Non-performing loans, bank profitability and the financial crisis
This dissertation was written as part of the MSc in Banking & Finance at the International Hellenic University. The aim of the dissertation thesis is to examine the much discussed problem of bank asset quality and non-performing loans, their connection to the global economic crisis, and their impact to banks’ profitability, together with other macroeconomic and bank specific factors. We illustrate data of the non-performing loans, through descriptive analysis, in Greece and the countries of South Europe that are related with the acronym PIIGSC. These countries are commonly accepted to have been influenced the most by the negative impacts of the subprime mortgage crisis started in 2007 the U.S. Moreover, we have created an unbalanced panel dataset of 553 banking institutions regarding the period 2005-2012, performing in Portugal, Italy, Ireland, Greece and Spain. . In order to investigate the pre and post crisis situation, we have spited our sample into two sub-regimes, from 2005-2008 and 2009-2012 and through regression analysis we examine the impact of non-performing loans and other factors such as bank size, capital adequacy and inflation rate, to bank performance, expressed in terms of profitability.