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Non-performing loans and Financial Development: New Evidence

Ozili, Peterson (2017) Non-performing loans and Financial Development: New Evidence. Working Paper. Essex Business School. (Unpublished)

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Abstract

This paper examine the relationship between non-performing loans (NPLs) and financial (sector) development. The study is motivated by the scant knowledge on how financial development structures impact non-performing loans across banking sectors around the world. In the pooled full country empirical analysis, we find that private credit to GDP ratio is positively associated with non-performing loans. Also, NPLs are inversely associated with bank efficiency, loan loss coverage, banking competition and banking system stability, and is positively associated with foreign bank presence, banking crises and bank concentration. We also find that efficient and stable banking sectors experience higher non-performing loans. In the regional empirical analysis, NPLs are negatively associated with regulatory capital ratio and bank liquidity while the graphical analysis show that NPLs are inversely related to financial development and profitability in several regions.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Non-performing loans; credit risk; financial development; banking crisis; foreign banks; financial intermediation; banking sector development; efficiency; liquidity; asset quality; bank concentration, banking stability; Sub-saharan Africa; MENA; Europe; Asia-Pacific; Latin America
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
Depositing User: Kitakogelu Ozili
Date Deposited: 09 Mar 2017 13:24
Last Modified: 09 Mar 2017 13:25
URI: http://repository.essex.ac.uk/id/eprint/18731

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