The Dynamics of Non-Performing Loans during Banking Crises: A New Database
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Summary:
This paper presents a new dataset on the dynamics of non-performing loans (NPLs) during 88 banking crises since 1990. The data show similarities across crises during NPL build-ups but less so during NPL resolutions. We find a close relationship between NPL problems—elevated and unresolved NPLs—and the severity of post-crisis recessions. A machine learning approach identifies a set of pre-crisis predictors of NPL problems related to weak macroeconomic, institutional, corporate, and banking sector conditions. Our findings suggest that reducing pre-crisis vulnerabilities and promptly addressing NPL problems during a crisis are important for post-crisis output recovery.
Series:
Working Paper No. 2019/272
Subject:
Banking crises Financial crises Financial institutions Loans Nonperforming loans Public debt
English
Publication Date:
December 6, 2019
ISBN/ISSN:
9781513521152/1018-5941
Stock No:
WPIEA2019272
Pages:
40
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