A model is constructed in which bank performance is explained by bank-specific variables, macroeconomic variables and, most importantly, a variable representing the BPRR compliance rating of each of the four major banks in Trinidad and Tobago.
Y is a measure of bank performance, which will be explained by bank-specific explanatory variables consisting of a bank's BPRR compliance variable, bcp, its operating expense ratio op, and its provision for loan loss to total assets ratio, pll.
3) The CBTT was asked to rate the individual banks on the level of compliance with the BPRR over the period 1997-2006 on a scale of 0 to 10.
BPRR compliance appears to be steadily increasing over time for Banks 1, 3 and 4 while it is showing a definite increase in the case of Bank no.
The main concern of this paper is whether compliance with the BPRR affects bank performance.
This paper investigates how compliance with BPRR affects the performance of an individual bank in Trinidad & Tobago.
The results show that BPRR compliance significantly affects the net interest margin, the return on assets and the non-performing loan ratio.
There is ample evidence that BPRR compliance brings about performance improvement, although there is some exception to this rule.
1) The BPRR correspond to principles 9-16 of the Basel Core Principles for Effective Banking Supervision.