The Effects of Nonperforming Loans on Dynamic Network Bank Performance
Table 1
Variable definitions.
Variables
Description
Input
: labor
Productive activity, especially for the sake of economic gain
: fixed asset
This item represents the difference between sale value and net book value (including the amount of any revaluation of the assets previously included in revaluation reserves) from the sale of fixed assets and/or investments
: operational expenses
The total costs and expenses incurred for all divisions of the company deduct component of labor and related expense
Input/output
: deposit
It is a credit for the party who placed it, and it may be taken back (withdrawn), transferred to some other party, or used for a purchase. It is often used with respect to banks, where deposits are usually their main source of funding
: loans
In finance, a loan is the lending of money from one individual, organization, or entity to another individual, organization, or entity
: NPLs
A loan is nonperforming when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced, or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full
Output
: interest earnings
Interest rate spread is the interest rate charged by banks on loans to private sector customers minus the interest rate paid by commercial or similar banks for demand, time, or savings deposits
: operating profits
Operating profit is the profit earned from a firm's normal core business operations. This value does not include any profit earned from the firm's investments (such as earnings from firms in which the company has partial interest) and the effects of interest and taxes
: nonaccrual loans
All nonperforming loans shall be transferred to non-accrual loans account item within six () months after the end of the payment period. However, those restructured loans to be performed in accordance with the agreement shall not be subject to this restriction
4: allowance for uncollectible accounts
With regard to the write-off of nonperforming loans and nonaccrual loans, the amount provided under the loan loss provision or the reserve against liability on guarantees shall be used to offset [the write off], and, if such amount(s) is insufficient, the deficiency shall be recognized as a loss in the current year