Impact of privatization on Non-Performing Loans of Banks in Oman

                    In recent years the competition in the international and in domestic markets has increased up to lot of extent. Due to the economic growth in the country of Oman several organizations are now competing with each other to gain the market share in the country. Therefore this study will going to evaluate the impact of privatization on the banks of Oman to investigate the performance and improvement in the bank’s operations. In Oman several steps has been taken by the authorities to improve the performance and efficiency of the banks in which privatization is also included. In this research study the simple random sampling technique will be employed. The simple random sampling technique is the probability sampling technique. The probability sampling technique has more level of generalization and its results are considered more authentic. From the analysis of the research study it is found that the privatization process of started in some of the banks of Oman because of the non-satisfactory banks performance in the country. The banks of Oman go for privatization process as there have been weak credit operations, lack of lenders plans, increased sizes loans and a lot of other factors in the banking system.

Contents of Impact of privatization on Non-Performing Loans of Banks in Oman

Impact of privatization on Non-Performing Loans of Banks in Oman

 Introduction & Literature Review of Impact of privatization on Non-Performing Loans of Banks in Oman

 Problem Statement of Impact of privatization on Non-Performing Loans of Banks in Oman

            In recent years the competition in the international and in domestic markets has increased up to lot of extent. Due to the economic growth in the country of Oman several organizations are now competing with each other to gain the market share in the country. It means that organizations cannot tolerate the issues which reduce the performance or profitability of the organization. There are many banks that operate the country of Oman and experiencing growth with the passage of time. One of the major issues which the banks face is the one performing loans. The non-performing loans are such loan which unable to receive interests or with the passage of time such loans become bad debts and banks unable to recover them. Due to this bank suffer from financial loss which has significant impact on the profitability.

            Therefore this study will going to evaluate the impact of privatization on the banks of Oman to investigate the performance and improvement in the bank’s operations. In Oman several steps has been taken by the authorities to improve the performance and efficiency of the banks in which privatization is also included. The study will provide brief information regarding the effects of privatization along with the benefits which the organization has achieved due to privatization.

Theoretical Concepts & Framework of Impact of privatization on Non-Performing Loans of Banks in Oman

                The country of Oman is experiencing growth with the passage of time. One of the major issue which the banks face is the on performing loans. This study will try to evaluate the performance of the bank and the strategies which allow it to improve its performance and experience growth over time. It means that the past performance of the bank before the privatization is going to be compared with the performance of the bank after the privatization. In simple words the study will provide information about privatization and weather performing privatization is wise decision or not. This study will try to elaborate how privatization can improve the performance of bank and can move the banks toward the path of success. The literature review has identified the issues which the bank is facing and after privatization various changes occur in the organization which changed them completely

 Literature Review of Impact of privatization on Non-Performing Loans of Banks in Oman

        In the study Salma M. Al-Lamki has explained the banking sector of Oman and how banking industry has experienced growth with the passage of time. In the study various policies and strategies of Omanization has been discussed. The results of the study show that the banks which are located in Oman have experienced many achievements due to the Omanization. The researchers have stated that the study can be implemented on other organizations as well.

            In the study the researcher William L. Megginson (2005) has discussed the bank privatization and how privatization enhances the performance efficiency of banks. The study focuses on the improvements and strategies which results from privatization of banks. . The study provides a brief information regarding the effects of privatization along with the benefits which the organization have achieved due to privatization (L.Megginson, 2005).

1Significance of Study of Impact of privatization on Non-Performing Loans of Banks in Oman

            This study has huge significance for various banking sectors and the government institutions. This study is evaluating the impact of privatization on banks and how privatization improves the efficiency and performance of the banks. The Non-performing loans are a major issue for bank and it is important to evaluate whether the banks are managing the non-performing loan issue efficiency or not. Therefore the impact of privatization will allow knowing whether privatization has improved the problem of non-performing loan or not. Moreover the other improvements which occurred due to the privatization are also discussed in detail in the study.

