Nonperforming loans and related lending: Evidence from Ukraine

Iegor Vyshnevskyi and Wook Sohn

Emerging Markets Review, 2023, vol. 57, issue C

Abstract: This study examines bank-specific factors that determine nonperforming loans (NPLs) in Ukraine. Analysis of an unbalanced sample of 207 banks from 2008 to 2020 reveals that the NPLs of banks increase with related lending, suggesting that related lending is detrimental to the soundness of bank loans owing to the standard information advantage that can be offset by the bank's conflict of interest in banking relationships. Moreover, a positive shock to NPLs causes a substantial increase in related lending. These results highlight the importance of close monitoring of banks' lending practices to related parties for suppressing excessive risk-taking behavior of banks.

Keywords: Nonperforming loans; Related party lending; Bank capitalization; Loan concentration; Lending behavior; Emerging market economy; Ukraine (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:57:y:2023:i:c:s1566014123000742

DOI: 10.1016/j.ememar.2023.101069

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