability measures like return on equity, return on assets, and earnings per share. Regression analysis was used to analyze the data from the national stock exchange. The findings revealed a positive relationship between short-term debt and the profitability measures. The purpose is to provide empirical evidence on the relationship between capital structure and banking performance to help public sector banks in India select an optimal capital structure to improve profitability.
International Journal of Business and Management Invention (IJBMI)inventionjournals
The document is a research paper that examines customers' post-purchase behavior of retailers' brands. It analyzes a sample of 500 customers through surveys and interviews. The study finds that customers are generally satisfied with retailers' brands and that retailers actively work to solve any product issues for customers. Customers also feel retailers' stores provide a relaxing shopping environment. However, the paper aims to further analyze how customers' demographic characteristics and purchasing experiences affect their post-purchase behavior and relationship with retailers' brands.
This document summarizes an article on Indian shopkeepers' perspectives on foreign direct investment. It discusses both the benefits and criticisms of allowing FDI in India's retail sector. The benefits include modernizing agriculture and retail, increasing employment, and bringing investment and expertise. However, critics argue that small farmers and businesses may not benefit and could be put out of business by larger, foreign-owned companies. The document also outlines the research methodology used in the original article, which included primary data collection from Indian shopkeepers and secondary data collection from various sources on FDI.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document discusses the negative impact of corruption and improper job seeking approaches in India. It notes that many qualified individuals fail to get jobs not due to lack of qualifications but because they do not have connections or are unable to pay bribes. This leads to mental health issues, loss of economic growth, and has cost the Indian economy approximately 450 billion rupees. The document examines several specific cases where unqualified individuals received jobs through connections. It concludes that widespread corruption in hiring is hindering India's development and that citizens must work to establish oversight and use tools like RTI to address these issues and promote fair employment.
WordPress es una plataforma CMS para blogs y páginas web creada por Matt Mullenweg en 2004. Inicialmente diseñada para blogs, evolucionó a un potente CMS gestionado por Automattic. Existe en versiones gratuitas online (WordPress.com) y de descarga (WordPress.org), esta última requiere configuración técnica. Gracias a plugins de terceros, WordPress puede transformarse en tiendas online, foros, redes sociales u otros usos, lo que le da gran versatilidad.
International Journal of Business and Management Invention (IJBMI)inventionjournals
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International Journal of Business and Management Invention (IJBMI)
1. International Journal of Business and Management Invention
ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X
www.ijbmi.org Volume 2 Issue 10ǁ October. 2013ǁ PP.96-103
Information Quality, Credit Risk and Performance: Empirical Evidence
In Tunisian Banking Context
Mohamed Ali ZARAI 1 And Hedi BAAZAOUI 2
1
Associate Professor of Accounting at Al Baha University, Kingdom of Saudi Arabia
2
Hedi BAAZAOUI, University of Kairouan, Tunisia
ABSTRACT : The objective of this paper is to study the determinants of credit risk in banking sector. Through
the study on banking institutions on the period 2003-2011, we found that performance, audit opinion, and audit
quality are the fundamental determinants of the banking credit risk level. However, information quality proxied
by discretionary accruals is not related to credit risk. In the literature, we find the importance of banking
regulation and its enforcement to improve market discipline, and efficient resource allocation.
KEY WORDS: disclosure, risk, performance, regulation.
I.
INTRODUCTION
Financialization is recognised as a key feature of the 2008 financial crisis (Hatherly and
Kretzschmar, 2011: 209). Those authors argue that financialization has been permitted through the failure
of accounting to distinguish distributable income from capital gains/transfers and to distinguish
productive from speculative capital. Literature has demonstrated the important role of several risks and the
weakness of banking regulation in explaining of financial crisis.After financial scandals and adoption of
treadway committee reports (COSO report 1 and COSO report 2), business world thinks of the actual and
potentiel risks. In fact, the COSO report 1 provides a great importance to evaluate risks, essential composant of
internal control and the COSO report 2 is reserved to risk management.Thus, the information disclosure viewed
through the angle of information quality and risk attracts the attention of several research works. Arif, Fah and
Ni (2013) examine the impact of unexpected earnings and risk factors on share price changes in eight
Organization of Economic cooperation and Development European countries. They find that credit risk, price
risk, exchange rate risk, and solvency risk are significantly correlated with share price changes. Credit risk
appears to be the most critical risk, while price risk and exchange rate risk are also significant in both large and
small economies in Europe (Arif, Fah and Ni, 2013: 103). Only credit risk is significantly influencing the
earnings in all countries except in Turkey.
