Determinants of Non-Performing Loans: The Case of Eurozone

PANOECONOMICUS, Vol.61 (2), pp. 193-206

Posted: 22 Mar 2014

See all articles by Vasiliki Makri

Vasiliki Makri

University of Patras - Business Administration

Athanasios Tsaganos

Department of Business Administration

Athanasios Bellas

University of Patras

Date Written: March 20, 2014

Abstract

The purpose of the present study is to identify the factors affecting the non-performing loans rate (NPL) of Eurozone’s banking systems for the period 2000-2008, just before the beginning of the recession. In our days, Eurozone is in the middle of an unprecedented financial crisis, calling into question the soundness of the banking systems of European countries. Looking at both macro-variables (e.g. annual percentage growth rate of gross domestic product, public debt as % of gross domestic product, unemployment) and micro-variables (e.g. loans to deposits ratio, return on assets, return on equity), we investigate which factors determine NPL on aggregate level. Overall, our findings reveal strong correlations between NPL and various macroeconomic (public debt, unemployment, annual percentage growth rate of gross domestic product) and bank-specific (capital adequacy ratio, rate of nonperforming loans of the previous year and return on equity) factors.

Keywords: Non-performing loans, Bank specific variables, Macroeconomic variables, GMM difference

JEL Classification: C23, G21

Suggested Citation

Makri, Vasiliki and Tsaganos, Athanasios and Bellas, Athanasios, Determinants of Non-Performing Loans: The Case of Eurozone (March 20, 2014). PANOECONOMICUS, Vol.61 (2), pp. 193-206, Available at SSRN: https://ssrn.com/abstract=2411932

Vasiliki Makri (Contact Author)

University of Patras - Business Administration ( email )

Greece

Athanasios Tsaganos

Department of Business Administration ( email )

Patra
Greece

Athanasios Bellas

University of Patras ( email )

Patra
Greece
0030 26910 996269 (Phone)

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