Macroeconomic Determinants of Non Performing Property Loans in Malaysia

Rosli Said, Nasir Daud and Tham Kuen Wei

ERES from European Real Estate Society (ERES)

Abstract: Non-performing property loans pose a huge threat to any country’s economic stability. This paper examines the effects and relationships of macroeconomic factors in determining the possible outcomes of non-performing real estate loans in Malaysia. It also examines some banking sentiments in their receptivity towards the conditions in terms of number of loans approved, rejected and applied. Using Stepwise Regression Approach, it was shown that Gross National Income responded significantly negative to the number of Non-performing Property Loans in Malaysia relatively close to the study conducted in Greece where GDP growth seems to be the dominant and main determinant in terms of non-performing loans compared to other macroeconomic determinants. At the same time, Unemployment responded significantly positive, where levels of unemployment would cause the inability of private individuals to repay their loans or debts. At the same time, sentiments of consumers shown that Applications for Non-residential Loans decreases as Non-performing Property Loans increases. Surprisingly, this study also shows that as Non-Performing Property Loans increases, the number of Loans Approved for Non-Housing Property Loans increases as well. This shows that Banking Sentiments in loan approvals are not affected by the conditions of economy when it comes to Non-Residential Properties.

Keywords: Macroeconomic Determinants; Non-performing Property Loans; Stepwise Regression (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2018-01-01
New Economics Papers: this item is included in nep-mac, nep-sea and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2018_328

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