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Corruption and Information Sharing as Determinants of Non-Performing Loans

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  • Ahmad Fawad

    () (Department of Management Sciences, Iqra National University, Peshawar, Pakistan)

Abstract

Background: There are several factors that lead to the growth or decline of the nonperforming loans, such as macroeconomic variables and bank specific variables, banks ownership structure, corruption and information sharing. Among them one of the main factors that affect the non-performing loans are the corruption. In developing countries corruption plays very important role in the growth of non-performing loans. Objectives: This study investigates the impact of corruption at economy level and institution level on the nonperforming loans. This study also examines the association of information sharing between depositors, lenders and financial institutions. Methods/Approach: The current study used time series data over the period of 2001 to 2010 and employed OLS method. Results: The results provide no significant association of corruption and information sharing with non-performing loans. Conclusions: The results suggest no significant impact of corruption on non-performing loans because of the nature of the data used, but as literature provides significant impact of corruption on non-performing loans, therefore State Bank of Pakistan and commercial banks can reduce the level of non-performing loans by reducing the chance of corrupt practices by following the rules and regulation of credit allocation, supervision and loan monitoring.

Suggested Citation

  • Ahmad Fawad, 2013. "Corruption and Information Sharing as Determinants of Non-Performing Loans," Business Systems Research, De Gruyter Open, vol. 4(1), pages 87-98, March.
  • Handle: RePEc:bit:bsrysr:v:4:y:2013:i:1:p:87-98
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    References listed on IDEAS

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    Cited by:

    1. repec:sau:ueedcc:06:154-173 is not listed on IDEAS
    2. Friedrich Thießen, 2018. "Korruption und die Finanzmärkte - Das Problem der Non-Performing-Loans im Kreditgeschäft," Chemnitz Economic Papers 021, Department of Economics, Chemnitz University of Technology, revised Mar 2018.

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