Explaining Non-Performing Loans of Commercial Banks in Malaysia

Authors

  • Leedya Sivalaxmi Sivarajan Department of Accounting and Finance, Faculty of Business, Management and Professional Studies, Management and Science University, Shah Alam, Malaysia
  • Siti Sarah Alyasa-Gan Department of Accounting and Finance, Faculty of Business, Management and Professional Studies, Management and Science University, Shah Alam, Malaysia
  • Norliza Che-Yahya Department of Economics and Financial Studies, Faculty of Business Management, Universiti Teknologi Mara, Puncak Alam Campus, Malaysia
  • Sharullizuannizam Salehuddin Department of Accounting and Finance, Faculty of Business, Management and Professional Studies, Management and Science University, Shah Alam, Malaysia

DOI:

https://doi.org/10.14738/assrj.106.2.15014

Keywords:

Non- performing loan, Capital adequacy, Liquidity, Fixed effect model

Abstract

This study examines the influence of bank size, capital adequacy, profitability and liquidity on non-performing loans (NPLs). The growing risk of non-performing loans leading to banks’ potential losses motivates this study to be conducted. This study includes commercial banks in the Main Market of Bursa Malaysia from 2010 to 2021. To test the hypotheses, this study employs a Fixed Effect model. The results show that bank size and capital adequacy have a significant and negative relationship with non-performing loans, indicating that banks with larger and higher capital adequacy have lower NPLs. Generally, this study found a limited number of commercial banks listed in the Malaysian market, providing a smaller sample. Nonetheless, the results of this study may benefit commercial banks in the significant factors to prevent the occurrence of non-performing loans.

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Published

2023-07-29

How to Cite

Sivarajan, L. S., Alyasa-Gan, S. S., Che-Yahya, N., & Salehuddin, S. (2023). Explaining Non-Performing Loans of Commercial Banks in Malaysia . Advances in Social Sciences Research Journal, 10(6.2), 98–106. https://doi.org/10.14738/assrj.106.2.15014

Issue

Vol. 10 No. 6.2 (2023): Advances in Social Sciences Research Journal

Section

Articles

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Copyright (c) 2023 Leedya Sivalaxmi Sivarajan, Siti Sarah Alyasa-Gan, Norliza Che-Yahya, Sharullizuannizam Salehuddin

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