Bank non-performing loans research around the world

This article presents a literature review of the post-2020 bank non-performing loans (NPLs) research around the world and suggests directions for future research. Using the thematic and bibliometric literature review methodologies, we find that significant NPL research has emerged from the European, Asian, and African regions while fewer research has emerged from the Asia-Pacific, North America, Latin America and Caribbean regions as well as from SAARC and OECD countries. The new NPL determinants in the recent literature are corporate governance, fintech, financial inclusion, country risks, regulatory quality, political risks, shadow banking activity, the COVID-19 pandemic, public/external debt, country risks, real house prices, and the independence of the central bank. The common regional NPL determinants are corruption, GDP, debt, loan growth, inflation, capital adequacy ratio, lending rate, competition, the regulatory environment, and GDP growth. The common theories used in the recent literature to explain the behavior of NPL are agency theory, stakeholder theory, information asymmetry theory, and moral hazard theory while the common empirical methodologies used are the panel regression and system GMM regression methods. The implication is that financial regulators, bank supervisors and banking scholars should pay attention to the new emerging determinants of NPL. They should also understand the effect of NPL on financial/banking stability so that safeguards can be put in place to minimise the adverse effect of non-performing loans. More research is needed to provide insights into this area.