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Title: Factors that increase credit risk of Azerbaijani banks
Authors: Mukhtarov, Shahriyar
Yüksel, Serhat
Mammadov, Elvin
Keywords: Panel logit
credit risk
non-performing loans
Issue Date: Apr-2018
Citation: The Journal of International Studies
Series/Report no.: Vol. 11;№ 2
Abstract: The main purpose of this paper is to analyze the influencing factors behind credit risks in Azerbaijani banks. Within this scope, we analyzed 10 biggest banks of Azerbaijan with respect to their asset size. Furthermore, 10 explanatory variables were used to achieve this objective. Annual data for the period between 2010 and 2015 was tested using the panel logit methodology. According to the results of our analysis, it was defined that 4 independent variables affect credit risk of Azerbaijani banks. It was also determined that decrease in the capital adequacy ratio, interest rate and total assets leads to increasing credit risk. We have also identified that there is a positive relationship between unemployment rate and the credit risk of Azerbaijani banks. Therefore, it can be stated that Azerbaijani banks should increase their capital adequacy ratio and total assets amount in order to minimize the negative effects from the credit risk problem.
ISSN: 2306-3483
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