Government debt accumulation and non-performing loans: An ARDL bounds testing approach
Economics and Business Letters
; 11(4):150-160, 2022.
Article
in English
| Web of Science | ID: covidwho-2164394
ABSTRACT
Following the financial and debt crises in the euro area and the global COVID pandemic, governments supported their economies by increasing borrowing and accumulating debt with ambiguous long-run effects on non-performing loans (NPLs). We empirically investigate the determinants of NPLs using quarterly (2003Q1-2020Q2) aggregate data for Greece and applying the autoregressive distributed lag (ARDL) bounds testing approach. We offer new policy-making relevant evidence by showing that government debt has a significant and positive long-term impact on NPLs irrespective of possible short-term dynamics that appear to provide a temporary relief. Fiscal balance, on the contrary, exerts a negative long-term effect justifying the quest for surpluses post-COVID.
Full text:
Available
Collection:
Databases of international organizations
Database:
Web of Science
Language:
English
Journal:
Economics and Business Letters
Year:
2022
Document Type:
Article
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