The impact of bad debts to the profitability of banks

Abstract

The paper examines the impact of bad debts to the profitability of banks. Using data from 34 shareholding commercial banks from 2005 to 2012keets results indicate that bad debts have a negative impact on profit margins of banks. In addition to the bad debt, other factors such as bank size, provision expense, credit risk, financial leverage, and effective asset management may also affect the rate of bank profitability.