Cheng (2012) uses discretionary loan loss provisions as a proxy for managing specific accruals, given
that loan loss provisions are a very important accrual for banks. Managers are more likely to utilize loan loss
provisions to meet earnings targets if the magnitude of earnings manipulation is close to the limit of loan loss
provisions (Cheng, 2012: 23).Ng (2011) demonstrates that information quality is associated negatively to the
liquidity risk. Information quality is measured by earnings precision, accruals quality, financial analysts’
forwards and agregated quality. High correlations were observed between the information quality proxies and
both liquidity risk and market risk.Cabedo and Tirado (2004: 182) define in detailed manner the different risk
categories. The financial risks have a direct effect on depreciation of value of monetary assets and liabilities.
They are integrated market risk, credit risk, liquidity risk, legal risk and operational risk. For non financial risks,
there are business risk and strategic risk. This work begins with the literature review (section 2). The regulation
of credit risk in Tunisia is examined in section 3. In section 4, research methodologie is presented. The results
and interpretations are presented in section 5. The empirical results are summarized in section 6.
II.
LITERATURE REVIEW
According to (Beck and Narayanamoorthy, 2013) study, Securities and Exchange Commission’s
regulatory internvention in the banking industry had a greater influence on banks’ loan loss estimates. Loan loss
allowances are changed in response to SEC’s intervention which having an objective to promote a more
disciplined and consistent loan loss methodology by requiring banks to provide enhanced documentation to
support their loan loss allowance estimates.
US banks were not in a position to absorb mark-to-market losses on mortgage assets and goodwill
impairment resulting from a credit crunch because they operate with narrow profit margins and a limited equity
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96 | Page
2. Information Quality, Credit Risk And Performance…
cushion in the balance sheet (Heilpern, Haslam and Andersson, 2009: 99). Hughes, Wood and Hodgdon (2011)
have demonstrated that American banks had complied with Securities and Exchange Commission guidance in
critical accounting policy and estimate disclosures as part of the management’s discussion and analysis. The
increases occur in disclosures affected by financial crisis and identified in Securities and Exchange Commission
guidance.
Despite the improvement in disclosure quantity and quality, the banks did not fully comply with SEC
guidance regarding critical accounting policy and estimate disclosures. In the 2008 Form 10-Ks, only seven of
the 20 banks disclosed that the critical accounting policies had been discussed with the audit committee; despite
specific guidance from the SEC stating that this information should be included in the disclosure (Hughes,
Wood and Hodgdon, 2011: 156).Hughes, Wood and Hodgdon (2011) demonstrate the importance of
institutional regulation of the banking industry (SEC guidance) in imposing transparency of financial
disclosures and providing new rules in determining of fair value accounting. Jackson and Wood (2013) study
different prediction models of credit risk and corporate insolvency. They find that the complicated models are
less efficient to simplified models. Firm size and cash flow to total debt have predictive ability to assess credit
risk and corporate insolvency. The authors suggest using techniques which consider market-based information
alongside accounting numbers because of the relatively poor performance of accounting number-based models.
Ariff and Fah (2011) examine the impact of disclosed earnings on share price changes for four Asia pacific
countries (Australia, South Korea, Malaysia and Thailand). They show that because of the banking industry is
more regulated than non-banking industry, the behavior of investors in revaluing share prices based on news of
earnings in this industry is important. The regression results using data from all four countries suggest that the
changes in total earnings as disclosed in the final reports appear to significantly affect the banking share prices
in each of the four countries.
Information disclosure is envisaged in terms of quality and quantity. Two measure methods are
applied: content analysis and disclosure indices (Joseph and Taplin, 2011). According to these authors,
disclosure abundance is measured by content analysis and disclosure occurrence is measured by disclosure
indices. Disclosure abundance counts the amount of words, sentences, lines, pages, etc. while disclosure
occurrence counts the amount of disclosed items in order to calculate disclosure indice. In Ng (2011) study,
information quality is measured by earnings precision, accruals quality, consensus financial analysts and
aggregated quality. Earnings precision is measured by a standard deviation of earnings over the most five recent
years deflated by standard deviation of cash flow from operations.
Accruals quality is the standard deviation of residuals obtained by regression the total accruals on cash
flow from operations, change in revenues and gross value of plant, property and equipment. Analysts’
consensus is measured by the standard deviation of analysts’ forcasts of annual earning per share for the
immediate fiscal year end deflated by the share price.The aggragate quality is measured by summing the three
standardized proxies described above. Each proxy is divised by standard deviation of the proxy of all firms.
