The dynamics of non-performing loans during banking crises : a new database

Anil Ari, Sophia Chen, Lev Ratnovski

This paper presents a new dataset on the dynamics of non-performing loans (NPLs) during 88 banking crises since 1990. The data show similarities across crises during NPL build-ups but less so during NPL resolutions. We find a close relationship between NPL problems-elevated and unresolved NPLs-and the severity of post-crisis recessions. A machine learning approach identifies a set of pre-crisis predictors of NPL problems related to weak macroeconomic, institutional, corporate, and banking sector conditions. Our findings suggest that reducing pre-crisis vulnerabilities and promptly addressing NPL problems during a crisis are important for post-crisis output recovery.

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Year of publication:	[2020]
Authors:	Ari, Anil ; Chen, Sophia ; Ratnovski, Lev
Publisher:	Frankfurt am Main, Germany : European Central Bank
Subject:	non-performing loans \| debt \| banking crises \| recessions \| crisis resolution \| Bankenkrise \| Banking crisis \| Notleidender Kredit \| Non-performing loan \| Welt \| World \| Konjunktur \| Business cycle \| Kreditgeschäft \| Bank lending \| Finanzkrise \| Financial crisis \| Wirtschaftskrise \| Economic crisis \| Kreditrisiko \| Credit risk