Factors Affecting the Level of Non-Performing Loans (NPLs) of Financial Institutions in the Commercial Banking Group Listed on the Stock Exchange of Thailand and Specialized Financial Institutions

Abstract

The objectives of this study were to 1) examine the factors affecting the level of non-performing loans (NPLs) of financial institutions, including commercial banks listed on the Stock Exchange of Thailand and specialized financial institutions, and 2) compare the factors influencing NPL levels between these two groups of financial institutions. The sample comprised 11 commercial banks listed on the Stock Exchange of Thailand and 3 Specialized Financial Institutions (SFIs) from 2014 to 2023 (a total of 10 years). Only banks that consistently disclosed information over the 10-year period were selected, yielding data from 40 quarters. In total, 560 quarterly observations were obtained. However, data from TMBThanachart Bank (TTB) following its merger, covering the period from the fourth quarter of 2019 to the fourth quarter of 2023, totaling 17 observations, were excluded to ensure continuity and analytical accuracy. Consequently, the final dataset consisted of 543 observations. The research instrument was a data recording form developed by the researcher. The statistical techniques employed included the mean, minimum, maximum, standard deviation, and panel regression analysis. Diagnostic tests included the Hausman test and multicollinearity tests.

The research findings were as follows: 1) Return on equity, total loan volume, lending interest rates, and the unemployment rate significantly affect the level of non-performing loans of financial institutions, including commercial banks listed on the Stock Exchange of Thailand and specialized financial institutions, at the 0.01 level of statistical significance. 2) The consumer price index and total loan volume have significantly different effects on the level of non-performing loans of financial institutions, including commercial banks listed on the Stock Exchange of Thailand and specialized financial institutions, at the 0.01 level of statistical significance.