The Dynamics of Non-Performing Loans during Banking Crises: A New Database
December 6, 2019
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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.
Subject: Banking crises, Financial crises, Financial institutions, Loans, Nonperforming loans, Public debt
Keywords: Asia and Pacific, Banking crises, banking crisis, elevated NPL, elevated npls, Europe, Global, Loans, Nonperforming loans, NPL dynamics, NPL ratio, NPL resolution, peak NPL, peak npls, WP
Pages:
40
Volume:
2019
DOI:
Issue:
272
Series:
Working Paper No. 2019/272
Stock No:
WPIEA2019272
ISBN:
9781513521152
ISSN:
1018-5941
