Title: Political system of a country and its non-performing loans: a case of emerging markets

Authors: Ramiz Ur Rehman; Junrui Zhang; Muhammad Ishfaq Ahmad

Addresses: School of Management, Xi'an Jiaotong University, No. 28, Xianning West Road, Xi'an, Shaanxi, 710049, China ' School of Management, Xi'an Jiaotong University, No. 28, Xianning West Road, Xi'an, Shaanxi, 710049, China ' Public Administration and Law School, Liaoning Technical University, Fuxin, Liaoning, China

Abstract: This paper analyses the trend of non-performing loans over the last one decade in the banking sector of Pakistan. This study also examines the factors which influences on NPLs. Using data from 1998-2009, this paper argues strongly that democratic political system of a country has positive influence on the non-performing loans. It also finds statistical evidence that board size have positive association with non-performing loans while board independence and ownership concentration have negative association with non-performing loans regardless the bank type.

Keywords: banking performance; corporate governance; political environment; non-performing loans; politics; political systems; case study; emerging markets; banking industry; Pakistan; democracy; board size; board independence; ownership concentration; bank types.

DOI: 10.1504/IJBPM.2016.077243

International Journal of Business Performance Management, 2016 Vol.17 No.3, pp.241 - 265

Received: 25 Jun 2014
Accepted: 27 May 2015
Published online: 25 Jun 2016 *

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