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Is the relationship between corruption, government stability and non‐performing loans non‐linear? A threshold analysis for the MENA region

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  • Abdelaziz Hakimi
  • Rim Boussaada
  • Majdi Karmani

Abstract

The purpose of this article is to check whether there is a threshold effect in the government stability, corruption and non‐performing loans (NPLs) relationship in the MENA region. To this end, we used a sample of MENA banks over the period 2004–2017. Empirical results of the panel smooth transition regression model indicate that there is a threshold effect in the government stability, corruption and NPLs relationship. More specifically, we have found that the impact of corruption and government stability on NPLs is negative and significant only if a certain threshold level has been attained; until then, the effect is insignificant.

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  • Abdelaziz Hakimi & Rim Boussaada & Majdi Karmani, 2022. "Is the relationship between corruption, government stability and non‐performing loans non‐linear? A threshold analysis for the MENA region," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4383-4398, October.
    • Handle: RePEc:wly:ijfiec:v:27:y:2022:i:4:p:4383-4398
    DOI: 10.1002/ijfe.2377
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