Macroeconomic Factors of Non-Performing Loans: The Case of Bosnia and Herzegovina

Džidić, Ante; Živko, Igor; Čolak, Anela

doi:10.17818/emip/2022/2.4

Cited by 3 publications

(1 citation statement)

References 21 publications

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“…Results from an autoregressive distributed lag (ARDL) analysis of the macroeconomic determinants of non-performing loans in Bosnia and Herzegovina by Dzidic et al (2022) show that economic growth leads to a reduction in non-performing loans, which implies an improvement in the asset quality of the banks. Economic expansion is linked to enhanced income levels, which reinforces the financial capacity of individual and corporate borrowers to meet their loan repayment obligations.…”

Section: Empirical Studies On the Effect Of Macroeconomic Dynamics On...mentioning

confidence: 99%

Effect of Macroeconomic Dynamics on Bank Asset Quality under Different Market Conditions: Evidence from Ghana

Apau,

Sibindi,

Jeke

2023

Risks

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This study assesses the dynamic relationship between macroeconomic factors and bank asset quality based on changes in the condition of stock market returns. A dynamic panel two-step system, the Generalized Method of Moments (system GMM) model, is employed using panel data from 18 universal banks spanning the period of 2007 to 2021. The analysis revealed that the real GDP growth rate, the average lending rate, and the real exchange rate represent a set of macroeconomic factors with a marked influence on banks’ asset quality, where a unit increase in these variables drive 0.02 percent, 0.98 percent, and 0.27 percent improvement in asset quality, respectively. In addition, a high-inflation rate was found to exert an adverse effect of −0.32 percent on asset quality, as it affects borrowers’ financial ability to meet loan repayment obligations. Furthermore, the study verified the existence of a positive relationship between market condition and asset quality, where a rise in the market return drives a 0.07 percent improvement in bank asset quality. This implies that bank performance adapts to changes in market conditions as posited under the Adaptive Market Hypothesis (AMH). Bank managers should consolidate banks’ asset bases during conditions of market stability to withstand periodic market fluctuations to boost trading momentum. Policy recommendations are suggested to foster a conducive business environment for bank stability.

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Section: Empirical Studies On the Effect Of Macroeconomic Dynamics On...mentioning

confidence: 99%

Effect of Macroeconomic Dynamics on Bank Asset Quality under Different Market Conditions: Evidence from Ghana

Apau,

Sibindi,

Jeke

2023

Risks

View full text Add to dashboard Cite

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Effect of Macroeconomic Dynamics on Bank Asset Quality under Different Market Conditions: Evidence from Ghana

Apau¹,

Sibindi²

2023

Preprint

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This study assesses the dynamic relationship between macroeconomic factors and bank asset quality based on changes in the condition of stock market returns. A Generalized Method of Moments (GMM) model is employed, using panel data from 18 universal banks spanning the period 2007 to 2021. The analysis revealed that the real GDP growth rate, the average lending rate, and the real exchange rate represent a set of macroeconomic factors with a marked influence on banks' asset quality. In addition, a high inflation rate was found to exert an adverse effect on asset quality, as it affects borrowers' financial ability to meet loan repayment obligations. Furthermore, the study verified the existence of a positive relationship between market condition and asset quality, which implies that bank performance adapts to changes in market conditions as posited under the Adaptive Market Hypothesis (AMH). Bank managers should consolidate banks' asset bases during conditions of market stability to withstand periodic market fluctuations to boost trading momentum. Policy recommendations are suggested to foster a conducive business environment for bank stability.

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Macroeconomic Factors of Consumer Loan Credit Risk in Central and Eastern European Countries

Kanapickienė

Keliuotytė-Staniulėnienė

Teresienė

et al. 2023

Economies

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In the scientific literature, there is a lack of a systematic approach to credit risk factors. In addition, insufficient attention is still paid to analysing the macroeconomic factors of consumer loan credit risk. Thus, this research aims to evaluate the macroeconomic factors of consumer loan credit risk in Central and Eastern European countries’ banking systems. The findings of the study can be formulated as follows. After analysing scientific literature on credit risk factors, an improved and detailed (at five different levels) classification of factors influencing banking credit risk is proposed. This classification can be beneficial for more enhanced analysis of the factors influencing banking credit risk for the whole loan portfolio as well as for different types of loans, e.g., consumer loans. For quantitative evaluation of the impact of macroeconomic factors on consumer loan credit risk, the methods of panel data analysis and bivariate and multiple regressions are employed. Eleven CEE countries in the period from 2008 to 2020 are analysed. The results revealed that the aggregate of general macroeconomic condition factors is negatively related to consumer loan NPLs. Moreover, the economic growth, stock market, foreign exchange market, and institutional environment factors proved to be risk-decreasing, while credit market and bond market factors had a risk-increasing impact. The results of this research might help financial institutions manage credit risk more efficiently and also might be relevant to governments and central banks when selecting and applying fiscal and monetary policy measures. This study also makes policy recommendations.

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Macroeconomic Factors of Non-Performing Loans: The Case of Bosnia and Herzegovina

Cited by 3 publications

References 21 publications

Effect of Macroeconomic Dynamics on Bank Asset Quality under Different Market Conditions: Evidence from Ghana

Effect of Macroeconomic Dynamics on Bank Asset Quality under Different Market Conditions: Evidence from Ghana

Effect of Macroeconomic Dynamics on Bank Asset Quality under Different Market Conditions: Evidence from Ghana

Macroeconomic Factors of Consumer Loan Credit Risk in Central and Eastern European Countries

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