Amuakwa Mensah, Franklin
- Department of Economics, Swedish University of Agricultural Sciences
Abstract
The detrimental effect non-performing loans (NPLs) have on banks’ income and the economy makes it necessary to examine the determinants of NPLs in the banking industry in Ghana. Using panel regression model, it was found that both bank-specific variables (i.e., previous year’s NPL, bank size, net interest margin (NIM), and current year’s loan growth) and macroeconomic variables (i.e., previous year’s inflation, real gross domestic product (GDP) per capita growth and real effective exchange rate) significantly affect NPLs in the banking industry. Also the sub-sample estimations showed that both bankspecific (i.e., previous year’s NPLs and current year’s loan growth) and macroeconomic factors (i.e., real effective exchange rate, real GDP per capita growth, and previous year’s inflation rate) affect NPLs of large banks. However, whereas bank-specific variables (i.e., previous year’s NPLs and current year’s loan growth) are important in explaining NPLs, macroeconomic factors are not important in explaining NPLs for small banks.
Keywords
NPLs; non-performing loans; panel model; Hausman test; banking industry; Ghana.
Published in
International Journal of Computational Economics and Econometrics
2015, volume: 5, number: 1, pages: 35-54
SLU Authors
Global goals (SDG)
SDG8 Decent work and economic growth
UKÄ Subject classification
Economics
Publication identifier
- DOI: https://doi.org/10.1504/IJCEE.2015.066207
Permanent link to this page (URI)
https://res.slu.se/id/publ/61730