Loan loss provisions during the financial crisis in Ukraine

This article investigates the determinants of impaired loans in the Ukrainian banking sector using bank balance sheet data at the micro level. The case of Ukraine is exceptionally interesting because the particularly severe contagion from the global financial crisis turned into a prolonged economic crisis resulting in large loan loss provisions. It seems, however, that both macroeconomic and bank-specific variables have an effect on loan quality as the banks have not been uniformly affected by the crisis. It seems that banks that do not specialise in loans were particularly affected with deteriorating asset quality. The authors' estimation results are based on dynamic panel regression methods on a unique dataset of Ukrainian banks with quarterly frequency from 2005 to 2013 to avoid problems associated with using samples from the BankScope database.