{
  "title": "Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects",
  "publication": "IMF Working Papers, October 1, 2010",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/nonperforming-loans-in-the-gcc-banking-system-and-their-macroeconomic-effects-24258",
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  "summary": "According to a dynamic panel estimated over 1995 - 2008 on around 80 banks in the GCC region, the NPL ratio worsens as economic growth becomes lower and interest rates and risk aversion increase.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- Dynamic panel estimated over 1995 - 2008 on around 80 banks in the GCC region.\n- The NPL ratio worsens as economic growth becomes lower and interest rates and risk aversion increase.\n- The model implies that the cumulative effect of macroeconomic shocks over a three year horizon is large.\n- Firm-specific factors related to risk-taking and efficiency are related to future NPLs.\n- A panel VAR indicates a strong, albeit short-lived, feedback effect from losses in banks’ balance sheets on economic activity, with a semi-elasticity of around 0.4."
    },
    {
      "heading": "Methodology and data",
      "content": "- Estimation approach: dynamic panel on around 80 banks.\n- Sample period: 1995 - 2008.\n- Additional analysis: panel VAR to investigate feedback from NPLs to growth."
    },
    {
      "heading": "Thematic keywords and subject areas",
      "content": "- Subjects: Banking, Commercial banks, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Loans, Money, Nonperforming loans\n- Keywords: balance sheet constraint, bank, bank Muscat SAOG, banking system, banks in the Gulf Cooperative Council, Commercial banks, Credit, Credit risk, feedback effect, GCC countries data, GCC country, GCC economy, GCC region, Global, Gulf Cooperation Council, interest rate, loan, Loans, macro-financial linkages, Nonperforming loans, NPL ratio, NPLs, Stress-testing, WP\n\nIMF Working Paper: \"Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects\" by Raphael A Espinoza and Ananthakrishnan Prasad, October 1, 2010.\n\n---\n\n Content in this bundle\n\n- wp10224\n  - wp10224 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp10224 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/nonperforming-loans-in-the-gcc-banking-system-and-their-macroeconomic-effects-24258"
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    "[Markdown version](/en/publications/wp/issues/2016/12/31/nonperforming-loans-in-the-gcc-banking-system-and-their-macroeconomic-effects-24258/index.md)",
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    "Authors: Raphael A Espinoza, Ananthakrishnan Prasad",
    "Published: October 1, 2010",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781455208890.001",
    "Dynamic panel estimated over 1995 - 2008 on around 80 banks in the GCC region.",
    "The NPL ratio worsens as economic growth becomes lower and interest rates and risk aversion increase.",
    "The model implies that the cumulative effect of macroeconomic shocks over a three year horizon is large.",
    "Firm-specific factors related to risk-taking and efficiency are related to future NPLs.",
    "A panel VAR indicates a strong, albeit short-lived, feedback effect from losses in banks’ balance sheets on economic activity, with a semi-elasticity of around 0.4.",
    "Estimation approach: dynamic panel on around 80 banks.",
    "Sample period: 1995 - 2008.",
    "Additional analysis: panel VAR to investigate feedback from NPLs to growth.",
    "Subjects: Banking, Commercial banks, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Loans, Money, Nonperforming loans",
    "Keywords: balance sheet constraint, bank, bank Muscat SAOG, banking system, banks in the Gulf Cooperative Council, Commercial banks, Credit, Credit risk, feedback effect, GCC countries data, GCC country, GCC economy, GCC region, Global, Gulf Cooperation Council, interest rate, loan, Loans, macro-financial linkages, Nonperforming loans, NPL ratio, NPLs, Stress-testing, WP",
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