Ng (2011) adds control variables those capture market characteristics (stock liquidity, stock return, stock
turnover, prior returns, return volatility, and size) and firm characteristics (investment opportunities, growth,
duration of operating cycle, capital intensity, cash liquidity and financial condition). High correlations are
founded between information quality proxies and both market and liquidity risks.Jaggi and Low (2000) examine
the legal system impact on financial disclosure made by firms in different countries. Their results demonstrate
that firms from common law countries disclose more information compared to firms from code law countries.
Moreover, these results demonstrate that cultural values have not a significative impact on disclosure in the
common law countries but they are significative in code law countries. They advance that empirical findings
support their arguments that strong legal protection provided to investors by common law countries has resulted
in a greater dispersion of corporate ownership in these countries. Additionally, they conclude that the common
law countries also offer better legal protection to creditors. They argue that with better protection for creditors,
firms in common law countries have better borrowing capabilities, and thus have higher debt financing. (Jaggi
and Low, 2000: 500-501)Cabedo and Tirado (2004) calssify risks in financial risks and non financial risks and
propose value at risk as a risk quantification method. Financial risks have a particular pertinence for the
information disclosure since they have an immediat effect on monetary assets and liabilities. Non financial risks
are not directly related to monetary assets and liabilities, although, they will have an effect on future cash flow
losses (Cabedo and
Tirado, 2004: 185-186).Edmister and Chen (1989) demonstrate that announcement effect of problem
loans on stockholder of returns of two bank portfolios is positive. They constate that imposing a requirement of
announcement of the non performing loans is associated significantly to increased stock returns of the two
www.ijbmi.org
97 | Page
3. Information Quality, Credit Risk And Performance…
portfolio of banks. Thus, investors appreciate the abundance of informational divulgation although it integrates
bad news.Patten (1991) examines if voluntary disclosure is due to public pressure or profitability imperatives.
It’s argumented that disclosure is practicised to expose firms to her environment. It is more related to public
pressure variables than to profitability measures. Regression analysis on the level of disclosure for 128 firms
in1985 indicates that size and industry classification are significant explanatory variables in contrast
profitability variables are not.
According to Pattern (1991), disclosure is measured by the amount of pages, exprimed in percentage of
annual report. The sample is subdivised into high disclosure and low disclosure classifications.Olson and Zoubi
(2008) try to identify diffrences between Islamic and conventional banks of golf countries on the basis of
financial characteristics alone. Their results indicate that financial ratios integrated performance ratios, liquidity
ratios, and risk ratios may be used to distinguish between Islamic and conventional banks. According to
Billings and Capie (2009), the framework of banking regulation is extensive. There is a clear international
consensus that transparency in information disclosed by bank institutions is desirable. There are two categories
of transparency: transparency stability and transparency fragility. The first imply that a greater disclosure
facilitates the efficient allocation of resources by improving market discipline via reducing informational
asymmetry. The second may engender banking system instability that is, disclosure creates negative
externalities (Tadesse, 2006: 33). Lang and Maffett (2011) soulign that a great transparency based on
accounting standards, auditor choice, earnings management, analysts’ forcasting and forcast accuracy generated
less liquidity volatility, fewer extreme illiquidity events and lower correlations between firm level liquidity
level and both market liquidity and market returns.
On the basis of the literature review, we can inspire hypothesis formulated by Ng (2011) relying information
quality (independent variable) and liquidity risk (dependant variable) in order to formulate the fisrt hypothesis.
Hypothesis 1: information quality affects significatively but in inverse sens the credit risk.Ng (2011) and Street
and Bryant (2000) integrate variables that represented firm characteristics (size, listing status, performance,
industry, audit opinion and audit quality). Several studies have addressed the impact of various corporate
characteristics on annual report disclosures. These characteristics include size, listing status, leverage,
profitability, industry, type of auditor, size of the equity market, degree of economic development, type of
economy, activity on the equity market, dispersion of stock ownership, and culture (Street and Bryant, 2000:
307).
Thus, the second hypothesis is formulated as follow:
Hypothesis 2: performance, audit quality, audit opinion and listing status affect significatively but in
inverse sens the credit riskt.
III.
CREDIT RISK COVERING REGULATION IN TUNISIA
According to article 8 of Tunisian central banking circular n°91-24 of December 17 1991, banks must
classify their assets. To appreciate insolvency risk, banks must distinguish assets in balance sheet and hors
balance sheet in current assets and classified assets according both to risk of loss and probability of
recovrement. Current assets those realization and integral recovrement in time seem to be ensured and those
holded on firm whose:- financial situation is balanced and confirmed by certified accounting documents dated
from less 18 months and provisional situations dated from less 3 months ;- management and activity
perspectives are juged satisfactory on the basis of visit reports ;- form and volume of loans compatibles with
both the needs of principal activity and the real capacity of repayement.
