Investigation of credit risk management role in the return on assets ratio

Over the past two decades, banking systems throughout the world have been subjected to significant changes in their business environment, and many internal and external factors have influenced the structure and function of the banking system. Nevertheless, unlike all of the above changes, the banking system remains the main source of financing for manufacturing activities in many countries, and plays a major role in the transfer of resources from savers to investment units. The banking industry as an intermediary alongside stock and insurance It is one of the main pillars of financial markets, with banking more important. Because of the lack of necessary capital market development, within the framework of the banking system of the country, in practice these banks are principally responsible for long-term and short-term financing. One of the most important issues in the Islamic banking industry is the issue of credit risk due to overdue debts.The present paper aims to investigate the role of credit risk management on the return on assets ratio of bank mellat. In this study, the four-variable self-regression model was used using effective variables including asset yield ratios, Overdue debts, bank assets and bank mellat grant facilities, in accordance with the base of the research. Statistical data are considered seasonally from the first season of 2003 to the fourth quarter of 2017. Considering the result of model estimation and computational statistics for model variables, the effect of asset risk factors, bank assets, and bank lending facilities on bank mellat asset return ratios during the research period was significant at 95% confidence level. Also, according to the model s estimation result, the effect of credit risk on the ratio of negative and meaningful asset returns, the impact of the bank s assets and the granting facilities of the bank on the ROA asset return ratio are positive and significant.

Keywords:

Overdue Debts , Return on Assets , Bank Facility , Bank Assets , Vector Autoregressive Model