The Impact of Islamic Contract Types on Non-Performing Loans in a Commercial Bank; An Application of Binary Logistic Regression

Ahmadpour, Hadi; Pourfaraj, Alireza; Gilak Hakimabadi, Mohammadtaghi; Tehranchian, Amirmansour

doi:10.22075/jem.2026.38519.2028

The Impact of Islamic Contract Types on Non-Performing Loans in a Commercial Bank; An Application of Binary Logistic Regression

Document Type : Original Article

Authors

Hadi Ahmadpour ¹

Alireza Pourfaraj ²

Mohammadtaghi Gilak Hakimabadi ²

Amirmansour Tehranchian ²

¹ Ph.D. Student in Economics, Department of Economics, University of Mazandaran

² Professor in Economics, Department of Economics, University of Mazandaran

10.22075/jem.2026.38519.2028

Abstract

In Islamic banking, financing facilities are provided through Islamic contracts, and the choice of contract type may play an important role in credit risk management. The present study examined the relationship between Islamic contract types and the probability of non-performing loans in the Iranian banking system. The research data included 165,228 loan records from Bank Saderat, Mazandaran Province, covering 2016–2021 and analyzed using binary logistic regression. The contracts examined included Murabaha, Mudarabah, Civil Partnership (Musharakah), Joalah, Lease-to-Own (Ijarah Muntahia Bittamleek), Installment Sale, Debt Purchase, Salam, Qard al-Hasan, Bank Guarantees, and Documentary Credits. The model indicated that Islamic contract type had a statistically significant effect on the probability of non-performing loans (P

Keywords

Islamic Contracts

Non-Performing Loans

Iranin Banking

Binary Logistic Regression

Credit Risk