The Impact of Credit Risk Management through Provisioning on the Financial Performance of Moroccan Conventional Banks

Authors

  • Salim KHRIBECH Faculty of Legal, Economic and Social Sciences Moulay Ismail University, Meknes, Morocco
  • Mounir BENBOUBKER Faculty of Legal, Economic and Social Sciences of Fez, Sidi Mohamed Ben Abdellah University, Fez, Morocco
  • Mourad ES-SALMANI Ecole des Hautes Etudes Comptables et Financières de Fès, Morocco

Abstract

This study aims at analyzing the impact of credit risk management, specifically the coverage of expected loss, on the financial profitability measured by ROA (Return on Assets) and ROE (Return on Equity) of Moroccan conventional banks. To verify this, we applied an econometric approach based on a panel model based on 63 observations. The results obtained from the estimation of the selected models reveal that an increase in credit risk, measured by the non-performing loan ratio (TRPI), leads to a decline in asset profitability. Meanwhile, credit risk management, measured by the provision coverage ratio concerning non-performing loans (TC) and the share of non-performing loans in the credit portfolio (TS), contributes to an improvement in ROA. However, the model results show a non-significant relationship between credit risk management and ROA.

 

Key words: credit risk, provisions, financial profitability.

JEL Classification: G21; C53

Paper type: Empirical Research

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Published

2024-05-18

How to Cite

KHRIBECH, S., BENBOUBKER, M., & ES-SALMANI, M. (2024). The Impact of Credit Risk Management through Provisioning on the Financial Performance of Moroccan Conventional Banks. International Journal of Accounting, Finance, Auditing, Management and Economics, 5(5), 280–293. Retrieved from https://www.ijafame.org/index.php/ijafame/article/view/1493

Issue

Vol. 5 No. 5 (2024)

Section

Articles

License

Article under license : CC-BY-NC-ND