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The Impact of Credit Risk Management on Profitability of Nordic Commercial Banks

Hurka, Róbert LU (2017) NEKP03 20171
Department of Economics
Abstract
This thesis investigates credit risk management in Nordic commercial banks and its effect on profitability. Two determinants of credit risk are chosen according to relevant literature, namely loan loss provision ratio and capital adequacy ratio. Thirteen banks in total are then investigated across the 16 year time frame from 2000-2015. The results seek to address two essential questions. Firstly, it seeks to capture the relation between credit risk management and profitability of Nordic commercial banks in the full data sample. Loan loss provision ratio is found to have negative effect on the performance of banks, while capital adequacy ratio presents mixed results. Second part of the thesis focuses on the financial crisis component, most... (More)
This thesis investigates credit risk management in Nordic commercial banks and its effect on profitability. Two determinants of credit risk are chosen according to relevant literature, namely loan loss provision ratio and capital adequacy ratio. Thirteen banks in total are then investigated across the 16 year time frame from 2000-2015. The results seek to address two essential questions. Firstly, it seeks to capture the relation between credit risk management and profitability of Nordic commercial banks in the full data sample. Loan loss provision ratio is found to have negative effect on the performance of banks, while capital adequacy ratio presents mixed results. Second part of the thesis focuses on the financial crisis component, most notably its impact on the change in credit risk management. It is shown that macroeconomic environment plays a bigger role in the decrease in profitability after the financial crisis than credit risk management does. (Less)
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author
Hurka, Róbert LU
supervisor
organization
course
NEKP03 20171
year
type
H2 - Master's Degree (Two Years)
subject
keywords
credit risk management, profitability, Nordic countries, commercial banks, loan loss provision
language
English
id
8910021
date added to LUP
2017-06-13 14:46:02
date last changed
2017-06-13 14:46:02
@misc{8910021,
  abstract     = {This thesis investigates credit risk management in Nordic commercial banks and its effect on profitability. Two determinants of credit risk are chosen according to relevant literature, namely loan loss provision ratio and capital adequacy ratio. Thirteen banks in total are then investigated across the 16 year time frame from 2000-2015. The results seek to address two essential questions. Firstly, it seeks to capture the relation between credit risk management and profitability of Nordic commercial banks in the full data sample. Loan loss provision ratio is found to have negative effect on the performance of banks, while capital adequacy ratio presents mixed results. Second part of the thesis focuses on the financial crisis component, most notably its impact on the change in credit risk management. It is shown that macroeconomic environment plays a bigger role in the decrease in profitability after the financial crisis than credit risk management does.},
  author       = {Hurka, Róbert},
  keyword      = {credit risk management,profitability,Nordic countries,commercial banks,loan loss provision},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Impact of Credit Risk Management on Profitability of Nordic Commercial Banks},
  year         = {2017},
}