The Roots of the Banking Crisis in the New EU Member States: A Panel Regression Approach

Mejra Festic () and Alenka Kavkler ()
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Mejra Festic: EPF - Faculty of Economics and Business, University of Maribor; EIPF - Economic Institute, Ljubljana. SLOVENIA
Alenka Kavkler: EPF - Faculty of Economics and Business, University of Maribor; EIPF - Economic Institute, Ljubljana. SLOVENIA

Journal for Economic Forecasting, 2012, issue 1, 20-40

Abstract: We contributed to the empirical evidence of the impact of macroeconomic environment on the non-performing loans (NPL) ratio dynamics by analyzing the panel model with fixed effects, the model with random effects and instrumental variable regressions to control for a potential endogeneity problem. Economic and consumption growth proved to be positively correlated with the business cycle in the ten new EU member states (NMS-10), which raised the quality of the loan portfolio. Compliance with the Basel Core Principles was shown to improve the NPL ratio dynamics.

Keywords: cyclicality; systemic risk; overheating economies (search for similar items in EconPapers)
JEL-codes: E32 E51 E66 F34 F43 G21 G28 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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