For classified assets, we distinguish:
Class 1: assets required a particular following: in this class, there are assets those realization or integral
recovrement in time seems to be ensured and those holded on firms presented one of characteristics as below:
activity sector knows difficulties ;
financial situation is deteriorated.
Classe 2: Incertainty assets: in this class, there are assets those realization or integral recovrement in time is
uncertain and those holded on firms knowing financial difficulties or others that can be involving a suspect of
their viability and necessitate the using or carrying out redressement measures.
Apart from defined characteristics in class 1, these firms present at least:
form and volume of loans those are not compatibles with their principal activities ;
evaluation of financial situation can not be up to date because the failing of information availability or of
necessar documentation ;
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4. Information Quality, Credit Risk And Performance…
existence of management problems or disputes between stockholders ;
existence of technical, trading or supplying difficulties ;
cash flow deterioration that compromises, in the absence of other sources of financing, repayment of debts
within the time allowed ;
existence of payment delay of interests or principals superior to 90 days without exceed 180 days.
As well in class 2, other assets remained in suspense and not apured within the time of 90 days without exceed
180 days.
Classe 3: preoccupant assets: in class 3, assets those realization or recovrement is threaten and those holded
on firms that situation suggests eventual losses degree calling for vigorous actions from bank in order to limit at
the very least.
These assets are generally holded on firms those present more gravity than class 2 characteristics.
Payment delay of interests and principals are generally superior to 180 days without exceed 360 days.
As well in class 3, other assets remained in suspense and not apured within the time of 180 days without exceed
360 days.
Classe 4: Compromised assets: in class 4:
receivables for those payment delay of interests and principals are superior to 360 days,
assets remained in suspense beyond 360 days ;
other assets those must be passed in losses. The bank must exhaut all legal procesures striving for realization of
those assets.
According to article 10 of the same circular, banks must constitute provisions equal at least 20% for class 2
assets, 50% for class 3 assets and 100% for class 4 assets.
According to a circular n° 2012-02, credit establishment must constitute general provisions called collective
provisions by the deduction on benefits of 2011 in order to recover latent risks relied to current commitments
and commitments those necessitate a particular following (class 1).
The amount of these provisions must be in adequation with latent risks relied to current commitments and those
necessitate a particular following (classe 1).
IV.
RESEARCH METHODOLOGIE
We study Tunisian banking establishments in view of abundant regulation those are benefited from.
Tunisan central banking circulars are precised credit risk categories and thus fixing mechanisms of provisions
allowing the covering of risks.Data concerns 14 banks and is collected in the period 2002-2011.
We test the relation between credit risk (dependant variable) and information quality (discretionary accruals
variable as proxy), performance, size, listing status, audit opinion, and audit quality (independant variables)
with applying ordinary least square model.
Model
1:
Table 1 contains variables of model, their measures and the expected sign of independent variable coefficient.
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5. Information Quality, Credit Risk And Performance…
Table 1: Analysis Variables
Variables
Dependant Variable
Credit risk
Discretionary Accruals
performance
Size
Listing status
Independant
Variables
Audit opinion
Audit quality
Kothari,
Lione
and
measure
Provisions/ custemer credit
Les résidus résultant du modèle
(2)
Net earning/Total asset
Natural logarithm of total asset
Binary variable: 1 listed, 0 not
listed
Expected sign
Binary variable: 1 unqualified
opinion or opinion without
reserve, 0 qualified opinion or
opinion with reserve
Binary variable: 1 audited by big
four, 0 otherwise
Yang
(2005),
-
+
+
-
Model 2:
Where total accrualsit is the difference between the net earning and operating cash flow of bank i in the end of
year t ; total assetit-1 is total asset of bank i in the end of year t-1 ; ΔRevit is the revenue net change (banking net
product) of bank i in the end of year t to the end of year t-1, IMMBit is the gross margin of plant, property and
equipment of the bank i in the end of year t, ROAit is the return on assets (net earning/total asset) of the bank i
in the end of year t et
is the error term of the bank i in the end of year t.
According to Kothari, Lione and Yang (2005), the error term
represents discretionary accruals of the bank i
in the end of year t.
V.
RESULTS AND INTERPRETATIONS
5.1. General characteristics of the sample
The sample contains 133 bank-years for total asset and 135 bank-years for listing status.
