Original scientific paper
https://doi.org/10.3326/fintp.38.1.2
Determinants of non-performing loans in Central and Eastern European countries
Bruna Škarica
; University of Zagreb, Faculty of Economics and Business, Zagreb, Croatia
Abstract
This paper analyses the determinants of the changes in the non-performing loan (NPL) ratio in selected European emerging markets. The model was estimated on a panel dataset using a fixed effects estimator for seven Central and Eastern European (CEE) countries between Q3:2007 and Q3:2012. The countries analyzed are Bulgaria, Croatia, Czech Republic, Hungary, Latvia, Romania and Slovakia. Although the literature on NPLs is quite extensive, this is the first empirical research on the countries of CEE region using aggregate, country-level data on problem loans. The results suggest that the primary cause of high levels of NPLs is the economic slowdown, which is evident from statistically significant and economically large coefficients on GDP, unemployment and the inflation rate.
Keywords
non-performing loans; macro-financial linkages; Central and Eastern Europe; panel regressions; financial stability
Hrčak ID:
119738
URI
Publication date:
11.3.2014.
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