Year: 2024
Type: article
Abstract: The existing literature has not examined how elections affect bank non-performing loans and its determinants even though banks are often the largest borrowers to fund election campaigns in many countries. This study investigates the determinants of bank non-performing loans (NPL) during election years in 35 developed countries. The fixed effect regression methodology was used to estimate the determinants of bank non-performing loans during election years. It was found that the banking sector experienced high NPLs during election years. Efficient banks operating in robust legal environments have higher non-performing loans during election years. It was also found that capital adequacy ratio, real GDP growth, loan-to-GDP ratio, cost-to-income ratio, political stability, and absence of terrorism are significant determinants of bank non-performing loans. The findings imply that election matters for the persistence of bank non-performing loans in developed countries.
Source: Modern Finance
DOI: 10.61351/mf.v2i2.175
Author: Peterson K. Ozili
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4402925379