FACTORS AFFECTING NON-PERFORMING LOANS (NPLs) OF COMMERCIAL BANKS LISTED ON THE STOCK EXCHANGE OF THAILAND

Abstract

This research study aimed to study the factors affecting the non-performing loans of commercial banks listed on the Stock Exchange of Thailand. The researcher collected secondary data of 10 commercial banks (excluding Thanachart Bank as it merged with TMB in 2019) listed on the Stock Exchange of Thailand on a quarterly basis from Q1 2016 to Q4 2020, a sum of 5 years 20 quarters totaling 200 data. The data studied consisted of bank-five specific factors including the capital adequacy ratio (CAR), current assets (CA), net interest margin (NIM), loan to deposit ratio (LDR), and growth loan (GL). This research estimations are done using fixed effects regression methods and random effects regression methods because the analyzed data were panel data.

The results of the study found that the factors affecting the non-performing loans of commercial banks listed on the Stock Exchange of Thailand were statistically significant at a positive level of 0.05 were capital adequacy ratio (CAR) and loan to deposit ratio (LDR), While current assets (CA) was a statistically significant negative impact factor of 0.05. Therefore, commercial banks should have more stringent credit approval screening measurements, and place emphasis on current asset management so that the returns and risks are at acceptable levels and meet the needs of business goals clearly. Moreover, banks must operate with prudence to maintain their strength in the ability to attract and retain citizens' deposits which are the lowest-cost source of capital in order to help mitigate the banks' non-performing loan problem.