Asset quality in the Algerian banking sector between public banks and private banks for the period (2014-2022)

Abstract

The aim of the study is to analyze and study asset quality indicators in the Algerian banking sector through comparison between public banks and private banks during the period 2014-2022. The data was collected from the reports of the Bank of Algeria. With the adoption of three asset quality indicators (non-performing loans net of provisions to capital ratio NPL1 and the rate of non-performing loans ratio NPL2) according to the International Monetary Fund’s financial soundness indicators guide, and the indicator (the rate of non-performing loan provisions ratio NPLP) used by the Bank of Algeria), methods were used. Descriptive statistics to determine the mean, the maximum and minimum values of the indicators, and inferential statistics methods (t-test) to determine the differences between the average asset quality indicators of public banks and private banks. It was found that there are statistically significant differences for the (NPL1) indicator and the (NPL2) indicator between public banks and private banks and in favor of public banks, which means that they are more financially stable than their private counterparts, while there are no statistically significant differences for the NPLP indicator between public banks and private banks. As a conclusion, public and private banks have assets of acceptable quality.