Approaches to the Impact of Non-Performing Loans on the Romanian Economy

Costinela Fortea, Monica Laura Zlati and Valentin Marian Antohi
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Costinela Fortea: Dunarea de Jos University of Galati, Romania
Monica Laura Zlati: Dunarea de Jos University of Galati, Romania
Valentin Marian Antohi: Dunarea de Jos University of Galati, Romania and Transilvania University of Brasov, Romania

Economics and Applied Informatics, 2024, issue 1, 148-155

Abstract: Non-performing loans (NPLs) are a financial item that affects bank profitability by reducing banks' income from lending and increasing non-performing loans at the industry level. This phenomenon is associated with a decrease in lenders' financial capacity due to inflation and exchange rate instability. We aim to analyze the impact of non-performing loans on the Romanian economy based on an econometric model for the period 2010-2021 using financial indicators on bank non-performing loans in correlation with macroeconomic indicators such as unemployment, inflation, GDP deflator and general government final consumption expenditure. The methods used consist of literature review on non-performing loans, consolidation of a database, application of econometric modelling techniques using linear regression. The results of the study support the possibilities of reducing the negative impact of non-performing loans through macroeconomic recovery and smart financial allocation.

Keywords: econometric model; inflation; non-performing loans; economic growth (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ddj:fseeai:y:2024:i:1:p:148-155

DOI: 10.35219/eai15840409401

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