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Bank non-performing loans, loan charge-offs, and crime incidence

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  • Jin, Justin
  • Nainar, Khalid
  • Sun, Chenwei

Abstract

This study examines whether banks’ non-performing loans (NPL) and loan charge-offs (LCO) are associated with state crime rates in the U.S. Our empirical results show that both NPLs and LCOs are significantly and positively associated with crimes incidence. After disaggregating the crime rates, we find a significant and positive association between the two financial reporting variables (NPL and LCO) and property crimes such as larceny, burglary, robbery, and motor vehicle theft. We conclude that bank financial reporting variables, such as non-performing loans and loan charge-offs, can serve as leading indicators of crime rates.

Suggested Citation

  • Jin, Justin & Nainar, Khalid & Sun, Chenwei, 2022. "Bank non-performing loans, loan charge-offs, and crime incidence," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s154461232200352x
    DOI: 10.1016/j.frl.2022.103129
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    References listed on IDEAS

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    More about this item

    Keywords

    Bank; Non-performing loans; Loan charge-offs; Crime incidence;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law

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