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Sustainable development and bank non-performing loans: are they correlated?

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  • Peterson K. Ozili

Abstract

Purpose - This paper aims to investigate the correlation between banking sector non-performing loans (NPLs) and the level of sustainable development. Design/methodology/approach - Pearson correlation test statistic was used to assess the correlation between bank NPLs and sustainable development. Findings - There is a significant positive correlation between banking sector NPLs and the level of sustainable development measured by the sustainable development index (SDI). The significant positive correlation is evident in European countries and in countries in the region of the Americas. There is a significant negative correlation between banking sector NPLs and achieving SDG3 and SDG7 in African countries and European countries. There is also a significant negative correlation between NPLs and achieving SDG10 in European countries. There is a significant positive correlation between banking sector NPLs and achieving SDG4 and SDG7 in the region of the Americas. There is also a significant positive correlation between NPLs and achieving SDG10 in African countries and in countries in the region of the Americas. Originality/value - The present study is unique and different from other studies because it used a unique SDI to capture the level of sustainable development. The analysis is also unique because it covers several regions, which have not been covered in previous studies.

Suggested Citation

  • Peterson K. Ozili, 2023. "Sustainable development and bank non-performing loans: are they correlated?," Arab Gulf Journal of Scientific Research, Emerald Group Publishing Limited, vol. 42(3), pages 551-565, May.
    • Handle: RePEc:eme:agjsrp:agjsr-01-2023-0028
    DOI: 10.1108/AGJSR-01-2023-0028
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    References listed on IDEAS

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    1. Lepetit, Laetitia & Strobel, Frank, 2015. "Bank insolvency risk and Z-score measures: A refinement," Finance Research Letters, Elsevier, vol. 13(C), pages 214-224.
    2. Peterson K. Ozili, 2019. "Non-performing loans and financial development: new evidence," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 20(1), pages 59-81, January.
    3. Naqvi, Bushra & Mirza, Nawazish & Rizvi, Syed Kumail Abbas & Porada-Rochoń, Małgorzata & Itani, Rania, 2021. "Is there a green fund premium? Evidence from twenty seven emerging markets," Global Finance Journal, Elsevier, vol. 50(C).
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    Cited by:

    1. Dhahri, Sabrine & Omri, Anis & Mirza, Nawazish, 2024. "Information technology and financial development for achieving sustainable development goals," Research in International Business and Finance, Elsevier, vol. 67(PA).

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    More about this item

    Keywords

    Sustainable development; Non-performing loans; Sustainable development goals; SDGs; SDG3; SDG4; SDG7; SDG10; Sustainable development index; Correlation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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