Determinants of NPL growth in Macedonia

Artikel

Non-performing loans are one of the most vulnerable categories in the balance sheet of banks. Their increase can affect banks' liquidity and solvency. That is why defining the main indicators that influence the development of non-performing loans is crucial for both bank performance and the financial system as a whole. This paper investigates macroeconomic and bank determinants of NPLs in Macedonia for the period 2006-2015, including descriptive and econometric analyses. The first analysis presents the correlation between NPLs and two macroeconomic indicators: GDP and Inflation. The second econometric analysis shows the correlation between NPLs and two bank indicators: Capital to Assets and Return on Equity. In these estimations, we also include the inflation as an independent variable. The analyses show that in a period of economic growth and higher inflation, non-performing loans are low and stable. The increase of the capital to asset and return on equity ratios reduces the level of NPLs as well. We conclude that as long as the economy is stable and banks are profitable and have adequate capital, nonperforming loans are on a level suitable for the banks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Contemporary Economic and Business Issues ; ISSN: 1857-9108 ; Volume: 3 ; Year: 2016 ; Issue: 2 ; Pages: 5-18 ; Skopje: Ss. Cyril and Methodius University in Skopje, Faculty of Economics

Classification and Topics

• Classification: Wirtschaft ; Econometrics ; Multiple or Simultaneous Equation Models: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models ; Money Supply; Credit; Money Multipliers ; Financial Crises ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: non-performing loans ; economic activity ; inflation ; capital to asset ; return on equity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Nikolov, Miso ; Popovska-Kamnar, Neda
• Event: Veröffentlichung
• (who): Ss. Cyril and Methodius University in Skopje, Faculty of Economics
• (where): Skopje
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/193465
• Last update: 10.03.2025, 11:43 AM CET