COVID-19 and Non-Performing Loans in Europe

Ioannis Plikas, Dimitrios Kenourgios and Georgios A. Savvakis
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Dimitrios Kenourgios: Department of Economics & UoA Center for Financial Studies, National and Kapodistrian University of Athens, 10559 Athens, Greece
Georgios A. Savvakis: Department of Economics & UoA Center for Financial Studies, National and Kapodistrian University of Athens, 10559 Athens, Greece

JRFM, 2024, vol. 17, issue 7, 1-48

Abstract: This study investigates the impact of COVID-19 on the non-performing loans (NPLs) in Europe, distinguishing by European subregion, country-level prosperity, NPL type, and NPL economic sector. We utilized panel data analysis covering the period 2015Q1–2021Q4 while controlling for macro, bank-specific, and regulatory indicators. We derived that the COVID-19 deaths and the strictness of lockdown measures positively affected the NPLs, while the economic support policies exerted a negative effect. Profitable, capitalized banks fared better. The strictness of lockdown measures hindered the ability of SMEs to repay their loans, increasing their NPLs. Sectors involving physical work-related activities also experienced an increase in their NPLs. We also deduced that bank securitization and national culture significantly contributed to NPL reduction.

Keywords: non-performing loans; COVID-19; policy responses; European banking system; cultural dimensions (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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