Abstract
The purpose of this study is to investigate the significant impact of macro-economic factors on the level of credit risk and, to
determine the moderating effect of Market concentration (HHI) on relationship between the macro-economic factors and credit risk
of banking sector in Pakistan. We apply GMM estimation model on time series data for the period of 2000 to 2017. Consistence
with the existence literature, we found a positive and significant impact of export of goods and services, foreign exchange rate and
un-employment rate on the level of credit risk. While the gross domestic product growth rate, import goods and services and stock
market capitalization found a negative and significant impact on the level of credit risk. Therefore, we found that market
concentration has significantly moderate the relationship between macro-economic factors and the level of credit risk, except gross
domestic product growth rate. In other words, when all macro-economic indicators stand on a better position specifically, it leads
to decrease in the level of credit risk. This study is conducted to help the commercial banks and regulatory authorities to change their
loaning policy and procedure, as per the change in factors that determine the credit risk (NPL).
Akbar Ali, Areeba Khan. (2019) Impact of Macro-economic Factors on Credit Risk. The Moderating Effect of Market Concentration: An Evidence from Pakistan, Paradigms , Vol 13, Issue 2.
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