A Segmentation Study of Non Performing Loans Rates in Turkish Credit Market


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Vatansever M., Demir İ.

International Business Research, vol.10, no.11, pp.29-41, 2017 (Refereed Journals of Other Institutions)

  • Publication Type: Article / Article
  • Volume: 10 Issue: 11
  • Publication Date: 2017
  • Doi Number: 10.5539/ibr.v10n11p29
  • Title of Journal : International Business Research
  • Page Numbers: pp.29-41

Abstract


 Non-performing loans (NPLs) rate is one of the main risks in commercial banks and is also a critical measure of the bank’s financial performance and stability. Banks meet the growth rate of NPLs when the debtors are not able to meet their financial obligations in terms of repayment of loans. Regional diversification can impact NPLs rate as well as macroeconomic and bank-specific factors. The purpose of this study is to detect homogeneous credit risk groups by geographical locations. Diversification across regions can help banks and financial institutions to determine appropriate market areas and identify effective diversified investment strategies by reducing the overall risk of the credit portfolios.