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Analysis of the Responsiveness of Environmental Sustainability to Non-Performing Loans in Africa

Author

Listed:
  • Ntarmah, Albert Henry

    (University of Cape Coast, Cape Coast, Ghana)

  • Kong, Yusheng

    (School of Finance and Economics, Jiangsu University, China)

  • Cobbinah, Eric

    (School of Management, Jiangsu University, China)

  • Gyan, Michael Kobina

    (School of Management, Jiangsu University, China)

  • Manu, Emmanuel Kwaku

    (School of Management, Jiangsu University, China)

Abstract

This study draws on Sustainable Development Goal 12 to analyze the responsiveness of environmental sustainability to non-performing loans (NPLs) in Africa over the period 2000–2016. We explore (1) how environmental sustainability reacts to shocks from NPLs and (2) heterogeneous responses of environmental sustainability to NPLs. We employed Generalized Method of Moment (GMM) style panel Vector Autoregressive and panel quantile regression models to investigate the phenomenon. Our results revealed that conditioning on other sustainability determinants, environmental sustainability responds negatively to NPLs. The impulse response function revealed that the impact of one standard deviation shock in rising NPLs on environmental sustainability is negative from year 1 to year 6 and equal to zero from years 7 to 10. Besides, the quantile regression revealed heterogeneous responses indicating that compared with countries distributed along a high environmentally sustainable path, countries on a low environmentally sustainable path suffer more environmental issues resulting from rising NPLs.

Suggested Citation

  • Ntarmah, Albert Henry & Kong, Yusheng & Cobbinah, Eric & Gyan, Michael Kobina & Manu, Emmanuel Kwaku, 2020. "Analysis of the Responsiveness of Environmental Sustainability to Non-Performing Loans in Africa," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 27(2), pages 77-109, December.
    • Handle: RePEc:ris:apecjn:0046
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    Citations

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    Cited by:

    1. Saba Iqbal & Safia Nosheen, 2023. "Moderating impact of non-performing loans on the relationship between sustainable development goals and the financial performance of banks," Future Business Journal, Springer, vol. 9(1), pages 1-12, December.
    2. Inuwa, Nasiru & Adamu, Sagir & Hamza, Yusuf & Sani, Mohammed Bello, 2023. "Does dichotomy between resource dependence and resource abundance matters for resource curse hypothesis? New evidence from quantiles via moments," Resources Policy, Elsevier, vol. 81(C).
    3. Chuimin Kong & Jijian Zhang & Albert Henry Ntarmah & Yusheng Kong & Hong Zhao, 2022. "Carbon Neutrality in the Middle East and North Africa: The Roles of Renewable Energy, Economic Growth, and Government Effectiveness," IJERPH, MDPI, vol. 19(17), pages 1-24, August.
    4. Hunjra, Ahmed Imran & Hassan, M. Kabir & Zaied, Younes Ben & Managi, Shunsuke, 2023. "Nexus between green finance, environmental degradation, and sustainable development: Evidence from developing countries," Resources Policy, Elsevier, vol. 81(C).

    More about this item

    Keywords

    environmental sustainability; non-performing loans; GMM style panel VAR; panel quantile regression; Africa;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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