LESSONS FROM THE IMPACT OF INTERNAL AND MACROECONOMIC DETERMINANTS OF BAD LOANS IN CEE BANKS

Bogdan Florin Filip ()
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Bogdan Florin Filip: Alexandru Ioan Cuza University of Iaşi Iași, Romania

EURINT, 2017, vol. 4, 198-212

Abstract: The paper aims identifying and analysing the determinants of bad loans in the banks from Central and Eastern Europe, while their accumulation may lead to malfunctions on macroeconomic level. Analysing 38 of the most representative banks in the region during 2004-2013, we found significant positive linkages of bad loans ratio with cost to income ratio, unemployment and crisis, but also significant negative linkages with bank size, activity mix, bank risk taking behaviour, real GDP growth and inflation. Moreover, using Panel Least Squares Fixed Effects Method, we found that the main determinants of bad loans ratio increase are bank size, crisis, unemployment and cost to income ratio. Contrary, activity mix, bank risk taking behaviour, real GDP growth and inflation proved to act against bad loans accumulation. The results offer important lessons which may be useful in the future both for the banks and also for the governments from this region.

Keywords: bad loans; internal determinants; macroeconomic determinants; crisis (search for similar items in EconPapers)
Date: 2017
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