Table 2 : number of observations
N
Tasset * bank
listing * bank
Inclus
Pourcentage
133
98,5%
135
100,0%
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Observations
Exclu(s)
N
Pourcentage
2
1,5%
0
,0%
N
Total
Pourcentage
135
100,0%
135
100,0%
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6. Information Quality, Credit Risk And Performance…
According to table 3, we observe that total asset for 5 banks don’t exceed 1 milliard Tunisian dinars through the
studying period. There are foreign participation banks (BFT, BTE, BTK, BTL, and STUSID).
According to listing status, the Emirates Tunisian bank (BTE) alone of 5 foreign participation banks is listed.
5.2. Credit risk determinants
According to table 4, we remark that discretionary accruals variable doesn’t present a significative
correlation with other variables of model. The performance (net earning/total asset) is negatively correlated with
credit risk (provisions/customer credit) and positively correlated with audit opinion.
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7. Information Quality, Credit Risk And Performance…
The credit risk is negatively correlated with performance, listing status, audit opinion and audit quality (Big four
or not).The size (natural logarithm of total asset) is positively correlated with listing status and negatively
correlated with audit quality that suggests big banks are listed and don’t audited, in the majorty of cases, by the
big four.The listing status is negatively correlated both with credit risk and audit quality and positively
correlated both with size and audit opinion. According to table 5, regression quality is high since ajusted R2 is
0,662. For residuals, the mean equals zero and standard deviation equals 1. (Tables 5 and 6) Moreover, these
residuals are independant (DW=1,710).
Table 5: Model capacity
R
R-square
,814
,662
Ajusted RStandard error
square
estimation
Durbin-Watson
,648
,039359258
1,710
Table 6: Residuals statistics
Prediction
Residual
Prediction error
Residual error
Minimum
,02528386
-,093123719
-1,541
-2,366
Maximum
,57412469
,168139011
8,627
4,272
Mean
Standard deviation
,10843985
,053977773
,000000000
,038537472
,000
1,000
,000
,979
N
122
122
122
122
According to table 7, we observe absence of multicollinearity since we are eliminated listing status
from regression model. In fact, this variable is significatively correlated with size. His integration in the model
generates increase of tolerance indice (,334 and ,330) and VIF coefficient also for this variable and for size
variable (2,992 and 3,032).Significative variables are performance, audit opinion and audit quality. All these
variables present negative coefficients. Thus, more performant banks are less risked. They can deduct from their
annual earnings sufficient amounts to cover risks that they are exposed.After financial scandals and the
appearance of financial security laws, legal texts are recently published and forced auditors to exprime their
opinion on internal control procedure quality. In tunisia, tunisian central bank circular n° 2012-02 obliges to
exprime their opinion about adequation collective provisions with nature of latent risks relied to current
commitments and commitments those necessitate a particular following (class 1). Moreover, according to
Tunisian central bank circular n°91-24, each bank must demand from firms those risks exceed 10 % of their
capital equity, an external audit report. Banks must, before any commitment, demand to her customers
commitments that exceed five million Tunisian dinars, and certified financial statements by legal authorized
auditor of exercise proceeding the year of credit. Banks must, as well, demand certified financial statements by
legal authorized auditor of exercise followed the year of credit borrowed. A bank audited by big four presents a
big size, well organized, and disposed a clair strategy in evaluation and management risks. Thus, audit made by
big four affects positively the risk covering essentially credit risk.
Table 6: Regression coefficients and multicollinearity tests (tolerance and VIF)
Model
1
Standardised
coefficients
Bêta
(Constant)
DISCRAC
NETEAsset
Lnsize
Opinion
Bigfour
,009
-,714
-,057
-,185
-,109
t
6,297
,164
-12,538
-1,018
-3,292
-1,949
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Sig.
,000
,870
,000
,311
,001
,054
Collinearity Statistics
Tolerance
VIF
,997
,898
,936
,923
,935
1,003
1,113
1,068
1,084
1,069
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8. Information Quality, Credit Risk And Performance…
VI.
CONCLUSION
The aim of this research is to study the link between credit risk, performance, and information quality.
We were used discretionary accruals variable as a proxy of information quality. This proxy was adopted by Ng
(2011) in his study about the link between information quality (independant variable) and liquidity risk
(dependant variable).Founded results show the absence of significative link between information quality and
credit risk. On the contrary, significative links but in opposite sense are observed between credit risk on the one
hand and performance, listing status, audit opinion and audit quality on the other hand. Our study demonstrates
the regulation role in evaluation and management risks. All banks try to comply with Tunisian central bank
circulars. However, opinions with reserve are formulated on financial statements of several exercises of the
bank because of insufficient amount of provisions compared to required provisions in accordance with risk
covering fixed by Tunisian central bank circulars.
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