The Dynamics of Non-Performing Loans during Banking Crises: A New Database

December 6, 2019

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Anil Ari, Sophia Chen, and Lev Ratnovski. The Dynamics of Non-Performing Loans during Banking Crises: A New Database, (USA: International Monetary Fund, 2019) accessed December 24, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/272
Stock No:

WPIEA2019272
ISBN:

9781513521152
ISSN:

1018-5941

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