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Macroeconomic Determinants Of Non-Performing Loans (Npl): Evidence From Pakistan

Author

Listed:
  • Altaf Hussain
  • Ambar Khalil

    (Department of Economics, The Islamia University of Bahawalpur, Pakistan.)

  • Maryam Nawaz

    (National College of Business Administration & Economics, Lahore, Multan Campus)

Abstract

This analytical study investigates the determinants of non-performing loan in Pakistan. Secondary data is used in this study. The data is collected through World Bank Databank, international financial statistics and various issues of economic survey of Pakistan. The issue of Non-Performing Loan is one of the clusters of financial problems in Pakistan. No one can deny the importance of financial sector in any economy. In this study we find the macroeconomic factor that surge the NPL. We also suggest some strategies to cutback the non-performing loans. Current study uses the time series data of Pakistan, ranging from 1990 to 2013. Ordinary least square (OLS) method is used to investigate the problem. The dependent variable is non-performing loan and independent variables are exchange rate, interest rate, GDP, share prices, energy crisis, exchange rate and energy crisis. GDP has significant relationship with NPL and interest rate, share prices have insignificant relationships with NPL. A positive link has established between non-performing loans and various independent variables like energy crisis, exchange rate, interest rate, share prices. But on the other hand a negative relationship has been found between dependent variable and GDP.

Suggested Citation

  • Altaf Hussain & Ambar Khalil & Maryam Nawaz, 2013. "Macroeconomic Determinants Of Non-Performing Loans (Npl): Evidence From Pakistan," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 1(2), pages 59-72, December.
    • Handle: RePEc:ani:ipjhss:v:1:y:2013:i:2:p:59-72
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Macroeconomics; Financial Economics; Multiple Regression.;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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