            There are studies who have discussed the impacts on privatization on banks however there are not many studies which provide a brief framework regarding the improvement in banks due to privatization. This study will focus on the improvements and strategies which results from privatization of banks. It will be determine how privatization leads to more effective strategy building. In simple words the performance of banks prior to privatization will be compared with the performance of the bank after privatization. This comparison will provide detail information regarding the privatization and its impact on banks.

Objectives of the Study of Impact of privatization on Non-Performing Loans of Banks in Oman

            Through literature review it has been identified that various studies have been conducted to identify the impact of privatization however there is still need to elaborate how [privatization improves the performance and I what ways banks can enhance their efficiency or performance through privatization. This study will try to elaborate how privatization can improve the performance of bank and can move the banks toward the path of success. The literature review has identified the issues which the banks are facing and after privatization various changes occur in the organization which changed them completely. The major objectives of the firm are explained as follows:

To evaluate the major impacts of privatization on the banks of Oman

To analyze how privatization has changed the performance and efficiency of banks.

To evaluate up to what extent the issue of non-performing loans have decreased in banks.

To analyze whether the banks have experience growth or decline after the privatization of banks in Oman.

To evaluate the performance of the banks before and after the privatization to discuss whether the banks have improved or not.

Scope of the study of Impact of privatization on Non-Performing Loans of Banks in Oman

            The study has vast scope because it is provide information from various aspects of privatization. The Non-performing loans are a major issue for bank and it is important to evaluate whether the banks are managing the non-performing loan issue efficiency or not. Therefore the impact of privatization will allow knowing whether privatization has improved the problem of non-performing loan or not. There are many banks that operate in the country of Oman and experiencing growth with the passage of time. One of the major issues which the banks face is the one performing loans. The non-performing loans are such loan which unable to receive interests or with the passage of time such loans become bad debts and banks unable to recover them

  Research Methodology of Impact of privatization on Non-Performing Loans of Banks in Oman

 Research Design of Impact of privatization on Non-Performing Loans of Banks in Oman

            In this chapter of the research study there is a discussion the method and procedure of research used to evaluate the data collected. In this study the quantitative and descriptive observational strategies for evaluation are used for the statistics analysis. Both primary and secondary resources are used for the collection of data. For the secondary research method the previous researches, journals articles, peer reviewed journals are used.  On the other side for the primary research, the questionnaire method is used to get the response from the sample. For the present research the questionnaire method is selected, the survey was conducted on voluntary basis, the respondent have to fill the questionnaire given to them. During the whole survey none of the respondent was forced to fill the questionnaire and they are also free to stop survey at any point or skip any of the questions if they not feel comfortable give their response. This research study can follow quantitative research methods. In this study the methods selection based on the nature of research study. The whole quantitative analysis is used in the whole procedure. This study is primarily focused on Impact of privatization on Non-Performing Loans of Banks in Oman.

 Sampling Design of Impact of privatization on Non-Performing Loans of Banks in Oman

            The research study that is used in this study is dictated from the type of research problem which is analyzed. A sample 250 managers and employees are selected from different bank in Oman. From the sample 150 professional were males, 50 were females and 50 were regular customers. The sample size is very appropriate depending on the requirement of the study. If the size were small, it would be difficult to know about the relationship between variables as  for doing statistical tests sufficient sample size is necessary to confirm population descriptive circulation and  it would be considered descriptive of groups of different people responses would be wide-ranging. The sample was selected from the population that was the Oman bank professionals and the regular customers of the banks in Oman.

