Non-Performing Loans in CESEE: Determinants and Impact on Macroeconomic Performance

By N. Klein. Social Science Research Network, 2013

550 citations recorded by the source corpus.

The paper investigates the non-performing loans (NPLs) in Central, Eastern and South-Eastern Europe (CESEE) in the period of 1998–2011. The paper finds that the level of NPLs can be attributed to both macroeconomic conditions and banks’ specific factors, though the latter set of factors was found to have a relatively low explanatory power. The examination of the feedback effects broadly confirms the strong macro-financial linkages in the region. While NPLs were found to respond to macroeconomic conditions, such as GDP growth, unemployment, and inflation, the analysis also indicates that there are strong feedback effects from the banking system to the real economy, thus suggesting that the high NPLs that many CESEE countries currently face adversely affect the pace economic recovery.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/f48aa7dc7a51fe8b00f3944f2c165cb7cb66ba3c

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Citations in the corpus

Macroeconomic and Institutional Determinants of Non-performing Loans (2015, background): “Klein (2013) investigates NPLs in CESEE in the period of 1998–2011.”
Banking-industry specific and regional economic determinants of non-performing loans: Evidence from US states (2015, unknown): “Using bank-level data, Klein (2013) investigates NPLs in 16 Central, Eastern and South-Eastern European nations, and find both bank-specific as well as macroeconomic factors to influence NPLs. Skarica (2014) uses quarterly data from 2007 to 2012 for 7 Central and East European countries, to explore…”
Macroeconomic and Bank-Specific Determinants of Non-Performing Loans: Evidence from Nepalese Banking System (2018, methodology): “Klein (2013) applied a panel VAR to investigate the effect of bank-specific and macroeconomic factors on NPLs taking the sample of a 16 Central, Eastern, and South-Eastern European nations (CESEE) for the period 1998-2011.”
The Impact of Non-performing Loans on Bank Lending Behavior: Evidence from the Italian Banking Sector (2015, methodology): “Laeven and Majnoni (2003) analyzed data from 45 countries to investigate factors influencing loan loss provisioning and income smoothing by banks during the period 1988–1999.”
Asset quality in a crisis period: An empirical examination of Ghanaian banks (2014, background): “26 Babouček and Jančar (2005), Rinaldi and Sanchis-Arellano (2006) and Klein 2013).”
Non-performing loans and financial development: new evidence (2019, methodology): “Regarding bank-level determinants, Klein (2013) finds that capital adequacy measured as equity-to-asset ratio is negatively correlated with NPLs, implying that banks with relatively low capital have incentives to engage in risky lending behaviour which increases the incidence of non-performing…”