The relationship between credit risk management parameters and profitability of selected banks in the Philippines for the period 2005-2012

• Main Authors: Dumlao, Jeniley J., Gueco, Joanna Minette T., Quetua, Sarah Joy A.
• Format: text
• Language: English
• Published: Animo Repository 2014
• Subjects: Credit > Management; Risk management > Philippines; Banks and banking > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18381
• Institution: De La Salle University

This study was undertaken with the objective of proving that with a good credit risk management parameter, there will also be a satisfactory level of profit. In this research paper, the proponents presented how credit risk management parameters affected profitability of 11 selected universal and commercial banks in the Philippines for the years 2005-2012. The proponents used asset ratio as parameter to accurately measure the impact being made by different variables on the return on assets and return on equity. The data are collected from Osiris and Orbis, an electronic database of De La Salle University. A regression model was used to come up with an empirical analysis. The proponents postulate that loans loss reserves/impaired loans, unimpaired loans/equity, non performing loans ratio, total loans to total assets and capital adequacy ratio are all statistically significant and met the expected sign to return on equity while impaired loans/ equity, and capital adequacy ratio for return on asset. The analysis on each bank has shown that the impact of credit risk management parameters on profitability is not the same.