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Effects of Macroeconomic Factors on Bank Loans Quality: Evidence from Central and Eastern European Countries

In: Entrepreneurship, Business and Economics - Vol. 2

Author

Listed:
  • Bilan Irina

    (“Alexandru Ioan Cuza” University of Iași)

  • Roman Angela

    (“Alexandru Ioan Cuza” University of Iași)

Abstract

The objective of our study is to identify the key macroeconomic factors with impact on the dynamics of non-performing bank loans and to empirically assess their contribution in 11 Central and Eastern European countries (namely Bulgaria, Czech Republic, Estonia, Croatia, Hungary, Lithuania, Latvia, Poland, Romania, Slovenia and Slovakia), over the period 2000–2013. Our research is conducted on data from the International Monetary Fund, the World Bank and the Eurostat databases, using panel data estimation techniques. The results of our study show that, among the considered macroeconomic variables, the GDP growth rate, the unemployment rate and the public debt have a significant impact on the ratio of non-performing bank loans in all countries included in our analysis. Our chapter thus underlines that the health of a country’s macroeconomic environment is of great importance for bank loans quality and, in general, for ensuring the soundness and stability of the banking sector in the selected Central and Eastern European countries. The added value of our study arises from the inclusion in the analysis of public finance variables, especially of public debt which has proved to have crucial relevance for the financial stability in the context of the recent economic and financial crisis.

Suggested Citation

  • Bilan Irina & Roman Angela, 2016. "Effects of Macroeconomic Factors on Bank Loans Quality: Evidence from Central and Eastern European Countries," Eurasian Studies in Business and Economics, in: Mehmet Huseyin Bilgin & Hakan Danis (ed.), Entrepreneurship, Business and Economics - Vol. 2, edition 1, pages 571-584, Springer.
    • Handle: RePEc:spr:eurchp:978-3-319-27573-4_36
    DOI: 10.1007/978-3-319-27573-4_36
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    Cited by:

    1. Iulia Iuga, 2019. "The Influence of Inflation rate on Robor in the Romanian Banking System - Case Study," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 607-613, August.
    2. Imad Jabbouri & Maryem Naili, 2020. "Determinants of Nonperforming Loans in Emerging Markets: Evidence from the MENA Region," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-33, February.

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