Credit Risk: Impact of Macroeconomic and Bank-related Factors on Loan Defaults
Keywords:
Credit Risk, Loan Default, Macroeconomic Factors, Bank-Specific Factors, Financial Stability, Banking SectorAbstract
This study investigates the impact of macroeconomic and bank-specific factors on credit risk, with a particular focus on loan defaults. In recent years, financial institutions have faced increasing challenges in managing credit risk due to economic fluctuations and internal operational inefficiencies. The research analyzes key macroeconomic indicators such as GDP growth, inflation rate, and unemployment, alongside bank-related factors including loan portfolio quality, capital adequacy, and liquidity ratios. A quantitative research methodology is applied using statistical analysis and comparative evaluation of financial data. The findings reveal that adverse macroeconomic conditions, especially high inflation and rising unemployment, significantly increase the probability of loan defaults. Additionally, weak internal risk management practices and insufficient capital buffers contribute to higher credit risk exposure. The study also emphasizes the importance of effective credit assessment procedures and regulatory compliance in minimizing financial instability. The results suggest that both external economic conditions and internal bank management practices play a crucial role in shaping credit risk levels. Strengthening these factors can enhance the resilience of banking systems and reduce default rates.
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Copyright (c) 2026 Kodirov Abdulvosi
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