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JOURNAL OF INTERNATIONAL STUDIES


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ISSN: 2306-3483 (Online), 2071-8330 (Print)



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Factors that increase credit risks of Azerbaijani banks

Vol. 11, No 2, 2018

 

Shahriyar Mukhtarov

 

Department of Economics and Management, Khazar University, Department of Economics and Management, Azerbaijan State University of Economics (UNEC),

Azerbaijan,

smukhtarov@khazar.org

 

 

Factors that increase credit risk of Azerbaijani banks

 

Serhat Yüksel

 

School of Business, İstanbul Medipol University, 

Turkey

serhatyuksel@medipol.edu.tr


Elvin Mammadov

 

Department of Economics and Management, Khazar University, School of Business, 

Azerbaijan State University of Economics (UNEC), 

Azerbaijan 

elmammadov@khazar.org


 

 

 

 

 

 

 

Abstract. The main purpose of this paper is to analyze the influencing factors behind credit risks in Azerbaijani banks. Within this scope, we analyzed 10 biggest banks of Azerbaijan with respect to their asset size. Furthermore, 10 explanatory variables were used to achieve this objective. Annual data for the period between 2010 and 2015 was tested using the panel logit methodology. According to the results of our analysis, it was defined that 4 independent variables affect credit risk of Azerbaijani banks. It was also determined that decrease in the capital adequacy ratio, interest rate and total assets leads to increasing credit risk. We have also identified that there is a positive relationship between unemployment rate and the credit risk of Azerbaijani banks. Therefore, it can be stated that Azerbaijani banks should increase their capital adequacy ratio and total assets amount in order to minimize the negative effects from the credit risk problem.

 

 

Received: December, 2017

1st Revision: February, 2018

Accepted: April, 2018

 

DOI: 10.14254/2071-8330.2018/11-2/5

 

JEL ClassificationG19, G20, G21

KeywordsPanel logit, credit risk, Azerbaijan, banks, non-performing loans