Determinations of Non-Performing Loans in World Economy, EU, G10 and G20 Member States: Aggregrated and Disaggreated Analyis.

Abstract

The objective of the study is to empirically investigate the key determinants of non-performing loans (NPLs) in the world economy and through disaggregate analysis while taking EU, G10 and G20 member states as subsamples. 148 countries with regional economies are under consideration in the period 2009-2016. Panel regression models and pooled equations are examined. The most significant determinants are the lagged NPLs, bank capital to asset ratio, inflation, and GDP growth, except the fixed effect for the bank capital to asset ratio. The effect of lending interest rate in EU members over NPLs is found significant. G20 members lagged NPLs, domestic credit to private sector, and GDP growth rate are assumed significant determinants.