Macroeconomic and bank specific covariates of Non-Performing Loans (NPLs) in Pakistani Commercial Banks: panel data evidence / Bilal Mehmood, Zahid Irshad Younas, Nisar Ahmed.

• Main Authors: Mehmood, Bilal, Younas, Zahid Irshad, Ahmed, Nisar
• Format: Article
• Language: English
• Published: Universiti Teknologi Mara Selangor 2013
• Subjects: HB Economic Theory. Demography; Macroeconomics
• Online Access: http://ir.uitm.edu.my/id/eprint/32768/1/32768.pdf; http://ir.uitm.edu.my/id/eprint/32768/; http://www.jeeir.com/v2/index.php/16-archieve/vol-1-no-3-2013/77-macroeconomic-and-bank-specific-covariates-of-non-performing-loans-npls-in-pakistani-commercial-banks-panel-data-evidence

Non-performing loans has become an important part of commercial banking of a country. This paper empirically tests the macroeconomic and bank-specific covariates of non-performing loans for a panel of 13 commercial banks for period of 2003-2012. Using fixed effects with Driscoll and Kraay standard errors, the influence of macroeconomic and bank-specific covariates is found meaningful. Recommendations include the policy steps to complement the sound financial system with a healthy macroeconomic environment to reduce non-performing loans in commercial banks in Pakistan. Moreover, need is highlighted for a policy approach with emphasis on the apposite credit culture and lending policy designed with pertinent economic and financial factors.