Khemraj, Tarron and Pasha, Sukrishnalall (2009): The determinants of non-performing loans: an econometric case study of Guyana.
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Abstract
The study attempts to ascertain the determinants of non-performing loans in the Guyanese banking sector using a panel dataset and a fixed effect model similar to Jimenez and Saurina (2005). Consistent with international evidence we find that the real effective exchange rate has a significant positive impact on non-performing loans. This indicates that whenever there is an appreciation in the local currency the non-performing loan portfolios of commercial banks are likely to be higher. Our empirical results show that GDP growth is inversely related to non-performing loans, suggesting that an improvement in the real economy translates into lower non-performing loans. We also find that banks which charge relatively higher interest rates and lend excessively are likely to incur higher levels of non-performing loans. However, contrary to previous studies, our evidence does not support the view that large banks are more effective in screening loan customers when compared to their smaller counterparts.
Item Type: | MPRA Paper |
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Original Title: | The determinants of non-performing loans: an econometric case study of Guyana |
Language: | English |
Keywords: | Financial stability, non-performing loans, commercial banks |
Subjects: | E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers G - Financial Economics > G0 - General > G01 - Financial Crises G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages |
Item ID: | 53128 |
Depositing User: | Tarron Khemraj |
Date Deposited: | 23 Jan 2014 03:02 |
Last Modified: | 26 Sep 2019 12:16 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/53128 |