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Assessing the Impact of Nonperforming Loans on Economic Growth in The Bahamas

Author

Listed:
  • Alwyn Jordan

    (Central Bank of The Bahamas)

  • Carisma Tucker

    (Central Bank of The Bahamas)

Abstract

This paper examines the extent to which economic output and other variables affect nonperforming loans in The Bahamas utilizing a vector error correction (vec) model. It also seeks to determine if there is a feedback response from nonperforming loans to economic growth. Data utilized in the study spanned the period September 2002 to December 2011. The main findings reveal that growth in economic activity tends to lead to a reduction in nonperforming loans, and there is additionally a small but significant feedback effect from nonperforming loans to output.

Suggested Citation

  • Alwyn Jordan & Carisma Tucker, 2013. "Assessing the Impact of Nonperforming Loans on Economic Growth in The Bahamas," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 371-400, July-Dece.
  • Handle: RePEc:cml:moneta:v:i:y:2013:i:2:p:371-400
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    References listed on IDEAS

    as
    1. Raphael A Espinoza & Ananthakrishnan Prasad, 2010. "Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects," IMF Working Papers 10/224, International Monetary Fund.
    2. Frain, John C., 2004. "A RATS subroutine to implement the Chow-Lin distribution/interpolation procedure," Research Technical Papers 2/RT/04, Central Bank of Ireland.
    3. Khemraj, Tarron & Pasha, Sukrishnalall, 2009. "The determinants of non-performing loans: an econometric case study of Guyana," MPRA Paper 53128, University Library of Munich, Germany.
    4. Reinout De Bock & Alexander Demyanets, 2012. "Bank Asset Quality in Emerging Markets; Determinants and Spillovers," IMF Working Papers 12/71, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    nonperforming loans; Chow-Lin procedure; impulse-response functions;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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