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Non-Performing Loans, Macroeconomic And Bank-Specific Variables In Southeast Asia During Covid-19 Pandemic

Author

Listed:
  • OOI KOK LOANG

    (City Graduate School, City University Malaysia, 46100, Petaling Jaya, Malaysia)

  • ZAMRI AHMAD

    (School of Management, Universiti Sains Malaysia, Gelugor 11800, Malaysia)

  • R. V. NAVEENAN

    (Symbiosis Institute of Business Management Bengaluru, Bengaluru 560100, Karnataka, India)

Abstract

This study examines the relationship between bank-specific variables, macroeconomic variables and non-performing loans (NPLs) in the seven countries of Southeast Asia (Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) during the pre-COVID-19and COVID-19 pandemic. This study adopts panel data regression and distributed lagged regression to examine the impact of bank-specific variables and macroeconomic variables as NPL determinants. The results show that bank-specific variables significantly correlate to NPL, but limited evidence indicates the influence of macroeconomic variables during pre-COVID. Nonetheless, macroeconomic variables are significant to NPL with the emergence of the pandemic, while the bank-specific variables are found to be insignificant. It shows that macroeconomic variables have a greater impact during the turbulent period as they affect most businesses, especially during the pandemic. Furthermore, macroeconomic variables are observed to have a stronger influence on developed countries, but the impact of bank-specific variables is stronger in emerging countries. The results of this study assist policymakers, regulators, banks and governments in identifying the determinants of high NPL as the indicator of a financial crisis. Greater emphasis shall be given to the changes in macroeconomic variables.

Suggested Citation

  • Ooi Kok Loang & Zamri Ahmad & R. V. Naveenan, 2023. "Non-Performing Loans, Macroeconomic And Bank-Specific Variables In Southeast Asia During Covid-19 Pandemic," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(03), pages 941-961, June.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:03:n:s0217590822500679
    DOI: 10.1142/S0217590822500679
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    More about this item

    Keywords

    Non-performing loan; macroeconomic; bank-specific; banking; COVID-19;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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