Bank Non-Performing Loans – a Panel Data-Based Analysis in European Context. Study Case: Germany
Abstract
Humanity has recently been crossed by periods of great crises, and banks have had a particularly important role in keeping the economy afloat and in relaunching economic activities in these difficult periods. If we refer to the stability, health and efficiency of the banking system, one of the important factors mentioned in the specialized literature is the size of Non-Performing Loans. The present work carries out a time and space analysis of this indicator for the EU member countries, observing its behavior during major crises. Thus, in the distribution of European countries there was a decrease in the median level of the indicator and in its variability, but also an increase in the predominance of countries with low non-performing loans ratio. At the same time, the case of Germany is studied, with the strong and weak points of its banking system and the key determinants of the rate of non-performing loans, for the main commercial banks in Germany are identified, using a panel data regression model. The results revealed that the indicator-level is negatively and significantly correlated with the loan-deposit ratio and the degree of financial profitability and positively and significantly correlated with the total value of assets and the degree of capital adequacy. From this emerges the need to promote policies to stimulate the prudent behavior of banks in granting loans, in order to ensure the stability and health of the banking system in European countries.