Economics at your fingertips  

Are non-performing loans sensitive to macroeconomic determinants? an empirical evidence from banking sector of SAARC countries

Saom Shawleen Anita (), Nishat Tasnova and Nousheen Nawar
Additional contact information
Saom Shawleen Anita: BRAC University
Nishat Tasnova: BRAC University
Nousheen Nawar: University of Dhaka

Future Business Journal, 2022, vol. 8, issue 1, 1-16

Abstract: Abstract The study empirically investigates selected macroeconomic determinants of non-performing loans (NPLs) for a panel of 8 South Asian Association for Regional Cooperation countries (Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan, and Sri Lanka), using annual data for the period 2008–2019. To examine the association, this study, primarily, conducted the OLS model, fixed effect estimates, and random effect estimates and, eventually, applied robust fixed effect estimates to resolve the problem of heteroscedasticity. The empirical findings confirmed the previous findings, indicating a significant positive association with the government budget balance and a significant inverse relationship with GDP, sovereign debt, inflation rate, and money supply. To reduce the aggregate NPLs in the South Asian Association for Regional Cooperation economy, the respective country’s government should identify the financial sector’s vulnerabilities and, thereby, emphasize boosting the economic growth, ensuring a moderate level of money supply along with inflation rate. The findings are useful for formulating macro-prudential along with fiscal policies to avoid the subsequent NPLs shock in South Asian Association for Regional Cooperation countries.

Keywords: Non-performing loans; Macroeconomic determinants; SAARC; Panel data; South Asia (search for similar items in EconPapers)
JEL-codes: C23 E60 O53 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1186/s43093-022-00117-9

Access Statistics for this article

Future Business Journal is currently edited by Soad Kamel Rizk and Hayam Wahba

More articles in Future Business Journal from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2023-11-13
Handle: RePEc:spr:futbus:v:8:y:2022:i:1:d:10.1186_s43093-022-00117-9