Loan portfolio problems have historically been the major cause of bank losses because of inherent risk of possible loan losses (credit risk). The study of Bank Loan Fraud Detection and IT-Based Combat Strategies in Nigeria which focused on analyzing the loan assessment system was carried out purposely to overcome the challenges of high incidence of NonPerforming Loan (NPL) that are currently be...

Written contracts between governments and state enterprises have been widely used in World Bank projects since the first Bank operation supporting performance contracts, a 1975 operation in Senegal. A Bank survey of developing countries found 565 such contracts in thirty-two countries, and another 103,000 in China as of June 1994 (World Bank 1995). Although these performance contracts go by dif...

This paper analyzes the joint influence of the quality of a bank’s loan portfolio, the bank’s maturity gap and its deposit rate policy on the value of deposit insurance in an arbitrage-free Basel II consistent framework. We develop and apply a two-stage structural model of a bank where deposit insurance is a European put option on the loan portfolio, the default of each loan is driven by the bo...

This study analyzes common stock return behavior around the announcement date of a bank loan commitment to a firm. The results demonstrate that loan commitments are viewed as positive when the more formal revolving credit agreement is used. Straight lines of credit do not show any significant reaction. Loan commitment announcements are associated with signals transmitted by banks and is an impl...

To sustain growth in an aging economy, it is important to ease the financing of small firms by bank loans. Using bank internal data of small business loans in Germany, we examine the determinants of loan rates in the period 1995-2010. Beyond characteristics of the firm, the loan contract, and the lending relationship, demographic aspects matter. However, collateral and relationship lending play...

We examine the implications of optimal credit risk transfer (CRT) for bank-loan monitoring, and the incentives for banks to engage in optimal CRT. In our model, properly designed CRT instruments allow banks to insure themselves against loan losses precisely in those states that signal monitoring. We find that optimal CRT enhances loan monitoring and expands financial intermediation, in contrast...

This paper studies the effects of bank capital requirements imposed by European authorities in October 2011 on loan collateral and personal guarantees usage to enhance ratios. We use detailed information contracts granted a representative Spanish several subsidiaries nonfinancial corporations around that date. document increases more than collateral, especially at with lower However, although f...

We provide a model of the impact of bank mergers on loan competition, individual reserve management and aggregate liquidity risk. Banks hold reserves against liquidity shocks, refinance in the interbank market and compete in a differentiated loan market. A merger creates an internal money market that induces financial cost advantages and may increase reserve holdings. We assess the liquidity ri...