TITLE:
Determinants of NPLS Revisited: The Aftermath of Two Crises and the Case of Greece
AUTHORS:
George Sfakianakis, George M. Agiomirgianakis, Marilou Ioakimidis, Stavros Arvanitis
KEYWORDS:
Non-Performing Loans, Panel Data Estimation, COVID-19 Pandemic, Financial Crisis, Economic Policy, Greece
JOURNAL NAME:
Theoretical Economics Letters,
Vol.12 No.6,
December
13,
2022
ABSTRACT: Building on previous research contributions on the
macroeconomic determinants of NPLs, this paper aims at assessing the cumulative
impact of the two recent crises which, although based on different
fundamentals, both resulted in a turbulent macroeconomic environment: first,
the global financial crisis originating from the US financial system in 2007
(which soon became an economic crisis culminating in a debt crisis for some
countries) and then the most recent outbreak of the COVID-19 pandemic—a health
crisis, albeit with very significant economic repercussions (some of which are
not yet apparent, while the impact of others cannot yet be fully extrapolated).
In this research endeavor we use an extended
set of OECD countries for a time span of 16 years including the most recent
data available (2020). Apart from evaluating the explanatory power of new
variables and variables only recently introduced (and used so far only to a
limited extent, such as housing prices), this model provides useful insights
also on the possible directions of economic policy interventions to alleviate
the impact of the most recent crisis, which is still unfolding. Using our
preferred specification, we then proceed to study the case of Greece, which was
the country probably hardest hit by the financial crisis, with NPLs approaching
50% of total loans. While still recovering from the previous crisis, Greece has
to deal with the repercussions of the pandemic; as a result, interesting
conclusions can be drawn from this specific case study.