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Effects of economic variables on NPLs depending on the economic cycle

Salvador Climent-Serrano ()
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Salvador Climent-Serrano: University of Valencia

Empirical Economics, 2019, vol. 56, issue 1, 325-340

Abstract: Abstract Late payments are a major problem for Spanish banks. This paper studies as determinants of loan delinquency: unemployment, interest rates, inflation, housing prices, leverage, bad debt coverage and solvency, which were the main problems facing the Spanish economy between 2004 and 2015, and also examines these determinants in periods of growth and recession. The results show that the price of housing, bad debt coverage, interest rates and solvency are the variables with the greatest impact on NPLs. Furthermore, differences exist in the behaviour of variables during periods of growth compared with periods of recession. Inertia of the dependent variable has also been detected.

Keywords: Loan default; Banks; Unemployment; Leverage; Housing prices (search for similar items in EconPapers)
JEL-codes: G21 M41 (search for similar items in EconPapers)
Date: 2019
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