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Determinants Of Loan Quality: Lessons From Greek Cooperative Banks

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  • Vasiliki MAKRI

    () (Department of Business Administration, University of Patras, University Campus, 26504, Rio, Achaia, Greece)

  • Konstantinos PAPADATOS

    () (Patras Custom House, General Secretariat of Public Revenue, Ministry of Finance, Ierotheou 2 and Akti Dymeon, Patras, 26222, Achaia, Greece)

Abstract

The article focuses on the credit risk of cooperative banks in Greece. The main objective is to define which factors are responsible for variations in loan quality during the period 2003-2014. Loan quality is measured by Loan Loss Reserves Ratio (LLR) and dynamic regression techniques are implemented for the econometric estimations. The outlined results suggest that the macroeconomic environment (i.e. public debt, local unemployment, economic activity and inflation) and the accounting ratios (i.e. past loan quality and profitability) seem to be the explanatory variables of problem loans.

Suggested Citation

  • Vasiliki MAKRI & Konstantinos PAPADATOS, 2016. "Determinants Of Loan Quality: Lessons From Greek Cooperative Banks," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 17, pages 115-140, June.
  • Handle: RePEc:aic:revebs:y:2016:j:17:makriv
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    More about this item

    Keywords

    credit risk; loan quality; loan loss reserves; accounting factors; macroeconomic environment and generalized methods of moments;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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