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Title: Determinants of the level of non-performing loans in commercial banks of transition countries
Authors: Mazreku, Ibish
Morina, Fisnik
Misiri, Valdrin
Spiteri, Jonathan V.
Grima, Simon
Keywords: Global Financial Crisis, 2008-2009
Loans -- Europe
Loans -- Law and legislation -- Europe
Gross domestic product
Banks and banking -- Europe
Banks and banking -- Law and legislation -- Europe
Inflation (Finance) -- Europe
Unemployment -- Effect of inflation on -- Europe
Unemployment -- Europe
Issue Date: 2018
Publisher: University of Piraeus. International Strategic Management Association
Citation: Mazreku, I., Morina, F., Misiri, V., Spiteri, J. V., & Grima, S. (2018). Determinants of the level of non-performing loans in commercial banks of transition countries. European Research Studies Journal, 21(3), 3-13.
Abstract: Problem loans have generated considerable academic and policy attention in recent years, fueled in part by the aftermath of the 2008-2009 economic crisis and subsequent credit crunch. Problem loans, referred to as non-performing loans (NPL), are loans which are not paid in the structured time period as set in the contract between the borrower and the bank. The goal of this study is to show the influence, in transition countries, of macroeconomic factors on the level of these loans. Specifically, factors such as Gross Domestic Product (GDP growth), inflation, unemployment and export growth shall be considered, using a variety of econometric models and specifications to ensure robustness, including Fixed and Random Effects Models and Arellano-Bond Dynamic Panel estimation. We use data from the World Bank and International Monetary Fund for a sample of transition countries over the period 2006 and 2016. Findings show that GDP growth and inflation are both negatively and significantly correlated with the level of NPLs, while unemployment is positively-related to NPLs. These results have important implications for banking stability within transition countries, and the role of macroeconomic policies in this regard.
ISSN: 11082976
Appears in Collections:European Research Studies Journal, Volume 21, Issue 3

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