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Subject: Bank profitability ×

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    Nonperforming loans as a factor affecting the health of banking system
    (2007-04) Corpuz, Jose Rowell T.; Guzman, Lauren Jerei T.; Alburo, Florian A.
    This paper focuses on addressing the significance of nonperforming loans on the Philippine banking system as these particularly affect the bank sector profitability. It discusses factors affecting the nonperforming loans and aims to test whether or not SPV Law help solve the bad loans problem. The paper uses Granger-causality techniques to test whether or not the hypotheses on loan loss provision, operating expenses, capital adequacy ratio and nonperforming loans hold. Moreover, regression model is used to show how margin of intermediation, operating expenses, nonperforming loans, and SPV law affect the health of banking system. The analysis is consistent with the hypotheses regarding nonperforming loans and others and it further reveals that SPV law positively affects bank sector profitability.
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    The liberalization of the Philippine banking sector: its effect on the interest rate spread and profitability of banks (1998-2008)
    (2009-01) Burgos, Bea Rosario Louise S.; Nario, Ma. Regina O.; Tecson, Gwendolyn
    The liberalization of the Philippine banking sector was intended to improve financial intermediation by promoting competition and enhancing the efficiency of the domestic banking sector. We examine how the entry of foreign banks affects the interest rate spreads and profitability of domestic banks and we find support that it does not systematically reduce both. Interest rate spreads of domestic banks remain on the same level and their profitability continues to grow. Nevertheless, foreign competition, at some extent, drives domestic banks to improve their operating performance. We construe that the presumed effect of the liberalization was felt but not fully realized.