UUM Electronic Theses and Dissertation
UUM ETD | Universiti Utara Malaysian Electronic Theses and Dissertation
FAQs | Feedback | Search Tips | Sitemap

Determinants of credit risk in Pakistan banking sector and the moderating role of intellectual capital

Nawaz, Muhammad (2021) Determinants of credit risk in Pakistan banking sector and the moderating role of intellectual capital. Doctoral thesis, Universiti Utara Malaysia.

[thumbnail of s901869_01.pdf] Text
s901869_01.pdf
Restricted to Repository staff only until 1 March 2024.

Download (2MB) | Request a copy
[thumbnail of s901869_02.pdf] Text
s901869_02.pdf

Download (1MB)

Abstract

The banks in Pakistan have failed to manage the quality of their assets as exposed by the upsurge in their non-performing loans (NPL) experiences as compared with the rest of the World. The high credit risk of the banking sector may reduce its profitability, affects the quality of its assets and increase loan losses which may eventually lead to severe financial distress. Accordingly, the objective of this study is to determine the relationship between external factors such as gross domestic products (GDP), inflation (IR), lending interest rate (LR), unemployment (UN), political stability index (PS) and corruption control index (CCI) and internal factors, namely operational efficiency (OE), liquidity (LIQ), loan growth (LGR) and profitability (ROA) with credit risk (CR) of the conventional and Islamic banks in Pakistan. The novelty of this study is the investigation of the moderating effect of intellectual capital which has previously been given less attention as credit risk determinant in the banking sector of Pakistan. Secondary data of 20 Conventional banks and 4 Islamic banks for the period 2006-2017 was utilized. The quantitative method with multiple and hierarchical regression technique was utilized for unbalanced panel data analysis. The study found that external and internal factors, namely GDP, LR, UN, PS, CCI, LIQ and LGR have significant impacts on the Credit Risk of Conventional banks in Pakistan. Meanwhile, LR, PS, CCI and ROA have significant impacts on the Credit Risk of Islamic banks in Pakistan. The hierarchical multiple regression showed that Intellectual Capital moderates the impact of the relationship between OE, LIQ, LGR and ROA and the Credit Risk of Conventional banks in Pakistan. However, for Islamic banks only the relationship of ROA and LGR between bank’s Credit Risk is moderated by Intellectual Capital. It is recommended that the State Bank of Pakistan would continuously monitor the development of Intellectual Capital through continuous training and excellent internal control system of the listed banks to protect the public funds. The findings of this study can also be applied to formulate fresh recovery and restructuring policies that can serve as a separate strategy between Islamic banks and Conventional banks in Pakistan.

Item Type: Thesis (Doctoral)
Supervisor : Mat Nor, Alias and Tolos, Habibah
Item ID: 9420
Uncontrolled Keywords: Islamic and Conventional banking, Credit Risk, external and internal factors, Intellectual Capital, Pakistan.
Subjects: H Social Sciences > HG Finance
Divisions: Othman Yeop Abdullah Graduate School of Business
Date Deposited: 29 May 2022 10:01
Last Modified: 29 May 2022 10:01
Department: Othman Yeop Abdullah Graduate School of Business
Name: Mat Nor, Alias and Tolos, Habibah
URI: https://etd.uum.edu.my/id/eprint/9420

Actions (login required)

View Item
View Item