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Covid Crisis Effects On Non-Performing Loans In The Romanian Banking Market

Author

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  • ANDREEA MAURA BOBICEANU

    (BabeÈ™-Bolyai University, Postal Adress: Teodor Mihali Street, Nr. 58-60, Cluj-Napoca 400591, Romania)

  • IOANA GEORGIANA FÄ‚RCAȘ

    (BabeÈ™-Bolyai University, Postal Adress: Teodor Mihali Street, Nr. 58-60, Cluj-Napoca 400591, Romania)

Abstract

The Non-performing loans ratio (NPLs) is an important indicator of the financial stability of a certain financial institution. Therefore, it is crucial to analyze the possible determinants of NPLs ratio. We aim to investigate this issue, by analyzing the NPLs ratio in Romania during 2000-2022. We find that Covid crisis impacts negatively significantly NPLs ratio due to the implementation of stringent measures to the banking sector, but also to the relief measures offered to borrowers. We bring evidence that the economic environment can impact significantly NPLs ratio. The higher level of employment implies an increase in NPLs ratio. Other macroeconomic determinants of NPLs ratio are GDP growth and inflation. Further, our results show that there are also bank determinants of NPLs ratio such us Return on Assets (ROA) and Loan to Deposit ratio. These results remain robust when we employ total NPLS 90 days and NPLs growth rate as dependent variables.

Suggested Citation

  • Andreea Maura Bobiceanu & Ioana Georgiana Fä‚Rcaè˜, 2022. "Covid Crisis Effects On Non-Performing Loans In The Romanian Banking Market," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 30, pages 25-37, December.
    • Handle: RePEc:aic:revebs:y:2022:j:30:bobiceanua
    DOI: 10.47743/rebs-2022-2-0002
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    References listed on IDEAS

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    More about this item

    Keywords

    non-performing loans; banking market; credit risk; emerging markets; covid;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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