A cross-country study: Determinants of Non-Performing Loans in the Eurozone

DOI: 10.5176/2251-1997_AF-54

Authors: Vasiliki Makri, Athanasios Tsaganos and Athanasios Bellas

Abstract:

The purpose of this study is to identify, using an econometric model, the factors affecting the Non-Performing Loans Rate (NPL) of the banking systems of the Eurozone for the period 2000-2008. Today, the Eurozone is in the middle of an unprecedented financial crisis, calling into question the soundness of the banking systems of European countries. Looking at both macro-variables (e.g. GDP, debt as {6e6090cdd558c53a8bc18225ef4499fead9160abd3419ad4f137e902b483c465} of GDP, unemployment) and micro-variables (Loans, ROA, ROE), we investigate whether and which of these significantly affect the non-performing loans rate.

Keywords: Non-performing Loans, bank specific variables, macroeconomic variables, fixed effect econometric model.