Macroeconomic and financial determinants of non-performing loans: Evidence from PIIGS

Panagiotis Magdalinos and Ioannis Tsakalos

Bulletin of Applied Economics, 2021, vol. 8, issue 2, 97-110

Abstract: The Eurozone Debt Crisis led to the outbreak of non-performing loans (NPLs). The purpose of this paper is to identify the macroeconomic and financial factors that enhanced the non-performing loans. We compare the impact of financial crisis to the following countries: Italy, Greece, Spain, Portugal, Ireland (PIIGS) and focus on specific parameters which affect the banking sector. We apply panel data analysis to highlight the relation among NPLs and specific parameters: Gross Domestic Product (GDP), unemployment rate, bank liquidity, and the real estate market. Findings confirm the negative correlation between NPLs and the GDP and the housing prices, as well as the positive one with the unemployment rate and the liquidity ratio (LDR).

Keywords: Non-performing loans; panel data; macroeconomic factors; financial ratios (search for similar items in EconPapers)
JEL-codes: G01 G20 G21 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:rmk:rmkbae:v:8:y:2021:i:2:p:97-110

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