The Impact of Macro-Economic Environment on Probability of Non-Performing Loans in Financial Institutions

The rise in mortgage defaults the banking industry highlights connections between financial and macroeconomic shocks as well risk of instability created by credit market friction. percentage non-performing loans is assessed this study connection to effects global economy. In order do a regression analysis, three American banks are chosen, variables GDP growth, unemployment rate, real interest CPI taken into account. found significant correlation rate (NPL). results Wells Fargo indicates that there no obvious link NPL. There an association expansion for Citi Bank America. Real rates NPL not significantly affect one another. Therefore, even though some factors might such probabilities, changes economic climate may have impact on banks' likelihood loans.