Determinants of Non-performing loans: in the case of Construction and Business Bank

Abstract

The main purpose of conducting this study was to find out bank specific factors affecting the occurrence of NPLs in Construction and Business Bank. To accomplish this purpose 5 years (2011-2015) time series secondary data and also primary data through questionnaire have been collected. The explanatory and descriptive research methodology is used as and it is the most suitable for fulfillment of the study objectives. The results show that various bank-specific factors like credit assessment; credit monitoring, ROA has strong and significant effect for the occurrence Non-Performing Loans. On the other hand the finding of the document collateralized loan, lending interest rate, loan maturity, LDR and LGR has a weak significant effect and relationship with the occurrence of NPLs. This research with regard to Non-Performing Loans and its bank specific factors will be useful for CBE decision makers and other private banks.