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Bank-specific and Macroeconomic Determinants of the Quality of Bank Loans Portfolio in Romania and Bulgaria

Angela Roman () and Irina Bilan

Ovidius University Annals, Economic Sciences Series, 2015, vol. XV, issue 1, 881-886

Abstract: The aim of our paper is to empirically investigate the determinants of the quality of bank loans portfolio for a panel of 29 commercial banks from two new EU Member States, namely Bulgaria and Romania, over the period 2003-2012. Our study is based on annual data coming from Bankscope Database, commercial banks’ annual reports, Eurostat and World Bank’s Global Financial Development Databases. The results of our study show that the dynamics of bank loans quality, expressed by the ratio of non-performing loans to total loans, is significantly influenced by both macroeconomic factors (the GDP growth rate, the unemployment rate and the inflation rate) and some bank-specific factors (the return on average total assets and the size of the bank). The added value of our study comes from providing evidence regarding the main factors that could influence the quality of bank loans portfolio in Bulgaria and Romania.

Keywords: non-performing loans; commercial banks; bank-specific variables; macroeconomic variables (search for similar items in EconPapers)
JEL-codes: C23 G01 G21 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:ovi:oviste:v:xv:y:2015:i:1:p:881-886