Financial Stability in the Baltics

Mejra Festiæ () and Sebastijan Repina ()
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Mejra Festiæ: Faculty of Economics and Business, University of Maribor, http://www.uni-mb.si
Sebastijan Repina: EIPF Economic Institute, Ljubljana, http://www.eipf.si

Czech Journal of Economics and Finance (Finance a uver), 2009, vol. 59, issue 6, 554-576

Abstract: The authors test the hypothesis of procyclicality of banking sector results in the Baltic economies. Their estimates suggest that a slowdown in economic activity is likely to accelerate the growth of the nonperforming loan (NPL) ratio in the Baltics. They also support the hypothesis that a rapid growth of credit harms loan performance, most likely due to soft-loan constraints and macroeconomic overheating. Higher concentration in banking market coincides with relatively higher nonperforming loans. Compliance with the Basel core principles improves the quality of the loan portfolio.

Keywords: cyclicality; non-performing loans; systemic risk; asset quality (search for similar items in EconPapers)
JEL-codes: F47 G15 G21 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:59:y:2009:i:6:p:554-576

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