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COVID-19 and Non-Performing Loans in Europe

Author

Listed:
  • John Hlias Plikas

    (Department of Economics & UoA Center for Financial Studies, National and Kapodistrian University of Athens, 10559 Athens, Greece)

  • Dimitrios Kenourgios

    (Department of Economics & UoA Center for Financial Studies, National and Kapodistrian University of Athens, 10559 Athens, Greece)

  • Georgios A. Savvakis

    (Department of Economics & UoA Center for Financial Studies, National and Kapodistrian University of Athens, 10559 Athens, Greece)

Abstract

This study investigates the impact of COVID-19 on the non-performing loans (NPLs) in Europe, distinguishing by European subregion, country-level prosperity, NPL type, and NPL economic sector. We utilized panel data analysis covering the period 2015Q1–2021Q4 while controlling for macro, bank-specific, and regulatory indicators. We derived that the COVID-19 deaths and the strictness of lockdown measures positively affected the NPLs, while the economic support policies exerted a negative effect. Profitable, capitalized banks fared better. The strictness of lockdown measures hindered the ability of SMEs to repay their loans, increasing their NPLs. Sectors involving physical work-related activities also experienced an increase in their NPLs. We also deduced that bank securitization and national culture significantly contributed to NPL reduction.

Suggested Citation

  • John Hlias Plikas & Dimitrios Kenourgios & Georgios A. Savvakis, 2024. "COVID-19 and Non-Performing Loans in Europe," JRFM, MDPI, vol. 17(7), pages 1-48, June.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:271-:d:1424942
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    References listed on IDEAS

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