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The Roots of the Banking Crisis in the New EU Member States: A Panel Regression Approach

Author

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  • Festic, Mejra

    (EPF - Faculty of Economics and Business, University of Maribor; EIPF - Economic Institute, Ljubljana. SLOVENIA)

  • Kavkler, Alenka

    (EPF - Faculty of Economics and Business, University of Maribor; EIPF - Economic Institute, Ljubljana. SLOVENIA)

Abstract

We contributed to the empirical evidence of the impact of macroeconomic environment on the non-performing loans (NPL) ratio dynamics by analyzing the panel model with fixed effects, the model with random effects and instrumental variable regressions to control for a potential endogeneity problem. Economic and consumption growth proved to be positively correlated with the business cycle in the ten new EU member states (NMS-10), which raised the quality of the loan portfolio. Compliance with the Basel Core Principles was shown to improve the NPL ratio dynamics.

Suggested Citation

  • Festic, Mejra & Kavkler, Alenka, 2012. "The Roots of the Banking Crisis in the New EU Member States: A Panel Regression Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 20-40, March.
    • Handle: RePEc:rjr:romjef:v::y:2012:i:1:p:20-40
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    References listed on IDEAS

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    Cited by:

    1. Viktor M. Dinev, 2017. "Risks and benefits for new member states of the European Union in their entry in the Euro area in the context of the debt crisis," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 112-130.
    2. Petros Golitsis & Athanasios P. Fassas & Anna Lyutakova, 2019. "Credit Risk Determinants: Evidence from the Bulgarian Banking System," Bulletin of Applied Economics, Risk Market Journals, vol. 6(1), pages 41-64.
    3. Vasiliki Makri, 2016. "Towards an Investigation of Credit Risk Determinants in Eurozone Countries," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 15(1), pages 27-57, March.

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    More about this item

    Keywords

    cyclicality; systemic risk; overheating economies;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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