| Summary: | 碩士 === 淡江大學 === 管理科學研究所企業經營碩士在職專班 === 94 === The non-performing loans ratio, which represents a customer’s inability in repaying the principal and paying off interest to the bank, has been frequently referred as one of the important indexes for loan quality. This paper is conducted in a way of quantitative analysis using data published by Taiwan Banking Industry over the past three years. The paper is to examine the relationship between the non-performing loans ratio and important factors: capital structure of the bank, loan category, interest rate, related revenues and etc. by multiple regression analysis. The purpose of the study is to provide bank employees reference in relation to the key factors affecting the non-performing loans ratio when making credit appraisal and loan decisions. The empirical results of my study are as followings:
1.For the credit type (including consumer loan, small and medium enterprise loan, middle/long term loan and credit card loan), the empirical result presents that credit type has little connection with non-performing loans ratio. As long as bank employees can follow the Five Credit Administration Principles and process the credit appraisal carefully, banks can avoid losses caused by borrowers with poor finance structure, time risk and risk driven by law of large numbers of consumer loan. Banks can increase profits if bank employees always devote themselves to reduce the non-performing loans ratio and commit themselves to develop banking business.
2.There is no statistically significant relationship between the amount of credit card using revolving credit and non-performing loans ratio. Banks normally assume a higher risk of credit card loan by charging customers high interest rate (approx. over 15%). Thus, non-performing loans ratio of credit card loan tends to be higher. Based on the empirical result of year 2004, the amount of credit card using revolving credit and non-performing loans ratio are not significantly related. This indicates that the non-performing loans ratio of credit card loan remains in a reasonable range because banks control their credit card business effectively and successfully.
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