{
  "title": "Non-Performing Loans in the ECCU: Determinants and Macroeconomic Impact",
  "publication": "IMF Working Papers, November 17, 2016",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/non-performing-loans-in-the-eccu-determinants-and-macroeconomic-impact-44414",
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  "summary": "This paper assesses the determinants of NPLs in the Eastern Caribbean Currency Union (ECCU) and whether a deterioration in asset quality may result in negative feedback effects from the banking system to economic activity.",
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    {
      "heading": "Publication metadata",
      "content": "- Authors: Kimberly Beaton, Alla Myrvoda, Shernnel Thompson\n- Date: November 17, 2016\n- Series: Working Paper No. 2016/229\n- Issue: 229\n- Volume: 2016\n- Pages: 33\n- DOI: https://doi.org/10.5089/9781475555714.001\n- ISBN: 9781475555714\n- ISSN: 1018-5941"
    },
    {
      "heading": "Research objective",
      "content": "- Assess the determinants of non-performing loans (NPLs) in the Eastern Caribbean Currency Union (ECCU).\n- Evaluate whether a deterioration in asset quality may result in negative feedback effects from the banking system to economic activity."
    },
    {
      "heading": "Key findings",
      "content": "- Deterioration in asset quality can be attributed to both macroeconomic and bank-specific factors.\n- Banks with stronger profitability tend to have lower NPLs.\n- Lower exposure to the construction sector and household loans is associated with lower NPLs.\n- Some evidence indicates that foreign owned banks systematically have lower NPLs than domestic banks, suggesting differences in bank practices that impact asset quality.\n- The results emphasize the strength of macrofinancial feedback loops in the ECCU."
    },
    {
      "heading": "Determinants of NPLs (as reported)",
      "content": "- Macroeconomic factors: linked to deterioration in asset quality and to macrofinancial feedback effects on real activity.\n- Bank-specific factors:\n  - Profitability (stronger profitability → lower NPLs).\n  - Loan portfolio composition (higher exposure to construction sector and household loans → higher NPLs).\n  - Ownership structure (foreign owned banks tend to have lower NPLs than domestic banks)."
    },
    {
      "heading": "Macroeconomic impact and feedback effects",
      "content": "- Evidence points to negative feedback effects from banking-sector asset-quality deterioration to economic activity.\n- The study emphasizes the strength of macrofinancial feedback loops in the ECCU, indicating that worsening bank asset quality can transmit to broader economic outcomes."
    },
    {
      "heading": "Subject classifications and keywords",
      "content": "- Subject: Banking, Commercial banks, Credit, Financial institutions, Foreign banks, Loans, Money, Nonperforming loans\n- Keywords: asset quality, bank asset quality, Caribbean, Commercial banks, coverage data sets, Credit, credit growth, dummy variable, economic activity, feedback effects, force bank, Foreign banks, Global, Loans, Macrofinancial linkages, non-performing loans, Nonperforming loans, NPL ratio, ownership structure, real GDP, resolution process, return on assets, WP\n\nIMF Working Papers. Non-Performing Loans in the ECCU: Determinants and Macroeconomic Impact, Kimberly Beaton, Alla Myrvoda, and Shernnel Thompson, November 17, 2016.\n\n---\n\n Content in this bundle\n\n- Non-Performing Loans in the ECCU: Determinants and Macroeconomic Impact\n  - Non-Performing Loans in the ECCU: Determinants and Macroeconomic Impact (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Non-Performing Loans in the ECCU: Determinants and Macroeconomic Impact (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/non-performing-loans-in-the-eccu-determinants-and-macroeconomic-impact-44414"
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    "Authors: Kimberly Beaton, Alla Myrvoda, Shernnel Thompson",
    "Published: November 17, 2016",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475555714.001",
    "Authors: Kimberly Beaton, Alla Myrvoda, Shernnel Thompson",
    "Date: November 17, 2016",
    "Series: Working Paper No. 2016/229",
    "Issue: 229",
    "Volume: 2016",
    "Pages: 33",
    "DOI: https://doi.org/10.5089/9781475555714.001",
    "ISBN: 9781475555714",
    "ISSN: 1018-5941",
    "Assess the determinants of non-performing loans (NPLs) in the Eastern Caribbean Currency Union (ECCU).",
    "Evaluate whether a deterioration in asset quality may result in negative feedback effects from the banking system to economic activity.",
    "Deterioration in asset quality can be attributed to both macroeconomic and bank-specific factors.",
    "Banks with stronger profitability tend to have lower NPLs.",
    "Lower exposure to the construction sector and household loans is associated with lower NPLs.",
    "Some evidence indicates that foreign owned banks systematically have lower NPLs than domestic banks, suggesting differences in bank practices that impact asset quality.",
    "The results emphasize the strength of macrofinancial feedback loops in the ECCU.",
    "Macroeconomic factors: linked to deterioration in asset quality and to macrofinancial feedback effects on real activity.",
    "Bank-specific factors:",
    "Evidence points to negative feedback effects from banking-sector asset-quality deterioration to economic activity.",
    "The study emphasizes the strength of macrofinancial feedback loops in the ECCU, indicating that worsening bank asset quality can transmit to broader economic outcomes.",
    "Subject: Banking, Commercial banks, Credit, Financial institutions, Foreign banks, Loans, Money, Nonperforming loans",
    "Keywords: asset quality, bank asset quality, Caribbean, Commercial banks, coverage data sets, Credit, credit growth, dummy variable, economic activity, feedback effects, force bank, Foreign banks, Global, Loans, Macrofinancial linkages, non-performing loans, Nonperforming loans, NPL ratio, ownership structure, real GDP, resolution process, return on assets, WP",
    "**Non-Performing Loans in the ECCU: Determinants and Macroeconomic Impact**"
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