Non-Performing Loans and Macroeconomics Factors: The Italian Case

Foglia, Matteo

doi:10.3390/risks10010021

Cited by 35 publications

(34 citation statements)

References 46 publications

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“…The macroeconomic variables in the study were found to have negative significant influence on NPLs. The findings indicated that higher GDP growth rate is more likely to decrease banks NPLs [18,15,27] and supports hypothesis 6. The study also found that higher inflation rate will result in less NPL which is contrary to the research hypothesis 7.…”

Section: Long Run Modelsupporting

confidence: 59%

“…However, empirical evidence shows there exists a significant but a negative relationship between the growth in real GDP and NPLs in Ghana [18]. Again, Foglia [27], investigated the relationship between NPLs and the macroeconomic environment in the Italian context in the period 2008-2020. An ARDL cointegration model analysis performed, found GPD and Public Debt have a strong (negative) impact on the level of NPLs.…”

Section: Macroeconomic Factorsmentioning

confidence: 99%

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Macroeconomic and Bank Specific Determinants of Non-performing Loans in Ghanaian Banking Sector

Okyere¹,

Mensah²

2022

IJAFRM

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Banks play an important role in the creation of capital for economic growth of a nation and their reliability is very critical for financial system stability. Nevertheless, banks face risks such as credit risk, which seem to have an impact on banks profitability. To determine credit risk, the ratio of Non-Performing Loans (NPLs) to total bank loans is the most common indicator used. Non-Performing Loans are loans that do not produce interest and principal amount for a minimum of 90 days and fundamentally reflects the performance of a bank. A high ratio indicates a greater risk of loss while a small ratio presents a low risk to the bank. NPLs systematically affects the whole banking system and if care is not taken will disturb its future development. The study examined the determinants of NPLs in the banking industry of Ghana using bank specific and macroeconomic variables. The study was based on monthly data covering the period January 2007 to December 2019 and employed the ARDL bounds test of co-integration to estimate the evidence of short run and long run relationship among the variables. The study results revealed that, bank's lending rate, bank's profitability, Cost to Income Ratio, Capital Adequacy Ratio and Net Interest Margin are the bank specific factors influencing non-performing loans. At the macroeconomic level, inflation and economic growth reduces non-performing loans. Furthermore, previous year's non-performing loans and net interest margin depresses Current NPLs whereas credit adequacy ratio promotes Current NPLs in the short-run. The study recommends a firm policy reform that pays attention to credit appraisal mechanisms to improve the quality of bank loan portfolios through tougher regulations and guidelines to support healthier investment. Thus, management of banks should do well to cut interest rate on loans to make them less expensive for borrower's to meet their commitments, whiles regulators undertake policies that can ensure efficiency in bank's operations. Furthermore, Policymakers must consider GDP growth carefully by implementing a set of policies geared towards improving investment and finally profitability.

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Section: Long Run Modelsupporting

confidence: 59%

Section: Macroeconomic Factorsmentioning

confidence: 99%

Macroeconomic and Bank Specific Determinants of Non-performing Loans in Ghanaian Banking Sector

Okyere¹,

Mensah²

2022

IJAFRM

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“…The non-performing loans widely used in literature (Fofack, 2005;Antonin, 2018;Onomo, 2021;Foglia, 2022) draw the fact that banks extend credit to economic agents who do not return the credit on time. These adverse effects hold in credit allocation, in turn, harm the performance of the financial sector and the downside is that it increases price instability.…”

Section: Empirical Results and Analysismentioning

confidence: 99%

CEMAC’ta Finansal Sektör Gelişiminin Parasal İstikrar Hedefine Etkisi

PAGAL

2022

International Journal of Business and Economic Studies

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Objective: The paper aim to determine the role play by banking sector stabilization policies over the relationship between financial sector development and monetary stability objective. Methodology: The data used comes from World Bank (WDI, 2021) and Centrale Bank of African states (BEAC). The study covers the period 2000-2018. Following inflation equation constructed by Gallic and al (2017), it has been calculated through generalised method of moments (GMM) system of Blundell and Bond (1998). Results: The undesirable effects of financial sector development (credit risk) increase inflation rate in CEMAC. Besides, the negative relationship between financial sector development and the objective of monetary stability quoted in literature is not reversed in CEMAC. While the banking sector stabilisation policy stabs to reduce negative influence of adverse effects financial sector development on monetary stability objective, its effect remains low Originality/relevance: This analysis highlighted factors hindering monetary stability objective of from two aspects (determinants of monetary instability and influence of the undesirable effects of financial sector development). The credit risks, the main cause of monetary instability and the main undesirable effects of financial sector development, increase the inflation rate in CEMAC. Therefore, policy makers need to curb any increased of credit risks associated with financial sector development as this risk increase inflation in CEMAC.

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“…From 2008-2020, the cointegration and the distributed autoregressive lag model were used by Foglia (2022) to investigate the macroeconomic determinants of NPLs impact on the Italian banking system. Empirical findings show that the GDP prompted a negative influence on NPLs; On the contrary, the unemployment rate affected impaired loans positively [48].…”

Section: -2-empirical Findings On the Impact Of Macroeconomic Determi...mentioning

confidence: 96%

The Impact of Macroeconomic Factors on Non-performing Loans in the Western Balkans

Gashi

Tafa²,

Bajrami³

2022

Emerg Sci J

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This paper analyzes the relationship of macroeconomic factors to the level of non-performing loans (NPLs) using the econometric models GMM, the Fixed Effect model, and the Random Effect model. This study aims to identify macroeconomic factors at the level of non-performing loans in the Western Balkans, measure their impact on non-performing loans, and thus fill the gap that exists between macroeconomic factors (consisting of economic growth) and those with more impact on NPLs. The methodology used to carry out this research was desk research. We used World Bank data from 2000–2019, processed with STATA software. Results show that macroeconomic factors have an impact on non-performing loans. It also proves that even when interacting with other variables, the level of bad debt has not been completely eliminated, despite economic growth in many countries. Third, throughout the study period, fixed effects estimates show that variables are not significant in a static context. According to the findings, the annual rates of GDP growth, final government consumption, the real interest rate, gross domestic savings, and the unemployment rate all have a favorable impact on NPLs. This research contributes to a deeper understanding of the relationship between macroeconomic factors and non-performing loans in the Western Balkans. Based on this, to help reduce loan risk and bad debt by the proper criteria, we propose a series of policy implications. These implications aim to improve the efficiency of banks in particular and the banking system as a whole. Doi: 10.28991/ESJ-2022-06-05-08 Full Text: PDF

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Non-Performing Loans and Macroeconomics Factors: The Italian Case

Cited by 35 publications

References 46 publications

Macroeconomic and Bank Specific Determinants of Non-performing Loans in Ghanaian Banking Sector

Macroeconomic and Bank Specific Determinants of Non-performing Loans in Ghanaian Banking Sector

CEMAC’ta Finansal Sektör Gelişiminin Parasal İstikrar Hedefine Etkisi

The Impact of Macroeconomic Factors on Non-performing Loans in the Western Balkans

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