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Not Performing Asset (NPA) in Bahrain Banks

Ali Merza Ahmed Shaikh Ali, Hemant Abhyankar

Abstract


The Purpose of this research is to show that the top reasons of increase in Not Performing Assets in Bahrain Banks. This research is exploratory and descriptive since it has been done by analyzing the historical data on Not Performing Assets status in Bahrain Banks and examining perceptions and views of financial officers through survey on selected construction projects. It gives the following results: The status of Not Performing Assets of construction projects in Bahrain are as follow:                                      

Not Performing Assets for the periods from 2010 until 2011 and from 2012 until 2013 were decreasing Whereas Not Performing Assets for the period from 2011 till 2012 increase.

Delay in project completion date, delay in operating toward business, poor credit quality, inability to liquidity and poor credit quality are reasons of increase in Not performing assets by Bahrain Banks those have same effects.

A total 42.86% of the financial officers stated that engaging in similar businesses was one of the reasons for rising in Not Performing Assets while market inflation, shortages in resources and geographical area of project were stated by 85.71% of financial officers. As other reasons, 14.28% of financial officers stated that shortage in liquidity was also considered as additional reasons. Misuse of resources, political and economic factors are also reasons of increase in Not Performing Asset. In conclusions, there is instability in not performing asset in Bahrain Banks for so many reasons as mentioned above. Mostly Banks in Bahrain were providing less financing and delayed assessment of projects so projects are might be inefficient. As recommended, the projects owners must ensure their projects are more efficient. Moreover, banks must ensure efficiency in project assessment process. 


Keywords


Not Performing Assets, Financing, Construction Projects, Bahrain Banks, Efficiency, Lender, Interest

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References


www.Data.worldbank.org

Central Bank of Bahrain;(2000); Financial Stability Directorates http://www.cbb.gov.bh/assets/E%20I/EI%20Mar2015.pdf


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Copyright (c) 2017 Ali Merza Ahmed Shaikh Ali, Hemant Abhyankar