The Banking Sector and Macroeconomic Performance in Central European Economies
AbstractWe present empirical evidence on the macroeconomic variables affecting non-performing loan (NPL) ratios in five central European economies (CEEs). We reach four main conclusions. First, a slowdown in economic activity can be expected to deteriorate the NPL ratios in the CEEs. Second, in four out of the five countries, foreign direct investment growth appears to improve NPL ratios. Third, an increase in real interest rates has a negative impact on the financial position of borrowers and loan portfolio quality in all the five CEEs. Fourth, in a majority of CEEs, increasing credit to the private sector increases the NPL ratio, indicating a need to strengthen the supervision of banks’ lending activities.
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Bibliographic InfoArticle provided by Charles University Prague, Faculty of Social Sciences in its journal Finance a uver - Czech Journal of Economics and Finance.
Volume (Year): 58 (2008)
Issue (Month): 03-04 (May)
non-performing loans; systemic risk; macro environment; economic growth;
Find related papers by JEL classification:
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
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