Macroeconomic and bank-specific determinants of non-performing loans in sub-Saharan Africa

Trust Mpofu () and Eftychia Nikolaidou

No 2019-02, School of Economics Macroeconomic Discussion Paper Series from School of Economics, University of Cape Town

Abstract: This paper investigates the macroeconomic and bank-specific determinants of non-performing loans (NPLs) in eight sub-Saharan African economies. The study is motivated by the fact that some of these economies have experienced banking crises in the past, their NPLs have relatively been rising post the 2008/2009 global financial crisis and have recently experienced rapid growth of bank credit to the private sector. Such issues pose credit risks in the banking sector. Employing dynamic panel data methods over the period 2000-2017 and using a variety of specifications, the results show that NPLs decrease when real GDP growth rate, return on equity, return on assets, and bank size increase and rises when public debt, inflation rate, broad money, and domestic credit to private sector by banks increase.

Date: 2019
New Economics Papers: this item is included in nep-afr, nep-ban, nep-fdg and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:ctn:dpaper:2019-02

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