 Sampling Technique of Impact of privatization on Non-Performing Loans of Banks in Oman

        In this research study the simple random sampling technique will be employed. The simple random sampling technique is the probability sampling technique. The probability sampling technique has more level of generalization and its results are considered more authentic. The simple random sample will be used with the help of the lists of professional which will be obtained from bank websites. The lists of the managers and employees will be obtained from the offices and the numbering will be assigned. Once, the numbering will be assigned the subjects will be chosen with the simple random tables. Therefore, this is the most important and fundamental way to collect the data. For the research study the data is collected from customers, managers, and employees of the banks of Oman from which five are private and five are the public. The total 250 questionnaires were distributed to respondents but only 150 questionnaires were returned in filled form and 100 were partially filled.

Data Collection Method(S) of Impact of privatization on Non-Performing Loans of Banks in Oman

            There are a lot of methods for data collection that are essential for conducting research for data collection. Here researchers have discussed various sources for collection of data. These sources are personal contacts, surveys, Interviews, email, telephonic call, and observations. The researcher conducts this research study by using mailing questionnaire to managers and directors of ten banks in Oman to get their responses, afterward the permission letter from the university is used in order to get permission from banks to collect data from their managers. For the collection of data, the ethical approval is get from the university.  The overall research study conducted by using questionnaire that are self- designed in which demographic questions are incorporated like (age, gender and designation) and this is a close ended questionnaire that is designed by allowing for the 5 point Likert scale which range from strongly agree to disagree in the close-ended questionnaire of his study. In this research study the self-designed questionnaires were used. The self-designed questionnaire used for better fit the principle of the research. The researchers personally met to the manger and employees after getting the permission to know about how are willing to respond. .for the permission the researchers have sent a request e mail to fill the questionnaire and also receive the responses via email.

 Analysis of Data: 

Tools & Techniques of Impact of privatization on Non-Performing Loans of Banks in Oman

            The selection of the suitable statistical is very important factors for the analysis of data that is collected from the primary research. So, for the present research the data analysis technique used is descriptive and inferential data analysis. The study will put to use the SPSS software that used to examine mathematical equations during analysis of data. However, the techniques inferential data analysis was also used in this research study. These techniques comprise regression and the correlation. The regression and the correlation both utilized to evaluate the impact of one variable on the other. Likewise, the performance examines the scale of the impact of the independent variables on dependent variable. Consequently, both the regression and the correlation analyze by using SPSS software to study the impact of privatization on Non-Performing loans of banks in Oman. The descriptive and the inferential data analysis are quite important in this research study. Both tools of data analysis will be used in the study to evaluate the independent variables impact over dependent (Hameed & Waheed, 2011).

 Limitations to the Study of Impact of privatization on Non-Performing Loans of Banks in Oman

        The major limitations of the present research are that it is going only to be conducted in the some areas of Oman. However, due to the time and resource limitations the researcher is not in an opposition to conduct the study in whole country. In the research study, there isn't sufficient literature review for the optional information. This difficulty can be solved by continuing looking deep on the Internet for white papers, official online stores of insightful research and money related materials and particular journals. The size of the sample was also limited, that is suitable for the academic purposes but as far as the economic and financial performance of country is concern all of the information gather might not be sufficient.

 Results and Discussion of Impact of privatization on Non-Performing Loans of Banks in Oman

 Findings of Study of Impact of privatization on Non-Performing Loans of Banks in Oman

            From the analysis of the research study it is found that the privatization process of started in some of the banks of Oman because of the non-satisfactory banks performance in the country. The banks of Oman go for privatization process as there have been weak credit operations, lack of lenders plans, increased sizes loans and a lot of other factors in the banking system. The research study revealed the better private banks performance of the Oman as compared with the banks owned by government. The most significant factor behind the privatization of the banks is non-performing loans handling which might be via early assessment of risk, better situations of law and order, time to time supervision and some of other similar factors. The banks in the Oman are also privatized to achieve efficiencies and these banks demonstrate major improvement after the process of privatization (L.Megginson, 2005).

