Wed. Mar 22nd, 2023

Model estimates of NPLs of a large sample of banks in the euro area suggest that macro-economic factors drive NPLs.

This implies that the NPL-ratio may not increase in a similar fashion as after the global financial crisis. However, the low fit of the model shows that idiosyncratic factors play a major role in explaining NPLs. This is illustrated in a case study for the Netherlands which suggests that deferred tax payments may lead to increasing NPLs. This document was provided/prepared by Economic Governance Support Unit at the request of the ECON Committee).

Source : © European Union, 2021 – EP

Source: In-Depth Analysis – Non-performing Loans – Different this Time? NPL resolution after COVID-19 – 05-03-2021

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