Determinants of credit risk in the banking system in Sub-Saharan Africa

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ID: 18618
2018
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Abstract
This paper investigates the macroeconomic determinants of credit risk in the banking system of 22 Sub-Saharan African economies. We measure credit risk as the ratio of non-performing loans to total gross loans (NPLs) and employ dynamic panel data methods over the period 2000–2016. Using a variety of specifications, the results show that an increase in real GDP growth rate has a statistically and economically significant reducing effect on the ratio of non-performing loans to total gross loans. Furthermore, inflation rate, domestic credit to private sector by banks as a percent of GDP, trade openness, VIX as a proxy of global volatility, and the 2008/2009 global financial crisis, all have positive and significant impact on NPLs. JEL classifications: E44, G21, Keywords: Non-performing loans, Macroeconomic factors, Banking system, Panel data, Sub-Saharan Africa
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mpofu2018determinantsreview Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
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Journal review of development finance
Year 2018
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