            The non-performing loans values is further separated in to the period of pre-privatization and post-privatization and collected from official websites and different executives and professional of banks in Oman. The graphical and also the logical analysis are carried out to judge the privatization impact. Non-performing loans average values demonstrate an important fall in the principles of non-performing loans after process of privatization in the banks. So it can be said that there are a number of other services for this development like the reforms of the banking system in Oman. Because of the reforms   of banking system the perception of risk assessment, corporate governance and management of loan portfolio and others operations of banks introduced.  It is also true that a very some of the customers of the Oman banks deprived of the reforms importance. Prominent developments demonstrate that the process of privatization in the banks has concentrated the standards of non-performing loans (Kausar, Gu, Khan, & Iqbal, 2014).

            The major reasons following the non-performing loans occurrence is because of the lenders not have plan to contract with risk, reduced borrowers intention, weak credit operations, moving along with the risk curve and increased loan size increased the risk. In Oman market goes through an increase in nonperforming loans because of the real estate market high speculation.  It is quite obvious that the investors were concerned to invest funds in real estate markets like Oman markets economic condition at that time. The Investors were intriguing more loans from Oman banks to receive conjecture prices in markets of real estate but as the effervesce of real estate speculation burst, the investors in THE Oman because of the privatization faced a enormous loss and turn out to be unable to compensate back the bank’s loan (BATSAIKHAN, DARVAS, & RAPOSO, 2018).

            The non-performing loans percentage in Oman was offer by real estate. One of the other reasons of non-performing loans increment in Oman markets was deprived loans recovery policies. The laws of government disagree with the policies banking for loans recuperation. The relationships of banker borrower contributed to non-performing loans increment. This can also result in relationship damaged the policies of credit control, as there is no comprehensive process of investigation previous to the sanction of loan. There is also some of the problem observed in Oman financial markets where the privatization of the non-performing loans can also result in some of the financial crises. They were more likely to focus on growing the volumes of loan and not pay any attention to processes the cash flow.  This overall study is based on the major banks in the Oman that are non-performing loan and also privatized and intended to monitor the privatization of the banks has reduced the amount of non-performing loans (L.Megginson, 2005).

 Discussion on the Findings of Study of Impact of privatization on Non-Performing Loans of Banks in Oman

            It is analyzed from the results and findings  of the study that privatization of the banks in Oman is done to appropriately assign financial resources and assets of organization and is usually measured to increase public sector performance. The overall process of Privatization of the banks refers to the assets sale in the public sector to general public.  It is obvious that privatization term has 2 meanings; the first is the financial transaction that is publicly owned asset sale to the private sector. The second is authority transfer to make decision about resource allocation from government to market. From the research study it is also analyzed that the entire process privatization include the sphere expanding of the market via regulations host that generate and facilitate environment for some of the enterprise to function as a sustainable economic development strategy. This research study holds up that if there is transformation in ownership then it will effect in more efficiency.

            The privatization process was basically started in 1970s in the whole world. In the very beginning there were very small numbers of transactions of privatization but soon it extend all over the globe. The process of banks privatization turns out to be very common because it has effect on firm’s performance and competence. Some of the countries in Asia like China, Pakistan and India also start using the process of privatization at a diminutive scale. So it can be said that in the banks of Oman the privatization is appropriate more significant to reform the firms structure of the developing states. The countries majority of go on board on process of privatization by selling partial or full stakes of government and public sector firms control to private or public owners  (BATSAIKHAN, DARVAS, & RAPOSO, 2018).

            The process of privatization has an optimistic impact on profitability and efficiency of banks in the Oman that were beforehand in civic sector. The profitability and efficiency of these privatized banks are considerably enhanced than banks that are still under the government sector. Alternatively, the liquidity and solvency of privatized banks are inferior as compare with the banks in the public sector. This can be linked with more open-minded loan policies approve by privatized banks are measure up to public sector of the banks in the Oman. To augment their overall profit and revenues to influence their productivity privatized banks are let somebody use considerably more, as calculated by advances to put down ratio, than banks of public sector while maintaining a debt ratio lower equity, acceptable by regulations of banking. It is also recommended by preceding studies that privatized banks likely to administer all of the risks more efficiently as measure up to banks of public sector. Consequently it can be said that the privation of the banks has a significantly positive impact on overall performance of Oman banking sector.

