Work detail

Non-Performing Loans – Determinants, the Development over Time and the Impact on Banks and the Real Economy

Author: Bc. Kateřina Kafková
Year: 2020 - summer
Leaders: Mgr. Magda Pečená Ph.D.
Work type: Bachelors
Language: English
Pages: 70
Awards and prizes:
Abstract: This thesis explains the concept of non-performing loans (NPL) and analyses factors
determining the share of NPLs in total gross loans provided in the Czech Republic. A panel of
24 banks operating in the Czech Republic with annual data from 2010-2019 is analysed. The
main estimation method that is used is the difference Generalized Method of Moments. The
possible determinants that are examined come from both macroeconomic and banking
environment. The results of the estimation provide evidence of the existence of a connection
between the NPL ratio and the macroeconomic factors, of which the effect of inflation and
unemployment was the most significant. Also, the estimation confirms that the NPL ratio is
significantly influenced by the bank-specific determinants, specifically by the effect of the
previous values of the NPL ratio and the effect of credit growth. Finally, the thesis discusses
the reversed effect – the effect of NPLs on the real economy.


Česká Spořitelna


Patria Finance