 Conclusion of Impact of privatization on Non-Performing Loans of Banks in Oman

        Summing up the discussion it can be said that the many banks that operate the country of Oman and experiencing growth with the passage of time. One of the major issues which the banks face is the one performing loans. In Oman quite a few steps has been taken by the authorities to improve the performance and efficiency of the banks in which privatization is also included. The past performance of the bank before the privatization is going to be compared with the performance of the bank after privatization. The most significant factor behind the privatization of the banks is the handling of non-performing loans which might be via early assessment of risk, better situations of law and order, time to time management and some of other similar factors. It is also factual that a very some of the customers of the Oman banks deprived of the reforms importance (L.Megginson, 2005).

        Privatization includes the globe expanding of the market through the overall regulations host that generate and facilitate environment for some of the enterprise to function as a sustainable economic development strategy. The banks which are located in Oman have experienced many achievements due to the privatization. The banks in Oman are done to properly assign financial resources and assets of organization and are usually measured to increase public sector performance. The overall process of Privatization of the banks refers to the assets sale in the public sector to general public.  So it can be said that in the banks of Oman the privatization is appropriate more important to reform the firms structure of the developing states. Non-performing loans average values reveal an important fall in the principles of non-performing loans after process of banks privatization.

 Suggestion and Direction for Future Research of Impact of privatization on Non-Performing Loans of Banks in Oman

 Suggestions of Impact of privatization on Non-Performing Loans of Banks in Oman

            From the research study it is recommended to combine all of the measures regarding the research study, excluding the banks of Non-Performing loans like profitability, measuring asset quality, capital adequacy, liquidity and banks earning to assess the banking sector performance with the evaluation that researcher   of the study have taken, the outcome are legally responsible to modify. On the whole study demonstrates that privatization of the banks has a good impact on the Non-Performing loans  of the banks in Oman keeping in mind the major privatized banks of the country, that were privatized previously in 1990s. It is also recommended to take the data from the banks that are more reliable and also provide their valid data.  It is obvious that all around the world there are already a lot of research and reports done on the topic and it also depends on the economic system of the country and what kind of problems this country is having regarding its banking system.

            In the Oman before that there is no sufficient research has been made and undoubtedly keeping in mind all of the statistics performed in the research that has been unconfined from current research. all in all it is also recommended for the research at hand that the Oman must go for more privatization in the Non-Performing Loans banking sector to improve its overall financial system and economic conditions with respect to a variable that is the privatization and there is also a need to combine other actions to make more inclusive account but because of time constraints and limitations of the study just limited variables taken for proving hypothesis. For the better result next time it is recommended to use more than one variable to analysis the study from different perspectives (L.Megginson, 2005).

 Directions for Future Research of Impact of privatization on Non-Performing Loans of Banks in Oman

            The limitations of the research study are also leading to new researcher for the further research in this field of study. The research that is done in this study about the privatization of none performing banks of is very limited, that is here we take just one Non-Performing Loans variable in order to investigate the performance of bank in privatization. Therefore some of the researchers in the future could examine the banks performance by intriguing some of the other variables related to the area of research for example return on equity, return on assets, and other significant procedures concerning the sector of banking. All of the recommendation of research aim the in dept study of privatization effect on performance of bank. So it can be said that this research is a great contribution towards future research.

References of Impact of privatization on Non-Performing Loans of Banks in Oman

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Kausar, A., Gu, F., Khan, R. M., & Iqbal, M. (2014). The impact of privatization on the financial performance of banking industry:a comparison of privatized and public banks in Pakistan. 28-30.

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